<PAGE>
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE OR OTHER STATE OR OTHER JURISDICTION IN WHICH SUCH +
+OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE OR OTHER +
+JURISDICTION. +
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
As Filed with the Securities and Exchange Commission on July 31, 1998.
Registration No.
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________
EMPRESS ENTERTAINMENT, INC.
EMPRESS CASINO HAMMOND CORPORATION
EMPRESS CASINO JOLIET CORPORATION
EMPRESS RIVER CASINO FINANCE CORPORATION
HAMMOND RESIDENTIAL, L.L.C.
(Exact names of registrants as specified in their respective charter)
<TABLE>
<S> <C> <C>
Delaware 36-3932031
Indiana 36-3865868
Illinois 36-3740765
Delaware 36-3929804
Indiana 7999 __________
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code) Identification No.)
</TABLE>
2300 Empress Drive
Joliet, Illinois 60436
(815) 744-9500
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
_______________
Michael W. Hansen
Chief Legal Officer
2300 Empress Drive
Joliet, Illinois 60436
(815) 744-9400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Joel D. Rubin, Esq.
Suzanne L. Saxman, Esq.
D'Ancona & Pflaum
30 N. LaSalle, Suite 2900
Chicago, IL 60602
(312) 580-2000
_______________
Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after the effectiveness of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================================
Proposed Proposed
Title of each class of maximum maximum
securities Amount offering price aggregate Amount of
to be registered to be registered per unit(1) offering price(2) registration fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8 1/8% Senior Subordinated Notes due 2006 of
Empress Entertainment, Inc. $150,000,000 100% $150,000,000 $44,250
- -----------------------------------------------------------------------------------------------------------------------------
Guarantee of 8 1/8% Senior Subordinated Notes
due 2006 by Guarantors (as hereinafter defined) $150,000,000 -- -- None(2)
=============================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.
(2) Pursuant to Rule 457(n), no separate fee is payable for the Guarantees.
_____________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 31, 1998
PROSPECTUS
- ----------
Empress Entertainment, Inc.
OFFER TO EXCHANGE
All 8 1/8% Senior Subordinated Notes due 2006
which have been registered under the
Securities Act of 1933 for all outstanding
8 1/8% Senior Subordinated Notes due 2006
($150,000,000 principal amount outstanding)
The Exchange Offer (as defined) and withdrawal rights will expire at 5:00
p.m., New York City time, on __________, 1998 (as such date may be extended, the
"Expiration Date").
Upon the terms and subject to the conditions set forth in this Prospectus,
as it may be amended and supplemented from time to time (this "Prospectus"), and
the accompanying Letter of Transmittal (the "Letter of Transmittal," and
together with the Prospectus, the "Exchange Offer"), Empress Entertainment,
Inc., a Delaware corporation (the "Company"), hereby offers, to exchange an
aggregate of up to $150,000,000 principal amount of its 8 1/8% Senior
Subordinated Notes due 2006 (the "New Notes"), which have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which this Prospectus is a part, for an identical
principal amount of its outstanding 8 1/8% Senior Subordinated Notes due 2006
(the "Old Notes") (the Old Notes and the New Notes are collectively referred to
herein as the "Notes") of the Company from the holders thereof in integral
multiples of $1,000. See "The Exchange Offer."
The Company will accept for exchange any and all Old Notes that are validly
tendered prior to 5:00 p.m., New York City time, on the Expiration Date.
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date; otherwise such tenders are irrevocable. The
Exchange Offer is not conditioned upon any minimum principal amount of the Old
Notes being tendered for exchange. However, the Exchange Offer is subject to
certain customary conditions and to the terms and provisions of the Registration
Rights Agreement, dated as of June 18, 1998 (the "Registration Rights
Agreement"), among the Company, Empress Casino Hammond Corporation ("Empress
Hammond"), Empress Casino Joliet Corporation ("Empress Joliet"), Empress River
Casino Finance Corporation ("Empress Finance") and Hammond Residential, L.L.C.
("Hammond Residential," and together with Empress Hammond, Empress Joliet and
Empress Finance, collectively, the "Guarantors") and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wasserstein Perella
Securities, Inc. (the "Initial Purchasers"). See "The Exchange Offer" and
"Registration Rights."
(continued on next page)
__________________
SEE "RISK FACTORS" ON PAGES 16 THROUGH 27 FOR A DISCUSSION OF CERTAIN RISKS
THAT SHOULD BE CONSIDERED BY HOLDERS IN EVALUATING THE EXCHANGE OFFER.
__________________
THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
NONE OF THE ILLINOIS GAMING BOARD, THE INDIANA GAMING COMMISSION OR ANY OTHER
GAMING AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
- -----------
The date of this Prospectus is ______, 1998
<PAGE>
An aggregate of $150 million principal amount of Old Notes were sold by the
Company to the Initial Purchasers (the "Offering") on June 18, 1998 (the "Issue
Date") without registration under the Securities Act, in reliance upon
exemptions therefrom, pursuant to a Purchase Agreement, dated June 11, 1998 (the
"Purchase Agreement"), among the Company, the Guarantors and the Initial
Purchasers. The Initial Purchasers subsequently resold the Old Notes in reliance
on Rule 144A under the Securities Act ("Rule 144A") and Regulation S under the
Securities Act ("Regulation S"). The Company, the Guarantors and the Initial
Purchasers also entered into the Registration Rights Agreement, pursuant to
which the Company granted certain registration rights for the benefit of the
holders of the Old Notes.
The Old Notes were, and the New Notes will be, issued under the Indenture,
dated as of June 18, 1998 (the "Indenture"), among the Company, the Guarantors
and U.S. Bank Trust National Association, as trustee (in such capacity, the
"Trustee"). As of the date of this Prospectus, there are $150 million aggregate
principal amount of Old Notes outstanding. The form and terms of the New Notes
will be identical in all material respects to the form and terms of the Old
Notes, except that (i) the New Notes have been registered under the Securities
Act and, therefore, will not bear legends restricting the transfer thereof, (ii)
holders of New Notes will not be entitled to any increase in the interest rate
("Additional Interest") thereon pursuant to certain circumstances under the
Registration Rights Agreement, and (iii) holders of New Notes will no longer be
entitled to certain other rights under the Registration Rights Agreement.
Interest on the New Notes is payable semiannually in arrears on each
January 1 and July 1, commencing January 1, 1999. Holders whose Old Notes are
accepted for exchange will have the right to receive interest accrued thereon
from the date of their original issuance or the last interest payment date, as
applicable, to, but not including, the date of issuance of the New Notes, such
interest to be payable with the first interest payment on the New Notes.
Interest on the Old Notes accepted for exchange will cease to accrue on the day
prior to the issuance of the New Notes. The New Notes will mature on July 1,
2006. See "Description of the New Notes--Maturity, Interest and Principal."
The New Notes will be redeemable at the option of the Company, in whole or
in part, at any time on or after July 1, 2002, at the redemption prices set
forth herein, plus accrued and unpaid interest thereon, if any, to the date of
redemption. In addition, on or prior to July 1, 2001, the Company may redeem up
to 35% of the originally issued aggregate principal amount of the Notes, at a
redemption price of 108 1/8% of the principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the redemption date, with the net proceeds
of an Equity Offering (as defined herein); provided, that not less than $97.5
million in aggregate principal amount of New Notes remain outstanding
immediately after giving effect to such redemption. The Company may redeem the
New Notes, in whole or in part, pursuant to a Required Regulatory Redemption (as
defined) at 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of redemption. Upon a Change of Control (as
defined herein), each holder of the New Notes will, subject to certain
limitations, have the right to require the Company to repurchase all or a
portion of such holder's New Notes, at a purchase price equal to 101% of the
principal amount, plus accrued and unpaid interest, if any, to the date of
repurchase. See "Description of the New Notes--Redemption" and "--Change of
Control."
Payment of principal and interest on the Notes will be jointly, severally
and unconditionally guaranteed (the "Guarantees") on an unsecured senior
subordinated basis by all existing and future Restricted Subsidiaries (as
defined) of the Company. The Notes and the Guarantees will be senior unsecured
subordinated obligations of the Company and the Guarantors, respectively, and
will be subordinated in right of payment to all existing and future Indebtedness
(as defined) of the Company, including Indebtedness (as defined) under the
Credit Facility (as defined), and the Guarantors, respectively. As of June 30,
1998, excluding $150.0 million of indebtedness (the "Defeased Debt") under the
Company's $150.0 million 10 3/4% Senior Notes due 2002 (the "10 3/4% Notes"),
substantially all of the operating covenants of which were defeased in
connection with the sale of the Old Notes (the "Covenant Defeasance") the
Company and the Guarantors had $10.0 million of Senior Indebtedness outstanding,
to which holders of the Notes are subordinated. In connection with the
Offering, the Company replaced its Existing Credit Facility (as defined) with a
new senior secured reducing revolving credit facility (the "Credit Facility").
See "Use of Proceeds" and "Description of Certain Other Indebtedness."
The New Notes are being offered hereby in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement. The
Company is making the Exchange Offer in reliance on the position of the staff of
i
<PAGE>
the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, the Company has not sought its own interpretive letter and there can be
no assurance that the staff of the Commission would make a similar determination
with respect to the Exchange Offer as it has in such interpretive letters to
third parties. Based on these interpretations by the staff of the Commission,
the Company believes that New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold and otherwise
transferred by a holder (other than (i) a broker-dealer who purchased Old Notes
directly from the Company for resale pursuant to Rule 144A or any other
available exemption under the Securities Act, (ii) an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act or (iii) a broker-dealer
who acquired the Old Notes as a result of market-making or other trading
activities), without further compliance with the registration and prospectus
delivery provisions of the Securities Act, provided, that such holder is
acquiring the New Notes in the ordinary course of business and is not
participating, and has no arrangement or understanding with any person to
participate, in a distribution (within the meaning of the Securities Act) of the
New Notes. Holders wishing to accept the Exchange Offer must represent to the
Company, as required by the Registration Rights Agreement, that such conditions
have been met. Any holder of Old Notes who is not able to rely on the
interpretations of the staff of the Commission set forth in the above-mentioned
interpretive letters must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale of such Old
Notes, unless such sale is made pursuant to an exemption from such requirements.
See "The Exchange Offer--Resales of New Notes."
Each broker-dealer who receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as a result of market-making activities or other trading activities and
must agree that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the staff of the
Commission in the interpretive letters referred to above, the Company believes
that broker-dealers who acquired Old Notes for their own accounts as a result of
market-making or other trading activities ("Participating Broker-Dealers") may
fulfill their prospectus delivery requirements with respect to the New Notes
received upon exchange of such Old Notes (other than Old Notes that represent an
unsold allotment from the original sale of the Old Notes) with a prospectus
meeting the requirements of the Securities Act, which may be the prospectus
prepared for an exchange offer so long as it contains a description of the plan
of distribution with respect to the resale of such New Notes. Accordingly, this
Prospectus may be used by a Participating Broker-Dealer in connection with
resales of New Notes received in exchange for Old Notes where such Old Notes
were acquired by such Participating Broker-Dealer for its own account as a
result of market-making or other trading activities. Subject to certain
provisions set forth in the Registration Rights Agreement, the Company has
agreed that this Prospectus may be used by a Participating Broker-Dealer in
connection with resales of such New Notes. See "Plan of Distribution." However,
a Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of New Notes received in exchange for Old Notes pursuant to the
Exchange Offer must notify the Company, or cause the Company to be notified, on
or prior to the Expiration Date, that it is a Participating Broker-Dealer. Such
notice may be given in the space provided for that purpose in the Letter of
Transmittal or may be delivered to the Exchange Agent at one of the addresses
set forth herein under "The Exchange Offer--The Exchange Agent; Assistance." Any
Participating Broker-Dealer who is an "affiliate" of the Company may not rely on
such interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. See "The Exchange Offer--Resales of New Notes."
In that regard, each Participating Broker-Dealer who surrenders Old Notes
pursuant to the Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained in this Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained herein, in light of the circumstances under which they were
made, not misleading or of the occurrence of certain other events specified in
the Registration Rights Agreement, such Participating Broker-Dealer will suspend
the sale of New Notes pursuant to this Prospectus until the Company has amended
or supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed, as the case may be.
ii
<PAGE>
The New Notes issued pursuant to this Exchange Offer will be issued in the
form of a Global New Note (as defined herein), which will be deposited with, or
on behalf of, The Depository Trust Company ("DTC") and registered in its name or
in the name of Cede & Co., its nominee. Beneficial interests in the Global New
Note representing the New Notes will be shown on, and transfers thereof will be
effected through, records maintained by DTC and its participants.
Notwithstanding the foregoing, Old Notes held in certificated form, if any, will
be exchanged solely for Certificated New Notes (as defined herein). After the
initial issuance of the Global New Note, Certificated New Notes will be issued
in exchange for interests in the Global New Note only on the terms set forth in
the Indenture. See "Description of the New Notes" and "Book-Entry; Delivery and
Form."
The Company will not receive any proceeds from this offering, but, pursuant
to the Registration Rights Agreement, the Company will bear certain registration
expenses. No underwriter is being utilized in connection with the Exchange
Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF OLD NOTES ARE URGED TO READ THIS PROSPECTUS AND THE
RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR
OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
AVAILABLE INFORMATION
The Company and the Guarantors have jointly filed a registration statement
on Form S-4 (together with any amendments thereto, the "Registration Statement")
with the Commission under the Securities Act with respect to the New Notes and
the related Guarantees. This Prospectus, which constitutes a part of the
Registration Statement, omits certain information contained in the Registration
Statement and reference is made to the Registration Statement and the exhibits
and schedules thereto for further information with respect to the Company and
the New Notes offered hereby. This Prospectus contains summaries of the material
terms and provisions of certain documents and in each instance reference is made
to the copy of such document filed as an exhibit to the Registration Statement.
Each such summary is qualified in its entirety by such reference.
The Company is not currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Upon the
effectiveness of the Registration Statement, the Company will be subject to the
reporting requirements of the Exchange Act and the interpretations issued
thereunder by the staff of the Commission. The Registration Statement, such
reports and other information can be inspected and copied at the offices of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as the following regional offices of the Commission: Seven
World Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such
material also may be accessed electronically by means of the Commission's home
page on the Internet (http://www.sec.gov).
So long as any of the Notes are outstanding, the Company will file with the
Commission, to the extent then permitted by the Commission, the annual reports,
quarterly reports and other documents that the Company would have been required
to file with the Commission pursuant to Sections 13(a) and 15(d) of the Exchange
Act if the Company was subject to such Sections, and the Company will promptly
provide to the Trustee copies of such reports and documents; provided, however,
that if the Company is for any reason unable to make such filings it will make
available, upon request, to any holder of Notes or prospective purchaser of New
Notes, the information specified in Rule 144A(d)(4) of the Securities Act.
iii
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus under "Prospectus Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," in addition to certain statements contained
elsewhere in this Prospectus, are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 and are thus
prospective. Such "forward-looking statements" are subject to risks,
uncertainties and other factors that could cause actual results to differ
materially from future results expressed or implied by such forward-looking
statements. The most significant of such risks, uncertainties and other factors
are discussed under the heading "Risk Factors," on pages 16 through 27 of this
Prospectus and holders of Notes are urged to carefully consider such factors.
iv
<PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere in
this Prospectus and is qualified by the more detailed information set forth
elsewhere herein, which should be read in its entirety. Unless otherwise
indicated, capitalized terms used in this Prospectus Summary have the respective
meanings ascribed to them elsewhere in this Prospectus. As used in this
Prospectus, unless the context suggests otherwise, references to "the Company"
shall include the Company and its subsidiaries. See "Forward-Looking
Statements" on page iv.
Overview
The Company is one of the largest operators of riverboat casinos serving
the Chicago Metropolitan Statistical Area (the "Chicago Market"). The Company
owns two distinctly themed casino entertainment operations, Empress Casino
Hammond Corporation ("Empress Hammond") and Empress Casino Joliet Corporation
("Empress Joliet"), both located adjacent to major highways. Empress Hammond,
located in Hammond, Indiana, is the closest casino to downtown Chicago and
Empress Joliet, located in Joliet, Illinois, is in the fastest growing county in
the Chicago Market. During 1997, the Company's casinos registered approximately
nine million customer admissions and had the highest share of casino revenue in
the Chicago Market (approximately 27%). The Company's 1997 average daily win per
slot machine and table game of $308 and $2,168, respectively, exceeded the
averages of each of the nine U.S. riverboat casino markets. For the twelve
months ended March 31, 1998, the Company generated approximately $372.5 million
of net revenues and $82.8 million of EBITDA.
The Chicago Market is a heavily populated and economically developed
region, consisting of approximately eight million people. Based on the 1993 U.S.
Census Bureau Report, the median household income of the Chicago Market was
$45,491, approximately 46% above the national median. The Chicago Market is
primarily served by nine riverboat casinos (the "Chicago Market Casinos"),
including the Company's two casinos, operating under a limited number of
licenses granted by the States of Illinois and Indiana. These casinos generated
1997 casino revenue of approximately $1.3 billion, ranking first among all U.S.
riverboat casino markets and capturing an estimated 6.8% of the total U.S.
casino market.
Empress Hammond features a newly built, luxury-appointed catamaran style
vessel, Empress III. Following the recent completion of the fourth deck, Empress
III contains approximately 42,500 square feet of gaming space with approximately
1,740 slot machines and 54 table games. Empress Hammond includes an
approximately 125,000 square foot mythologically themed pavilion featuring
waterfalls, undersea volcanoes and lounge and dining facilities including the
Blue Water Lounge, the Harborside Steakhouse, the Empressive Buffet and the
Waves Deli. In addition, the pavilion includes a gift shop, concierge suite and
a 150 seat banquet room. Empress Hammond provides parking for approximately
1,000 cars in a multi-story parking structure and offers 1,300 additional
surface parking spaces.
Empress Joliet features two luxury-appointed catamaran style vessels,
Empress I and Empress II, which collectively contain approximately 36,000 square
feet of gaming space, 1,011 slot machines and 52 table games. Empress Joliet
includes an approximately 150,000 square foot Egyptian themed pavilion featuring
lounge and award-winning dining facilities including the Oasis Bar, the
Steakhouse Alexandria, Cafe Casablanca and the Marrakech Buffet. The pavilion
also includes an off-track betting facility, gift shop, concierge suite and a
400 seat banquet room. Empress Joliet is supported by a three story hotel with
80 deluxe rooms, 17 junior suites and five king-size suites and an 80-space
recreational vehicle park located on 12 acres of land adjacent to the hotel.
Empress Joliet provides surface parking for more than 2,350 cars.
The Company actively pursues opportunities to expand its customer base by
developing additional amenities and by working to attract customers from outside
the Chicago Market. Empress Joliet is the only Chicago Market Casino with a
hotel to accommodate overnight visitors. As a part of its development plan, the
Company expects to construct a 200 room deluxe hotel and a conference center at
Empress Hammond to expand its appeal to customers outside the Chicago Market.
The Company intends to further develop dedicated transportation services to its
complexes and is increasing billboard advertising to improve visitation by
customers outside the Chicago Market.
1
<PAGE>
Company Strengths
The Company believes that the following factors contribute significantly to
its success:
. Premier Properties in Superior Locations. The Company's distinctly themed
casino entertainment complexes are strategically located to serve the growing
Chicago Market which has strong population demographics and a legislatively
limited number of licensed competitors. Empress Hammond is the closest casino
to downtown Chicago and is conveniently accessible from major highways.
Empress Joliet is located in the fastest growing county in the Chicago Market
and is the only Chicago Market Casino to feature a hotel, an off-track
betting facility or a recreational vehicle park. The Company's casinos are
equipped with the latest gaming devices and are continually upgraded to
reflect innovative games. The Company delivers value to its customers by
offering superior customer service and maintaining clean, moderately priced
gaming, dining, lodging and entertainment amenities.
. Market Leadership. The Company was the first Chicago Market Casino and has
established market leadership during its nearly six years of operations. The
Company is the largest Chicago Market casino operator in terms of casino
revenue and number of slot machines. During 1997, the Company's average daily
slot machine and table win per unit exceeded the averages of each of the nine
U.S. riverboat casino markets. The Company's casinos also had nearly two and
one-half times as many 1997 customer admissions as any other Chicago Market
casino operator. For the past two years, the Company's casinos received the
"Best Blackjack Games in the U.S.A." award in Indiana and Illinois from
Casino Player Magazine.
. Marketing Synergies. The Company derives unique marketing advantages from
operating two riverboat casino entertainment complexes serving the Chicago
Market. The Company believes that it receives favorable rates for television,
radio, newspaper, magazine, billboard, direct mail, mass transit and airport
diorama advertising due to its higher buying volume. Through its Empress Club
frequent player reward program, the Company promotes customer loyalty and
encourages customers to visit its complexes. Benefits of Empress Club
membership include use of VIP boarding areas, participation in special
discount programs including meal and merchandise discounts and preferred
valet parking. At March 31, 1998, approximately 900,000 customers were
Empress Club members.
. Proprietary Customer Database. The Company has developed a proprietary
customer database that assists it in tracking customer characteristics
including visitation frequency, preferred gaming equipment usage and gaming
and entertainment spending. The Company uses information gathered from
Empress Club members to create targeted marketing programs to encourage
increased visitation to its complexes by its most profitable customers. The
Company also utilizes promotional programs, such as merchandise giveaways,
slot machine and table game tournaments and other special events in order to
reward customer loyalty, attract new customers and maintain a high level of
brand name recognition.
Recent Developments
To capitalize on excess demand, the Company opened a fourth deck on Empress
III on April 27, 1998, which increased gaming space by over 7,500 square feet,
and added 335 slot machines and space for ten table games. This addition
increased Empress III's gaming square footage and passenger capacity by
approximately 25%, making it the second largest Chicago Market Casino.
Furthermore, in an effort to increase its market share, the Company has begun an
approximately $5.0 million renovation of the Empress Joliet pavilion which will
include construction of a state-of-the-art nightclub, along with extensive
remodeling of the food and beverage outlets. In addition, the Company completed
a $1.0 million renovation of Empress I in May 1998.
2
<PAGE>
The Reorganization
Concurrently with the Offering, the Company effected a reorganization (the
"Reorganization") pursuant to which (i) the Company changed its name from LMC
Leasing, Ltd. to Empress Entertainment, Inc., (ii) Empress Joliet merged into a
newly formed, wholly-owned subsidiary of the Company, with Empress Joliet
surviving the merger, (iii) Empress Joliet sold its 60% common stock interest in
Empress River Casino Finance Corporation ("Empress Finance") to the Company
and (iv) the Company contributed Empress III to Empress Hammond. As a result of
the Reorganization, Empress Joliet and Empress Finance became wholly-owned
subsidiaries of the Company. Following the Reorganization, the Company operates
Empress III through its wholly-owned subsidiary Empress Hammond and operates
Empress I and Empress II through its wholly-owned subsidiary Empress Joliet.
The following chart illustrates the current organizational structure of the
Company:
<TABLE>
<CAPTION>
---------------------------
EMPRESS ENTERTAINMENT, INC.
(Issuer of the Notes)
---------------------------
|
|
------------------------------------------------------------------------------------------------
100% | 100% | 100% | 100% |
| | | |
- ------------------- ------------------------------ ----------------------- --------------------
EMPRESS CASINO EMPRESS OPPORTUNITIES, INC.(1) EMPRESS RIVER CASINO EMPRESS CASINO
JOLIET CORPORATION (Unrestricted Subsidiary) FINANCE CORPORATION (2) HAMMOND CORPORATION
(Guarantor) (Guarantor) (Guarantor)
- ------------------- ------------------------------ ----------------------- --------------------
<S> <C> 100% | <C> <C> |
| |
| |100%
------------------------------------- |
| | |
100% | |100% --------------------
------------------------- ------------------------------- HAMMOND RESIDENTIAL
EMPRESS RACING, INC. EMPRESS MISSISSIPPI, INC. (4) L.L.C.(5)
(Unrestricted Subsidiary) (Unrestricted Subsidiary) (Guarantor)
------------------------- -------------------------------- --------------------
</TABLE>
(1) Empress Opportunities, Inc. ("Empress Opportunities") was formed as an
Unrestricted Subsidiary (as defined) to serve as a holding company under
which the Company intends to explore certain business opportunities other
than the Company's gaming operations in Hammond, Indiana and Joliet,
Illinois.
(2) Empress Finance was formed as a single purpose entity to issue the 10 3/4%
Notes and is expected to be dissolved during 1999.
(3) Empress Racing, Inc. ("Empress Racing") was formed as an Unrestricted
Subsidiary (as defined) to hold a 50% ownership interest in a limited
liability company which, subject to certain regulatory approvals, intends to
acquire certain outstanding secured indebtedness of Sunshine Racing, Inc.,
the owner of the Woodlands Racetrack in Kansas City, Kansas, and to
ultimately bid to purchase the Woodlands Racetrack in an auction pursuant to
a proceeding under Chapter 7 of the U.S. Bankruptcy Code. See "Business--
Recent Developments."
(4) Empress Mississippi, Inc. ("Empress Mississippi") was formed as an
Unrestricted Subsidiary (as defined) to investigate business opportunities
in Mississippi.
(5) Hammond Residential, L.L.C. ("Hammond Residential") was formed to satisfy
certain residential development commitments to the City of Hammond. See
"Business--Commitments to Governmental Authorities."
- ----------------------------
The Company's principal executive offices are located at 2300 Empress
Drive, Joliet, Illinois 60436 and its telephone number is (815) 744-9400.
3
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<CAPTION>
<S> <C>
Securities Offered.................. Up to $150,000,000 principal amount of
the Company's 8 1/8% Senior Subordinated
Notes due 2006, which have been
registered under the Securities Act. The
terms of the New Notes and the Old Notes
are identical in all material respects,
except for certain transfer restrictions,
additional interest provisions and
certain other registration rights
relating to the Old Notes described below
under "--Description of the New Notes."
The Exchange Offer.................. The Company is offering, upon the terms
and subject to the conditions set forth
herein and in the accompanying Letter of
Transmittal, to exchange $1,000 in
principal amount of New Notes for each
$1,000 in principal amount of the
outstanding Old Notes. The issuance of
the New Notes is intended to satisfy
obligations of the Company contained in
the Registration Rights Agreement. As of
the date of this Prospectus, $150 million
in aggregate principal amount of Old
Notes is outstanding, the maximum amount
authorized by the Indenture for all
Notes. The Company will issue the New
Notes to holders that validly tender Old
Notes on or prior to the Expiration Date.
See "The Exchange Offer--Terms of the
Exchange Offer."
Expiration Date..................... 5:00 p.m., New York City time, on______ ,
1998, as the same may be extended. See
"The Exchange Offer--Expiration Date;
Extensions; Amendments."
Conditions of the Exchange
Offer; Extensions; Amendments...... The Exchange Offer is not conditioned
upon any minimum principal amount of Old
Notes being tendered for exchange.
However, the Exchange Offer is subject to
certain customary conditions and to the
terms and provisions of the Registration
Rights Agreement. The Company expressly
reserves the right, in its sole and
absolute discretion, (i) to delay
accepting any Old Notes, (ii) to extend
the Exchange Offer, (iii) if any of the
conditions set forth under "The Exchange
Offer--Conditions of the Exchange Offer"
shall not have been satisfied, to
terminate the Exchange Offer, by giving
oral or written notice of such delay,
extension or termination to the Exchange
Agent (as defined herein) and (iv) to
waive any condition or otherwise amend
the terms of the Exchange Offer in any
manner. If the Exchange Offer is amended
in a manner determined by the Company to
constitute a material change, the Company
will promptly disclose such amendments by
means of a prospectus supplement that
will be distributed to the registered
holders of the Old Notes. See "The
Exchange Offer--Expiration Date;
Extensions; Amendments" and "The Exchange
Offer--Conditions of the Exchange Offer."
Accrued Interest on the Old Notes... Holders whose Old Notes are accepted for
exchange will have the right to receive
interest accrued thereon from the date of
their original issuance or the last
interest payment date, as applicable, to,
but not including, the date of issuance
of the New Notes, such interest to be
payable with the first interest payment
on the New Notes. Interest on the Old
Notes accepted for exchange will cease to
accrue on the day prior to the issuance
of the New Notes.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Procedures for Tendering Old Notes; Special
Procedures for Beneficial Owners........... Except as otherwise provided
below, each holder desiring to
accept the Exchange Offer must
transmit a properly completed and
duly executed Letter of
Transmittal, including all other
documents required by the Letter
of Transmittal, to the Exchange
Agent at the address set forth in
"The Exchange Offer--The Exchange
Agent; Assistance" prior to 5:00
p.m., New York City time, on the
Expiration Date. In addition,
either (i) certificates for such
Old Notes must be received by the
Exchange Agent along with the
Letter of Transmittal, (ii) a
timely confirmation of book-entry
transfer of such Old Notes, if
such procedure is available, into
the Exchange Agent's account at
DTC pursuant to the procedure for
book-entry transfer described
below must be received by the
Exchange Agent prior to the
Expiration Date or (iii) the
holder must comply with the
guaranteed delivery procedures
described below. Any beneficial
owner of the Old Notes (a
"Beneficial Owner") whose Old
Notes are registered in the name
of a nominee, such as a broker,
dealer, commercial bank or trust
company, and who wishes to tender
Old Notes in the Exchange Offer
should instruct such registered
holder to promptly tender on such
Beneficial Owner's behalf. If
such Beneficial Owner wishes to
tender on such Beneficial Owner's
own behalf, such Beneficial Owner
must, prior to completing and
executing the Letter of
Transmittal and delivering the
Old Notes, make appropriate
arrangements to either register
ownership of the Old Notes in
such Beneficial Owner's name or
obtain a properly completed bond
power from the registered holder.
By executing the Letter of
Transmittal, each holder will
represent to the Company that,
among other things, (i) the
holder is not an "affiliate" of
the Company as defined in Rule
405 of the Securities Act, (ii)
the holder is not a broker-dealer
that acquired Old Notes directly
from the Company in order to
resell them pursuant to Rule 144A
of the Securities Act or any
other available exemption under
the Securities Act, (iii) the
holder will acquire the New Notes
in the ordinary course of
business and (iv) the holder is
not participating, and does not
intend to participate, and has no
arrangement or understanding with
any person to participate, in the
distribution of the New Notes.
Any Old Notes not accepted for
exchange for any reason will be
returned, without expense to the
tendering holder thereof, as
promptly as practicable after the
Expiration Date. See "The
Exchange Offer--Procedures for
Tendering Old Notes."
Guaranteed Delivery Procedures.............. Holders of Old Notes who wish to
tender their Old Notes and (i)
whose Old Notes are not
immediately available or (ii) who
cannot deliver their Old Notes,
the Letter of Transmittal or any
other documents required by the
Letter of Transmittal to the
Exchange Agent on or prior to the
Expiration Date or (iii) who
cannot complete the procedures
for delivery by book-entry
transfer on a timely basis, may
tender their Old Notes according
to the guaranteed delivery
procedures set forth in the
Letter of Transmittal. See "The
Exchange Offer--Guaranteed
Delivery Procedures."
Acceptance of Old Notes and
Delivery of New Notes...................... Upon satisfaction or waiver of
all conditions of the Exchange
Offer, the Company will accept
any and all Old Notes that are
properly tendered in the Exchange
Offer prior to 5:00 p.m., New
York City time, on the Expiration
Date. The New Notes issued
pursuant to the Exchange Offer
will be delivered promptly after
acceptance of the Old Notes. See
"The Exchange Offer--Acceptance
of Old Notes for Exchange;
Delivery of New Notes."
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Withdrawal Rights.................... Tenders of Old Notes may be withdrawn at
any time prior to 5:00 p.m., New York
City time, on the Expiration Date. See
"The Exchange Offer--Withdrawal Rights."
The Exchange Agent................... U.S. Bank Trust National Association is
the exchange agent (in such capacity,
the "Exchange Agent"). The address and
telephone number of the Exchange Agent
are set forth in "The Exchange Offer--
The Exchange Agent; Assistance."
Fees and Expenses.................... All expenses incident to the Company's
consummation of the Exchange Offer and
compliance with the Registration Rights
Agreement will be borne by the Company.
The Company will also pay certain
transfer taxes, if applicable, related
to the Exchange Offer. See "The Exchange
Offer--Fees and Expenses."
Resales of New Notes................. The Company is making the Exchange Offer
in reliance on the position of the staff
of the Commission as set forth in
certain interpretive letters addressed
to third parties in other transactions.
However, the Company has not sought its
own interpretive letter and there can be
no assurance that the staff of the
Commission would make a similar
determination with respect to the
Exchange Offer as it has in such
interpretive letters to third parties.
Based on these interpretations by the
staff of the Commission, the Company
believes that New Notes issued pursuant
to the Exchange Offer in exchange for
Old Notes may be offered for resale,
resold and otherwise transferred by a
holder (other than (i) a broker-dealer
who purchased Old Notes directly from
the Company for resale pursuant to Rule
144A or any other available exemption
under the Securities Act, (ii) an
"affiliate" of the Company within the
meaning of Rule 405 under the Securities
Act or (iii) a broker-dealer who
acquired the Old Notes as a result of
market-making or other trading
activities) without further compliance
with the registration and prospectus
delivery provisions of the Securities
Act; provided, that such holder is
acquiring the New Notes in the ordinary
course of business and is not
participating, and has no arrangement or
understanding with any person to
participate, in a distribution (within
the meaning of the Securities Act) of
the New Notes. Holders wishing to accept
the Exchange Offer must represent to the
Company, as required by the Registration
Rights Agreement, that such conditions
have been met. Any holder of Old Notes
who is not able to rely on the
interpretations of the staff of the
Commission set forth in the above-
mentioned interpretive letters must
comply with the registration and
prospectus delivery requirements of the
Securities Act in connection with any
sale of such Old Notes, unless such sale
is made pursuant to an exemption from
such requirements. See "The Exchange
Offer--Resales of New Notes."
Federal Income Tax
Consequences......................... The issuance of the New Notes to holders
pursuant to the terms set forth in this
Prospectus will not constitute an
exchange for federal income tax
purposes. Consequently, no gain or loss
will be recognized by holders upon
receipt of the New Notes. See "Certain
Federal Income Tax Considerations."
Use of Proceeds...................... There will be no proceeds to the Company
from the Exchange Offer. See "Use of
Proceeds."
</TABLE>
Consequences Of Not Exchanging Old Notes
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to restrictions on
transfer of such Old Notes contained in the legend thereon. In general, the Old
6
<PAGE>
Notes may not be offered or sold unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register the Old Notes under the Securities
Act. See "Risk Factors--Restrictions on Resale" and "The Exchange Offer--
Consequences of Failure to Exchange."
7
<PAGE>
DESCRIPTION OF THE NEW NOTES
The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes, except that (i) the New Notes
have been registered under the Securities Act and, therefore, will not bear
legends restricting the transfer thereof, (ii) holders of New Notes will not be
entitled to any Additional Interest pursuant to certain circumstances under the
terms of the Registration Rights Agreement and (iii) holders of New Notes will
not be entitled to certain other rights under the Registration Rights Agreement.
The New Notes will evidence the same debt as the Old Notes and will be entitled
to the benefits of the Indenture. See "The Exchange Offer--Termination of
Certain Rights," "The Exchange Offer--Procedures for Tendering Old Notes" and
"Description of the New Notes."
Notes Offered........... Up to $150,000,000 principal amount of the Company's
8 1/8% Senior Subordinated Notes due 2006, which have
been registered under the Securities Act.
Maturity Date........... July 1, 2006
Interest Payment Dates.. Interest on the New Notes will be payable
semi-annually in arrears on January 1, and July 1 of
each year, commencing January 1, 1999.
Guarantees.............. The Notes will be guaranteed by each of Empress
Hammond, Empress Joliet, Empress Finance, Hammond
Residential and all future Restricted Subsidiaries.
Ranking................. The Notes and the Guarantees will be unsecured senior
subordinated obligations of the Company and the
Guarantors, respectively, and will be subordinated in
right of payment to all existing and future Senior
Indebtedness of the Company, including Indebtedness
under the Credit Facility (as defined herein), and the
Guarantors, respectively. The Notes and the Guarantees
will rank pari passu in right of payment with all
other existing and future senior subordinated
indebtedness of the Company and the Guarantors,
respectively, and senior in right of payment to all
other existing and future Subordinated Indebtedness of
the Company and the Guarantors, respectively. As of
June 30, 1998, excluding the Defeased Debt, the
Company and the Guarantors had $10.0 million of
Senior Indebtedness outstanding to which holders of
the Notes are subordinated.
Change of Control....... Upon the occurrence of a Change of Control, each
holder of the Notes, subject to certain limitations,
has the right to require the Company to repurchase all
or a portion of such holder's Notes at a purchase
price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest thereon, if any, to
the repurchase date. See "Description of the New
Notes--Change of Control."
Offers to Purchase...... The Company will, under certain circumstances, be
obligated to make an offer to purchase Notes in the
event of an Asset Sale. See "Description of the New
Notes--Certain Covenants--Limitation on Sale of Assets
and Subsidiary Stock; Event of Loss."
8
<PAGE>
Optional Redemption..... The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after
July 1, 2002, at the redemption prices set forth
herein, plus accrued and unpaid interest thereon, if
any, to the date of redemption. See "Description of
the New Notes--Redemption."
In the event the Company consummates an Equity
Offering on or prior to July 1, 2001, the Company may
redeem up to 35% of the originally issued aggregate
principal amount of the Notes at a redemption price of
108 1/8% of the principal amount thereof, plus accrued
and unpaid interest thereon, if any, to the date of
redemption; provided that not less than $97.5 million
of the aggregate principal amount of the Notes remains
outstanding immediately after giving effect to such
redemption. See "Description of the New Notes--
Redemption."
Regulatory Redemption... The Notes will be subject to certain mandatory
disposition and redemption requirements following
certain determinations by the applicable Gaming
Authorities (as defined) of any jurisdiction in which
the Company conducts gaming operations. See
"Description of the New Notes--Redemption."
Registration Rights..... In the event that applicable law or Commission policy
does not permit the Company to effect the Exchange
Offer, or if certain holders of the Old Notes are not
permitted to participate in, or do not receive the
benefit of the Exchange Offer, the Registration Rights
Agreement provides that the Company will use its best
efforts to cause to become effective a shelf
registration statement (the "Shelf Registration
Statement") with respect to the resale of the Old
Notes and to keep such Shelf Registration Statement
effective until two years after the Issue Date or such
shorter period ending when all the Old Notes have been
sold thereunder or cease to be outstanding. The
interest rate on the Old Notes is subject to increase
under certain circumstances if the Company is not in
compliance with its obligations under the Registration
Rights Agreement.
Certain Covenants....... The Indenture contains certain covenants, including,
among others: (i) limitation on incurrence of
indebtedness and preferred stock; (ii) limitation on
restricted payments; (iii) limitation on dividends and
other payment restrictions affecting Restricted
Subsidiaries; (iv) limitation on liens; (v) limitation
on sale of assets and subsidiary stock; event of loss;
(vi) limitation on transactions with affiliates; (vii)
limitation on mergers and consolidations; (viii)
limitation on other senior subordinated indebtedness;
(ix) limitation on sale of capital stock of Restricted
Subsidiaries; and (x) limitations on lines of
business. See "Description of the New Notes--Certain
Covenants."
For more detailed information regarding the terms of the new Notes and for
definitions of capitalized terms not otherwise defined, see "Description of the
New Notes."
Risk Factors
Prospective investors should carefully consider all of the information set
forth in this Prospectus and, in particular, should evaluate the specific
factors set forth under "Risk Factors" beginning on page 16 for a discussion of
certain risks involved with the Notes.
9
<PAGE>
SUMMARY HISTORICAL COMBINED FINANCIAL DATA
The following table presents summary combined financial data of the Company.
The historical financial data were derived from, and should be read in
conjunction with, the combined financial information appearing elsewhere in this
Prospectus. See "Selected Combined Financial Data."
The Company believes the results of operations for each of the five years in
the period ended December 31, 1997 are not readily comparable to each other
because Empress Hammond commenced gaming operations on June 28, 1996. See "Risk
Factors--Competition" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<TABLE>
<CAPTION>
Three months
------------------
ended March 31, Year ended December 31,
------------------ ------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(in millions, except certain Other Data and ratios)
Statement of Operations Data:
Revenues
Casino................................ $ 91.3 $ 88.4 $ 346.0 $ 263.0 $ 202.3 $ 202.7 $ 172.8
Other, net of promotional allowances.. 5.6 5.6 23.6 15.7 12.3 12.6 14.5
------- ------- ------- ------- ------- ------- -------
Total net revenues.................. 96.9 94.0 369.6 278.7 214.6 215.3 187.3
Operating expenses
Casino................................ 15.1 15.7 64.8 48.1 30.7 29.1 18.7
Gaming and admission taxes............ 30.2 27.1 108.0 73.1 47.1 46.9 38.9
Other departmental expenses........... 26.0 24.9 113.4 77.7 56.1 51.3 35.5
Pre-opening expenses.................. -- -- -- 5.7 1.3 3.3 3.0
Depreciation and amortization......... 4.7 4.7 18.8 13.9 16.9 17.8 13.2
------- ------- ------- ------- ------- ------- -------
Total operating expenses............ 76.0 72.4 305.0 218.5 152.1 148.4 109.3
------- ------- ------- ------- ------- ------- -------
Income from operations.................. 20.9 21.6 64.6 60.2 62.5 66.9 78.0
Interest expense........................ (5.3) (5.7) (21.1) (18.3) (16.4) (11.5) (2.8)
Interest income......................... 1.0 1.1 3.3 3.5 5.2 2.9 0.4
State taxes............................. (0.1) (0.1) (0.5) (0.5) (0.7) (0.8) (1.2)
------- ------- ------- ------- ------- ------- -------
Net income.............................. $ 16.5 $ 16.9 $ 46.3 $ 44.9 $ 50.6 $ 57.5 $ 74.4
======= ======= ======= ======= ======= ======= =======
Other Data:
EBITDA (1).............................. $ 25.6 $ 26.3 $ 83.4 $ 79.8 $ 80.7 $ 88.0 $ 94.2
Capital expenditures (2)................ 7.2 2.0 16.1 106.0 7.4 44.3 34.6
Casino square footage (3)............... 71,156 71,156 71,156 71,156 36,266 36,266 36,266
Number of slot machines (3)............. 2,425 2,320 2,325 2,232 978 964 688
Win per slot per day (4)................ $ 326 $ 312 $ 308 $ 322 $ 382 $ 386 $ 480
Number of table games (3)............... 107 107 107 110 56 59 49
Win per table per day (4)............... $ 2,175 $ 2,413 $ 2,168 $ 2,535 $ 3,169 $ 3,107 $ 3,820
Ratio of Earnings to Fixed Charges (5).. 4.1x 4.0x 3.1x 3.1x 4.0x 5.3x 25.3x
Pro Forma Ratio of Earnings to
Fixed Charges (5).................... 2.8x 2.2x
</TABLE>
<TABLE>
<CAPTION>
March 31, 1998
--------------
Actual
------
Balance Sheet Data:
<S> <C>
Cash, cash equivalents and marketable securities.. $ 93.6
Total assets...................................... 302.4
Long-term debt, including current maturities...... 203.4
Stockholders' equity.............................. 65.1
</TABLE>
Footnotes on following page
10
<PAGE>
(1) EBITDA is a supplemental financial measurement used by the Company in the
evaluation of its gaming business. EBITDA is calculated by adding net
interest expense, income taxes, depreciation and amortization and pre-
opening expense to net income. However, EBITDA should only be read in
conjunction with all of the Company's financial data summarized above and
its combined financial statements, including the Notes thereto, prepared in
accordance with generally accepted accounting principles ("GAAP")
appearing elsewhere herein, and should not be construed as an alternative
either to income from operations (as determined in accordance with GAAP) as
an indicator of the Company's operating performance or to cash flows from
operating activities (as determined in accordance with GAAP) as a measure of
liquidity.
(2) Included in capital expenditures for the year ended December 31, 1996 is
$93.4 million in conjunction with the opening of Empress Hammond.
(3) Data reflected is as of the end of the respective period.
(4) Amount reflects the weighted average calculation for the respective period.
(5) The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (income before state income taxes plus
fixed charges and the current period amortization of interest capitalized in
prior periods less capitalized interest) by fixed charges (interest expense
plus capitalized interest, amortization of debt issue costs and the interest
factor of rent expense). The pro forma ratio of earnings to fixed charges
reflects the increase in interest expense related to the 8 1/8% Notes
included in fixed charges and the impact on earnings of the increased
interest expense offset by the increase in interest income related to the
interest to be earned on the U.S. Treasury Securities held to effect the
Covenant Defeasance lowered by the interest income no longer earned on the
cash to be utilized to effect the Covenant Defeasance.
11
<PAGE>
Empress Entertainment, Inc.
Unaudited Pro Forma Combined
Financial Information
Unaudited Pro Forma Condensed Combined Balance Sheet
The unaudited pro forma condensed combined balance sheet of the Company has been
derived from the historical actual combined balance sheet of the Company
adjusted for the Offering, the U.S. Treasury Securities purchased to effect the
Covenant Defeasance and certain costs and expenses incurred in connection with
the Offering. The unaudited pro forma condensed combined balance sheet of the
Company has been prepared assuming the Offering occurred on March 31, 1998.
The unaudited pro forma condensed combined balance sheet of the Company should
be read in conjunction with the historical combined financial statements of the
Company and the notes thereto as of December 31, 1997 and 1996, and for each of
the three years in the period ended December 31, 1997 and as of March 31, 1998
and 1997, and for the three month periods then ended, which are included
elsewhere in this Registration Statement. The unaudited pro forma condensed
combined balance sheet of the Company is not necessarily indicative of the
financial position of the Company that would actually have been obtained had the
Offering been consummated on March 31, 1998.
12
<PAGE>
Empress Entertainment, Inc.
Pro Forma Condensed Combined Balance Sheet
<TABLE>
<CAPTION>
March 31, 1998
----------------------------------
Pro Forma As
Actual Adjustments (1) Adjusted
------ --------------- ---------
(in millions)
<S> <C> <C> <C>
Assets -
Cash and cash equivalents $ 77.5 $(30.8) 46.7
Cash and U.S. Treasury Securities
held to effect the Covenant Defeasance - 175.3 175.3
Other current assets 21.5 - 21.5
------ ------ ------
Total current assets 99.0 144.5 243.5
Property and equipment, net 189.0 - 189.0
Other assets, net 14.4 5.5 19.9
------ ------ ------
Total assets $302.4 $150.0 $452.4
====== ====== ======
Liabilities and stockholders' equity -
Current liabilities $ 51.3 $ - -
Other long-term debt 36.0 - 36.0
10 3/4% Notes to be redeemed in
connection with the Covenant Defeasance 150.0 - 150.0
New Notes - 150.0 150.0
Stockholders' equity 65.1 - 65.1
------ ------ ------
Total liabilities and stockholders'
equity $302.4 $150.0 $452.4
====== ====== ======
</TABLE>
(1) The pro forma adjustments reflect the impact of the Offering and the
Covenant Defeasance as of March 31, 1998. The cash and U.S. Treasury
Securities held to effect the Covenant Defeasance represent an irrevocable
deposit in trust for the purpose of effecting the Covenant Defeasance. The
amount was funded through the net proceeds from the Offering ($146.1
million) and cash on hand ($29.2 million). The fees and expenses
associated with the Offering ($5.5 million) were capitalized and will be
amortized over the life of the Notes. The 10 3/4% Notes to be redeemed in
connection with the Covenant Defeasance will be recorded as a liability
until the redemption of the outstanding 10 3/4% Notes is consummated, which
is anticipated to occur on April 1, 1999. The effects of repaying all other
outstanding indebtedness of the Company has not been reflected in the pro
forma adjustments.
13
<PAGE>
Unaudited Pro Forma Condensed Combined Statements of Income
The unaudited pro forma condensed combined statements of income of the
Company have been derived from the historical actual combined statements of
income adjusted for the Offering and the Covenant Defeasance. The unaudited pro
forma combined statements of income of the Company have been prepared assuming
the Offering occurred on January 1, 1997.
The unaudited pro forma combined statements of income of the Company should
be read in conjunction with the historical combined financial statements of the
Company and the notes thereto for each of the three years in the period ended
December 31, 1997, and for the three months ended March 31, 1998 and 1997,
included elsewhere in this Registration Statement. The unaudited pro forma
statements of income of the Company are not necessarily indicative of the
financial results of the Company that would actually have been obtained had the
Offering been consummated on January 1, 1997.
14
<PAGE>
Empress Entertainment, Inc.
Pro Forma Condensed Combined Statements of Income
<TABLE>
<CAPTION>
Three months ended March 31, 1998
------------------------------------
Pro Forma As
Actual Adjustments (1) Adjusted
-------- --------------- ---------
(in millions)
<S> <C> <C> <C>
Revenues
Casino $ 91.3 $ - $ 91.3
Other, net of promotional allowances 5.6 - 5.6
------ ------ ------
Total net revenues 96.9 - 96.9
Operating expenses
Casino 15.1 - 15.1
Gaming and admission taxes 30.2 - 30.2
Other departmental expenses 26.0 - 26.0
Depreciation and amortization 4.7 - 4.7
------ ------ ------
Total operating expenses 76.0 - 76.0
------ ------ ------
Income from operations 20.9 - 20.9
Interest expense (5.3) (3.2) (8.5)
Interest income 1.0 2.3 3.3
State taxes (0.1) - (0.1)
------ ------ ------
Net income $ 16.5 $ (0.9) $ 15.6
====== ====== ======
Year ended December 31, 1997
-----------------------------------
Pro Forma As
Actual Adjustments (1) Adjusted
------- -------------- --------
(in millions)
Revenues
Casino $346.0 $ - $346.0
Other, net of promotional allowances 23.6 - 23.6
------ ------ ------
Total net revenues 369.6 - 369.6
Operating expenses
Casino 64.8 - 64.8
Gaming and admission taxes 108.0 - 108.0
Other departmental expenses 113.4 - 113.4
Depreciation and amortization 18.8 - 18.8
------ ------ ------
Total operating expenses 305.0 - 305.0
------ ------ ------
Income from operations 64.6 - 64.6
Interest expense (21.1) (12.9) (34.0)
Interest income 3.3 9.2 12.5
State taxes (0.5) - (0.5)
------ ------ ------
Net income $ 46.3 $ (3.7) $ 42.6
====== ====== ======
</TABLE>
(1) The pro forma adjustments reflect the impact of the Offering assuming the
Offering occurred on January 1, 1998. The interest expense adjustment
reflects the interest on the New Notes and the amortization of the deferred
financing costs. The interest income adjustment reflects the interest to
be earned on the U.S. Treasury Securities held in trust to effect the
Covenant Defeasance based on the securities purchased and their respective
interest rates offset by the interest income no longer earned on the cash
to be utilized to effect the Covenant Defeasance.
15
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus,
including the combined financial statements and notes thereto of the Company,
the following risk factors should be carefully considered by a holder of Old
Notes prior to making a decision to tender their Old Notes in the Exchange
Offer. The Risk Factors set forth below are generally applicable to the Old
Notes as well as the New Notes. This Prospectus contains forward-looking
statements which involve risks and uncertainties. The Company's actual results
could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including those set forth in the
following risk factors and elsewhere in this Prospectus.
Leverage and Ability to Service Debt
As a result of the Offering and future borrowings by the Company (including
the Guarantors) under the Credit Facility, the Company will incur a significant
amount of Indebtedness. At June 30, 1998, excluding the Defeased Debt, the
Company had total consolidated long-term indebtedness of $160.0 million
(including $150.0 million of the Old Notes) and $90.0 million of availability
under the Credit Facility. In addition, subject to the restrictions in the
Indenture governing the Notes and in the Credit Facility, the Company may incur
additional Indebtedness from time to time. If the Company is unable to meet its
debt service obligations, it could be required to pursue one or more
alternatives, such as refinancing or restructuring the Indebtedness or divesting
assets or operations. There can be no assurance that any of such actions could
be effected on satisfactory terms, that such actions would enable the Company to
meet its debt service obligations or that such actions would be permitted under
the terms of the Indenture or under the Credit Facility. See "Use of
Proceeds," "Capitalization," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Description of Certain Other
Indebtedness," and "Description of the New Notes."
The ability of the Company to satisfy its debt service obligations, engage
in various significant corporate transactions that may be important to its
business, and comply with the covenants contained in the Indenture and in the
Credit Facility, including the ability of the Company to repurchase Notes
pursuant to offers that must be made under certain circumstances, will be
dependent on the future performance of the Company's business.
Subordination
The Notes and the Guarantees will be subordinated in right of payment to
all Senior Indebtedness of the Company, including Indebtedness under the Credit
Facility, and the Guarantors, respectively. Further, the Credit Facility will be
secured by substantially all of the assets of the Company and the Guarantors and
will become due prior to the time the principal on the Notes will become due. In
the event of any default in the payment in respect of certain Senior
Indebtedness, no payment with respect to the Notes may be made by the Company
unless and until such default has been cured or waived. In addition, in the
event of the bankruptcy, liquidation, dissolution, reorganization or other
winding up of the Company or the Guarantors, the assets of the Company and the
Guarantors will be available to pay obligations on the Notes and the Guarantees
only after all Indebtedness that is senior to the Notes and the Guarantees has
been paid in full, and there may not be sufficient assets remaining to pay
amounts due on any or all of the Notes or the Guarantees outstanding. As of June
30, 1998, the Company and the Guarantors had $10.0 million of Senior
Indebtedness outstanding to which holders of the Notes are subordinated and
would have had the ability (subject to certain conditions) to incur an
additional $90.0 million of Senior Indebtedness under the Credit Facility.
Subject to certain restrictions, exceptions and financial tests set forth in the
Indenture and the Credit Facility, the Company and the Guarantors also may incur
additional Indebtedness in the future that ranks prior to claims of holders of
the Notes. See "Description of the New Notes--Certain Covenants--Limitation on
Incurrence of Indebtedness and Preferred Stock."
16
<PAGE>
Competition
General
The casino gaming industry is highly fragmented and characterized by
competition from a large number of participants, including riverboat casinos,
dockside casinos, land-based casinos, video lottery and poker machines in
locations other than casinos, Native American gaming and other forms of gaming
and non-gaming entertainment in the U.S. The Company primarily competes with the
Chicago Market Casinos, five of which are located on Lake Michigan in Indiana
(including Empress Hammond) and four of which are located in Illinois (including
Empress Joliet). The seven other Chicago Market Casinos are: Trump Casino and
Majestic Star located in Gary, Indiana; Showboat Casino located in East Chicago,
Indiana; Blue Chip Casino located in Michigan City, Indiana; Harrah's Casino
located in Joliet, Illinois; Hollywood Casino located in Aurora, Illinois; and
Grand Victoria Casino located in Elgin, Illinois. On June 1, 1998, Harrah's
publicly announced the consummation of its acquisition of Showboat, Inc.
(operator of the Showboat Casino) which made Harrah's the largest riverboat
operator serving the Chicago Market in terms of gaming square footage and number
of table games and the only other operator of two Chicago Market Casinos. In the
fourth quarter of 1997, Trump Casino commenced construction of a 300 room hotel
in Gary, Indiana.
Certain of the Company's competitors are larger and have significantly
greater financial and other resources than the Company. Given these factors, it
is possible that substantial competition could have a material adverse effect on
the Company.
Indiana
Currently, Indiana gaming law limits the number of licenses to operate
riverboat casinos in northern Indiana on Lake Michigan to five in total, all of
which have been issued to casinos that are currently operating. In addition to
the five northwest Indiana riverboats located on Lake Michigan (including
Empress Hammond), the Indiana Gaming Commission has awarded gaming licenses to
three other riverboats and a certificate of suitability, a precursor to a
license, to a fourth riverboat, all four of which are located on the Ohio River
in southern Indiana and the closest of which is located over 250 miles from
downtown Chicago. Two licenses are unissued, one of which must be issued on
Patoka Lake and the other of which must be issued on the Ohio River.
There are at least two potential sources of increased competition in
Indiana: licensure of additional riverboats and the introduction of slot
machines or other forms of gaming at horse tracks. The authorization and opening
of additional Indiana riverboats could adversely effect the Company's potential
pool of customers and have a material adverse effect on the Company. On January
6, 1998, a bill was introduced in the Indiana State Legislature that would grant
the Indiana Horse Racing Commission (the "Racing Commission") the power to
authorize slot machine gaming, under certain circumstances, at Indiana
racetracks. Under the bill, the Racing Commission could grant a slot machine
gaming license to a person who holds a pari-mutuel horse racing permit and who
conducted live races at the racetrack prior to January 1, 1998. To date, there
has been no action with respect to the proposed legislation. If such legislation
were to be enacted, it could have a material adverse effect on the Company.
Illinois
The Illinois Riverboat Gambling Act ("Illinois Riverboat Act") authorizes
ten owner's licenses for riverboat gaming operations, all of which have been
issued. Four of the licensees, including Empress Joliet, serve the Chicago
Market. The other six licenses have been granted to operators, the closest of
which is located approximately 150 miles from downtown Chicago.
17
<PAGE>
In recent years, legislation has been introduced in Illinois to provide for
an expansion of gaming in Illinois, including legislation to authorize land-
based casinos in downtown Chicago and the surrounding suburbs, modify existing
regulations to decrease or eliminate certain restrictions, such as limitations
on the number of gaming positions or restrictions prohibiting dockside gaming,
and permit slot machines at horse tracks. To date, no such legislation has been
enacted. The Company is unable to predict whether any such legislation will be
enacted. If such legislation were to be enacted, it could have a material
adverse effect on the Company.
Native American Gaming
The Company competes, and expects to compete, with various gaming
operations on Native American land, including those located, or to be located,
in Michigan, Wisconsin and possibly northern Indiana. The Pokagon Band of the
Potawatomi Indians have recently proposed building a land-based casino in
northern Indiana, specifically in St. Joseph or Elkhart Counties. In addition,
the Saginaw Chippewa Tribe has substantially completed the construction of, and
is currently operating, one of the largest Native American gaming complexes in
the U.S. in Mt. Pleasant, Michigan, approximately 250 miles northeast of
Hammond, Indiana. The Governor of Michigan has recently signed a number of
Indian Compacts that would allow land-based casinos in Michigan, including
southwest Michigan. The opening of land-based casinos, which generally have a
competitive advantage over cruising casinos, in close proximity to the Company,
could have a material adverse effect on the Company. Moreover, lower age limits
at Native American casinos may put the Company, with a minimum age requirement
for admittance of 21, at a competitive disadvantage.
Additional Sources of Competition
The Company competes with gaming facilities as well as other forms of
entertainment. Other jurisdictions may legalize various forms of gaming and
wagering that may compete with the Company in the future, including those
jurisdictions in close proximity to the Company's facilities. Gaming and
wagering include online computer gambling, bingo, pull tab games, card clubs,
sports books, pari-mutuel or telephonic betting on horse racing and dog racing,
state sponsored lotteries, video lottery terminals, video poker terminals and in
the future, may include in-flight gaming or gaming at other venues. The
legalization of gaming or wagering operations in jurisdictions in close
proximity to the Company's facilities could have a material adverse effect on
the Company.
In addition to Illinois and Indiana, several other states have authorized
gaming activities and other states in the future may authorize such gaming
activities. To date, riverboat and/or dockside gaming has also been approved in
nearby states such as Iowa and Missouri. Moreover, on November 20, 1997, the
Mayor of Detroit announced the three finalists to construct and operate three
land-based casinos in downtown Detroit. These casinos are not expected to be
licensed or operational until 2001.
Expansion Opportunities; Sale Transactions
The Company is currently exploring the potential of other gaming operations
as opportunities arise, including the possible expansion of riverboat gaming and
land-based casinos in other states throughout the U.S. Empress Racing was formed
to hold a 50% ownership interest in a limited liability company which, subject
to certain regulatory approvals, intends to acquire certain outstanding secured
indebtedness of Sunshine Racing, Inc., the owner of the Woodlands Racetrack in
Kansas City, Kansas, and to ultimately bid to purchase the Woodlands
Racetrack in an auction pursuant to a proceeding under Chapter 7 of the U.S.
Bankruptcy Code. Empress Racing has been designated as an Unrestricted
Subsidiary under the Indenture and is not a Guarantor of the Notes. There can be
no assurance that the Woodlands transaction will be consummated or that, if
consummated, that it will be successful. In addition, there can be no assurances
that other such ventures will become available to the Company, that any
opportunities made available to the Company with respect to such
18
<PAGE>
ventures will be made available on terms and conditions acceptable to the
Company, or that, if suitable opportunities are found, the Company will be
successful.
In addition, from time to time the Company receives offers to purchase all
or a portion of its stock or assets. The Company's Board of Directors considers
all such offers in accordance with its fiduciary duties. The Company cannot make
any representations as to whether it will enter into any sale transaction in the
future or whether any person that would acquire the Company in such a
transaction would be able to satisfy the Company's obligations under the
Indenture. See "--Repurchase of Notes upon a Required Regulatory Redemption or
Change of Control.
Gaming Licensing and Regulation
General
From time to time, various proposals have been introduced in the Indiana
and Illinois legislatures that, if enacted, could adversely affect the taxation,
regulation, operation or other aspects of the gaming industry, and the Company.
Furthermore, pursuant to the Indiana Riverboat Gambling Act (the "Indiana
Riverboat Act") and the Illinois Riverboat Act, the Indiana Gaming Commission
and the Illinois Gaming Board, respectively, have broad rulemaking authority to
adopt regulations with respect to riverboat gaming operations. For example, in
the event any stockholder of the Company were to be found "unsuitable" by
either the Indiana Gaming Commission or the Illinois Gaming Board, such
regulatory authority could require such stockholder to divest himself of his
Company stock. Since there is no public market for the shares of the Company's
stock, a transfer to any person or entity other than the Company or its
stockholders may not be possible. The Company may be unable or unwilling to
acquire such stockholder's shares due to various factors, including, without
limitation, restrictions in the terms of the Notes or the Credit Facility,
disagreements on the purchase price, or inadequate funds available to consummate
the purchase. If either gaming authority were to order a stockholder to divest
his shares of Company stock and he failed to do so, Empress Hammond or Empress
Joliet may be subject to discipline that may have a material adverse effect on
the Company.
No assurances can be given that future legislation or regulations would not
have a material adverse effect on the Company. An additional degree of
uncertainty exists in the Indiana and Illinois regulatory environment due to the
limited experience in the interpretation of the Indiana and Illinois gaming
legislation and regulations. See "Regulatory Matters."
Gas City, Ltd., a corporation owned by William McEnery, a stockholder and
director of the Company and a director of each of the Company's corporate
subsidiaries, has operated ten service stations along the Indiana Toll Road
since June 1995. Since December 1995, Gas City and Mr. McEnery have responded to
document subpoenas from the Assistant U.S. Attorney for the U.S. District Court
for the Northern District of Indiana for a grand jury. In addition, certain Gas
City employees have been subpoenaed to testify before the grand jury. While
grand jury proceedings are secret, published accounts have indicated that the
grand jury is investigating, and has indicted, certain officials and suppliers
of the Indiana Toll Road. As of this date, none of Gas City, Mr. McEnery or any
employees of Gas City have received target letters from the Assistant U.S.
Attorney with respect to the pending grand jury. In March 1998, the Indiana
Department of Transportation ("INDOT") notified Gas City that it was
terminating Gas City's lease for the ten toll road service stations alleging
that for approximately a six month period Gas City engaged in wire fraud with
respect to the price survey used to determine the gasoline prices at its service
stations on the toll road. Gas City responded by filing a cause of action
against INDOT contesting its allegations and seeking a declaratory judgment that
INDOT has no grounds for termination. INDOT filed an emergency petition for
injunctive relief to cause Gas City to vacate the leased premises on May 1,
1998. The court has denied INDOT's petition, ruling that under Indiana law INDOT
must file an ejectment action. INDOT has appealed the court's ruling. The
Company cannot predict the outcome of these actions, however, any unfavorable
developments may have a material adverse effect on the Company.
19
<PAGE>
In May 1998, T.J. Lambrecht Construction, Inc., a corporation owned by
Thomas J. Lambrecht, a stockholder and director of the Company and a director of
each of the Company's corporate subsidiaries, pleaded guilty, pursuant to a
settlement agreement, to two misdemeanor charges under the Federal Clean Water
Act relating to two discharges of effluent waste into Hickory Creek without a
permit. As part of the settlement agreement, T.J. Lambrecht Construction, Inc.
paid a $200,000 fine. There were no personal allegations or charges against Mr.
Lambrecht in connection with this matter. The Company does not anticipate that
any unfavorable developments will result from this matter; however, if any such
developments do arise, they may have a material adverse effect on the Company.
Indiana
Pursuant to the Indiana Riverboat Act, Empress Hammond's current operations
are regulated by the Indiana Gaming Commission, which initially issued Empress
Hammond a five-year gaming license (the "Indiana License") on June 21, 1996.
As a condition to maintaining the Indiana License, Empress Hammond must, among
other things, submit detailed financial and other information to the Indiana
Gaming Commission, which has broad powers to suspend or revoke gaming licenses.
In granting and renewing gaming licenses, the Indiana Gaming Commission conducts
investigations into the character, reputation, experience and financial
integrity of each owner and principal employee of the applicant. The Indiana
Gaming Commission may request a detailed personal disclosure form from any
officer, director or shareholder of Empress Hammond or any other person or
entity having a significant relationship with Empress Hammond.
The Indiana License is subject to renewal in June 2001. Although Empress
Hammond believes that its current compliance record and standing with the
Indiana Gaming Commission indicate that the Indiana License will likely be
renewed, there can be no assurance that the Indiana Gaming Commission will renew
the Indiana License. The failure of the Indiana Gaming Commission to renew the
Indiana License would cause Empress Hammond to cease its Indiana gaming
operations, and, therefore, would have a material adverse effect on the Company.
In addition, the Indiana Gaming Commission has broad regulatory powers with
respect to changes in Empress Hammond's operations. For example, Empress Hammond
was required to obtain the Indiana Gaming Commission's approval of the Offering
and the Credit Facility (which approval was obtained on May 6, 1998). No
assurance can be given that Empress Hammond will be able to obtain the
regulatory approvals necessary for other future plans. See "Business" and
"Regulatory Matters."
Illinois
Pursuant to the Illinois Riverboat Act, Empress Joliet's current operations
are regulated by the Illinois Gaming Board, which initially issued Empress
Joliet a three-year gaming license (the "Illinois License") on July 9, 1992,
with annual renewals required thereafter. The Illinois License was renewed on
July 21, 1998 for a one-year period through July 1999. As a condition to
maintaining the Illinois License, Empress Joliet must, among other things,
submit detailed financial and other information to the Illinois Gaming Board,
which has broad powers to suspend or revoke gaming licenses. In granting gaming
licenses, the Illinois Gaming Board conducts investigations into the character,
reputation, experience and financial integrity of each owner and principal
employee of the applicant. The failure of the Illinois Gaming Board to renew the
Illinois License in the future would cause Empress Joliet to cease its Illinois
gaming operations, and, therefore, would have a material adverse effect on the
Company. In addition, the Illinois Gaming Board has broad regulatory powers with
respect to changes in Empress Joliet's operations. For example, Empress Joliet
was required to obtain the Illinois Gaming Board's approval of the Offering
(which approval was obtained on April 22, 1998) and the Credit Facility (which
approval was obtained on June 30, 1998). No assurance can be given that Empress
Joliet will be able to obtain the regulatory approvals necessary for other
future plans. See "Business" and "Regulatory Matters."
20
<PAGE>
Non-Gaming Regulatory Requirements
The Company is subject to certain Federal, state and local safety and
health laws, regulations and ordinances that apply to businesses generally, such
as the Clean Air Act, Clean Water Act, Occupational Safety and Health Act,
Resource Conservation and Recovery Act and Comprehensive Environmental Response,
Compensation and Liability Act. The coverage and attendant compliance costs
associated with such laws, regulations and ordinances may result in material
costs to the Company.
Empress I, Empress II and Empress III must comply with U.S. Coast Guard
safety requirements and must hold a Certificate of Seaworthiness. These
requirements set limits on the operation of the vessels and require individual
licensing of all personnel involved with the operation of the vessels. Loss of
the Certificate of Seaworthiness of Empress I, Empress II or Empress III would
preclude use as a riverboat, which would have a material adverse effect on the
Company. Periodically, the Company's vessels must either be drydocked for an
inspection of the hull or undergo an underwater hull survey, which could result
in a loss of service for a period of time. Empress I is currently undergoing an
underwater hull survey. Empress II and Empress III will be due for inspection
prior to December 1998 and September 2000, respectively. Any extended period of
time during which any of the Company's vessels is required to cease gaming
operations to facilitate inspections or maintenance could have a material
adverse effect on the Company. See "Business--Other Applicable Non-Gaming
Regulatory Requirements."
Repurchase of Notes upon a Required Regulatory Redemption or Change of Control
The Notes will be redeemable, in whole or in part, at any time, at 100% of
the principal amount thereof, plus accrued and unpaid interest to the redemption
date, (i) pursuant to, and in accordance with, any order of any Governmental
Authority (as defined) with appropriate jurisdiction and authority relating to a
Gaming License (as defined), or (ii) to the extent necessary in the reasonable,
good faith judgment of the Board of Directors of the Company to prevent the
loss, failure to obtain or material impairment of, or to secure the
reinstatement of, any Gaming License, which if lost, impaired, not obtained or
not reinstated, would reasonably be expected to have a material adverse effect
on the Company or would restrict the ability of the Company to conduct business
in any Gaming Jurisdiction, in the case of each of (i) and (ii) where such
redemption or acquisition is required because the holder or beneficial owner of
such Note is required to be found suitable, or otherwise qualify, under any
Gaming Laws and is not found suitable or so qualified. Upon a Change of Control
(as defined), each holder of the Notes will, subject to certain limitations,
have the right to require the Company to repurchase all or a portion of such
holder's Notes at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the date of
repurchase. There can be no assurance that the Company will have sufficient
funds to consummate such a redemption or acquisition or that such a redemption
or acquisition, if consummated, would not have a material adverse effect on the
Company. See "Description of the New Notes--Redemption" and "--Change of
Control."
Stockholder Relationships; Stockholders Agreement
Certain aspects of the ownership and management of the Company are governed
by the terms of an Amended and Restated Stockholders Agreement (the
"Stockholders Agreement"). In addition to limiting the rights of stockholders to
transfer shares of stock of the Company, the Stockholders Agreement requires
each stockholder to vote in favor of the existing directors of the Company,
Empress Hammond, Empress Joliet and Empress Finance for so long as he owns
shares in the Company. The Stockholders Agreement also requires the approval of
a super majority of the stockholders in order to undertake certain matters,
including the merger of the Company or any of its subsidiaries, the sale of all
or substantially all of the assets of the Company or any of its subsidiaries or
the sale or issuance of stock of Empress Joliet or Empress Hammond. See
"Management," "Certain Transactions" and "Principal Stockholders."
21
<PAGE>
Loss of Riverboat or Dockside Facility from Service
The Company's profitability is entirely dependent on three riverboats and
the dockside facilities in Hammond, Indiana and Joliet, Illinois. Empress I,
Empress II or Empress III could be lost from service due to casualty, mechanical
failure, a flood or other severe weather conditions or extended or extraordinary
maintenance or inspection (including routine inspections required by the U.S.
Coast Guard). Any extended period of time during which Empress I, Empress II or
Empress III is required to be out of service without the conduct of gaming could
have a material adverse effect on the Company. See "--Non-Gaming Regulatory
Requirements."
Single Market
The Company's gaming operations primarily serve the Chicago Market. The
Company's future operating results will depend in part, on matters over which
the Company has no control, including, without limitation, general economic
conditions and economic conditions in the Chicago Market. Therefore, it is not
possible to estimate future operating revenues and expenses of the Company based
upon historical operating performance. There can be no assurances that the
Company will continue to be profitable.
Holding Company Structure
The Company is a holding company that conducts its operations through
direct and indirect subsidiaries. The Company's available cash will depend upon
the cash flow of its subsidiaries and the ability of such subsidiaries to make
funds available to the Company. The subsidiaries are separate and distinct legal
entities and have no obligation to make funds available to the Company.
Concurrently with the closing of the Offering, the Company entered into the
Credit Facility, which is secured by substantially all of the assets of Empress
Hammond and Empress Joliet (excluding the Indiana License and the Illinois
License). In addition, the Guarantors, either alone or in combination, may
become parties to other financing arrangements. In the event of any insolvency,
bankruptcy or similar proceedings of such Guarantors, creditors of any such
entity would generally be entitled to priority over the Company with respect to
assets of such Guarantors.
Year 2000 Compliance
In the year 2000, many existing computer programs that use only two digits to
identify a year (for example, "98" instead of "1998") could fail or create
erroneous results if not corrected. The Company has determined that it may need
to modify portions of its software so that its computer systems will function
properly with respect to the year 2000 and beyond. The Company also has
initiated discussions with its software providers to ensure that those parties
have appropriate plans to remedy any year 2000 issues that may impact the
Company's operations; however, the Company has not verified that companies doing
business with it are year 2000 compliant. The Company does not anticipate that
the effect of any computer program deficiency on its operations will be
material. However, significant uncertainty exists concerning the potential costs
and effects associated with any year 2000 compliance. Any year 2000 compliance
problem of the Company or the companies doing business with it could have a
material adverse effect on the Company.
Labor Relations
Approximately 12.7% of the Company's workforce is unionized. Empress
Joliet's contract with the International Union of Operating Engineers, Local 150
expires in November 2002. On April 29, 1998, Empress
22
<PAGE>
Joliet and the Hotel Employees and Restaurant Employees Union, Local 1 entered
into a Memorandum of Agreement, which is being converted into a formal contract,
containing the terms of their collective bargaining agreement. This Agreement
will be in effect until April 30, 2001. There can be no assurances that the
Company will be able to negotiate future labor agreements with its unions on
terms acceptable to the Company. In addition, Empress Hammond is not a party to
any collective bargaining agreements, although there are current efforts to
organize certain of its employees. Although the Company believes that its
relations with its employees and the unions are good, any labor disruptions,
whether union-related or otherwise, could have a material adverse effect on the
Company.
Commitments to Governmental Authorities
The City of Hammond, Indiana
As a condition to the Indiana License, Empress Hammond made various
financial and other commitments to the City of Hammond, Indiana ("City") and
other Indiana governmental bodies pursuant to a Hammond Riverboat Gaming Project
Development Agreement (the "Development Agreement"). As of March 31, 1998,
approximately $25.0 million of such commitments remained outstanding primarily
for commercial development, residential development and the construction of a
hotel. In addition, under the terms of the Development Agreement, Empress
Hammond is required to make annual payments of approximately $1.3 million for
public safety services and other uses and an annual payment based on a varying
percentage of Empress Hammond's adjusted gross receipts. In 1997, Empress
Hammond paid approximately $9.9 million to the City to satisfy this obligation.
In the event that the Company suffers a decrease in revenues, the costs of
satisfying the foregoing commitments may have a material adverse effect on the
Company. In addition, there can be no assurance that the actual costs of Empress
Hammond's commitments will not exceed the currently anticipated costs of such
commitments. See "Business--Commitments to Governmental Authorities."
Hammond Port Authority
Empress Hammond entered into a License Agreement ("License Agreement") with
the Hammond Port Authority ("Port Authority") on June 21, 1996, pursuant to
which Empress Hammond licenses from the Port Authority certain rights to land
and docking facilities at the Hammond marina. For the rights and privileges
granted to it under the terms of the License Agreement, Empress Hammond is
required to pay the Port Authority (i) a $1.00 per passenger fee for each
passenger visiting Empress III; and (ii) an amount equal to the aggregate annual
rental at the Hammond marina for each boat slip that was removed or taken out of
operation as a result of the construction of the docking facilities and/or the
operation of Empress III. In the event that the Company suffers a decrease in
revenues, the costs of satisfying the foregoing commitments may have a material
adverse effect on the Company. See "Business--Commitments to Governmental
Authorities."
Taxation
The Company believes that the prospect of significant additional revenue is
one of the primary reasons that jurisdictions have legalized gaming. As a
result, gaming companies are typically subject to significant taxes and fees in
addition to normal Federal and state income taxes, and such taxes and fees are
subject to increase at any time. The Company pays substantial taxes and fees
with respect to its operations. There can be no assurance that the Indiana or
Illinois legislatures will not enact higher wagering taxes. In addition, there
have been proposals from time to time to tax all gaming establishments
(including riverboat casinos) at the Federal level. Any increase in the
Company's tax rates could have a material adverse effect on the Company. See
"--Commitments to Governmental Authorities" and "Regulatory Matters."
23
<PAGE>
Dependence on Key Personnel; Ability to Attract Qualified Employees
The success of the Company is largely dependent upon the efforts and skills
of its executive officers, the loss of services of any of whom could have a
material adverse effect on the Company. A shortage of skilled labor exists in
the gaming industry, which may make it more difficult and expensive to attract
and retain qualified employees. While the Company believes that it will be able
to attract qualified employees, no assurance can be given that such employees
will be available to the Company. See "Management."
Fraudulent Transfer Considerations
The obligations of the Company under the Notes or of the Guarantors under
their respective Guarantees may be subject to challenge under state or Federal
fraudulent transfer laws. Under such laws, if a court in a lawsuit by an unpaid
creditor or representative of creditors of the Company or a Guarantor, such as a
trustee in bankruptcy of the Company or a Guarantor, or the Company or a
Guarantor as debtor in possession, were to find that at the time the Company or
any such Guarantor incurred its obligations, it (a)(i) is or was rendered
insolvent; (ii) was engaged in a business or transaction for which its remaining
unencumbered assets constituted unreasonably small capital; or (iii) intended to
incur, or believed or reasonably should have believed that it would incur, debts
beyond its ability to pay as such debts matured; and (b) received less than
reasonably equivalent value or fair consideration therefor, such court could
void all or a portion of the Company's obligations to the holders of the Notes
or void such Guarantor's Guarantee and its obligations thereunder, and direct
the return of any amounts paid by the Company or any such Guarantor to holders
of the Notes to a fund for the benefit of their respective creditors. A court
might hold that the Company or a Guarantor received less than fair consideration
or reasonably equivalent value for incurring the Notes or any debt being
refinanced thereby, or for its Guarantee to the extent that its liability
thereunder exceeded the amount of the proceeds of the Notes made available to
the Guarantor, respectively. Moreover, a court could void all or a portion of
the Company's obligations to the holders of the Notes or void the Guarantee and
direct such repayment if it found that the Notes or any such Guarantee was
entered into with the actual intent to hinder, delay or defraud the Company's or
a Guarantor's creditors. The measure of insolvency for purposes of the foregoing
will vary depending on the law of the jurisdiction being applied. Generally,
however, an entity would be considered insolvent if the sum of its debts
(including contingent or unliquidated debts) is greater than all of its property
at a fair valuation or if the present fair salable value of its assets is less
than the amount that will be required to pay its probable liability on its
existing debts as they become due.
Environmental Risks
Pursuant to the terms of the Development Agreement, Empress Hammond
constructed certain public improvements necessary to provide improved access to
the location of its riverboat gaming facility. To satisfy this requirement,
certain parcels of real property located near the proposed complex were either
purchased by Empress Hammond or an affiliated entity or taken by the City of
Hammond pursuant to eminent domain proceedings with funds donated to the City of
Hammond by Empress Hammond. The area surrounding the Hammond complex is heavily
industrialized and may be subject to various environmental risks. At the present
time, the Company is not aware of any environmental costs that would have a
material adverse effect on the Company. However, if any environmental clean-up
costs or other related liabilities turn out to be substantial, such costs could
have a material adverse effect on the Company.
Litigation
On July 17, 1998, a lawsuit was filed against Empress Hammond and Empress
Joliet and four of their employees in the United States District Court for the
Northern District of Illinois. The lawsuit, brought by a
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current female employee of Empress Hammond and a former female employee of
Empress Hammond, alleges that Empress Hammond and Empress Joliet committed
gender discrimination and sexual harassment in violation of Title VII of the
Civil Rights Act of 1964 and permitted a hostile work environment to exist at
its facilities. The lawsuit also alleges certain tort claims and seeks
certification as a class action on behalf of similarly situated current and
former female employees of Empress Joliet and Empress Hammond, and seeks
injunctive relief and money damages. The Company denies the allegations in the
complaint and intends to vigorously contest this matter. There can be no
assurances, however, that Empress Joliet and Empress Hammond will not be found
liable for an amount that could have a material adverse effect on the Company.
The City of Hammond is presently a plaintiff in a condemnation proceeding
filed in September 1995 in Lake Superior Court in Lake County, Indiana in which
the City of Hammond condemned a small parcel of land for the construction of the
overpass located near Empress Hammond. Under the terms of the Development
Agreement, Empress Hammond is responsible for the payment of all costs incurred
by the City of Hammond with respect to this litigation. The two appraisers
representing the City of Hammond appraised the subject property at approximately
$36,000 and $41,000, respectively. The two appraisers representing the former
property owner appraised the property at approximately $6.6 million and $8.9
million, respectively. Two court-appointed appraisers valued the subject
property at $959,000 and one valued it at $455,776. On December 8, 1995, the
City of Hammond deposited $959,000 with the Clerk of the Court, which amount was
tendered to the City of Hammond by Empress Hammond. A trial has been scheduled
to commence in September 1998. The Company anticipates that the deposited amount
should cover any judgment or settlement. There can be no assurances, however,
that the court will not find in favor of the defendant for a sum materially in
excess of the amount placed in escrow.
A lawsuit was filed on October 25, 1996 in Harrison County, Indiana by
three individuals residing in counties abutting the Ohio River against the State
of Indiana, the 108th Indiana General Assembly, the Indiana Gaming Commission
and individual members of the Indiana Gaming Commission. The lawsuit challenges
the constitutionality of the Indiana Riverboat Act on the grounds that (i) it
allegedly creates an unequal privilege because under the Indiana Riverboat Act
"citizens opposed to riverboat gambling must win several elections to ensure
riverboat gambling is not allowed in their county" but "citizens who support
riverboat gambling need only win once to entrench riverboat gambling
indefinitely into a county"; and (ii) it was enacted as a provision attached to
a state budget bill allegedly in violation of an Indiana constitutional
provision requiring legislative acts to be confined to one subject and to
matters properly connected with the subject. The defendants have filed an answer
to the complaint generally denying the allegations. If the Indiana Riverboat Act
ultimately were held unconstitutional it would, absent timely corrective
legislation, have a material adverse effect on the Company.
S Corporation Status
The Company is a Subchapter S Corporation under the Internal Revenue Code
of 1986, and its corporate subsidiaries are Qualified Subchapter S Subsidiaries.
Accordingly, the stockholders of the Company are directly subject to tax on
their respective proportionate share of the taxable income of the Company and
its subsidiaries for Federal and certain state income tax purposes.
While the Company believes that it was properly formed and has been
properly operating as an S Corporation and that its corporate subsidiaries were
properly formed and have been properly operating as Qualified Subchapter S
Subsidiaries for Federal and state income tax purposes, if the S Corporation tax
status of the Company or the Qualified Subchapter S Subsidiary status of any of
its corporate subsidiaries were successfully challenged, such entity could be
required to pay Federal and certain state income taxes (plus interest and
possibly penalties) on its taxable income as far back as the commencement of
their respective operations. Such payments could have a material adverse effect
on the Company.
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Absence of Prior Public Market for New Notes
The New Notes will constitute a new class of securities with no established
trading market. Although the New Notes will generally be permitted to be resold
or otherwise transferred by nonaffiliates of the Company without compliance with
the registration requirements under the Securities Act, the Company does not
intend to apply for a listing of the New Notes on any securities exchange or to
arrange for the New Notes to be quoted on the NASDAQ National Market or other
quotation system, although they have been designated for trading in the Private
Offering, Resales and Trading through Automated Linkages ("PORTAL") Market.
The Initial Purchasers have advised the Company that they currently intend to
make a market in the New Notes; however, the Initial Purchasers are not
obligated to do so, and any market-making with respect to the New Notes may be
discontinued at any time without notice. As a result, there can be no assurance
that an active trading market for the New Notes will develop. If a market were
to develop, the New Notes could trade at prices that may be lower than the
initial market values thereof depending on many factors, including prevailing
interest rates and the markets for similar securities.
Restrictions on Resale
The Old Notes were offered and sold by the Company in a private offering
exempt from registration pursuant to the Securities Act and have been resold
pursuant to Rule 144A, Regulation S and certain other available exemptions under
the Securities Act. As a result, the Old Notes may not be reoffered or resold by
purchasers, except pursuant to an effective registration statement under the
Securities Act, or pursuant to an applicable exemption from such registration.
Based on interpretations by the staff of the Commission, the Company believes
that each holder (other than (i) a broker-dealer who purchased Old Notes
directly from the Company for resale pursuant to Rule 144A of the Securities Act
or any other available exemption under the Securities Act, (ii) an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act or (iii)
a broker-dealer who acquired the Old Notes as a result of market-making or other
trading activities) who duly exchanges Old Notes for New Notes in the Exchange
Offer will receive notes that are freely transferable under the Securities Act,
provided, that such New Notes are acquired in the ordinary course of such
holder's business and that such holder is not participating, and has no
arrangement or understanding with any other person to participate, in a
distribution (within the meaning of the Securities Act) of the New Notes. The
Company has not, however, sought its own no-action letter from the staff of the
Commission regarding resales of the New Notes and there can be no assurance that
the staff of the Commission would make a similar determination with respect to
the resale of the New Notes. Any holder of Old Notes who is not able to rely
upon such staff interpretations must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale of such
Old Notes, unless such sale is made pursuant to an exemption from such
requirements. See "Prospectus Summary--The Exchange Offer."
Certain Market Consequences of Failure to Exchange Old Notes
To the extent that Old Notes are tendered and accepted for exchange
pursuant to the Exchange Offer, the trading market for Old Notes that remain
outstanding may be more significantly limited, which might adversely affect the
liquidity of the Old Notes not tendered for exchange. The extent of the market
therefor and the availability of price quotations would depend upon a number of
factors, including the number of holders of Old Notes remaining at such time and
the interest in maintaining a market in such Old Notes on the part of securities
firms. An issue of securities with a smaller outstanding market value available
for trading (the "float") may command a lower price than would a comparable
issue of securities with a greater float. As a result, the market price for Old
Notes that are not exchanged in the Exchange Offer may be adversely affected to
the extent that the amount of Old Notes exchanged pursuant to the Exchange Offer
reduces the float. The reduced float also may make the trading price of the Old
Notes that are not exchanged more volatile. In addition, holders of Old Notes
who do not exchange their Old Notes for New Notes pursuant to the Exchange Offer
will continue to be subject to restrictions on transfer of such Old Notes
contained in the legend thereon.
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In general, the Old Notes may not be offered or sold unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. The Company
does not currently anticipate that it will register the Old Notes under the
Securities Act. See "Risk Factors--Restrictions on Resale" and "The Exchange
Offer--Consequences of Failure to Exchange."
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THE EXCHANGE OFFER
The following discussion sets forth or summarizes what the Company believes
are the material terms of the Exchange Offer. This Summary is qualified in its
entirety by reference to the full text of the documents underlying the Exchange
Offer, copies of which are filed as exhibits to the Registration Statement of
which this Prospectus is a part, and are incorporated by reference herein.
Purpose and Effect
The Old Notes were sold by the Company to the Initial Purchasers on June
18, 1998 pursuant to the Purchase Agreement. The Initial Purchasers subsequently
resold the Old Notes in reliance on Rule 144A and Regulation S. The Company, the
Guarantors and the Initial Purchasers also entered into the Registration Rights
Agreement, pursuant to which the Company agreed to use its best efforts (i) to
file an exchange offer registration statement ("Exchange Offer Registration
Statement") with the Commission under the Securities Act concerning the Exchange
Offer within 45 days after the Issue Date, (ii) to cause the Exchange Offer
Registration Statement to be declared effective by the Commission within 105
days after the Issue Date, (iii) to keep the Exchange Offer Registration
Statement effective until the closing of the Exchange Offer and (iv) to cause
the Exchange Offer to be consummated within 135 days after the Issue Date.
Pursuant to such Registration Rights Agreement, the Company will endeavor to,
within the applicable time periods, register under the Securities Act all of the
New Notes pursuant to a registration statement under which the Company will
offer each holder of Old Notes the opportunity to exchange any and all of the
outstanding Old Notes held by such holder for New Notes in an aggregate
principal amount equal to the aggregate principal amount of Old Notes tendered
for exchange by such holder. Subject to limited exceptions, the Exchange Offer
being made hereby, if commenced and consummated within such applicable time
periods, will satisfy those requirements under the Registration Rights
Agreement. In such event, Old Notes not exchanged for New Notes in the Exchange
Offer would remain outstanding and would continue to accrue interest, but would
generally not retain any rights under the Registration Rights Agreement. Holders
of Old Notes seeking liquidity in their investment would have to rely on an
exemption to the registration requirements under the securities laws, including
the Securities Act. This Exchange Offer is intended to satisfy the Company's
exchange offer obligations under the Registration Rights Agreement.
Terms of the Exchange Offer
The Company hereby offers, upon the terms and subject to the conditions set
forth herein and in the accompanying Letter of Transmittal, to exchange $1,000
in principal amount of the New Notes for each $1,000 in principal amount of the
outstanding Old Notes. The Company will accept for exchange any and all Old
Notes that are validly tendered on or prior to 5:00 p.m., New York City time, on
the Expiration Date. Tenders of the Old Notes may be withdrawn in accordance
with the procedures described under "--Withdrawal Rights" at any time prior to
5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Notes being tendered for
exchange. However, the Exchange Offer is subject to certain customary conditions
that may be waived by the Company, and to the terms and provisions of the
Registration Rights Agreement. See "--Conditions of the Exchange Offer."
Old Notes may be tendered only in multiples of $1,000. Subject to the
foregoing, holders may tender less than the aggregate principal amount
represented by the Old Notes held by them, provided that they appropriately
indicate this fact on the Letter Of Transmittal accompanying the tendered Old
Notes (or so indicate pursuant to the procedures for book-entry transfer).
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As of the date of this Prospectus, $150 million in aggregate principal
amount of the Old Notes is outstanding, the maximum amount authorized by the
Indenture for all Notes. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about ______, 1998, to all holders of Old
Notes known to the Company.
Because the Exchange Offer is for any and all Old Notes, the number of Old
Notes tendered and exchanged in the Exchange Offer will reduce the principal
amount of Old Notes outstanding. Following the consummation of the Exchange
Offer, holders who did not tender their Old Notes generally will not have any
further registration rights under the Registration Rights Agreement, and such
Old Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market for such Old Notes could be adversely
affected. The Old Notes are currently eligible for sale pursuant to Rule 144A
through the PORTAL system. Because the Company anticipates that most holders of
Old Notes will elect to exchange such Old Notes for New Notes due to the absence
of restrictions on the resale of New Notes under the Securities Act, the Company
anticipates that the liquidity of the market for any Old Notes remaining after
the consummation of the Exchange Offer may be substantially limited. See "Risk
Factors--Certain Market Consequences of Failure to Exchange Old Notes."
The form and terms of the New Notes are generally the same as the form and
terms of the Old Notes, except that (i) the New Notes have been registered under
the Securities Act and will not bear legends restricting the transfer thereof,
(ii) the holders of New Notes will not be entitled to any Additional Interest
under the terms of the Registration Rights Agreement and (iii) holders of New
Notes will not be entitled to certain other rights under the Registration Rights
Agreement. The New Notes will evidence the same debt as the Old Notes and will
be entitled to the benefits of the Indenture.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Old Notes and for the purposes of receiving the New Notes from the Company
and delivering New Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders of Old Notes do not have any appraisal or dissenters' rights in
connection with the Exchange Offer.
Holders of Old Notes who tender in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"--Fees and Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE COMPANY MAKES ANY
RECOMMENDATION TO HOLDERS OF OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING ALL OR ANY PORTION OF THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS
OF OLD NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE PRINCIPAL AMOUNT OF OLD NOTES TO
TENDER, AFTER READING CAREFULLY THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL
AND CONSULTING WITH THEIR ADVISORS, IF ANY, BASED ON THEIR OWN FINANCIAL
POSITION AND REQUIREMENTS.
Expiration Date; Extensions; Amendments
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The Exchange Offer shall remain open for a period of not less than 20
Business Days after notice is mailed to holders. The Expiration Date shall be
, 1998 at 5:00 p.m., New York City time, unless the Company, in its sole
discretion, extends the Exchange Offer, in which case the Expiration Date shall
be the latest date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, by means of a press release or any other acceptable means,
each prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date.
The Company expressly reserves the right, in its sole and absolute
discretion, (i) to delay accepting any Old Notes, (ii) to extend the Exchange
Offer, (iii) if any of the conditions set forth below under "--Conditions of the
Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer,
by giving oral or written notice of such delay, extension or termination to the
Exchange Agent and (iv) to waive any condition or otherwise amend the terms of
the Exchange Offer in any manner. If such waiver or amendment constitutes a
material change to the Exchange Offer, the Company will promptly disclose such
waiver or amendment by means of a prospectus supplement that will be distributed
to the registered holders of the Old Notes, and the Company will extend the
Exchange Offer to the extent required by Rule l4e-1 under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and by
making a public announcement thereof, and such announcement in the case of an
extension will be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Without limiting
the manner in which the Company may choose to make any public announcement and
subject to applicable law, the Company shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to the Dow Jones News Service.
Conditions of the Exchange Offer
Notwithstanding any other provisions of the Exchange Offer, or any
extension of the Exchange Offer, the Company will not be required to accept for
exchange, or to exchange, any Old Notes for any New Notes, and, as described
below, may terminate the Exchange Offer (whether or not any Old Notes have
theretofore been accepted for exchange) or may waive any conditions to or amend
the Exchange Offer, if any of the following conditions have occurred or exist or
have not been satisfied:
(i) the due tendering of Old Notes in accordance with the Exchange
Offer;
(ii) the Exchange Offer, or the making of any exchange by a holder,
violates any applicable law, statute, rule, regulation or any applicable
interpretation of the staff of the Commission;
(iii) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the reasonable
judgment of the Company, might materially impair the ability of the Company to
proceed with the Exchange Offer or materially impair the contemplated benefits
of the Exchange Offer to the Company;
(iv) each holder of Old Notes exchanged in the Exchange Offer shall have
made certain customary representations, including representations that, among
other things, (i) the holder is not an "affiliate" of the Company as defined in
Rule 405 of the Securities Act, (ii) the holder is not a broker-dealer that
acquired Old Notes directly from the Company in order to resell them pursuant to
Rule 144A of the Securities Act or any other available exemption under the
Securities Act, (iii) the holder will acquire the New Notes in the ordinary
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course of business and (iv) that the holder is not participating, and does not
intend to participate, and has no arrangement or understanding with any person
to participate, in the distribution of the New Notes;
(v) all governmental approvals have been obtained, which such approval
the Company shall, in its reasonable judgment, deem necessary for the
consummation of the Exchange Offer as contemplated hereby;
(vi) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been issued by,
any court or governmental agency or other governmental regulatory or
administrative agency or commission, (a) seeking to restrain or prohibit the
making or consummation of the Exchange Offer or any other transaction
contemplated by the Exchange Offer, or assessing or seeking any damages as a
result thereof or (b) resulting in a material delay in the ability of the
Company to accept for exchange or exchange some or all of the Old Notes pursuant
to the Exchange Offer;
(vii) there shall have occurred (a) any general suspension of or general
limitation on prices for, or trading in, securities on any national securities
exchange or in the over-the-counter market, (b) any limitation by any
governmental agency or authority which may adversely affect the ability of the
Company to complete the transactions contemplated by the Exchange Offer, (c) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or any limitation by any governmental agency or
authority which adversely affects the extension of credit or (d) a commencement
of a war, armed hostilities or other similar international calamity directly or
indirectly involving the United States, or, in the case of any of the foregoing
existing at the time of the commencement of the Exchange Offer, a material
acceleration or worsening thereof; or
(viii) any change (or any development involving a prospective change)
shall have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or prospects
of the Company and its subsidiaries taken as a whole that, in the sole judgment
of the Company, is or may be adverse to the Company, or the Company shall have
become aware of facts that, in the sole judgment of the Company, have or may
have an adverse effect on the value of the Old Notes or the New Notes.
If the Company determines in its sole and absolute discretion that any of
the foregoing events or conditions has occurred or exists or has not been
satisfied, the Company may, subject to applicable law, (i) terminate the
Exchange Offer (whether or not any Old Notes have theretofore been accepted for
exchange), (ii) extend the Exchange Offer and retain all Old Notes tendered
prior to the expiration of the Exchange Offer subject, however, to the rights of
holders to withdraw such Old Notes or (iii) waive any such condition or
otherwise amend the terms of the Exchange Offer in any respect. If such waiver
or amendment constitutes a material change to the Exchange Offer, the Company
will promptly disclose such waiver or amendment by means of a prospectus
supplement that will be distributed to the registered holders of the Old Notes,
and the Company will extend the Exchange Offer to the extent required by Rule
l4e-1 under the Exchange Act.
The foregoing conditions are for the sole benefit of the Company and may be
waived by the Company in whole or in part at any time and from time to time in
its sole discretion. The failure by the Company at any time to exercise any of
the foregoing rights shall not be deemed a waiver of such rights and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Company concerning the events
described above will be final and binding upon all parties.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939.
Termination of Certain Rights
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Holders of New Notes will not be and, upon consummation of the Exchange
Offer, holders of Old Notes who were permitted to participate in the Exchange
Offer will no longer be, entitled to (i) the right to receive Additional
Interest under the Registration Rights Agreement or (ii) certain other rights
under the Registration Rights Agreement intended for the holders of unregistered
securities; provided, that holders of Old Notes who are not permitted to
participate in the Exchange Offer or who do not receive fully tradeable New
Notes pursuant to the Exchange Offer, shall have the right to require the
Company to file a Shelf Registration Statement solely for the benefit of such
holders of Old Notes and will be entitled to receive Additional Interest
following the occurrence of a Registration Default in connection with the filing
of such Shelf Registration Statement. See "Registration Rights." Notwithstanding
anything to the contrary in the foregoing, Old Notes not tendered in the
Exchange Offer will remain outstanding and continue to accrue interest in
accordance with their terms.
Accrued Interest on the Old Notes
Holders whose Old Notes are accepted for exchange will have the right to
receive interest accrued thereon from the date of their original issuance or the
last interest payment date, as applicable, to, but not including, the date of
issuance of the New Notes, such interest to be payable with the first interest
payment on the New Notes. Interest on the Old Notes accepted for exchange, which
interest accrued at the rate of 8 1/8% per annum, will cease to accrue on the
day prior to the issuance of the New Notes.
Procedures for Tendering Old Notes
The tender of a holder's Old Notes as set forth below and the acceptance
thereof by the Company will constitute a binding agreement between the tendering
holder and the Company upon the terms and subject to the conditions set forth in
this Prospectus and in the accompanying Letter of Transmittal. Except as set
forth below, a holder who wishes to tender Old Notes for exchange pursuant to
the Exchange Offer must transmit a properly completed and duly executed Letter
of Transmittal, including all other documents required by such Letter of
Transmittal, to the Exchange Agent at the address set forth under "--The
Exchange Agent; Assistance" prior to 5:00 p.m., New York City time on the
Expiration Date. In addition, either (i) certificates of such Old Notes must be
received by the Exchange Agent along with the Letter of Transmittal, (ii) a
timely confirmation of book-entry transfer of such Old Notes, if such procedure
is available, into the Exchange Agent's account at DTC pursuant to the procedure
for book-entry transfer described below, must be received by the Exchange Agent
prior to the Expiration Date, or (iii) the holder must comply with the
guaranteed delivery procedures described below.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
ELIGIBLE HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED
MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF
DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE ELIGIBLE HOLDER USE AN OVERNIGHT OR
HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE
COMPANY OR DTC. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS,
COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT SUCH TENDER FOR SUCH
HOLDER.
Any Beneficial Owner whose Old Notes are registered in the name of a
nominee, such as a broker, dealer, commercial bank or trust company, and who
wishes to tender Old Notes in the Exchange Offer should contact such registered
holder promptly and instruct such registered holder to tender on such Beneficial
Owner's
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behalf. If such Beneficial Owner wishes to tender directly, such Beneficial
Owner must, prior to completing and executing the Letter of Transmittal and
tendering Old Notes, either make appropriate arrangements to register ownership
of the Old Notes in such Beneficial Owner's name or obtain a properly completed
bond power from the registered holder. Beneficial Owners should be aware that
the transfer of registered ownership may take considerable time.
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at DTC for the purposes of the Exchange Offer within two
business days after the date of this Prospectus. Any financial institution that
is a participant in DTC's Book-Entry Transfer Facility system may make book-
entry delivery of the Old Notes by causing DTC to transfer such Old Notes into
the Exchange Agent's account in accordance with DTC's procedures for such
transfer. However, although delivery of the Old Notes may be effected through
book-entry transfer into the Exchange Agent's account at DTC, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, must in any
case, be delivered to and received by the Exchange Agent at its address set
forth under "--The Exchange Agent; Assistance" on or prior to the Expiration
Date, or the guaranteed delivery procedure set forth below must be complied
with, within the time period provided under such procedures. Delivery of
documents to DTC does not constitute delivery to the Exchange Agent.
Each signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined herein)
unless the Old Notes surrendered for exchange pursuant hereto are tendered (i)
by a registered holder of the Old Notes who has not completed either the box
entitled "Special Exchange Instructions" or the box entitled "Special Delivery
Instructions" in the Letter of Transmittal or (ii) for the account of an
Eligible Institution. In the event that a signature on a Letter of Transmittal
or a notice of withdrawal, as the case may be, is required to be guaranteed,
such signature must be guaranteed by an Eligible Institution. If the Letter of
Transmittal is signed by a person other than the registered holder of the Old
Notes, the Old Notes surrendered for exchange must be endorsed or accompanied by
appropriate bond powers and a proxy which authorizes such person to tender the
Old Notes on behalf of the registered holder, in each case, signed by the
registered holder, with the signature thereon guaranteed by an Eligible
Institution. The term "registered holder" as used herein with respect to the Old
Notes means any person in whose name the Old Notes are registered on the books
of the Registrar. The term "Eligible Institution" as used herein means a firm
which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States or any other
"eligible guarantor institution" as such term is defined in Rule 17Ad-15 under
the Exchange Act.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Old Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
Old Notes not properly tendered and to reject any Old Notes the Company's
acceptance of which might, in the judgment of the Company or its counsel, be
unlawful. The Company also reserves the absolute right to waive any defects or
irregularities or conditions of the Exchange Offer as to particular Old Notes
either before or after the Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Old Notes in the Exchange
Offer). The interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) by the
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes for exchange must be
cured within such period of time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Old Notes,
nor shall any of them incur any liability for failure to give notification of
defects or irregularities with respect to tenders of Old Notes. Tenders of the
Old Notes will not be deemed to have been made until such irregularities have
been cured or waived.
If any Letter of Transmittal, endorsement, bond power, power of attorney or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, administrator, guardian, attorney-in-fact,
33
<PAGE>
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and, unless waived by the
Company, proper evidence satisfactory to the Company, in its sole discretion, of
such person's authority so to act must be submitted with the Letter of
Transmittal.
By tendering, each registered holder will represent to the Company, among
other things, that: (i) the holder is not an "affiliate" of the Company as
defined in Rule 405 of the Securities Act, (ii) the holder is not a broker-
dealer that acquired Old Notes directly from the Company in order to resell them
pursuant to Rule 144A of the Securities Act or any other available exemption
under the Securities Act, (iii) the holder will acquire the New Notes in the
ordinary course of business and (iv) the holder is not participating, and does
not intend to participate, and has no arrangement or understanding with any
person to participate, in the distribution of the New Notes. Any holder of Old
Notes that is unable to make these representations to the Company will not be
able to rely on the interpretations of the staff of the Commission described in
"--Resales of New Notes" and therefore will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale of such Old Notes, unless such sale is made pursuant to
an exemption from such requirements.
Guaranteed Delivery Procedures
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other documents required by the Letter of Transmittal to the
Exchange Agent on or prior to the Expiration Date or (iii) who cannot complete
the procedure for book-entry transfer on a timely basis, may tender their Old
Notes according to the guaranteed delivery procedures set forth in the Letter of
Transmittal. Pursuant to such procedures: (i) such tender must be made by or
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent must have received from the holder and the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name and address of the
holder, the certificate or registration number or numbers of the tendered Old
Notes, and the principal amount of tendered Old Notes, stating that the tender
is being made thereby and guaranteeing that, at least within four (4) New York
Stock Exchange trading days after the Expiration Date, the tendered Old Notes, a
duly executed Letter of Transmittal (or a facsimile thereof) and any other
required documents will be deposited by the Eligible Institution with the
Exchange Agent and (iii) such properly completed and executed documents required
by the Letter of Transmittal (or a facsimile thereof) and the tendered Old Notes
in proper form for transfer (or confirmation of a book-entry transfer of such
Old Notes into the Exchange Agent's account at DTC) must be received by the
Exchange Agent within at least four (4) New York Stock Exchange trading days
after the Expiration Date.
Acceptance of Old Notes for Exchange; Delivery of New Notes
Upon satisfaction or waiver of all the conditions to the Exchange Offer,
the Company will accept any and all Old Notes that are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date.
The New Notes issued pursuant to the Exchange Offer will be delivered as
promptly as practicable after acceptance of the Old Notes. For purposes of the
Exchange Offer, the Company shall be deemed to have accepted validly tendered
Old Notes, when, as, and if the Company has given oral or written notice thereof
to the Exchange Agent.
In all cases, issuances of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of such Old Notes, a properly completed and duly executed
Letter of Transmittal (or a facsimile thereof) and all other required documents
(or of confirmation of a book-entry transfer of such Old Notes into the Exchange
Agent's account at DTC); provided, that the Company reserves the absolute right
to waive any defects or irregularities in the tender or
34
<PAGE>
conditions of the Exchange Offer. If any tendered Old Notes are not accepted for
any reason, such unaccepted Old Notes will be returned without expense to the
tendering holder thereof as promptly as practicable after the expiration or
termination of the Exchange Offer.
Withdrawal Rights
Tenders of the Old Notes may be withdrawn by delivery of a written or
facsimile transmission notice to the Exchange Agent, at its address set forth
herein, at any time prior to 5:00 p.m., New York City time, on the Expiration
Date after which tenders of Old Notes are irrevocable. Any such notice of
withdrawal must (i) specify the name of the person having deposited the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate or registration number or numbers and
principal amount of such Old Notes, as applicable or, in the case of notes
transferred by book-entry transfer, the name and number of the account at DTC to
be credited), (iii) be signed by the Depositor in the same manner as the
original signature on the Letter of Transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by a
bond power in the name of the person withdrawing the tender, in satisfactory
form as determined by the Company in its sole discretion, duly executed by the
registered holder, with the signature thereon guaranteed by an Eligible
Institution together with the other documents required upon transfer by the
Indenture, (iv) specify the name in which such Old Notes are to be re-
registered, if different from the Depositor, pursuant to such documents of
transfer and (v) include a statement that such holder is withdrawing its
election to have such Old Notes exchanged. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by the Company, in its sole discretion. The Old Notes so withdrawn
will be deemed not to have been validly tendered for exchange for purposes of
the Exchange Offer and no New Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Any Old Notes which have
been tendered for exchange but which are withdrawn will be returned to the
holder thereof without cost to such holder as promptly as practicable after
withdrawal. Properly withdrawn Old Notes may be retendered by following one of
the procedures described under "--Procedures for Tendering Old Notes" at any
time on or prior to the Expiration Date.
35
<PAGE>
The Exchange Agent; Assistance
U.S. Bank Trust National Association has been appointed the Exchange Agent
for the Exchange Offer. All tendered Old Notes, executed Letters of Transmittal
and other related documents should be directed to the Exchange Agent. Questions
and requests for assistance and requests for additional copies of the
Prospectus, the Letter of Transmittal and other related documents should be
addressed to the Exchange Agent as follows:
By Hand, Registered or Certified Mail or Overnight Courier:
U.S. Bank Trust National Association
U.S. Bank Trust Center
180 East Fifth Street
St. Paul, MN 55101
Attention: Specialized Finance Department
By Facsimile:
651-244-1537
Attention: Specialized Finance Department
Confirm by Telephone 651-
DELIVERY OF DOCUMENTS TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF DOCUMENTS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY OF SUCH DOCUMENTS.
Fees and Expenses
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail. However, additional solicitations may be
made by facsimile, telephone or in person by officers and regular employees of
the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptance of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith and pay
other registration expenses, including fees and expenses of the Trustee, filing
fees, blue sky fees and printing and distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered holder of the Old Notes tendered or if
a transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
Accounting Treatment
The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss will be recognized
36
<PAGE>
by the Company for accounting purposes in connection with the Exchange Offer.
The expenses of the Exchange Offer will be amortized over the term of the New
Notes.
Resales of New Notes
Upon consummation of the Exchange Offer, holders of Old Notes who were not
prohibited from participating in the Exchange Offer and did not tender their Old
Notes will generally not have any registration rights under the Registration
Rights Agreement with respect to such nontendered Old Notes and such Old Notes
will continue to be subject to the restrictions on transfer contained in the
legend thereon. In general, the Old Notes may not be offered or sold unless
registered under the Securities Act and applicable state securities laws, except
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register the Old Notes under the Securities
Act.
The Company is making the Exchange Offer in reliance on the position of the
staff of the Commission as set forth in certain interpretive letters addressed
to third parties in other transactions. However, the Company has not sought its
own interpretive letter and there can be no assurance that the staff of the
Commission would make a similar determination with respect to the Exchange Offer
as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Commission, the Company believes that New
Notes issued pursuant to the Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise transferred by a holder (other than (i)
a broker-dealer who purchased Old Notes directly from the Company for resale
pursuant to Rule 144A or any other available exemption under the Securities Act,
(ii) an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (iii) a broker-dealer who acquired the Old Notes as a result
of market-making or other trading activities), without further compliance with
the registration and prospectus delivery provisions of the Securities Act,
provided, that such holder is acquiring the New Notes in the ordinary course of
business and is not participating, and has no arrangement or understanding with
any person to participate, in the distribution of the New Notes. Any holder
wishing to accept the Exchange Offer must represent to the Company, as required
by the Registration Rights Agreement, that (i) it is not an "affiliate" of the
Company as defined in Rule 405 of the Securities Act, (ii) it is not a broker-
dealer that acquired Old Notes directly from the Company in order to resell them
pursuant to Rule 144A of the Securities Act or any other available exemption
under the Securities Act, (iii) it will acquire the New Notes in the ordinary
course of business and (iv) it is not participating, and does not intend to
participate, and has no arrangement or understanding with any person to
participate, in the distribution of the New Notes. Any holder of Old Notes that
is unable to make these representations to the Company will not be able to rely
on the interpretations of the staff of the Commission described above and
therefore will be required to comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale of such
Old Notes unless such sale is made pursuant to an exemption from such
requirements.
Each broker-dealer who receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it acquired the Old Notes for its own
account as a result of market-making activities or other trading activities and,
because it may be deemed a statutory underwriter, must agree that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff of the Commission in
the interpretive letters referred to above, the Company believes that
Participating Broker-Dealers may fulfill their prospectus delivery requirements
with respect to the New Notes received upon exchange of such Old Notes (other
than Old Notes that represent an unsold allotment from the original sale of the
Old Notes) with a prospectus meeting the requirements of the Securities Act,
which may be the prospectus prepared for an exchange offer so long as it
contains a description of the plan of distribution with respect to the resale of
such New Notes. Accordingly, this Prospectus may be used by a Participating
Broker-Dealer during the period referred to below in connection with resales of
New Notes received in exchange for Old Notes where such Old Notes were acquired
by such Participating Broker-Dealer for its own
37
<PAGE>
account as a result of market-making or other trading activities. Subject to
certain provisions and time limitations set forth in the Registration Rights
Agreement, the Company has agreed that this Prospectus may be used by a
Participating Broker-Dealer in connection with resales of such New Notes. See
"Plan of Distribution." However, a Participating Broker-Dealer who intends to
use this Prospectus in connection with the resale of New Notes received in
exchange for Old Notes pursuant to the Exchange Offer must notify the Company,
or cause the Company to be notified, on or prior to the Expiration Date, that it
is a Participating Broker-Dealer. Such notice may be given in the space provided
for that purpose in the Letter of Transmittal or may be delivered to the
Exchange Agent at one of the addresses set forth herein under "--The Exchange
Agent; Assistance." A Participating Broker-Dealer who delivers this Prospectus
to purchasers in connection with resales of New Notes will be subject to certain
of the civil liabilities under the Securities Act and will be bound by the
provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations). Any Participating Broker-Dealer who is
an "affiliate" of the Company may not rely on such interpretive letters and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Old Notes
pursuant to The Exchange Offer will be deemed to have agreed, by execution of
the Letter of Transmittal, that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained in this Prospectus untrue in any material respect or which causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained herein, in light of the circumstances under which they were
made, not misleading or of the occurrence of certain other events specified in
the Registration Rights Agreement, such Participating Broker-Dealer will suspend
the sale of New Notes pursuant to this Prospectus until the Company has amended
or supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such Participating
Broker-Dealer or the Company has given notice that the sale of the New Notes may
be resumed, as the case may be.
Consequences of Failure to Exchange
Holders of Old Notes who are permitted to participate in the Exchange Offer
and who do not tender their Old Notes generally will not have any further
registration rights under the Registration Rights Agreement or otherwise.
Accordingly, any holder that does not exchange such holder's Old Notes for New
Notes will continue to hold the untendered Old Notes and will be entitled to all
the rights and limitations applicable thereto under the Indenture, except to the
extent that such rights or limitations, by their terms, terminate or cease to
have further effectiveness as a result of the Exchange Offer.
The Old Notes that are not exchanged for New Notes pursuant to the Exchange
Offer will continue to be subject to the restrictions on transfer contained in
the legend thereon. In general, the Old Note may not be offered or sold, unless
registered under the Securities Act, except pursuant to an exemption from, or in
a transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register the Old
Notes under the Securities Act. Accordingly, such Old Notes may be resold only
(i) to the Company (upon redemption thereof or otherwise), (ii) pursuant to an
effective registration statement under the Securities Act, (iii) so long as the
Old Notes are eligible for resale pursuant to Rule 144A, to a Qualified
Institutional Buyer (as defined in the Securities Act) in a transaction meeting
the requirements of Rule 144A, (iv) outside the United States to a foreign
person pursuant to the exemption from the registration requirements of the
Securities Act provided by Regulation S, (v) to an institutional "accredited
investor" (as defined in the Securities Act) in a transaction exempt from the
registration requirements of the Securities Act, in each case in accordance with
any applicable securities laws of any state of the United States or other
applicable jurisdiction, or (vi) pursuant to any other available exemption from
the registration requirements of the Securities Act.
Miscellaneous
38
<PAGE>
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept such offer. Holders of the Old Notes are
urged to consult their financial and tax advisors in making their own decisions
on what action to take.
The Company may in the future seek to acquire untendered Old Notes, to the
extent permitted by applicable law, in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise. The Company has
no present plans to acquire any Old Notes that are not tendered in the Exchange
Offer or to file a registration statement to permit resales of any untendered
Old Notes.
HOLDERS OF OLD NOTES WILL NOT HAVE DISSENTERS' RIGHTS OR APPRAISAL RIGHTS
IN CONNECTION WITH THE EXCHANGE OFFER.
39
<PAGE>
USE OF PROCEEDS
There will be no proceeds to the Company from the Exchange of the Old Notes
for New Notes pursuant to the Exchange Offer.
The net proceeds to the Company from the Offering were approximately $146.1
million, after deducting the Initial Purchasers' discount and other expenses
related to the Offering. The Company used the net proceeds of the Offering,
together with approximately $73.7 million of cash on hand, to (i) place $167.2
million of cash and U.S. Treasury Securities in trust with U.S. Bank Trust
National Association to effect the Covenant Defeasance; (ii) repay in full $52.0
million of outstanding indebtedness under the Amended and Restated Promissory
Note (the "Existing Credit Facility") dated June 30, 1997 executed by Empress
Hammond in favor of Bank of America National Trust and Savings Association; and
(iii) repay in full $0.6 million of outstanding vendor financing. See "Certain
Transactions," "Description of Certain Other Indebtedness," and "Description of
the New Notes."
40
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1998 and as adjusted to give effect to the Offering and the
application of the net proceeds therefrom. See "Use of Proceeds" and the
combined financial statements and notes thereto contained elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
March 31, 1998
-------------------
Actual As Adjusted
------ -----------
<S> <C> <C>
(in millions)
Current maturities of long-term debt.............................. $ 17.4 $ 17.4
Long-term debt:
Credit Facility................................................ 36.0 36.0
10-3/4% Notes to be redeemed in connection with the Covenant
Defeasance (1).............................................. 150.0 150.0
New Notes...................................................... -- 150.0
------ ------
Total long-term debt........................................ 203.4 353.4
Total stockholders' equity (2).................................... 65.1 65.1
------ ------
Total capitalization.............................................. $268.5 $418.5
====== ======
</TABLE>
- --------------
(1) The 10-3/4% Notes to be redeemed in connection with the Covenant Defeasance
will be recorded as a liability until the redemption of the outstanding 10-
3/4% Notes is effected, which is anticipated to occur on April 1, 1999. The
effects of the refinancing related to the repayment of all other outstanding
Indebtedness of the Company has not been reflected in the table above.
(2) The impact of the premium ($8.1 million) on the redemption of the 10-3/4%
Notes and the write-off of the remaining deferred financing costs ($2.1
million) related to the 10-3/4% Notes will be recognized on April 1, 1999.
41
<PAGE>
SELECTED COMBINED FINANCIAL DATA
The following selected combined financial data as of and for each of the
three years ended December 31, 1997, 1996 and 1995 have been derived from the
audited combined financial statements of the Company. The data presented below
as of and for each of the years ended December 31, 1994 and 1993 and as of and
for each of the three months ended March 31, 1998 and 1997 are unaudited. In the
opinion of the Company, such interim data includes all adjustments (which were
of a normal recurring nature) necessary for a fair presentation of the
information set forth therein. The Company's operations are subject to seasonal
factors, and therefore, the results of operations for each of the three months
ended March 31, 1998 and 1997 are not necessarily indicative of the results of
operations for the full year. The following data should be read in conjunction
with the combined financial statements and notes thereto included elsewhere in
this Prospectus. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
The Company believes the results of operations for each of the five years
in the period ended December 31, 1997 are not readily comparable to each other
because Empress Hammond commenced gaming operations on June 28, 1996. See "Risk
Factors--Competition" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
<TABLE>
<CAPTION>
Three months
ended
March 31, Year ended December 31,
---------------- ------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(in millions)
Statement of Operations Data:
Revenues
Casino.......................................... $ 91.3 $ 88.4 $346.0 $263.0 $202.3 $202.7 $172.8
Other, net of promotional allowances............ 5.6 5.6 23.6 15.7 12.3 12.6 14.5
------ ------ ------ ------ ------ ------ ------
Total net revenues............................ 96.9 94.0 369.6 278.7 214.6 215.3 187.3
Operating expenses
Casino.......................................... 15.1 15.7 64.8 48.1 30.7 29.1 18.7
Gaming and admission taxes...................... 30.2 27.1 108.0 73.1 47.1 46.9 38.9
Other departmental expenses..................... 26.0 24.9 113.4 77.7 56.1 51.3 35.5
Pre-opening expenses............................ -- -- -- 5.7 1.3 3.3 3.0
Depreciation and amortization................... 4.7 4.7 18.8 13.9 16.9 17.8 13.2
------ ------ ------ ------ ------ ------ ------
Total operating expenses...................... 76.0 72.4 305.0 218.5 152.1 148.4 109.3
------ ------ ------ ------ ------ ------ ------
Income from operations............................ 20.9 21.6 64.6 60.2 62.5 66.9 78.0
Interest expense.................................. (5.3) (5.7) (21.1) (18.3) (16.4) (11.5) (2.8)
Interest income................................... 1.0 1.1 3.3 3.5 5.2 2.9 0.4
State taxes....................................... (0.1) (0.1) (0.5) (0.5) (0.7) (0.8) (1.2)
------ ------ ------ ------ ------ ------ ------
Net income........................................ $ 16.5 $ 16.9 $ 46.3 $ 44.9 $ 50.6 $ 57.5 $ 74.4
====== ====== ====== ====== ====== ====== ======
Other Data:
Capital expenditures (1).......................... 7.2 2.0 16.1 106.0 7.4 44.3 34.6
Ratio of earnings to fixed charges(2)............. 4.1x 4.0x 3.1x 3.1x 4.0x 5.3x 25.3x
Balance Sheet Data:
Cash, cash equivalents and marketable securities.. $ 93.6 $ 82.8 $ 83.3 $ 75.7 $ 67.1 $ 62.8 $ 16.3
Total assets...................................... 302.4 291.0 291.5 288.3 201.8 208.2 92.9
Total debt........................................ 203.4 204.7 208.5 214.3 150.6 152.2 32.6
Stockholders' equity.............................. 65.1 57.7 55.9 49.6 36.8 33.4 48.8
</TABLE>
- -------------
42
<PAGE>
(1) Included in capital expenditures for the year ended December 31, 1996 is
$93.4 million in conjunction with the opening of Empress Hammond.
(2) The ratio of earnings to fixed charges has been computed by dividing
earnings available for fixed charges (income before state income taxes plus
fixed charges and the current period amortization of interest capitalized in
prior periods less capitalized interest) by fixed charges (interest expense
plus capitalized interest, amortization of debt issue costs and the interest
factor of rent expense).
43
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is
qualified in its entirety by, the combined financial statements and the notes
thereto of the Company included elsewhere in the Prospectus.
Overview
The Company was organized in January 1994, as an S Corporation for Federal
and state income tax purposes, for the sole purpose of constructing Empress III
and leasing it to Empress Hammond. As a result of the Reorganization, the
Company is a holding company with Empress Hammond, Empress Joliet and Empress
Finance as its wholly-owned, Qualified Subchapter S Subsidiaries.
Empress Hammond was organized in November 1992 as an S Corporation for
Federal and state income tax purposes. A preliminary finding of suitability of
the owners of Empress Hammond was granted by the Indiana Gaming Commission on
November 17, 1995, and Empress Hammond was granted a five-year operating license
from the Indiana Gaming Commission on June 21, 1996. Empress Hammond commenced
gaming operations in Hammond, Indiana on June 28, 1996. On November 14, 1997,
Empress Hammond became a wholly-owned, Qualified Subchapter S Subsidiary of the
Company.
Empress Joliet was organized in December 1990 as an S Corporation for
Federal and state income tax purposes. A preliminary finding of suitability of
the owners of Empress Joliet was granted by the Illinois Gaming Board on July
16, 1991. Empress Joliet commenced gaming operations in Joliet, Illinois on June
17, 1992, and was granted a one-year renewal of its gaming license by the
Illinois Gaming Board on July 21, 1998. In connection with the Reorganization,
Empress Joliet became a wholly-owned, Qualified Subchapter S Subsidiary of the
Company.
Empress Finance was organized in January 1994 as a C Corporation for the
sole purpose of issuing the 10 3/4% Notes. In connection with the
Reorganization, Empress Finance became a wholly-owned, Qualified Subchapter S
Subsidiary of the Company. Hammond Residential is the wholly-owned subsidiary of
Empress Hammond and was formed primarily to satisfy certain residential
development commitments to the City of Hammond. Empress Finance has no business
activities except its obligations with respect to the 10 3/4% Notes and Hammond
Residential has no business activities except for satisfying such residential
development commitments.
Empress Opportunities was formed as an Unrestricted Subsidiary to serve as
a holding company under which the Company intends to explore business
opportunities other than the Company's gaming operations in Hammond, Indiana and
Joliet, Illinois. Empress Racing was formed as an Unrestricted Subsidiary to
hold a 50% ownership interest in a limited liability company which, subject to
certain regulatory approvals, intends to acquire certain outstanding secured
indebtedness of Sunshine Racing, Inc., the owner of the Woodlands Racetrack in
Kansas City, Kansas and to ultimately bid to purchase the Woodlands Racetrack in
an auction pursuant to a proceeding under Chapter 7 of the U.S. Bankruptcy Code.
Empress Mississippi was formed as an Unrestricted Subsidiary to investigate
business opportunities in Mississippi. As unrestricted Subsidiaries, Empress
Opportunities, Empress Racing and Empress Mississippi are not Guarantors of the
Notes.
Results of Operations
The Company's results from 1997 forward reflect full operations at Empress
Joliet and Empress Hammond, the 1996 results reflect a full year of operations
at Empress Joliet and one-half year of operations at Empress Hammond and the
1995 results reflect a full year of operations at Empress Joliet only. From May
1994 through September 1994, Empress Hammond operated a seasonal restaurant at
its current operating site. Empress
44
<PAGE>
Hammond did not commence gaming operations until June 28, 1996. The following
discussion is based upon the combined operating results of the Company.
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
Net revenues for the three months ended March 31, 1998 increased to
approximately $96.9 million, or 3.1% compared to net revenues of approximately
$94.0 million for the three months ended March 31, 1997. The increase in net
revenues was primarily attributable to increased casino revenues.
Casino revenues were approximately $91.3 million for the three months ended
March 31, 1998 compared to approximately $88.4 million for the three months
ended March 31, 1997, an increase of approximately $2.9 million, or 3.3%. This
increase was primarily due to an increased win per passenger of $40.85 compared
to $39.53 in 1997.
Revenues from non-gaming operations, consisting primarily of food and
beverage, parking, gift shop and hotel revenues, were approximately $6.9 million
for the three months ended March 31, 1998 compared to approximately $6.7 million
for the three months ended March 31, 1997, an increase of approximately $0.2
million, or 3.0%. The increase in revenues from non-gaming operations was
primarily attributable to an increase in food and beverage revenues at Empress
Hammond partially offset by a decrease in food and beverage revenues at Empress
Joliet.
Promotional allowances increased approximately $0.3 million for the three
months ended March 31, 1998 compared to the three months ended March 31, 1997.
This increase was primarily attributable to an increase in food and beverage
complementaries at Empress Joliet.
Casino expenses totaled approximately $15.1 million for the three months
ended March 31, 1998, a decrease of 3.8% or approximately $0.6 million compared
to $15.7 million for the three months ended March 31, 1997. This decrease was
principally due to a decrease in casino marketing and promotional expenses.
Gaming and admission taxes increased approximately $3.1 million to
approximately $30.2 million for the three months ended March 31, 1998 compared
to the three months ended March 31, 1997. This increase was due to the increase
in combined casino revenues and passengers, as well as a higher gaming tax
structure in Illinois.
Expenses relating to non-gaming operations, including depreciation and
amortization, for the three months ended March 31, 1998 totaled approximately
$30.7 million, an increase of 3.7% or approximately $1.1 million compared to the
three months ended March 31, 1997. This increase was primarily due to an
increase in general and administrative expenses, as well as advertising and
sales expenses.
Income from operations for the three months ended March 31, 1998 totaled
approximately $20.9 million compared to approximately $21.6 million for the
three months ended March 31, 1997, a decrease of approximately $0.7 million, or
3.2%. This decrease in income from operations was primarily attributable to a
decline in operating results at Empress Hammond due to increased competition
partially offset by an increase in operating results at Empress Joliet.
Net interest expense for the three months ended March 31, 1998 was
approximately $4.3 million, a decrease of approximately $0.3 million compared to
the three months ended March 31, 1997. This decrease was a result of lower
interest expense associated with decreased borrowings under the Existing Credit
Facility.
Net income amounted to approximately $16.5 million and $16.9 million for
the three months ending March 31, 1998 and 1997, respectively.
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Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Net revenues for the year ended December 31, 1997 were approximately $369.6
million, an increase of 32.6% from net revenues of approximately $278.7 million
for the year ended December 31, 1996. The increase in net revenues was primarily
attributable to a full year of operations at Empress Hammond, partially offset
by a decrease in revenues at Empress Joliet due to increased competition from
Indiana riverboats serving the Chicago Market.
Casino revenues were approximately $346.0 million for the year ended
December 31, 1997 compared to approximately $263.0 million for the year ended
December 31, 1996, an increase of approximately $83.0 million, or 31.6%. This
increase was primarily attributable to a full year of operations at Empress
Hammond, partially offset by a decrease in revenues at Empress Joliet due to
increased competition serving the Chicago Market.
Revenues from non-gaming operations, consisting primarily of food and
beverage, parking, gift shop and hotel revenues, were approximately $34.9
million for the year ended December 31, 1997 compared to approximately $22.8
million for the year ended December 31, 1996, an increase of approximately $12.1
million, or 53.1%. The increase in revenues from non-gaming operations was
primarily due to the full year of operations of Empress Hammond and hotel
revenue at Empress Joliet, partially offset by a decrease in food and beverage
revenue at Empress Joliet due to a reduction in the number of customers visiting
Empress Joliet due to increased competition serving the Chicago Market.
Promotional allowances increased approximately $4.1 million for the year
ended December 31, 1997 compared to the year ended December 31, 1996. This
increase was primarily attributable to a full year of operations at Empress
Hammond, partially offset by a decrease in promotional allowances at Empress
Joliet.
Casino expenses totaled approximately $64.8 million for the year ended
December 31, 1997, an increase of 34.7% or approximately $16.7 million compared
to the year ended December 31, 1996. This increase was principally due to a full
year of operations at Empress Hammond.
Gaming and admission taxes increased approximately $34.9 million to
approximately $108.0 million for the year ended December 31, 1997 compared to
the year ended December 31, 1996. This increase was due to the increase in
combined casino revenues and passengers.
Expenses relating to non-gaming operations, including depreciation and
amortization, for the year ended December 31, 1997 totaled approximately $132.2
million, an increase of 35.9% or approximately $34.9 million compared to the
year ended December 31, 1996. This increase was primarily due to a full year of
operations at Empress Hammond.
Income from operations for the year ended December 31, 1997 totaled
approximately $64.6 million compared to approximately $60.2 million for the year
ended December 31, 1996, an increase of approximately $4.4 million, or 7.3%.
This increase in income from operations was primarily attributable to an
increase in the operating results at Empress Hammond, partially offset by a
decline in the operating results at Empress Joliet due to increased competition
serving the Chicago Market.
Net interest expense for the year ended December 31, 1997 was approximately
$17.8 million, an increase of approximately $3.0 million compared to the year
ended December 31, 1996. This increase was a result of the additional interest
expense associated with increased borrowings under the Existing Credit Facility
and vendor financing of gaming equipment.
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Net income amounted to approximately $46.3 million and $44.9 million for
the years December 31, 1997 and 1996, respectively.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Net revenues for the year ended December 31, 1996 were approximately $278.7
million, an increase of 29.8% from net revenues of approximately $214.6 million
for the year ended December 31, 1995. The increase in net revenues was primarily
attributable to the opening of Empress Hammond in June, 1996 partially offset by
a decrease in revenues at Empress Joliet due to increased competition from
Indiana riverboats serving the Chicago Market.
Casino revenues were approximately $263.0 million for the year ended
December 31, 1996 compared to approximately $202.3 million for the year ended
December 31, 1995, an increase of approximately $60.7 million, or 30.0%. This
increase was primarily attributable to the opening of Empress Hammond in June
1996, partially offset by a decrease in revenues at Empress Joliet due to
increased competition serving the Chicago Market.
Revenues from non-gaming operations, consisting primarily of food and
beverage, admissions, parking, gift shop and hotel revenues, were approximately
$22.8 million for the year ended December 31, 1996 compared to approximately
$28.2 million for the year ended December 31, 1995, a decrease of approximately
$5.4 million, or 19.1%. The decrease in revenues from non-gaming operations was
primarily due to the full year impact of the elimination of admission charges in
August 1995 in response to customer and market demand, partially offset by an
increase in food and beverage revenues from the opening of Empress Hammond, as
well as hotel revenue at Empress Joliet.
Promotional allowances decreased approximately $8.7 million for the year
ended December 31, 1996 compared to the year ended December 31, 1995. This
decrease was primarily attributable to the elimination of admission fees and the
implementation of a player recognition program which rewards guests for their
number of visits and amount of play. Guests earn points and may use them for
cash back rewards, food and beverage or valuable gifts. Costs relating to this
reward program are classified as a casino expense, rather than classified as a
promotional allowance.
Casino expenses totaled approximately $48.1 million for the year ended
December 31, 1996, an increase of 56.9% or approximately $17.5 million compared
to the year ended December 31, 1995. This increase was principally due to the
opening of Empress Hammond as well as a player recognition program in effect for
the entire year.
Gaming and admission taxes increased approximately $26.0 million to
approximately $73.1 million for the year ended December 31, 1996 compared to the
year ended December 31, 1995. This increase was due to the increase in combined
casino revenues and passengers.
Expenses relating to non-gaming operations, including depreciation and
amortization, for the year ended December 31, 1996 totaled approximately $97.3
million, an increase of 30.9% or approximately $23.0 million compared to the
year ended December 31, 1995. This increase was primarily due to the opening and
operation of Empress Hammond, partially offset by a decrease in depreciation and
amortization expenses due to an increase in the useful lives of the Company's
riverboats and the expiration of a non-compete agreement.
Income from operations for the year ended December 31, 1996 totaled
approximately $60.2 million compared to approximately $62.5 million for the year
ended December 31, 1995, a decrease of approximately $2.3 million, or 3.8%. This
decrease in income from operations was primarily attributable to the cost of
opening
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<PAGE>
Empress Hammond as well as a decline in the operating results of Empress Joliet
due to increased competition serving the Chicago Market.
Net interest expense for the year ended December 31, 1996 was approximately
$14.8 million, an increase of approximately $3.7 million compared to the year
ended December 31, 1995. This increase was a result of the additional interest
expenses associated with increased borrowings under the Company's credit
facilities and vendor financing of gaming equipment.
Net income amounted to approximately $44.9 million and $50.6 million for
the years ended December 31, 1996 and 1995, respectively.
Liquidity and Capital Resources
The principal sources of capital for the Company since 1995 have been cash
provided from operations, credit facilities, non-recourse vendor financing, the
Old Notes and the 10 3/4% Notes. Concurrently with the Offering, the Company
undertook a Covenant Defeasance of the 10 3/4% Notes. See "Use of Proceeds,"
"Description of Certain Other Indebtedness" and "Description of the New Notes."
For the three months ended March 31, 1998, the Company generated cash flow
from operations of approximately $29.9 million compared to approximately $27.6
million for the three months ended March 31, 1997. This increase of
approximately $2.3 million was primarily attributable to an increase in other
accrued liabilities, partially offset by a decrease in accrued payroll and
related expenses.
During the three months ended March 31, 1998, the Company used cash to
purchase approximately $7.2 million of property and equipment primarily related
to the addition of the fourth deck on Empress III.
During the three months ended March 31, 1998, principal payments on
borrowings were approximately $5.1 million.
During the three months ended March 31, 1998 and 1997, stockholder
distributions totaled approximately $7.2 million and $8.8 million, respectively.
Of these distributions, approximately $7.2 million and approximately $5.1
million, respectively, were distributed to allow the Company's stockholders to
pay Federal and state income taxes due to the Company's Subchapter S status.
For the year ended December 31, 1997, proceeds from borrowings were $29.0
million of which $28.1 million were proceeds from the Existing Credit Facility
and $0.9 million was from vendor financing.
For the year ended December 31, 1997, the Company generated cash flow from
operations of approximately $70.3 million compared to approximately $64.3
million for the year ended December 31, 1996. This increase of approximately
$6.0 million was primarily attributable to a full year of operations of Empress
Hammond.
During the year ended December 31, 1997, the Company used cash to purchase
approximately $16.1 million of property and equipment. Approximately $11.9
million was related to the following expenditures at Empress Hammond: (i)
construction of an exterior access ramp for the parking garage; (ii)
commencement of construction of the fourth deck to Empress III; and (iii) other
miscellaneous maintenance capital expenditures. Approximately $4.2 million was
used in connection with the commencement of construction of Empress Joliet's
recreational vehicle park, childcare center and other miscellaneous maintenance
capital expenditures. During the year ended December 31, 1996, the Company used
cash to purchase approximately $106.0 million of property and equipment, of
which $93.4 million was used in conjunction with the opening of Empress Hammond,
$6.5 million was used to construct the Empress Joliet hotel and the remaining
$6.1 million was used
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<PAGE>
for other property improvements. In addition, the Company used approximately
$0.5 million and $4.8 million in the years ended December 31, 1997 and 1996,
respectively, for the purchase of other assets associated with the development
and opening of Empress Hammond.
During the years ended December 31, 1997 and 1996, principal payments on
borrowings were approximately $34.8 million and $3.0 million, respectively.
During the years ended December 31, 1997 and 1996 stockholder distributions
totaled approximately $40.1 million and $32.3 million, respectively. Of these
distributions, approximately $24.3 million and approximately $20.1 million,
respectively, was distributed to allow the stockholders to pay Federal and state
income taxes due to the Company's Subchapter S status.
The net proceeds of the Offering, together with approximately $28.9 million
of cash on hand, was used by the Company to effect the Covenant Defeasance, to
repay all other outstanding Indebtedness of the Company and to pay fees and
expenses in connection with the Refinancing. See "Use of Proceeds" and
"Description of Certain Other Indebtedness."
The Company's 1998 operating plan includes capital expenditures totaling
approximately $22.0 million, of which $7.2 million has been expended as of March
31, 1998. Planned capital improvements include the renovation of the exterior
and interior of the Empress Joliet complex, the addition of a nightclub at
Empress Joliet and the fourth deck on Empress III. The Company also intends to
explore the expansion of its operations into other gaming markets as
opportunities arise. The Company anticipates that cash on hand, the Credit
Facility and cash flows from operations will be sufficient to satisfy the
Company's cash requirements as currently contemplated. In the event such sources
are insufficient to satisfy the foregoing, or in the event that the Company
expands its operations into other gaming markets, the Company may need to obtain
additional capital either through debt and/or equity financings. See "Risk
Factors--Leverage and Ability to Service Debt," "--Expansion Opportunities," and
"Use of Proceeds."
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BUSINESS
Overview
The Company is one of the largest operators of riverboat casinos serving
the Chicago Market. The Company owns two distinctly themed casino entertainment
operations, Empress Hammond and Empress Joliet, both located adjacent to major
highways. Empress Hammond, located in Hammond, Indiana, is the closest casino to
downtown Chicago and Empress Joliet, located in Joliet, Illinois, is in the
fastest growing county in the Chicago Market. During 1997, the Company's casinos
registered approximately nine million customer admissions and had the highest
share of casino revenue in the Chicago Market (approximately 27%). The Company's
1997 average daily win per slot machine and table game of $308 and $2,168,
respectively, exceeded the averages of each of the nine U.S. riverboat casino
markets. For the twelve months ended March 31, 1998, the Company generated
approximately $372.5 million of net revenues and $82.8 million of EBITDA.
The Chicago Market is a heavily populated and economically developed
region, consisting of approximately eight million people. Based on the 1993 U.S.
Census Bureau Report, the median household income of the Chicago Market was
$45,491, approximately 46% above the national median. The Chicago Market is
primarily served by the Chicago Market Casinos, operating under a limited number
of licenses granted by the States of Illinois and Indiana. These casinos
generated 1997 casino revenue of approximately $1.3 billion, ranking first among
all U.S. riverboat casino markets and capturing an estimated 6.8% of the total
U.S. casino market.
Empress Hammond features a newly built, luxury-appointed catamaran style
vessel, Empress III. Following the recent completion of the fourth deck, Empress
III contains approximately 42,500 square feet of gaming space with approximately
1,740 slot machines and 54 table games. Empress Hammond includes an
approximately 125,000 square foot mythologically themed pavilion featuring
waterfalls, undersea volcanoes and lounge and dining facilities including the
Blue Water Lounge, the Harborside Steakhouse, the Empressive Buffet and the
Waves Deli. In addition, the pavilion includes a gift shop, concierge suite and
a 150 seat banquet room. Empress Hammond provides parking for approximately
1,000 cars in a multi-story parking structure and offers 1,300 additional
surface parking spaces.
Empress Joliet features two luxury-appointed catamaran style vessels,
Empress I and Empress II, which collectively contain approximately 36,000 square
feet of gaming space, 1,011 slot machines and 52 table games. Empress Joliet
includes an approximately 150,000 square foot Egyptian themed pavilion featuring
lounge and award-winning dining facilities including the Oasis Bar, the
Steakhouse Alexandria, Cafe Casablanca and the Marrakech Buffet. The pavilion
also includes an off-track betting facility, gift shop, concierge suite and a
400 seat banquet room. Empress Joliet is supported by a three story hotel with
80 deluxe rooms, 17 junior suites and five king-size suites and an 80-space
recreational vehicle park located on 12 acres of land adjacent to the hotel.
Empress Joliet provides surface parking for more than 2,350 cars.
The Company actively pursues opportunities to expand its customer base by
developing additional amenities and by working to attract new customers from
outside the Chicago Market. Empress Joliet is the only Chicago Market Casino
with a hotel to accommodate overnight visitors. As a part of its development
plan, the Company expects to construct a 200 room deluxe hotel and a conference
center at Empress Hammond to expand its appeal to customers outside the Chicago
Market. The Company intends to further develop dedicated transportation services
to its complexes and is increasing billboard advertising to improve visitation
by customers outside the Chicago Market.
Company Strengths
The Company believes that the following factors contribute significantly to
its success:
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. Premier Properties in Superior Locations. The Company's distinctly themed
casino entertainment complexes are strategically located to serve the
growing Chicago Market which has strong population demographics and a
legislatively limited number of licensed competitors. Empress Hammond is
the closest casino to downtown Chicago and is conveniently accessible from
major highways. Empress Joliet is located in the fastest growing county in
the Chicago Market and is the only Chicago Market Casino to feature a
hotel, an off-track betting facility or a recreational vehicle park. The
Company's casinos are equipped with the latest gaming devices and are
continually upgraded to reflect innovative games. The Company delivers
value to its customers by offering superior customer service and
maintaining clean, moderately priced gaming, dining, lodging and
entertainment amenities.
. Market Leadership. The Company was the first Chicago Market Casino and has
established market leadership during its nearly six years of operations.
The Company is the largest Chicago Market casino operator in terms of
casino revenue and number of slot machines. During 1997, the Company's
average daily slot machine and table win per unit exceeded the averages of
each of the nine U.S. riverboat casino markets. The Company's casinos also
had nearly two and one-half times as many 1997 customer admissions as any
other Chicago Market casino operator. For the past two years, the Company's
casinos received the "Best Blackjack Games in the U.S.A." award in Indiana
and Illinois from Casino Player Magazine.
. Marketing Synergies. The Company derives unique marketing advantages from
operating two riverboat casino entertainment complexes serving the Chicago
Market. The Company believes that it receives favorable rates for
television, radio, newspaper, magazine, billboard, direct mail, mass
transit and airport diorama advertising due to its higher buying volume.
Through its Empress Club frequent player reward program, the Company
promotes customer loyalty and encourages customers to visit its complexes.
Benefits of Empress Club membership include use of VIP boarding areas,
participation in special discount programs including meal and merchandise
discounts and preferred valet parking. At March 31, 1998, approximately
900,000 customers were Empress Club members.
. Proprietary Customer Database. The Company has developed a proprietary
customer database that assists it in tracking customer characteristics
including visitation frequency, preferred gaming equipment usage and gaming
and entertainment spending. The Company uses information gathered from
Empress Club members to create targeted marketing programs to encourage
increased visitation to its complexes by its most profitable customers. The
Company also utilizes promotional programs, such as merchandise giveaways,
slot machine and table game tournaments and other special events in order
to reward customer loyalty, attract new customers and maintain a high level
of brand name recognition.
Empress Hammond
Empress Hammond commenced gaming operations on June 28, 1996 and operates
Empress III, which departs on two-hour cruises every two hours from 8:30 a.m. to
2:30 a.m., seven days per week. Passengers can board 30 minutes prior to the
cruise time and can begin gaming immediately upon boarding. Including the fourth
deck, Empress III's gaming space is configured as follows:
Empress III Gaming Configuration
<TABLE>
<CAPTION>
Number Number
------ ------
Slot Machines of Units(1) Table Games of Units(1)
- ------------- ----------- ----------- -----------
<S> <C> <C> <C>
25c................... 682 Baccarat................ 1
50c................... 97 Blackjack............... 37
$1.................... 877 Caribbean Stud.......... 2
$2.................... 14 Craps................... 5
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C> <C>
$5....................... 63 Let It Ride............. 5
$10...................... 2 Mini Baccarat........... 1
$25...................... 5 Roulette................ 3
----- --
Total Slot Machines...... 1,740 Total Table Games....... 54
===== ==
</TABLE>
- --------------
(1) An additional 10 poker tables have been received but will not be used until
receipt of Indiana Gaming Commission approval.
The fourth deck on Empress III will allow the Company to offer a greater
variety of gaming than was previously offered, including a wider selection of
slot machines and additional table games, including poker.
Empress Hammond Pavilion
The Empress Hammond pavilion is a 125,000 square foot mythologically themed
facility featuring waterfalls, undersea volcanoes and a picturesque view of Lake
Michigan and the Chicago skyline. Amenities offered at the Empress Hammond
pavilion include the following:
. Three Restaurants: The Harborside Steakhouse is a steak and chops
restaurant with seating for 92 and private dining for 40. The Empressive
Buffet offers a broad selection of food items with seating for 154. The
Waves Deli offers customers quick fare such as hot dogs, sandwiches and
snack items, with seating for 62.
. Gift Shop: A gift shop offering a variety of items bearing the Company's
brand name is located in a strategic position in the pavilion to maximize
usage by customers.
. Lounge: Customers waiting for the next cruise can relax in the Blue Water
Lounge, which offers light snacks and beverages with seating for 90.
. Concierge Suite: A 1,900 square foot concierge suite overlooks the Hammond
marina. The concierge suite provides selected gaming customers the
opportunity to enjoy a well-appointed relaxation area with special
amenities and services prior to a cruise.
. Banquet Room: For private gatherings and group functions, a 2,380 square
foot room with seating for 150 is available.
. Parking Facilities: Customers are offered the convenience of valet parking
services or free access to the approximately 1,000 space sheltered parking
garage that is connected to the pavilion. The sheltered parking facility
offers benefits in inclement weather and advantages over the remote
parking/bus transportation system utilized at some of the other Chicago
Market Casinos. In August 1997, the Company completed a $7.2 million
addition to its parking garage, which further improved customer access and
traffic flow within the parking garage.
Empress Joliet
Empress Joliet commenced operations on June 17, 1992 and operates Empress I
and Empress II. With the ability to facilitate simultaneous docking of both
riverboats, Empress Joliet is able to offer to its customers a flexible cruise
schedule that limits the maximum time between boarding to 30 minutes during peak
gaming hours. Cruises depart every hour from 9:30 a.m. to 2:30 a.m., with an
additional 4:30 a.m. cruise each day, and
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each cruise lasts two hours. Passengers can board 30 minutes prior to the cruise
time and can begin gaming immediately upon boarding. Empress I and Empress II's
combined gaming space is configured as follows:
Combined Empress I and Empress II Gaming Configuration
<TABLE>
<CAPTION>
Number Number
------ ------
Slot Machines of Units(1) Table Games of Units(1)
- ------------- ----------- ----------- -----------
<S> <C> <C> <C>
25c................... 386 Blackjack................. 32
50c................... 118 Caribbean Stud............ 4
$1.................... 447 Craps..................... 6
$5.................... 52 Let it Ride............... 4
$10................... 3 Mini Baccarat............. 2
$25................... 5 Roulette.................. 4
----- --
Total Slot Machines... 1,011 Total Table Games......... 52
===== ==
</TABLE>
- ---------------
(1) Under Illinois law, casinos are limited to a maximum of 1,200 gaming
positions.
The configuration of Empress Joliet's slot machines and table games
outlined above is designed to fully utilize all 1,200 gaming positions allowed
under its Illinois License. On December 2, 1993, the Illinois Gaming Board
adopted a resolution authorizing gaming operators to maintain additional gaming
equipment on riverboats as long as no more than 1,200 gaming positions are
operated at any given time. The Company currently maintains 40 tournament slot
machines, in addition to those set forth in the table above, on Empress II and
utilizes these machines during slot tournaments.
Empress Joliet Pavilion
Empress Joliet owns the dock site and other facilities from which it
operates, all of which are located on approximately 350 acres along the Des
Plaines River. In 1994, Empress Joliet completed the expansion of its land-based
Egyptian themed pavilion which features approximately 150,000 square feet of
guest amenities, including the following:
. Three Restaurants: In 1998, Empress Joliet received the Silver Platter
Award for the #1 Casino Dining in the Chicago Market from Food Industry
News. The Steakhouse Alexandria, recipient of the 1995 Award of Excellence
from Wine Spectator, features fine dining with seating for 88. Cafe
Casablanca specializes in casual fare offering a wide range of menu items,
with seating for 150. Marrakech Buffet offers a broad selection of food
items with seating for 212.
. Gift Shop: The Palace Treasures gift shop offers a wide assortment of goods
and souvenirs, including, clothing, jewelry and gaming novelties.
. Off-Track Betting: Opened in 1994, the Empress Joliet OTB was the first
off-track betting facility to operate in an Illinois casino. This facility
was renovated and reconfigured in 1998 and is the only off-track betting
facility operating in a Chicago Market Casino.
. Lounge: Guests waiting for the next cruise may relax in the Oasis Bar. The
bar features a walk-out terrace that overlooks landscaped grounds, as well
as the dock.
. Concierge Suite: The concierge suite is available adjacent to the boarding
area to provide selected gaming customers with special amenities and
services, including a bar, television viewing area and food service.
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<PAGE>
. Banquet Room: The Egyptian themed Grand Ballroom can accommodate groups of
up to 400 people for special events, such as concerts, fund-raising
telethons and player parties.
. Parking Facilities: Empress Joliet offers over 2,350 well-lit parking
spaces, including handicapped, bus and valet areas, for the convenience of
its customers.
Empress Joliet Hotel
On August 2, 1996, the Company opened a three story hotel at Empress Joliet
featuring 80 deluxe rooms, 17 junior suites and 5 king-size suites, as well as a
fitness center and an indoor pool. The structure and exterior finish are matched
to the existing Empress Joliet pavilion. Both the junior and king-size suites
offer jacuzzi baths, and the king-size suites also offer separate living and
sleeping areas, a corner bar and a refrigerator. A meeting room, fully equipped
with current audio-visual equipment, is also available.
Marketing and Promotion
The Company has capitalized on its leading market position by developing a
strong brand identity during its nearly six years of operation. In addition to
mass media marketing, the Company utilizes on-site marketing, provides
complementary items to selected customers, maintains a proprietary customer
database and organizes customer transportation to its complexes. The Company's
on-site marketing efforts include a variety of promotions, media events,
merchandise give-aways, Empress Club membership and concierge suites. The
Company's proprietary database, with information derived from Empress Club
members, allows the Company to track and direct market to its customers. Through
its up-scale concierge suites, the Company offers selected customers
complementary food and non-alcoholic beverages while they wait for the next
cruise.
As part of the Company's marketing campaign, the Company organizes the
transportation of local group and bus tours to its facilities. The Company
focuses on this market segment through its relationships with local and out of
town tour operators and by contacting local businesses, organizations and other
groups. To date, the Company's marketing efforts to these groups have focused on
filling cruises during off peak hours. The typical customer from this market
segment tends to be a slot machine player. The Company generally monitors the
level of slot play in order to better focus its marketing efforts in an attempt
to maximize slot win.
Competition
The Company competes for customers principally on the basis of location,
variety and quality of amenities. Certain of the Company's competitors have
significantly greater financial and other resources than the Company. The
Company's primary competition consists of the Chicago Market Casinos, five of
which are located in Indiana (including Empress Hammond) and four of which are
located in Illinois (including Empress Joliet). To a lesser extent, the Company
also competes with casino operations in nearby states including Iowa and
Missouri where riverboat and/or dockside gaming have also been approved.
Additionally, the Company competes with casino gaming on Native American land,
including those located or proposed to be located in northern Indiana, Michigan
and Wisconsin. See "Risk Factors--Competition."
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Commitments to Governmental Authorities
City of Hammond, Indiana
As a condition to the Indiana License, Empress Hammond made various
financial and other commitments to the City of Hammond, Indiana and other
Indiana governmental bodies pursuant to the Development Agreement. As of March
31, 1998, approximately $25.0 million of such commitments remained outstanding
primarily for commercial development, residential development and the
construction of a hotel. In addition, under the terms of the Development
Agreement, Empress Hammond is required to make annual payments of approximately
$1.3 million for public safety services and other uses and to make an annual
payment to the City of the greater of $3.0 million or certain percentages of
Empress Hammond's adjusted gross receipts as follows: 4.0% of adjusted gross
receipts up to $125.0 million; 6.0% of adjusted gross receipts over $125.0
million up to $200.0 million; and 4.0% of adjusted gross receipts in excess of
$200.0 million. In 1997, Empress Hammond paid approximately $9.9 million to the
City to satisfy this obligation.
Hammond Port Authority
Pursuant to the License Agreement with the Hammond Port Authority, Empress
Hammond licenses from the Port Authority certain rights to land and docking
facilities at the Hammond Marina. For the rights and privileges granted to it
under the terms of the License Agreement, Empress Hammond is required to pay the
Port Authority (i) a $1.00 per passenger fee for each passenger visiting Empress
III; and (ii) an amount equal to the aggregate annual rental at the Hammond
Marina for each boat slip that was removed or taken out of operation as a result
of the construction of the docking facilities and/or the operation of Empress
III.
Recent Developments
The Company recently formed Empress Racing as an Unrestricted Subsidiary to
hold a 50% ownership interest in a limited liability company which, subject to
regulatory approval of the Kansas Racing and Gaming Commission, intends to
acquire certain outstanding secured indebtedness of Sunshine Racing, Inc., the
owner of the Woodlands Racetrack in Kansas City, Kansas, and to ultimately bid
to purchase the Woodlands Racetrack in an auction pursuant to a proceeding under
Chapter 7 of the U.S. Bankruptcy Code. There can be no assurance that the
Woodlands transaction will be consummated or that, if consummated, that it will
be successful. In addition, the Company recently formed Empress Opportunities
and Empress Mississippi as Unrestricted Subsidiaries. See "Description of the
New Notes--Certain Covenants--Limitation on Designations of Unrestricted
Subsidiaries."
Properties
Empress Hammond owns Empress III, which has been pledged as security under
the Credit Facility. Supporting Empress III is the Empress Hammond pavilion,
which is situated on land owned by the City of Hammond and leased to Empress
Hammond pursuant to the License Agreement. Empress Hammond owns a ten acre
parcel of land near its complex. See "--Commitments to Governmental
Authorities--Hammond Port Authority" and "Certain Transactions."
Empress Joliet owns Empress I, Empress II, the dock site from which they
operate and the surrounding land-based facilities, all of which are located on
approximately 350 acres along the Des Plaines River in Joliet, Illinois.
Additionally Empress Joliet owns a 102-room hotel and an 80 space recreational
vehicle park.
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<PAGE>
Employees
As of March 31, 1998, the Company had approximately 3,150 full-time
employees, of which 2,650 are hourly employees and the remainder are salaried
employees. Approximately 12.7% of the Company's workforce is unionized. Empress
Joliet's contract with the International Union of Operating Engineers, Local 150
expires in November 2002. On April 29, 1998, Empress Joliet and Hotel Employees
and Restaurant Employees Union, Local 1 entered into a Memorandum of Agreement,
which is being converted into a formal contract, containing the terms of their
collective bargaining agreement. This agreement will expire on April 30, 2001.
The Company has not experienced any work stoppages and believes its relations
with its employees and the unions are good. See "Management."
The Reorganization
Concurrently with the Offering, the Company effected the Reorganization
pursuant to which (i) the Company changed its name from LMC Leasing, Ltd. to
Empress Entertainment, Inc., (ii) Empress Joliet merged into a newly-formed
wholly-owned subsidiary of the Company, with Empress Joliet surviving the
merger, (iii) Empress Joliet sold its 60% common stock interest in Empress
Finance to the Company and (iv) the Company contributed Empress III to Empress
Hammond. Immediately after the Reorganization, Empress Joliet and Empress
Finance became wholly-owned subsidiaries of the Company. Following the
Reorganization, the Company operates Empress III through its wholly-owned
subsidiary Empress Hammond and operates Empress I and Empress II through its
wholly-owned subsidiary Empress Joliet.
Legal Proceedings
On July 17, 1998, a lawsuit was filed against Empress Hammond and Empress
Joliet and four of their employees in the United States District Court for the
Northern District of Illinois. The lawsuit, brought by a current female
employee of Empress Hammond and a former female employee of Empress Hammond,
alleges that Empress Hammond and Empress Joliet committed gender discrimination
and sexual harassment in violation of Title VII of the Civil Rights Act of 1964
and permitted a hostile work environment to exist at its facilities. The lawsuit
also alleges certain tort claims and seeks certification as a class action on
behalf of similarly situated current and former female employees of Empress
Joliet and Empress Hammond, and seeks injunctive relief and money damages. The
Company denies the allegations in the compliant and intends to vigorously
contest this matter. There can be no assurances, however, that Empress Joliet
and Empress Hammond will not be found liable for an amount that could have a
material adverse effect on the Company.
The City of Hammond is presently a plaintiff in a condemnation proceeding
filed in September 1995 in Lake Superior Court in Lake County, Indiana in which
the City of Hammond condemned a small parcel of land for the construction of the
overpass located near Empress Hammond. Under the terms of the Development
Agreement, Empress Hammond is responsible for the payment of all costs incurred
by the City of Hammond with respect to this litigation. The two appraisers
representing the City of Hammond appraised the subject property at approximately
$36,000 and $41,000, respectively. The two appraisers representing the former
property owner appraised the property at $6.6 million and $8.9 million,
respectively. Two court-appointed appraisers valued the subject property at
$959,000 and one valued it at $455,776. On December 8, 1995, the City of Hammond
deposited $959,000 with the Clerk of the Court, which amount was tendered to the
City of Hammond by Empress Hammond. The Company anticipates that such amount
should cover any judgment or settlement amount. There can be no assurances,
however, that the court will not find in favor of the defendant for a sum
materially in excess of the amount placed in escrow.
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<PAGE>
A lawsuit was filed on October 25, 1996 in Harrison County, Indiana by
three individuals residing in counties abutting the Ohio River against the State
of Indiana, the 108th Indiana General Assembly, the Indiana Gaming Commission
and individual members of the Indiana Gaming Commission. The lawsuit challenges
the constitutionality of the Indiana Riverboat Act on the grounds that (i) it
allegedly creates an unequal privilege because under the Indiana Riverboat Act
"citizens opposed to riverboat gambling must win several elections to ensure
riverboat gambling is not allowed in their county" but "citizens who support
riverboat gambling need only win once to entrench riverboat gambling
indefinitely into a county"; and (ii) it was enacted as a provision attached to
a state budget bill allegedly in violation of an Indiana constitutional
provision requiring legislative acts to be confined to one subject and matters
properly connected with the subject. The defendants have filed an answer to the
complaint generally denying the allegations. The Indiana Supreme Court has
previously upheld the constitutionality of the Indiana Riverboat Act, although
the prior challenge was on different grounds than those contained in the
recently filed lawsuit. If the Indiana Riverboat Act ultimately were held
unconstitutional it would, absent timely corrective legislation, have a material
adverse effect on the Company's operations.
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REGULATORY MATTERS
Indiana
The Indiana Riverboat Act authorizes the issuance of up to 11 riverboat
gaming licenses on waterways located in Indiana counties which are contiguous to
Lake Michigan, the Ohio River or Patoka Lake. The Indiana Gaming Commission has
not considered applicants for the eleventh license since the Patoka Lake site
has been determined by the U.S. Army Corps of Engineers to be unsuitable for a
casino vessel project. The Indiana Riverboat Act strictly regulates the
facilities, persons, associations and practices related to gaming operations
pursuant to the police powers of the State of Indiana, including comprehensive
law enforcement provisions. The Indiana Riverboat Act vests the Indiana Gaming
Commission with the power and duties of administering, regulating and enforcing
the system of riverboat gaming in the State of Indiana. The Indiana Gaming
Commission's jurisdiction extends to every person, association, corporation,
partnership and trust involved in riverboat gaming operations in the State of
Indiana.
Owner's Licenses
The Indiana Riverboat Act requires the owner of a riverboat gaming
operation to hold an owner's license issued by the Indiana Gaming Commission.
The Indiana Gaming Commission is authorized to issue 11 owner's licenses
statewide. Each license granted entitles the licensee to own and operate one
riverboat and gaming equipment as part of the gaming operation. A licensee may
own no more than a 10% interest in any other owner's license under the Indiana
Riverboat Act.
The Indiana Riverboat Act restricts the granting of the 11 owner's licenses
by location. The 11 licenses must be awarded as follows: (i) two licenses for
riverboats operating from Gary; (ii) one license for a riverboat operating in
Hammond; (iii) one license for a riverboat operating in East Chicago; (iv) one
license for a riverboat operating in any city located in LaPorte, Porter or Lake
counties, not including the above-named cities; (v) five licenses for riverboats
that operate upon the Ohio River from counties contiguous thereto and with no
more than one operating in any county; and (vi) one license for a riverboat
operating on Patoka Lake from either DuBois, Crawford or Orange Counties.
Each owner's license runs for a period of five years. Thereafter, the
license is subject to renewal on an annual basis upon a determination by the
Indiana Gaming Commission that the licensee continues to be eligible for an
owner's license pursuant to the Indiana Riverboat Act and the rules and
regulations adopted thereunder. A licensed owner undergoes a complete
investigation every three years. A licensed owner may apply for and may hold
other licenses that are necessary for the operation of a riverboat, including
licenses to sell alcoholic beverages, a license to prepare and serve food and
any other necessary license. Furthermore, the Indiana Riverboat Act requires
that officers, directors and employees of a gaming operation and suppliers of
gaming equipment, devices, and supplies and certain other suppliers be licensed.
All Indiana state excise taxes, use taxes, and gross retail taxes apply to sales
on a riverboat.
Applicants for licensure must submit comprehensive application and personal
disclosure forms and undergo an exhaustive background investigation prior to the
issuance of a license. The applicant must also disclose the identity of every
shareholder or participant of the applicant and provide specific information
with respect to certain shareholders holding significant interests (5% or
greater) in the applicant. The Indiana Gaming Commission has the authority to
request specific information on any shareholder.
A riverboat owner licensee or any other person may not lease, hypothecate,
borrow money against or loan money against an owner's riverboat gaming license.
An ownership interest in an owner's riverboat gaming license may only be
transferred in accordance with the regulations promulgated under the Indiana
Riverboat Act.
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Regulation of Gaming Operations
The Indiana Riverboat Act does not limit the maximum bet or per patron
loss. Minimum and maximum wagers on games are set by the licensee. Wagering may
not be conducted with money or other negotiable currency. No person under the
age of 21 is permitted to wager, and wagers may only be taken from a person
present on a licensed riverboat.
Riverboats operating in Indiana must (i) have a valid certificate of
inspection from the U.S. Coast Guard to carry at least 500 passengers; and (ii)
be at least 150 feet long. Any riverboat that operates on the Ohio River must
replicate, as nearly as possible, historic Indiana steamboat passenger vessels
of the nineteenth century. Riverboats operating on Lake Michigan or Patoka Lake
need not meet this requirement.
Gaming sessions are generally required to be at least two hours and are
limited to a maximum duration of four hours. No gaming may be conducted while
the boat is docked, except (i) for 30-minute time periods at the beginning and
end of each cruise while the passengers are embarking and disembarking (total
gaming time is limited to four hours, however, including the pre- and post-
docking periods); and (ii) when weather or water conditions prevent the boat
from cruising. The Indiana Gaming Commission may grant extended cruise hours in
its discretion. If the master of the riverboat reasonably determines and
certifies in writing that specific weather conditions or water conditions
present a danger to the riverboat and the riverboat's passengers and crew, the
riverboat may remain docked and gaming may take place until (i) the master
determines that the conditions have sufficiently diminished for the riverboat to
safely proceed; or (ii) the duration of the authorized excursion has expired.
After consultation with the U.S. Army Corps of Engineers, the Indiana
Gaming Commission may determine the available navigable waterways that are
suitable for the operation of riverboats under the Indiana Riverboat Act. If the
U.S. Army Corps of Engineers rescinds an approval for the operation of
riverboats on a waterway, a license issued under the Indiana Riverboat Act is
void and the holder may not conduct or continue gaming operations under the
Indiana Riverboat Act. The Indiana Gaming Commission requires employees working
on a riverboat to have a valid merchant marine document from the U. S. Coast
Guard.
The Indiana Riverboat Act imposes a 20% wagering tax on adjusted gross
receipts from gaming. The tax imposed is to be paid by the licensed owner to the
Indiana Department of State Revenue before the close of the business day
following the day when the wagers are made. The Indiana Riverboat Act also
requires that licensees pay a $3.00 admission tax for each person admitted to a
gaming excursion. A riverboat license may be suspended for failure to pay such
tax as required pursuant to the Indiana Riverboat Act. Riverboats are assessed
for property tax purposes as real property and are taxed at rates determined by
local taxing authorities.
The Indiana Gaming Commission may subject a licensee to fines, suspension
or revocation of its license for any act that is in violation of the Indiana
Riverboat Act, the regulations of the Indiana Gaming Commission, or for any
other fraudulent act. In addition, the Indiana Gaming Commission may revoke an
owner's license if the licensee has not begun regular riverboat excursions prior
to the end of the twelve month period following receipt of a license from the
Indiana Gaming Commission or if the Indiana Gaming Commission determines that
the revocation of the license is in the best interests of the State of Indiana.
A holder of a gaming license is required to post bond with the Indiana Gaming
Commission in an amount that the Indiana Gaming Commission determines will
adequately reflect the amount that a local community will expend for
infrastructure and other facilities associated with a riverboat operation.
The Indiana Riverboat Act places special emphasis upon minority and women's
business enterprise participation in the riverboat industry. Any person issued a
riverboat owner's license must establish goals of expending at least 10% of the
total dollar value of the licensee's contracts for goods and services with
minority
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business enterprises and 5% of the total dollar value of the licensee's
contracts for goods and services with women's business enterprises.
An institutional investor which acquires 5% or more of any class of voting
securities of a holding company of a licensee is required to notify the Indiana
Gaming Commission and to provide additional information, and may be subject to a
finding of suitability. A person who acquires 5% or more of any class of voting
securities of a holding company of a licensee is required to apply to the
Indiana Gaming Commission for a finding of suitability.
A riverboat owner licensee may not enter into or perform any contract or
transaction in which it transfers or receives consideration which is not
commercially reasonable or which does not reflect the fair market value of the
goods and services rendered or received. All contracts are subject to
disapproval by the Indiana Gaming Commission. A riverboat owner licensee or an
affiliate may not enter into a debt transaction of $1.0 million or more without
the prior approval of the Indiana Gaming Commission. The Indiana Gaming
Commission has a rule requiring the reporting of certain currency transactions,
which is similar to that required by Federal authorities. See "--Other
Applicable Non-Gaming Regulations."
The Indiana Riverboat Act prohibits contributions to a candidate for a
state, legislative, or local office, or to a candidate's committee or to a
regular party committee by the holder of a riverboat owner's license or a
supplier's license, by an officer of a licensee or by an officer of a person
that holds at least a 1% interest in the licensee. The Indiana Gaming Commission
has promulgated a rule requiring quarterly reporting by the holder of a
riverboat owner's license or a supplier's license or officers of the licensee,
officers of persons that hold at least a 1% interest in the licensee, and of
persons who directly or indirectly own a 1% interest in the licensee.
The Indiana Gaming Commission adopted a rule which prohibits a distribution
by a riverboat licensee to its partners, shareholders, itself, or any affiliated
entity, if the distribution would impair the financial viability of the
riverboat gaming operation. The Indiana Gaming Commission has adopted a rule
which requires riverboat licensees to maintain, on a quarterly basis, a cash
reserve in the amount of the actual payout for three days, and the cash reserve
would include cash in the casino cage, cash in a bank account in Indiana, or
cash equivalents not committed or obligated.
The Governor of Indiana has appointed a Gaming Impact Study Commission
chaired by the Attorney General to review the impact of all forms of gaming in
Indiana and to issue its final report by December 31, 1999.
Illinois
The Illinois Riverboat Act authorizes the issuance of up to ten riverboat
gaming licenses by the five-member Illinois Gaming Board on navigable streams
within or forming a boundary of Illinois, except for Lake Michigan and any
waterway in Cook County, which includes the City of Chicago. The Illinois
Riverboat Act regulates the facilities, persons, associations and practices
related to riverboat gaming operations. The Illinois Riverboat Act grants the
Illinois Gaming Board specific powers and duties, and all other powers necessary
and proper to fully and effectively execute the Illinois Riverboat Act for the
purpose of administering, regulating and enforcing the system of riverboat
gaming. The Illinois Gaming Board's jurisdiction extends to every person,
association, corporation, partnership and trust involved in riverboat gaming
operations in Illinois.
Owner's Licenses
The Illinois Riverboat Act requires the owner of a riverboat gaming
operation to hold an owner's license issued by the Illinois Gaming Board. The
Illinois Gaming Board is authorized to issue ten owner's licenses
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statewide. Each owner's license permits up to two boats as a part of a single
riverboat gaming operation. No entity may be licensed as the owner of more than
one riverboat gaming operation in Illinois, although a licensed owner may hold
up to 10% of a second riverboat gaming operation in Illinois.
The Illinois Riverboat Act restricts the granting of certain of the ten
owner's licenses by location. Four licenses are reserved for operators docking
at sites on the Mississippi River, one for an operator docking at a site on the
Illinois River south of Marshall County and one for an operator docking at a
site on the Des Plaines River in Will County. The remaining four owner's
licenses are not restricted as to location. In addition to the ten owner's
license which are authorized under the Illinois Riverboat Act, the Illinois
Gaming Board may issue special event licenses allowing persons who are not
otherwise licensed to conduct riverboat gaming and to conduct such gaming on a
specified date or series of dates. Riverboat gaming under such a license may
take place on a riverboat not normally used for riverboat gaming.
An owner's license is issued for an initial period of three years and must
be renewed annually thereafter. An owner's license is eligible for renewal upon
payment of the applicable fee and a determination by the Illinois Gaming Board
that the licensee continues to meet all of the requirements of the Illinois
Riverboat Act. The Illinois Gaming Board also requires that officers, directors,
shareholders and employees of a gaming operation and suppliers of gaming
equipment, devices and supplies and certain other suppliers be licensed.
Licenses issued by the Illinois Gaming Board may not be transferred to another
person or entity. All licensees must maintain their suitability for licensure
and have a continuing duty to disclose any material changes in information
provided to the Illinois Gaming Board.
Applicants for and holders of an owner's license are required to obtain
formal approval from the Illinois Gaming Board for changes in: (i) key
personnel, including officers, directors, managing agents, or holders of a 5% or
greater ownership interest in the business entity; (ii) its organizational form;
(iii) the equity and debt capitalization of the entity; (iv) investors and/or
debt holders; (v) sources of funds; (vi) the applicant's economic development
plan; (vii) riverboat capacity or significant design changes; (viii) the number
of gaming positions; (ix) anticipated economic impact; or (x) oral or written
agreements relating to the acquisition or disposition of property of a value
greater than $1,000,000. A holder of an owner's license is allowed to make
distributions to its partners, stockholders or itself only to the extent that
such distribution would not impair the financial viability of the gaming
operation. Factors to be considered by the licensee include, but are not limited
to, the following: (i) working capital requirements, (ii) debt service
requirements, (iii) requirements for repairs and maintenance and (iv) capital
expenditure requirements.
The Illinois Gaming Board will require a personal disclosure from any
person or entity (unless such person or entity qualifies as an institutional
investor) who or which, individually or in association with others, acquires,
directly or indirectly, beneficial ownership of more than 5% of any class of
voting securities or non-voting securities convertible into voting securities of
a publicly traded corporation which holds an ownership interest or a beneficial
interest in the holder of an owner's license. If the Illinois Gaming Board
denies an application for such an acquisition, commencing as of the date the
Illinois Gaming Board issues a notice that it denies such application, it will
be unlawful for such applicant to receive any dividends or interest on his or
its securities, to exercise, directly or indirectly, any right conferred by such
securities or to receive any remuneration in any form from any person or entity
holding any license under the Illinois Riverboat Act for services rendered or
otherwise. If the Illinois Gaming Board denies an application for such a
transfer and if no hearing is requested or if the Illinois Gaming Board issues a
final order of disqualification, the holder of the affected owner's license
shall purchase all of the disqualified person's or entity's securities at the
lesser of either the market price or the purchase price of such securities. An
ownership interest in a holder of an owner's license may be transferred or
pledged as collateral only with the consent of the Illinois Gaming Board.
Regulation of Gaming Operations
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The Illinois Riverboat Act does not limit the maximum bet or per patron
loss, and licensees may set any maximum or minimum limits on wagering. No person
under the age of 21 is permitted to wager in Illinois.
Under the Illinois Riverboat Act, vessels must have the capacity to hold a
minimum of 500 persons if operating on the Mississippi River or the Illinois
River south of Marshall County, and a minimum of 400 persons on any other
waterway.
The number of gaming positions is limited to a maximum of 1,200 per
license. All riverboats must be accessible to disabled persons, must be either a
replica of a 19th century Illinois riverboat or be of a casino cruise ship
design, and must comply with applicable Federal and state laws, including, but
not limited to, U.S. Coast Guard regulations.
Gaming sessions are generally limited to a maximum duration of four hours.
No gaming may be conducted while the boat is docked, except (i) for 30-minute
time periods at the beginning and end of each cruise while the passengers are
embarking and disembarking (total gaming time, however, including such
embarkation and disembarkation, is limited to a maximum of four hours) and (ii)
when weather or mechanical problems prevent the boat from cruising. If a
riverboat captain reasonably determines that it is unsafe to transport
passengers on the waterway due to inclement weather or that the riverboat has
been rendered temporarily inoperable by mechanical or structural difficulties or
river icing, the captain must either not leave the dock or immediately return to
it in which event a gaming excursion may commence or continue while the
gangplank or its equivalent is raised and remains raised. Special event extended
cruises may be authorized by the Illinois Gaming Board.
A $2 per person admission tax is imposed on the owner of a riverboat
operation. Prior to January 1, 1998, the Illinois Riverboat Act imposed a 20%
tax on all adjusted gross receipts on each Illinois gaming vessel. Effective on
January 1, 1998, the Illinois Riverboat Act was amended to impose the following
graduated wagering tax rates on adjusted gross receipts from gaming: (i) 15% of
the calendar year adjusted gross receipts up to and including $25.0 million;
(ii) 20% of the calendar year adjusted gross receipts in excess of $25.0 million
but not exceeding $50.0 million; (iii) 25% of the calendar year adjusted gross
receipts in excess of $50.0 million but not exceeding $75.0 million; (iv) 30% of
the calendar year adjusted gross receipts in excess of $75.0 million but not
exceeding $100.0 million; and (v) 35% of the calendar year adjusted gross
receipts in excess of $100.0 million. The licensee is required to wire transfer
all such gaming tax payments to the Illinois Gaming Board.
The Illinois Gaming Board is authorized to conduct investigations into the
conduct of gaming and into alleged violations of the Illinois Riverboat Act and
to take such disciplinary and enforcement action as it may deem necessary and
proper. Employees and agents of the Illinois Gaming Board have access to and may
inspect any facilities relating to riverboat gaming operations at all times.
A holder of any license is subject to the imposition of penalties and
fines, suspension or revocation of such licence, or other action for any act or
failure to act by such holder or his or her agents or employees, that is
injurious to the public health, safety, morals, good order and general welfare
of the people of the State of Illinois, or that would discredit or tend to
discredit the Illinois gaming industry or the State of Illinois. Any riverboat
operation not conducted in compliance with the Illinois Riverboat Act may
constitute an illegal gaming place and consequently may be subject to criminal
penalties, which penalties include possible seizure, confiscation and
destruction of illegal gaming devices and seizure and sale of riverboats and
dock facilities to pay any unsatisfied judgment that may be recovered and any
unsatisfied fine that may be levied. The Illinois Riverboat Act also provides
for civil penalties, equal to the amount of gross receipts derived from wagering
on gaming, whether unauthorized or authorized, conducted on the day of any
violation. The Illinois Gaming Board may revoke or suspend licenses, as the
Illinois Gaming Board may see fit and in compliance with applicable laws of the
State of Illinois regarding administrative procedures, and may suspend an
owner's license, without notice or hearing, upon a determination that the safety
or health of patrons or employees is jeopardized by continuing a riverboat's
operation. The suspension may remain in effect until the Illinois Gaming Board
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determines that the cause for suspension has been abated and it may revoke the
owner's license upon a determination that the owner has not made satisfactory
progress toward abating the hazard.
The Illinois Gaming Board may waive any licensing requirement or procedure
provided by rule if it determines that such waiver is in the best interests of
the public and the gaming industry.
Native American Gaming
The Federal Indian Gaming Regulatory Act of 1988 (the "Gaming Act")
provides that a Native American tribe may conduct defined gaming activities in a
state only in accordance with a compact between the tribe and the state in which
the gaming activities are located. The Gaming Act imposes on a state a duty to
negotiate in good faith with the tribe for purposes of forming a compact and
authorizes a tribe to file suit in Federal court to compel the state to perform
that duty. In March 1996, the U.S. Supreme Court decided, in the case of
Seminole Tribe of Florida v. Florida, that, under the Eleventh Amendment to the
U.S. Constitution (state sovereign immunity), Congress did not have the power to
grant Federal court jurisdiction under the Gaming Act over a state that did not
consent to be sued. As a result of this decision, the future of Native American
gaming under Federal and state laws and regulations is uncertain and no
assurance can be given with respect to future developments including, among
other things, rulemaking by the U.S. Department of the Interior's Bureau of
Indiana Affairs.
Other Applicable Non-Gaming Regulatory Requirements
The Company is subject to certain Federal, state and local safety and
health laws, regulations and ordinances that apply to non-gaming businesses
generally, such as the Clean Air Act, Clean Water Act, Occupational Safety and
Health Act, Resource Conservation Recovery Act and the Comprehensive
Environmental Response, Compensation and Liability Act. The Company has not
made, and does not anticipate making, material expenditures with respect to such
environmental laws and regulations. However, the coverage and attendant
compliance costs associated with such laws, regulations and ordinances may
result in future additional costs to the Company's operations. For example, in
1990 Congress enacted the Oil Pollution Act to consolidate and rationalize
mechanisms under various oil spill response laws. The Department of
Transportation has proposed regulations requiring owners and operators of
certain vessels to establish through the U.S. Coast Guard evidence of financial
responsibility in the amount of $5.5 million for clean-up of oil pollution. This
requirement would be satisfied by either proof of adequate insurance (including
self-insurance) or the posting of a surety bond or guaranty.
The riverboats operated by the Company must comply with U.S. Coast Guard
requirements as to boat design, on-board facilities, equipment, personnel and
safety. Each of them must hold a Certificate of Seaworthiness or must be
approved by the American Bureau of Shipping ("ABS") for stabilization and
flotation, and may also be subject to local zoning and building codes. The U.S.
Coast Guard requirements establish design standards, set limits on the operation
of the vessels and require individual licensing of all personnel involved with
the operation of the vessels. Loss of a vessel's Certificate of Seaworthiness or
ABS approval would preclude its use as a floating casino.
All shipboard employees of the Company, including those who have nothing to
do with the actual operation of the vessel (such as dealers, waiters and
security personnel) may be subject to the Jones Act which, among other things,
exempts those employees from state workers' compensation awards.
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MANAGEMENT
Executive Officers and Directors
The following table sets forth the names, ages and principal position of
the executive officers and directors of the Company and each of the Guarantors:
<TABLE>
<CAPTION>
Name Age Position(1)
- ---- --- --------------------------------------------------------------------
<S> <C> <C>
Peter A. Ferro, Jr.............. 47 Chief Executive Officer and Director of the Company, Empress
Hammond and Empress Joliet, Chief Executive Officer of Hammond
Residential and President and Director of Empress Finance
Joseph J. Canfora............... 39 President of the Company, Empress Hammond and Empress Joliet
John G. Costello................ 36 Vice President, Chief Financial Officer and Treasurer of the Company
and each of the Guarantors
Michael W. Hansen............... 46 Vice President, Chief Legal Officer and Secretary of the Company and
each of the Guarantors
Rick S. Mazer................... 43 Vice President--General Manager of Empress Hammond
David F. Fendrick............... 48 Vice President--General Manager of Empress Joliet
Charles P. Hammersmith, Jr.(2).. 46 Director of each of the Company, Empress Joliet, Empress Hammond
and Empress Finance
Robert W. Kegley, Sr.(2)........ 56 Director of each of the Company, Empress Joliet, Empress Hammond,
and Empress Finance
Thomas J. Lambrecht(2).......... 48 Chairman of the Board and Director of each of the Company, Empress
Joliet, Empress Hammond and Empress Finance
William J. McEnery.............. 55 Director of each of the Company, Empress Joliet, Empress Hammond
and Empress Finance
Edward T. McGowan............... 61 Director of each of the Company, Empress Joliet, Empress Hammond
and Empress Finance
William J. Sabo................. 59 Director of each of the Company, Empress Joliet, Empress Hammond
and Empress Finance
</TABLE>
- -------------
(1) Each director of the Company, Empress Hammond, Empress Joliet and Empress
Finance has been a member of the Board of Directors of such entity since
such entity's formation.
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(2) Serves on the Company's audit committee.
Peter A. Ferro, Jr. Mr. Ferro has been a Director of the Company and each
of the corporate Guarantors since their respective formation. Since January 1997
Mr. Ferro has been Chief Executive Officer of each of the Company, Empress
Hammond and Empress Joliet. Mr. Ferro has been President of Empress Finance
since December 1997. From 1984 to 1997 Mr. Ferro was President and Chief
Executive Officer of P. T. Ferro Construction Company. From 1989 to 1997 Mr.
Ferro was Vice President of Ferro Asphalt Corporation. Mr. Ferro is a graduate
from the University of Illinois with a Bachelors of Science in finance which he
received in 1972.
Joseph J. Canfora. Mr. Canfora was elected President of the Company,
Empress Hammond and Empress Joliet in June 1997. From 1995 through 1997, Mr.
Canfora was President of Midwest Operations for Station Casinos, Inc. From 1992
through 1997, Mr. Canfora served as Executive Vice President and Chief Operating
Officer of Station Casinos, Inc. Prior to joining Station Casinos, Inc., Mr.
Canfora held management positions with the Maxim Hotel and Casino, Sundance
Casino and the Aladdin Hotel and Casino. Mr. Canfora graduated from the
University of Nevada, Las Vegas in 1982.
John G. Costello. Mr. Costello has served as the Vice President, Chief
Financial Officer and Treasurer of the Company and each of the corporate
Guarantors since June 1994 and has served in such capacity at Hammond
Residential since the date of its formation. From 1991 through 1994, Mr.
Costello was employed by Argosy Gaming Company, serving as its Controller from
1991 through 1993, and as Assistant General Manager of its Alton Belle Casino
from July 1993 through June 1994. From 1984 to 1991, Mr. Costello was in public
accounting as a Certified Public Accountant. Mr. Costello received his Bachelor
of Science degree in Business Administration from Southern Illinois University
at Edwardsville.
Michael W. Hansen. Mr. Hansen has served as Chief Legal Officer of the
Company and each of the corporate Guarantors since July 1994 and has served in
such capacity at Hammond Residential since the date of its formation. Since
1995, Mr. Hansen has served as Vice President and, since 1997, as the Secretary,
of the Company and the Guarantors. Mr. Hansen acted as outside counsel in the
formation of Empress Joliet in 1991 and oversaw the development and construction
of Empress Hammond in 1995 and 1996. From 1976 to 1994, Mr. Hansen was in
private legal practice as a partner in the Joliet, Illinois law firm of
Herschbach, Tracy, Johnson, Bertani & Wilson. Mr. Hansen is a 1973 graduate of
the University of Notre Dame, and a 1976 graduate of Drake University Law
School.
Rick S. Mazer. Mr. Mazer was appointed Vice President-General Manager of
Empress Hammond in February 1996, where he oversees the operation of Empress
Hammond's gaming complex. From October 1995 to February 1996, Mr. Mazer served
as Director of Marketing and Advertising for Empress Joliet. From 1993 through
1995, Mr. Mazer was Vice President of Marketing for Par-A-Dice Riverboat Casino
in Peoria, Illinois and served in various other management capacities from 1991
through 1993. Mr. Mazer received a B.S.B.A. degree from Boston University in
1976.
David F. Fendrick. Mr. Fendrick was appointed Vice President-General
Manager of Empress Joliet in August 1997. From 1994 through 1997, Mr. Fendrick
served as Vice President-General Manager of Station Casinos, Inc. in Kansas
City. From 1993 through 1994, Mr. Fendrick held the position of Vice President-
General Manager of Fitzgerald's Casino in Tunica, Mississippi. He was the
Director of Casino Operations for Princess Cruises in 1993. From 1992 to 1993,
Mr. Fendrick served as the Director of Casino Operations for President Riverboat
Casino in Davenport, Iowa.
Charles P. Hammersmith, Jr. Mr. Hammersmith has been a Director of each of
the Company, Empress Joliet, Empress Hammond and Empress Finance from the date
of their respective formation. Since 1973, Mr. Hammersmith has been employed
with Elmhurst-Chicago Stone Co. and since 1989 has served as its President.
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Since 1983, Mr. Hammersmith has been the President of Hammerline Express, a bulk
cement transportation company.
Robert W. Kegley, Sr. Mr. Kegley has been a Director of each of the
Company, Empress Joliet, Empress Hammond and Empress Finance from the date of
their respective formation. Since 1982, Mr. Kegley has owned and operated
Columbia Properties, a real estate holding company. Since 1979, Mr. Kegley has
owned the Columbian Agency in New Lenox, Illinois, a commercial insurance
brokerage company, where he is the President.
Thomas J. Lambrecht. Mr. Lambrecht is the original founder of the Company
and has been Chairman of the Board and a Director of each of the Company,
Empress Joliet, Empress Hammond and Empress Finance from the date of their
respective formation. Since 1988, Mr. Lambrecht has been the President and sole
stockholder of T.J. Lambrecht Construction, Inc. See "Risk Factors--Gaming
Licensing and Regulation--General."
William J. McEnery. Mr. McEnery has been a Director of each of the Company,
Empress Joliet, Empress Hammond and Empress Finance from the date of their
respective formation. Since 1966, Mr. McEnery has owned and operated Gas City,
Ltd., which owns and operates approximately 40 gasoline stations and convenience
stores. Since 1975, Mr. McEnery has owned and operated Bell Valley Farm, Inc.
which is devoted to breeding and training standard-bred horses for the harness
horse racing industry. Since 1982, Mr. McEnery has owned and operated A.D.
Connor, Inc., a petroleum transportation company. Since 1990, Mr. McEnery has
owned and operated Green Garden Country Club. Since 1991, Mr. McEnery has been a
director and shareholder of Argosy Gaming Company, which owns a beneficial
interest in Indiana Gaming Company, L.P., the holder of an owner's license in
Lawrenceburg, Indiana, and Alton Gaming Company, the holder of an owner's
license in Alton, Illinois. See "Risk Factors--Gaming Licensing and Regulation-
- -General."
Edward T. McGowan. Mr. McGowan has been a Director of each of the Company,
Empress Joliet, Empress Hammond and Empress Finance from the date of their
respective formation. Since 1963, Mr. McGowan has been the President of, and
since 1977, has been the sole owner of, the EDON Construction Company. Since
1977, Mr. McGowan has been a 50% owner of Dremco Inc., a corporation that
builds, sells and/or manages various real estate developments in the Chicago
area. In 1977, Mr. McGowan was elected as a member of the Board of Directors of
Ford City Bank of Chicago which merged into Cole Taylor Bank in 1984, at which
time Mr. McGowan became a member of the Board of Directors of Cole Taylor Bank.
William J. Sabo. Mr. Sabo was the Vice Chairman of Empress Hammond and
Empress Joliet from 1991 until 1997, and has been a Director of the Company,
Empress Hammond, Empress Joliet and Empress Finance from the date of their
respective formation. Since January 1, 1998, Mr. Sabo has served as a consultant
to Empress Hammond and Empress Joliet.
The directors of the Company, Empress Hammond, Empress Joliet and Empress
Finance are elected each year at annual meetings of stockholders. Executive
officers are elected each year by the Board of Directors of each entity.
Pursuant to the terms of the Stockholders Agreement, all stockholders have
agreed to vote their shares to establish Boards of Directors of the Company,
Empress Hammond, Empress Joliet and Empress Finance to include the following
seven persons: Peter A. Ferro, Jr., Charles P. Hammersmith, Jr., Robert W.
Kegley, Sr., Thomas J. Lambrecht, William J. McEnery, Edward T. McGowan and
William J. Sabo. See "Certain Transactions."
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Principal Position Annual Compensation
- --------------------------- ---------------------
All other
Year Salary (1) Bonus (2) compensation(3)
---- ---------- --------- ---------------
<S> <C> <C> <C> <C>
Peter A. Ferro, Jr.
President and Chief Executive Officer(4)........... 1997 $389,231 $ -- $ 3,781
1996 -- -- --
1995 -- -- --
Joseph J. Canfora
President(4)....................................... 1997 250,000 125,000 29,075
1996 -- -- --
1995 -- -- --
William J. Sabo
Former Vice Chairman of the Board(5)............... 1997 220,673 -- 5,678
1996 225,000 70,000 9,132
1995 225,000 100,000 20,089
Michael W. Hansen
Chief Legal Officer................................ 1997 202,539 70,000 4,564
1996 189,423 100,000 3,955
1995 160,000 100,000 2,565
John G. Costello
Chief Financial Officer............................ 1997 134,423 50,000 5,470
1996 112,423 32,000 3,951
1995 90,000 22,500 1,947
</TABLE>
- -------------
(1) The services and salaries of the executive officers are allocated evenly
between Empress Hammond and Empress Joliet. The salaries listed represent
the full, unallocated amount of the named executive's salary.
(2) Consists of bonuses paid pursuant to a management bonus plan. Under such
plan, a percentage of pretax earnings based upon operating results of each
year are distributed to the executive officers of Empress Hammond and
Empress Joliet and to other selected employees, if any, during the next
fiscal year. The bonuses distributed to each executive officer and/or
employee of Empress Hammond and Empress Joliet (other than the Chief
Executive Officer) are determined by the Chief Executive Officer of the
Company. The bonus, if any, paid to the Chief Executive Officer of the
Company is determined by the Board of Directors of the Company. The bonuses
paid are allocated between Empress Hammond and Empress Joliet. The bonuses
listed represent the full, unallocated amount of the named executive's
bonus.
(3) Consists of the Company's contribution to such executive officer's 401(k)
plan, Company paid group term life insurance premiums and automobile
expenses. Pursuant to the terms of Mr. Canfora's employment agreements with
Empress Joliet and Empress Hammond, those entities provide Mr. Canfora with
term life insurance in an amount equal to $4.0 million and reimbursement of
relocation expenses. The amount listed in the table includes the aggregate
annual premiums paid by Empress Joliet and Empress Hammond with respect to
such insurance and reimbursement of relocation expenses.
Footnotes continued on following page
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(4) Mr. Ferro served as President of the Company, Empress Hammond and Empress
Joliet until June 22, 1997, when Mr. Canfora began his employment as
President.
(5) Mr. Sabo served as Vice Chairman of the Board of the Company, Empress
Hammond, Empress Joliet and Empress Finance until the annual stockholders
meetings of the Company in January 1998. Mr. Sabo's employment agreement
with Empress Hammond expired on December 31, 1997. Mr. Sabo currently
serves as a consultant to Empress Hammond and Empress Joliet. See "Certain
Transactions--Other Relationships."
Employment Agreements
Peter A. Ferro, Jr., Chief Executive Officer. Empress Hammond and Empress
Joliet are each parties to identical employment agreements dated March 7, 1997
with Peter A. Ferro, Jr. The agreements were effective as of January 1, 1997 and
terminate on December 31, 1999. An allocation agreement was entered into between
Empress Hammond and Empress Joliet calling for an equal allocation of Mr.
Ferro's compensation and benefits between the two entities. Pursuant to the
terms of the employment agreements, Mr. Ferro is entitled to an aggregate salary
of $400,000 per year. In addition, Mr. Ferro is entitled to certain customary
employee benefits.
Empress Hammond and Empress Joliet may terminate the employment agreements
if (i) Mr. Ferro's gaming license in Indiana or Illinois, respectively, is
suspended or revoked; (ii) Mr. Ferro fails a drug test administered by either
entity; (iii) at least two-thirds of the members of Empress Hammond's or Empress
Joliet's Board of Directors vote to terminate his employment with either entity;
(iv) the Indiana License or the Illinois License is revoked or not renewed; or
(v) there is a change in control in Empress Hammond or Empress Joliet during the
term of the agreements, consisting of either a sale or transfer of a majority
equity interest or a sale of a substantial portion of the assets.
Notwithstanding termination due to (iii), (iv) or (v) above, Empress Hammond's
and Empress Joliet's obligations to Mr. Ferro under the agreements continue in
full force and effect until December 31, 1999.
Joseph J. Canfora, President. Empress Hammond and Empress Joliet are each
parties to identical employment agreements dated June 12, 1997 with Joseph J.
Canfora. Each of the employment agreements commenced on June 23, 1997 and
terminates on June 22, 2000. An allocation agreement was entered into between
Empress Hammond and Empress Joliet calling for an equal allocation of Mr.
Canfora's compensation and benefits between the two entities. Pursuant to the
terms of the employment agreements, Mr. Canfora is entitled to an aggregate base
salary of $500,000 per year ("Base Salary"). In addition, Mr. Canfora is
eligible to receive performance based bonuses ("Bonus") based on a percentage
of the Company's, Empress Hammond's and Empress Joliet's ("Affiliated
Companies") combined EBITDA. If the Affiliated Companies' EBITDA is greater
than $100 million, Mr. Canfora's Bonus will be 3.913% of half of the combined
after-tax earnings of the Affiliated Companies less his Base Salary. Mr. Canfora
will not be entitled to a Bonus if he resigns or is terminated for cause.
Furthermore, the Chief Executive Officer of Empress Hammond or Empress Joliet,
in his sole discretion, may increase Mr. Canfora's Base Salary and Bonus.
In addition to such compensation, Mr. Canfora is entitled to term life
insurance in an amount equal to $4.0 million and certain other employee
benefits. If Mr. Canfora's employment is terminated for reasons other than
cause, death, disability or change in control, Empress Hammond and Empress
Joliet are required (i) to pay Mr. Canfora his Base Salary, Bonus and earned
benefits for services rendered prior to the date of termination; (ii) to pay Mr.
Canfora a pro rata Bonus to the date of termination in accordance with the terms
of the agreements; (iii) to make all payments of Base Salary required under the
agreements to Mr. Canfora through the next scheduled termination date; and (iv)
in the case of disability, to continue to provide health insurance to Mr.
Canfora. If Mr. Canfora resigns his employment with Empress Hammond or Empress
Joliet, other than at the expiration of the term of the agreements, he is not
entitled to any compensation or benefits beyond his last day of employment.
Unless terminated without cause or at the next scheduled termination date, Mr.
Canfora is
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prohibited, for a period of one year, from competing with the Affiliated
Companies' business, products or services in the Counties of Lake, Cook, Kane,
Will, DuPage and McHenry, Illinois, and the Counties of Lake, Porter and
LaPorte, Indiana.
In addition, the Affiliated Companies and Mr. Canfora are parties to a
long-term incentive bonus agreement (the "Bonus Agreement"), under which Mr.
Canfora is entitled to 3.913% of the excess of (i) the Benchmark Value (as
defined in the Bonus Agreement) of the Affiliated Companies as of the date of
termination of Mr. Canfora's employment without cause, or a Change in Control,
over (ii) the Affiliated Companies' Base Value (as defined in the Bonus
Agreement). If there is a Change of Control within the first twelve months of
the Bonus Agreement, Mr. Canfora is to receive the greater of the bonus as
determined by the above formula or $1.0 million. The Bonus Agreement provides
for differing vesting provisions depending on Mr. Canfora's length of employment
or the occurrence of a Change in Control. With the exception of a Change in
Control, Mr. Canfora's bonus under the Bonus Agreement is not to exceed $10.0
million.
John G. Costello, Chief Financial Officer. Empress Joliet is a party to an
employment agreement dated March 12, 1998 with John G. Costello. Mr. Costello's
employment agreement was effective as of January 1, 1998 and terminates on
December 31, 1999. Pursuant to the terms of the employment agreement, Mr.
Costello is entitled to a base salary of not less than $135,000 per year. Mr.
Costello's base salary is allocated equally between Empress Joliet and Empress
Hammond. In addition, Mr. Costello is entitled to participate in the incentive
compensation bonus programs and employee benefit plans of Empress Joliet.
Empress Joliet may terminate Mr. Costello's employment for cause (as
defined in the agreement) at any time or without cause on thirty (30) days'
written notice. If terminated for cause, Mr. Costello will be paid to the date
of termination only. If terminated without cause, Mr. Costello is to receive his
present base salary and all health insurance benefits, through the later of the
expiration date of the agreement or one year from the date of termination plus
two weeks, whichever is greater. In addition, Mr. Costello is entitled to a
payment equal to his bonus payment from the prior year. Moreover, in the event
Empress Joliet fails to provide 180 days notice to Mr. Costello that his
agreement will not be renewed, Empress Joliet is required to pay Mr. Costello:
(i) a six month severance payment; (ii) a bonus payment through the scheduled
term based upon the last annual bonus payment paid; and (iii) benefits through
the scheduled term. If Mr. Costello is terminated as a result of a change of
control (as defined in the agreement), Empress Joliet must continue to pay his
base salary through the next scheduled termination date or one year, whichever
is greater, and an amount equal to the last annual bonus payment prorated to the
date termination. Upon a change of control, Mr. Costello is also entitled to
receive a bonus equal to two and one-half times ("Bonus Multiple") the sum of
his annual base salary in effect immediately prior to the change in control plus
his annual bonus for the fiscal year immediately prior to the change in control.
Michael W. Hansen, Chief Legal Officer. Empress Joliet is a party to an
employment agreement dated March 12, 1998 and effective January 1, 1998 with
Michael W. Hansen. Mr. Hansen's employment agreement with Empress Joliet is
substantially similar to Mr. Costello's agreement, except that (i) Mr. Hansen is
to receive an annual base salary of not less than $206,000 during the term of
the agreement, and (ii) Mr. Hansen's Bonus Multiple is two.
Rick S. Mazer, Vice President--General Manager of Empress Hammond. Empress
Hammond is party to an employment agreement dated March 12, 1998 and effective
January 1, 1998 with Rick S. Mazer. Mr. Mazer's employment agreement with
Empress Hammond is substantially similar to Mr. Costello's agreement, except
that (i) Mr. Mazer is to receive an annual base salary of not less than $180,000
during the term of the agreement, and (ii) Mr. Mazer's Bonus Multiple is two.
David F. Fendrick, Vice President--General Manager of Empress Joliet.
Empress Joliet is party to an employment agreement dated March 12, 1998 and
effective August 1, 1997 with David F. Fendrick. Mr. Fendrick's employment
agreement with Empress Joliet is substantially similar to Mr. Costello's
agreement,
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<PAGE>
except that (i) the term of Mr. Fendrick's contract is three years, from August
1, 1997 through July 31, 2000, (ii) Mr. Fendrick is to receive an annual base
salary of not less than $200,000 during the term of the agreement, and (iii) Mr.
Fendrick's Bonus Multiple is one and one-half.
William J. Sabo. Empress Joliet and William J. Sabo were parties to an
employment agreement dated October 23, 1991, as amended March 3, 1992. The
agreement expired on December 31, 1997. Mr. Sabo currently serves as a
consultant to Empress Hammond and Empress Joliet. See "Certain Transactions--
Other Relationships."
Limitations on Directors' and Officers' Liability
The by-laws of the Company, Empress Hammond, Empress Joliet and Empress
Finance provide that each corporation will have the power to indemnify any
person who is or was a director, officer, employee or agent of the corporation,
or who is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, or other enterprise to the fullest extent permitted by law.
The Company and Empress Finance are each incorporated under the laws of the
State of Delaware. The Company's and Empress Finance's respective Certificates
of Incorporation provide that a director of such corporation shall not be
personally liable to such corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director to the fullest extent permitted by
law. The effect of this provision in the Company's and Empress Finance's
respective Certificates of Incorporation is to eliminate the rights of the
corporation and its stockholders (through stockholders' derivative suits on
behalf of the Company or Empress Finance) to recover monetary damages against a
director for breach of the fiduciary duty of care as a director (including
breaches resulting from negligent or grossly negligent behavior) except in
certain limited situations. This provision does not limit or eliminate the
rights of the Company or Empress Finance or any of their respective stockholders
to seek non-monetary relief such as an injunction or rescission in the event of
a breach of a director's duty of care. These provisions do not alter the
liability of directors under Federal securities laws.
Section 145 of the Delaware General Corporation Law empowers a corporation,
subject to certain qualifications and limitations, to indemnify its directors
and officers against expenses (including attorneys' fees), judgments, fines and
certain amounts paid in settlements actually and reasonably incurred by them in
connection with any suit or proceeding to which they are a party so long as they
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. The Company's and Empress Finance's respective Certificates of
Incorporation and by-laws provide that such entity shall indemnify its directors
and such of its officers, employees and agents as the Board of Directors may
determine from time to time, to the fullest extent permitted by applicable law.
Empress Hammond is incorporated under the laws of the State of Indiana.
Sections 23-1-37-8 and 23-1-37-13 of the Indiana Business Corporation Law
empower a corporation to indemnify its directors and officers against liability
incurred by them in connection with any suit or proceeding to which they are a
party so long as their conduct was in good faith and (i) in the case of conduct
in the director's or officer's capacity as a director or officer, as the case
may be, in a manner the individual reasonably believed to be in the best
interests of the corporation; (ii) in all other cases, in a manner the
individual reasonably believed to be not opposed to the best interests of the
corporation; and (iii) with respect to criminal proceedings, the individual
either (A) had reasonable cause to believe his conduct was lawful; or (B) had no
reasonable cause to believe his conduct was unlawful. In addition, unless
limited by its articles of incorporation, a corporation shall indemnify a
director or officer who is wholly successful, on the merits or otherwise, in the
defense of any proceeding to which the director or officer was a party because
the director or officer was a director or officer of the corporation against
reasonable expenses incurred by the director or officer in connection with the
proceeding. Section 23-1-35-1(e)
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of the Indiana Business Corporation Law provides that a director of an Indiana
corporation is not liable for any action taken as a director, or any failure to
take any action, unless (1) the director has breached or failed to perform the
duties of the director's office in compliance with the statute, and (2) the
breach or failure to perform constitutes willful misconduct or recklessness.
Empress Hammond's by-laws provide that Empress Hammond shall indemnify its
directors and its officers, employees and agents in accordance with the
provisions of the Indiana Business Corporation Law.
Empress Joliet is incorporated under the laws of the State of Illinois. The
Illinois Business Corporation Act was amended effective January 1, 1994 to
permit an Illinois corporation's articles of incorporation to limit its
directors' personal exposure to liability for monetary damages. As a result
thereof, Empress Joliet amended its Articles of Incorporation to provide that a
director of Empress Joliet shall not be personally liable to Empress Joliet or
its shareholders for monetary damages for breach of fiduciary duty as a director
to the fullest extent permitted by law. The effect of this provision in Empress
Joliet's Articles of Incorporation is to eliminate the rights of Empress Joliet
and its shareholders (through shareholders' derivative suits on behalf of
Empress Joliet) to recover money damages against a director for breach of the
fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior) except in certain limited situations.
This provision would not limit or eliminate the rights of each of Empress Joliet
or its shareholders to seek non-monetary relief such as an injunction or
recession in the event of a breach of a director's duty of care. The provision
would not alter the liability of directors under Federal securities laws.
Section 8.75 of the Business Corporation Act of 1983 of the State of
Illinois, as amended, empowers a corporation, subject to certain qualifications
and limitations, to indemnify its directors and officers against expenses
(including attorney's fees), judgments, fines and certain amounts paid in
settlements actually and reasonably incurred by them in connection with any suit
or proceeding to which they are a party, or are threatened to be made a party
of, so long as they acted in good faith and in a manner they reasonably believed
to be in or not opposed the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe their
conduct to have been unlawful. Empress Joliet's by-laws provide that Empress
Joliet shall have the power to indemnify its officers, directors, employees and
agents to the full extent permitted by law.
CERTAIN TRANSACTIONS
Company and Subsidiary Relationships
Empress Hammond licenses certain trademarks from Empress Joliet pursuant to
the terms of a Trademark License Agreement dated as of June 30, 1997. Empress
Hammond pays an annual fixed license fee of $1.2 million to Empress Joliet for
the non-exclusive right to use certain Empress Casino trademarks in Hammond,
Indiana, with express permission to use intrastate and interstate advertising
and promotion of Empress Hammond's gaming operation in Hammond, Indiana. The
Trademark License Agreement expires on December 31, 2001. In 1997 and 1996, the
total amount paid by Empress Hammond to Empress Joliet under this agreement was
approximately $1.2 million and $0.6 million, respectively.
Using information generated from the Empress Club, Empress Joliet created
and currently maintains a database containing information about customers of the
casino. Empress Hammond contributes information to the patron database and
licenses from Empress Joliet its patron database information. Empress Hammond is
required to pay to Empress Joliet five annual payments of approximately $0.5
million each year based on an estimated fair market value of Empress Joliet's
patron database as of June 1996. The amount charged to Empress Hammond for the
database was approximately $0.6 million and $0.1 million in 1997 and 1996,
respectively.
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The Company shares common executive officers with its subsidiaries,
including the President, Chief Executive Officer, Chief Financial Officer and
Chief Legal Officer. Prior to the Reorganization, the salaries of such executive
officers were allocated evenly between Empress Joliet and Empress Hammond. See
"Management."
Empress Joliet provides certain consulting services to Empress Hammond for
a fee of $5,000 per month. The consulting fee for each of the years ended
December 31, 1997, 1996 and 1995 was $60,000. Empress Joliet also incurs certain
indirect corporate and general and administrative costs and expenses related to
the start-up, management and operations of Empress Hammond. These costs are then
allocated to Empress Hammond. In 1997 and 1996, the total amounts allocated to
Empress Hammond were approximately $2.8 million and $2.7 million, respectively.
In accordance with Empress Hammond's original $50.0 million revolving
credit facility (the "Original Credit Facility"), which was replaced with the
Existing Credit Facility, Empress Joliet guaranteed the indebtedness and was
compensated by Empress Hammond in an amount equal to approximately $0.2 million
and $0.2 million in 1997 and 1996, respectively. In addition, under the Original
Credit Facility and the Existing Credit Facility, the Company guaranteed Empress
Hammond's obligations thereunder and was compensated by Empress Hammond in an
amount equal to 0.5% of the available line of credit. The total amount paid by
Empress Hammond to the Company for such guaranty was approximately $0.2 million
for each of 1997 and 1996. On June 30, 1997, Empress Joliet's guaranty of
Empress Hammond's indebtedness terminated. These facilities were replaced by the
Credit Facility.
Pursuant to the terms of the 1994 Indenture, (i) Empress Finance loaned
Empress Joliet the principal amount of $150.0 million; (ii) Empress Joliet
loaned the Company the principal amount of $25.0 million; (iii) Empress Joliet
loaned Empress Hammond the principal amount of $33.0 million and (iv) Empress
Joliet has from time to time made intercompany loans to the Company and Empress
Hammond in the aggregate principal amount of $7.0 million and $4.0 million,
respectively, all of which loans were repaid in full in connection with the
Offering.
Other Relationships
The Company is governed by an Amended and Restated Stockholders Agreement
pursuant to which, among other things, (i) the stockholders agreed to vote for
the election of Mr. Ferro, Mr. Hammersmith, Mr. Kegley, Mr. Lambrecht, Mr.
McEnery, Mr. McGowan and Mr. Sabo to the Board of Directors of the Company and
each of its subsidiaries, (ii) the Company and each of the other stockholders
have an option to purchase the stock of a stockholder upon certain events, (iii)
limitations were placed on the ability of the stockholders to sell their stock
in the Company, (iv) the approval of at least 75% of the stockholders is
required in order for the Company or any of its subsidiaries to undertake
certain transactions, including the merger of the Company or any of its
subsidiaries, the sale of all or substantially all of the assets of the Company
or any of its subsidiaries or the issuance or sale of stock of Empress Joliet or
Empress Hammond and (v) as long as the Company qualifies as a Subchapter S
Corporation, the Company has agreed to make distributions to its stockholders in
order for them to pay federal and state income taxes on the net income of the
Company.
In July 1998, in settlement of litigation, and in exchange for a general
release of all claims, the Company redeemed for $4.7 million all of the shares
of the Company's common stock held by an approximately 1% stockholder.
Empress Hammond, Empress Joliet and William J. Sabo, a stockholder and
director of the Company, and a director of each of the corporate Guarantors, are
parties to two identical consulting agreements dated as of January 1, 1998,
pursuant to which Mr. Sabo provides consulting services to Empress Hammond and
Empress Joliet for an annual consulting fee of $150,000 in the aggregate. Such
consulting fee is paid equally by Empress Hammond and Empress Joliet. The
consulting agreements expire on December 31, 1999, and may be terminated
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for cause (as defined in the agreements). In connection with his consulting
agreements, Mr. Sabo has agreed during his consulting period and for a period of
one year thereafter not to compete in the casino business within a 200 mile
radius of each of Hammond, Indiana and Joliet, Illinois. Mr. Sabo has also
agreed not to solicit any employee, vendor or supplier of Empress Hammond or
Empress Joliet.
The Company and its subsidiaries have entered into the following contracts
with certain of the companies owned by its stockholders: (i) a contract with Gas
City, Ltd., a company owned by William J. McEnery, to provide fuel for the
Company's vessels and Company-owned vehicles; (ii) a contract with P.T. Ferro
Construction Company, a company owned in part by Peter A. Ferro, Jr., to provide
construction services; (iii) a contract with Columbian Agency, an insurance
brokerage company owned by Robert W. Kegley, Sr., to provide insurance brokerage
services; and (iv) a contract with T.J. Lambrecht Construction, Inc., an entity
owned by Thomas J. Lambrecht, to provide construction services.
From January 1, 1998 through May 31, 1998, the Company paid an aggregate of
approximately $15,763, $0.1 million, $0.3 million and $13,179 to the Columbian
Agency, Gas City, Ltd., P.T. Ferro Construction Company, Inc. and T.J. Lambrecht
Construction, Inc., respectively. In 1997, the Company paid an aggregate of
approximately $2.7 million, $0.5 million, $0.4 million and $0.2 million to the
Columbian Agency, Gas City, Ltd., P.T. Ferro Construction Company and T.J.
Lambrecht Construction, Inc., respectively. In 1996, the Company paid an
aggregate of approximately $2.1 million, $0.6 million, $0.3 million and $0.1
million to the Columbian Agency, Gas City, Ltd., P.T. Ferro Construction Company
and T.J. Lambrecht Construction, Inc., respectively.
Distributions to Stockholders
From January 1, 1993 through December 31, 1997, the Company made an
aggregate of approximately $267.0 million of distributions to stockholders,
which included distributions in the amount of approximately $122.4 million to
pay certain personal Federal and state income taxes owed by stockholders as a
result of the Company's Subchapter S tax status. In addition, from January 1,
1998 through June 30, 1998, the Company, Empress Hammond and Empress Joliet
made an aggregate of approximately $22.3 million of distributions to pay
personal income taxes to stockholders. The Company currently intends to make
periodic distributions to its stockholders in sufficient amounts to enable them
to pay Federal and state income taxes attributable to their pro rata portion of
the estimated taxable earnings of the Company, and to make other periodic
distributions to its stockholders.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the ownership
of shares of common stock of the Company as of the date of this Prospectus (i)
by each person known to the Company to own beneficially more than 5% of the
outstanding shares of common stock of the Company and (ii) by each of the
Company's executive officers and directors and by all of such executive officers
and directors as a group.
<TABLE>
<CAPTION>
Non-Voting
----------
% of Common % of
---- ------ ----
Name and Address of Beneficial Owner(1) Common Shares Class Shares Class
- --------------------------------------- ------------- ------ ------ -----
<S> <C> <C> <C> <C>
Joseph J. Canfora.......................... -- -- -- --
John G. Costello........................... -- -- -- --
David F. Fendrick.......................... -- -- -- --
Peter A. Ferro, Jr......................... 196.14(2)(3) 11.2% 15.15(2)(3) 9.2%
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
Charles P. Hammersmith, Jr................. 332.44 19.0 25.67 15.7
Michael W. Hansen.......................... -- -- -- --
Robert W. Kegley, Sr....................... 166.22 9.5 12.84 7.8
Thomas J. Lambrecht........................ 302.52 17.3 23.36 14.2
Rick S. Mazer.............................. -- -- -- --
William J. McEnery......................... 332.44(4) 19.0 25.67 15.7
Edward T. McGowan.......................... 332.44(5) 19.0 25.67 15.7
William J. Sabo............................ 113.03(2) 6.6 8.73(2)(3) 5.3
All executive officers and directors as a
group (12 persons)....................... 1,745.33 100.0% 134.79 82.17%
======== ===== ======= =====
</TABLE>
- -------------
(1) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares of common stock shown as
beneficially owned by them, unless otherwise noted in the footnotes to this
table. The address of each of the stockholders named in this table is c/o
Empress Entertainment, Inc., 2300 Empress Drive, Joliet, Illinois 60436.
(2) Includes the following number of shares of common stock of the Company
owned by the following trusts of which William J. Sabo and Peter A. Ferro,
Jr. are co-trustees: 9.97 common shares and 0.77 non-voting common shares
of the Company owned of record by the Trust for the benefit of Melissa Kate
Lambrecht under Trust Agreement dated May 3, 1993; 9.97 common shares and
0.77 non-voting common shares of the Company owned of record by the Trust
for the benefit of Paul John Lambrecht under Trust Agreement dated May 3,
1993; and 9.97 common shares and 0.77 non-voting common shares of the
Company owned of record by the Trust for the benefit of Matthew Thomas
Lambrecht under Trust Agreement dated May 3, 1993. These shares are
included twice in the table, once in the total for Mr. Sabo and once for
the total for Mr. Ferro.
(3) Includes 166.22 common shares and 12.84 non-voting common shares held by a
voting trust of which Mr. Ferro is the sole voting trustee. Mr. Ferro is
the owner of 55.4 of the shares of common stock and 4.28 of the shares of
non-voting common stock held by such voting trust and 55.4 shares of common
stock and 4.28 of the shares of non-voting common stock are owned by each
of James J. Ferro and John T. Ferro, Mr. Ferro's two brothers.
(4) Held by Trust for the benefit of William J. McEnery of which Mr. McEnery is
the sole trustee.
(5) Held by Trust for the benefit of Edward T. McGowan of which Mr. McGowan is
the sole trustee.
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<PAGE>
DESCRIPTION OF CERTAIN OTHER INDEBTEDNESS
As of June 30, 1998, the Company had outstanding indebtedness aggregating
approximately $160.0 million, excluding the Defeased Debt and including $150.0
million of outstanding Old Notes.
10 3/4% Notes
The Company currently has outstanding $150.0 million of the 10 3/4% Notes. The
Company irrevocably deposited $167.2 million of cash and U.S. Treasury
Securities in trust for the purpose of effecting the Covenant Defeasance, which,
together with interest earned thereon, will be used to pay (i) the principal
amount of the 10 3/4% Notes on April 1, 1999; (ii) estimated interest of $16.1
million on the 10 3/4% Notes through the date of redemption (April 1, 1999): and
(iii) the premium of $8.1 million upon the redemption of the 10 3/4% Notes on
April 1, 1999.
Credit Facility
Concurrently with the closing of the Offering, the Company entered into a $100
million senior secured reducing revolving credit facility. The Company, Empress
Hammond and Empress Joliet are primary obligors under the Credit Facility. The
Company granted a first priority security interest in substantially all of the
assets of the Company, Empress Hammond and Empress Joliet (excluding the
Illinois License and the Indiana License) to secure their obligations under the
Credit Facility. The Credit Facility expires on June 15, 2003. Credit
availability starts at $100.0 million, with scheduled reductions on December 31
of each year beginning on December 31, 1998, in the amounts of $5.0 million,
$7.5 million, $7.5 million and $15.0 million, respectively. The Company is
subject to a number of restrictive covenants, including: (i) maintenance of a
maximum Leverage Ratio; (ii) maintenance of an Adjusted Fixed Charge Coverage
Ratio; (iii) maintenance of a Minimum Tangible Net Worth; and (iv) a Limitation
on Capital Expenditures. The interest rate on borrowings under the Credit
Facility is determined by a pricing matrix based upon, at the Company's option,
either (i) LIBOR or (ii) a base rate equal to the higher of (a) the agent's
prime rate, or (b) 0.5% plus the Federal Funds Rate, in each case, plus a
sliding scale margin of up to 2.125% on LIBOR loans and up to 1.00% on base rate
loans based upon the ratio of the Company's funded debt (excluding defeased
debt) to its EBITDA (the "Leverage Ratio"). During the term of the Credit
Facility, the Company must pay a commitment fee of between 0.225% and 0.375% of
the unused portion of the commitment under the Credit Facility, determined based
upon the Leverage Ratio. The Company paid at the closing of the Credit Facility
a closing fee equal to $750,000.
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<PAGE>
DESCRIPTION OF THE NEW NOTES
The Old Notes were issued and the New Notes will be issued under an
Indenture dated as of June 18, 1998 (the "Indenture") among the Company, the
Guarantors and U.S. Bank Trust National Association, as trustee (the "Trustee").
For purposes of this summary, references to the "Company" means only Empress
Entertainment, Inc. and not any of its subsidiaries. References to the Notes
include the New Notes and the Old Notes unless the context otherwise requires.
Upon the effectiveness of the Registration Statement of which this
Prospectus forms a part, the Indenture will be subject to and governed by the
Trust Indenture Act. The following is a summary of the material provisions of
the Indenture and does not purport to be complete, and where reference is made
to particular provisions of the Indenture, such provisions, including the
definitions of certain terms, are qualified in their entirety by reference to
all of the provisions of the Indenture and those terms made a part of the
Indenture by reference to the Trust Indenture Act. A copy of the Indenture is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part, and is incorporated by reference herein. For definitions of certain
capitalized terms used in the following summary, see "--Certain Definitions" or
"Exchange Offer; Registration Rights."
General
The New Notes will be unsecured senior subordinated obligations of the
Company limited to $150,000,000 aggregate principal amount. Principal of,
premium, if any, and interest on, the Notes will be payable, and the Notes may
be presented for registration of transfer or exchange, at the office or agency
of the Company maintained for such purpose in the City of New York, New York. At
the option of the Company, payment of interest may be made by check mailed to
the holders at the addresses set forth upon the registry books of the Company.
See "Book-Entry, Delivery and Form." The New Notes will be issued solely in
exchange for an equal principal amount of outstanding Old Notes pursuant to the
Exchange Offer. The form and terms of the New Notes will be identical in all
material respects to the form and terms of the Old Notes, except that (i) the
New Notes have been registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof, (ii) holders of New Notes will
not be entitled to any Additional Interest thereon pursuant to certain
circumstances under the Registration Rights Agreement and (iii) holders of New
Notes will no longer be entitled to certain other rights under the Registration
Rights Agreement. The New Notes will be issued only in fully registered form
without coupons, in denominations of $1,000 and integral multiples thereof. No
service charge will be made for any registration of transfer, exchange or
redemption of the Notes, except in certain circumstances for any tax or other
governmental charge that may be imposed in connection therewith.
Because the Company is a holding company which conducts substantially all
of its operations through its Subsidiaries, the Notes will be effectively
subordinated to all existing and future liabilities of the Company's
Subsidiaries. Thus, the right of the Company, and hence the right of creditors
of the Company (including the holders of the Notes), to participate in any
distribution of the assets of any Subsidiary upon its liquidation or
reorganization or otherwise is necessarily subject to the prior claims of
creditors of such Subsidiary, except to the extent that claims of the Company
itself as a creditor of the Subsidiary may be recognized.
As of the date of the Indenture, all of the Company's Subsidiaries will be
Restricted Subsidiaries. However, under certain circumstances, the Company will
be able to designate future Subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants set forth in the Indenture.
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<PAGE>
Maturity, Interest and Principal
The Notes will mature on July 1, 2006. The Notes will bear interest at the
rate per annum equal to 8 1/8% per annum from the date of issuance. Interest
will be payable semi-annually on January 1 and July 1 of each year, commencing
on January 1, 1999, to the registered holders of such Notes ("Holders") at the
close of business on the December 15 or June 15 immediately preceding such
Interest Payment Date. Interest will be calculated on the basis of a 360-day
year, consisting of twelve 30-day months.
Guarantees
The Company's payment obligations under the Notes will be jointly and
severally guaranteed on an unsecured senior subordinated basis (the
"Guarantees") by each of the Company's existing and future Restricted
Subsidiaries, as guarantors. The Guarantees will be subordinated in right of
payment to all existing and future Senior Indebtedness of the Guarantors. The
Notes are not guaranteed by Empress Opportunities, Empress Racing, Empress
Mississippi, or any future Unrestricted Subsidiaries.
The Indenture contains provisions the intent of which is to provide that
the obligations of each Guarantor will be limited to the maximum amount that
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor 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 its Guarantee or
pursuant to its contribution obligations under the Indenture, result in the
obligations of such Guarantor under its Guarantee not constituting a fraudulent
conveyance or fraudulent transfer under any applicable Federal, state or foreign
law. Each Guarantor that makes a payment or distribution under a Guarantee shall
be entitled to contribution from each other Guarantor so long as the exercise of
such right does not impair the rights of the holders of the Notes. See "Risk
Factors--Fraudulent Transfer Considerations."
The Indenture provides that in the event of (i) a sale or other disposition
of all or substantially all of the assets of any Guarantor or the sale of a
Guarantor, by way of merger, consolidation or otherwise, (ii) a Subsidiary
becoming an Unrestricted Subsidiary pursuant to terms of the Indenture or (iii)
a sale or other disposition of all of the Capital Stock of any Guarantor, then
such Guarantor or the corporation acquiring the property, as applicable, shall
be released and relieved of any obligations under its guarantee, provided that
the Company complies with the provisions of the covenant described under
"Certain Covenants--Limitation on Sale of Assets and Subsidiary Stock; Event of
Loss."
The Indenture provides that the Company shall cause each Restricted
Subsidiary hereafter formed or acquired or any Unrestricted Subsidiary that is
designated a Restricted Subsidiary to (i) execute and deliver to the Trustee a
supplemental indenture in a form satisfactory to the Trustee pursuant to which
such Restricted Subsidiary shall unconditionally guarantee all of the Company's
obligations under the Notes on the terms set forth in the Indenture and (ii)
deliver to the Trustee an opinion of counsel, subject to customary assumptions
and exclusions, stating that such supplemental indenture has been duly executed
and delivered by such Restricted Subsidiary.
Redemption
Optional Redemption. The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or after July 1, 2002, at the
following redemption prices (expressed as percentages of the principal amount)
set forth below, plus accrued and unpaid interest thereon, if any, to the date
of redemption, if redeemed during the 12-month period commencing July 1 of the
years indicated below:
Year Percentage
---- ----------
2002.................... 104.063%
2003.................... 102.708%
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2004................... 101.354%
2005................... 100.000%
Optional Redemption upon Equity Offering. On or prior to July 1, 2001, the
Company may, at its option, use the net proceeds of an Equity Offering to redeem
up to 35% of the issued aggregate principal amount of the Notes, at a redemption
price in cash equal to 108 1/8% of the principal amount thereof, plus accrued
and unpaid interest thereon, if any, to the date of redemption; provided,
however, that not less than $97.5 million in aggregate principal amount of Notes
is outstanding following such redemption. Notice of any such redemption must be
given not later than 60 days after the consummation of the related Equity
Offering.
As used in the preceding paragraph, an "Equity Offering" means a public
sale of common stock of the Company in a transaction registered with the
Commission.
Required Regulatory Redemption. The Notes will be redeemable, in whole or
in part, at any time, at 100% of the principal amount thereof, plus accrued and
unpaid interest to the redemption date, (i) pursuant to, and in accordance with,
any order of any Governmental Authority with appropriate jurisdiction and
authority relating to a Gaming License (a "Gaming Authority"), or (ii) to the
extent necessary in the reasonable, good faith judgment of the Board of
Directors of the Company to prevent the loss, failure to obtain or material
impairment of, or to secure the reinstatement of, any Gaming License, which if
lost, impaired, not obtained or not reinstated would reasonably be expected to
have a material adverse effect on the Company and its Restricted Subsidiaries,
considered as a whole, or would restrict the ability of the Company or any of
its Restricted Subsidiaries to conduct business in any Gaming Jurisdiction, in
the case of each of (i) and (ii) where such redemption or acquisition is
required because the Holder or beneficial owner of such Note is required to be
found suitable, or otherwise qualify, under any Gaming Laws and is not found
suitable or so qualified (a "Required Regulatory Redemption").
If a Noteholder or a beneficial owner of a Note is required by any Gaming
Authority to be found suitable, the Noteholder shall apply for a finding of
suitability within 30 days after a Gaming Authority requests or sooner if so
required by such Gaming Authority. The applicant for a finding of suitability
must pay all costs of the investigation for such finding of suitability. If a
Noteholder or beneficial owner is required to be found suitable and is not found
suitable by a Gaming Authority, the Noteholder shall, to the extent required by
applicable law, dispose of his Notes within 30 days or within that time
prescribed by a Gaming Authority, whichever is earlier.
Selection and Notice. Notice of any redemption will be sent by first-class
mail at least 30 days and not more than 60 days prior to the date fixed for
redemption, to the Holder of each Note to be redeemed to such Holder's last
address as then shown upon the registry books of the Company. The notice of
redemption must state the date fixed for redemption, the redemption price and
the amount of accrued and unpaid interest to be paid. Any notice which relates
to a Note to be redeemed in part only must state the portion of the principal
amount equal to the unredeemed portion thereof and must state that on and after
the date fixed for redemption, upon surrender of such Note, a new Note or Notes
in principal amount equal to the unredeemed portion thereof will be issued. On
and after the date fixed for redemption, interest will cease to accrue on the
Notes or portions thereof called for redemption so long as the Company has
deposited with the paying agent for the Notes funds in satisfaction of the
redemption price, plus accrued and unpaid interest, pursuant to the Indenture.
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed
or, if the Notes are not listed on a national securities exchange, on a pro rata
basis, by lot or in such other manner as the Trustee deems appropriate and fair;
provided, however, that any such redemption made with the net proceeds of an
Equity Offering shall be made on a pro rata basis or on as nearly a pro rata
basis as practicable (subject to the procedures of the DTC). The Notes may be
redeemed in part in multiples of $1,000 only.
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The Notes will not have the benefit of any sinking fund.
Change of Control
The Indenture provides that, upon the occurrence of a Change of Control,
each Holder of Notes will have the right, at such Holder's option, subject to
the terms and conditions of the Indenture, pursuant to an irrevocable,
unconditional offer by the Company (the "Change of Control Offer"), to require
the Company to repurchase all or any portion of such Holder's Notes (provided
that the principal amount of such Notes at maturity must be $1,000 or an
integral multiple thereof) on a date (the "Change of Control Purchase Date")
that is no later than 30 Business Days after the occurrence of such Change of
Control, at a cash price (the "Change of Control Purchase Price") equal to
101% of the principal amount thereof, plus accrued and unpaid interest to and
including the Change of Control Purchase Date. The Change of Control Offer must
commence within 10 Business Days following a Change of Control and must remain
open for at least 20 Business Days following its commencement, except to the
extent that a longer period is expressly required by applicable law (the
"Change of Control Offer Period"). Upon expiration of the Change of Control
Offer Period, the Company will purchase all Notes tendered in accordance with
the terms of the Indenture in response to the Change of Control Offer.
On or before the Change of Control Purchase Date, (i) the Company will
accept for payment Notes or portions thereof properly tendered to the Company
pursuant to the Change of Control Offer; (ii) the Company will deposit with the
paying agent for the Notes U.S. Legal Tender sufficient to pay the Change of
Control Purchase Price (including accrued and unpaid interest) of all Notes so
tendered; and (iii) the Company will deliver to the Trustee Notes so accepted
together with an Officers' Certificate listing the Notes or portions thereof
being purchased by the Company. The joint and several obligations of each of the
Guarantors upon a Change of Control extend both to the payment of principal and
interest on the Notes and to the joint and several obligations of each of the
Guarantors to honor the Change of Control repurchase obligations of the Company
in the event that a Change of Control occurs and the Company is unable to pay in
full the Change of Control Purchase Price. The paying agent for the Notes will
promptly mail to the Holders of Notes so accepted, payment in an amount equal to
the Change of Control Purchase Price (including accrued and unpaid interest),
and the Trustee will promptly authenticate and mail or deliver to such Holders a
new Note equal to the principal amount of any unpurchased portion of the Note
surrendered. Any Notes not so accepted will be promptly mailed or delivered by
the Company to the Holder thereof. The Company will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Purchase Date. The Company can give no assurances that it will
have sufficient funds or access to financing to enable it to meet its obligation
to repurchase the Notes upon a Change of Control.
To the extent applicable and if required by law, the Company will comply
with Section 14 of the Exchange Act, and the provisions of Regulation 14E and
any other tender offer rules promulgated pursuant to the Exchange Act and other
securities laws, rules and regulations which may then be applicable to any offer
by the Company to purchase the Notes at the option of Holders upon a Change of
Control or other Offer to Purchase.
Subordination
The payment of the principal of, premium, if any, and interest (including
any additional interest in respect of a Registration Default) on the Notes will
be subordinated in right of payment, as described below, to the prior payment in
full of all Senior Indebtedness.
The Indenture will provide that in the event of any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith, relating to the
Company, or any liquidation, dissolution or other winding-up of the Company,
whether voluntary or involuntary, or any assignment for the benefit of creditors
or other marshalling of assets or liabilities of the
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Company, (i) all Senior Indebtedness must be paid in full before any payment or
distribution (excluding any payment or distribution of certain permitted equity
or subordinated securities) is made on account of the principal of, premium, if
any, or interest on the Notes or the Guarantees, and (ii) until all Senior
Indebtedness is paid in full, any distribution to which Holders of the Notes
would be entitled but for this provision shall be made to holders of Senior
Indebtedness as their interests may appear, except that Holders of the Notes may
receive Capital Stock or any debt securities that are subordinated to Senior
Indebtedness to at least the same extent as the Notes.
During the continuance of any default in the payment of any Designated
Senior Indebtedness pursuant to which the maturity thereof may immediately be
accelerated beyond any applicable grace period, no payment or distribution of
any assets of the Company of any kind or character (excluding any payment or
distribution of certain permitted equity or subordinated securities) shall be
made on account of the principal of, premium, if any, or interest on, or the
purchase, redemption or other acquisition of, the Notes unless and until such
default has been cured or waived or has ceased to exist or such Designated
Senior Indebtedness shall have been discharged or paid in full.
During the continuance of any non-payment default with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may
immediately be accelerated (a "Non-payment Default") and after the receipt by
the Trustee from the representatives of holders of such Designated Senior
Indebtedness of a written notice of such Non-payment Default, no payment or
distribution of any assets of the Company of any kind or character (excluding
any payment or distribution of certain permitted equity or subordinated
securities) may be made by the Company on account of the principal of, premium,
if any, or interest on, or the purchase, redemption or other acquisition of, the
Notes for the period specified below (the "Payment Blockage Period").
The Payment Blockage Period will commence upon the receipt of written
notice of a Non-payment Default by the Trustee from the representatives of
holders of Designated Senior Indebtedness specifying an election to effect a
Payment Blockage Period and will end on the earlier to occur of the following
events: (i) 179 days shall have elapsed since the receipt of such notice of a
Non-payment Default (provided that such Designated Senior Indebtedness shall not
theretofore have been accelerated), (ii) such default is cured or waived or
ceases to exist or such Designated Senior Indebtedness is discharged or (iii)
such Payment Blockage Period shall have been terminated by written notice to the
Company or the Trustee from the representatives of holders of Designated Senior
Indebtedness initiating such Payment Blockage Period. After the end of any
Payment Blockage Period, the Company shall promptly resume making any and all
required payments in respect of the Notes, including any missed payments.
Notwithstanding anything in the subordination provisions of the Indenture or the
Notes to the contrary, (x) in no event shall a Payment Blockage Period extend
beyond 179 days from the date of the receipt by the Trustee of the notice
initiating such Payment Blockage Period, (y) there shall be a period of at least
186 consecutive days in each 365-day period when no Payment Blockage Period is
in effect and (z) not more than one Payment Blockage Period with respect to the
Notes may be commenced within any period of 365 consecutive days. A Non-payment
Default with respect to Designated Senior Indebtedness that existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Designated Senior Indebtedness initiating such Payment Blockage
Period cannot be made the basis for the commencement of a second Payment
Blockage Period, whether or not within a period of 365 consecutive days, unless
such default has been cured or waived for a period of not less than 90
consecutive days and subsequently recurs.
As used herein, the term "Designated Senior Indebtedness" means (a) the
Bank Indebtedness and (b) any other Senior Indebtedness in a principal amount of
at least $10 million outstanding which, at the time of determination, is
specifically designated in the instrument governing such Senior Indebtedness as
"Designated Senior Indebtedness" by the Company.
If the Company fails to make any payment on the Notes when due or within
any applicable grace period, whether or not on account of the payment blockage
provisions referred to above, such failure would constitute
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an Event of Default under the Indenture and would enable the holders of the
Notes to accelerate the maturity thereof. See "--Events of Default and
Remedies."
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the Notes and funds which would be otherwise
payable to the holders of the Notes will be paid to the holders of Senior
Indebtedness to the extent necessary to pay the Senior Indebtedness in full, and
the Company may be unable to meet its obligations fully with respect to the
Notes.
As of June 30, 1998, excluding the outstanding indebtedness under the
10 3/4% Notes, the Company and the Guarantors had $10.0 million of Senior
Indebtedness outstanding. The Indenture limits, but does not prohibit, the
incurrence by the Company of additional Indebtedness which is senior to the
Notes. See "Risk Factors--Subordination."
Certain Covenants
Limitation on Incurrence of Indebtedness and Preferred Stock
The Indenture provides that, except as set forth in any one of the
paragraphs below, the Company shall not, and shall not cause or permit any of
its Restricted Subsidiaries to, directly or indirectly, issue, assume, guaranty,
incur, suffer to exist, become directly or indirectly liable with respect to
(including as a result of an acquisition, merger or consolidation), extend the
maturity of, or otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur," or, as appropriate, an
"incurrence"), any Indebtedness or any Preferred Stock on or after the Issue
Date; provided that the Company and its Restricted Subsidiaries may incur
Indebtedness or Preferred Stock if: (i) no Default or Event of Default shall
have occurred and be continuing at the time of, or would occur after giving
effect to, on a pro forma basis, such incurrence of such Indebtedness or
Preferred Stock; and (ii) on the date of the incurrence of such Indebtedness or
Preferred Stock (the "Incurrence Date"), the Consolidated Fixed Charge
Coverage Ratio for the Reference Period immediately preceding the Incurrence
Date, after giving effect, on a pro forma basis, to the incurrence of such
Indebtedness or Preferred Stock as of the first day of the Reference Period,
would be at least 2.00 to 1.
Notwithstanding the foregoing, the Company and its Restricted Subsidiaries,
as applicable, may incur each of the following (collectively, "Permitted
Indebtedness"):
(a) The Company may incur the Indebtedness represented by the Notes and its
Restricted Subsidiaries may incur the Subsidiary Guarantees;
(b) The Company and its Restricted Subsidiaries may incur the Existing
Indebtedness;
(c) The Company and its Restricted Subsidiaries may incur the Bank
Indebtedness in an aggregate principal amount at any one time outstanding not to
exceed $100.0 million, less the amount of all permanent repayments thereof with
the Net Cash Proceeds from an Asset Sale as set forth under "--Limitation on
Sale of Assets and Subsidiary Stock; Event of Loss";
(d) The Company and its Restricted Subsidiaries may incur Purchase Money
Indebtedness or Non-Recourse Indebtedness, provided that the amount of such
Indebtedness outstanding at any time pursuant to this paragraph (d) (including
any Indebtedness, whether or not Refinancing Indebtedness, issued to refinance,
replace or refund such Indebtedness) shall not, in the aggregate, exceed $7.5
million;
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(e) The Company and its Restricted Subsidiaries may incur FF&E
Indebtedness, provided, that the amount of such Indebtedness outstanding at any
time pursuant to this paragraph (e) (including any Indebtedness, whether or not
Refinancing Indebtedness, issued to refinance, replace or refund such
Indebtedness) shall not, in the aggregate, exceed at any time the product of (i)
$7.5 million, times (ii) the number of Facilities being operated by the Company
and its Restricted Subsidiaries;
(f) The Company and its Restricted Subsidiaries may incur Refinancing
Indebtedness with respect to any Indebtedness or Preferred Stock, as applicable,
described in clauses (b) through (e) of this covenant (so long as, in the case
of Indebtedness used to refinance, replace or retire Indebtedness in clause (d),
such Refinancing Indebtedness is non-recourse as to any assets other than the
assets that secured such Indebtedness being refinanced, replaced or retired; and
in the case of clause (b) of this covenant, other than Refinancing Indebtedness
with respect to the 10 3/4% Notes);
(g) The Company and its Restricted Subsidiaries may incur Indebtedness
under Interest Swap Obligations, provided that in each case the notional
principal amount of such Interest Swap Obligation does not exceed the principal
amount of Indebtedness to which such Interest Swap Obligation relates;
(h) The Company and its Restricted Subsidiaries may incur Indebtedness in
the form of (i) letters of credit and (ii) performance bonds and surety bonds,
the aggregate principal amount of which shall not at any time exceed $7.5
million in the aggregate outstanding;
(i) The Company may incur Indebtedness to a Restricted Subsidiary, a
Restricted Subsidiary may incur Indebtedness to the Company and a Restricted
Subsidiary may incur Indebtedness to another Restricted Subsidiary; provided
that any such Indebtedness is made pursuant to an intercompany note and is
expressly subordinated in right of payment to the payment and performance of the
Company's obligations under the Notes or such Restricted Subsidiary's
obligations under the Subsidiary Guarantees, as applicable, and, upon an Event
of Default, such Indebtedness shall not be due and payable until such Event of
Default is cured, waived or rescinded; provided, further, that any disposition,
pledge or transfer of any such Indebtedness to a Person (other than a
disposition, pledge or transfer to a Restricted Subsidiary) shall be deemed to
be an incurrence of such Indebtedness by the Company or such Restricted
Subsidiary, as applicable, not permitted by this clause (i); and
(j) The Company and its Restricted Subsidiaries may incur Indebtedness in
an aggregate principal amount outstanding at any time of up to $25 million in
the aggregate.
Limitation on Restricted Payments
The Company shall not, and shall not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, make any Restricted Payment if,
immediately prior to such proposed Restricted Payment or after giving effect to
such proposed Restricted Payment on a pro forma basis, (1) a Default or an Event
of Default shall have occurred and be continuing; or (2) the Company would not
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Fixed Charge Coverage Ratio test contained in the covenant
described under "--Limitation on Incurrence of Indebtedness and Preferred
Stock"; or (3) the aggregate amount of all Restricted Payments made by the
Company and its Restricted Subsidiaries, including after giving pro forma effect
to such proposed Restricted Payment (including Restricted Payments described in
clause (a) of the following paragraph) from and after the Issue Date, would
exceed the sum of (a) 50% of the amount by which the aggregate Adjusted
Consolidated Net Income for the period (taken as one accounting period)
commencing on the first day of the fiscal quarter that includes the Issue Date,
to and including the last day of the full fiscal quarter ended immediately prior
to the date of each such calculation, exceeds permitted distributions of Tax
Amounts (as defined) made with respect to such period (or, in the event Adjusted
Consolidated Net Income less permitted distributions of Tax Amounts made with
respect to such period is a deficit, then minus 100% of such deficit) plus (b)
50% of all cash dividends or any other cash payments which
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represent distributions of net income (determined in accordance with GAAP) paid
by an Unrestricted Subsidiary or any other person (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary has an ownership
interest to the Company or a Restricted Subsidiary to the extent the same are
not otherwise included in Adjusted Consolidated Net Income or represent a return
of capital, plus (c) 100% of the aggregate Net Cash Proceeds received by the
Company or any Restricted Subsidiary as a capital contribution (other than
capital contributions directly or indirectly made from the Company or any
Restricted Subsidiary and other than capital contributions made from the
proceeds of loans or advances described in clause (g) of the following
paragraph) or from the sale of Qualified Capital Stock after the Issue Date plus
(d) in the case of the disposition or repayment of any Investment in an
Unrestricted Subsidiary or any other person (other than a Restricted Subsidiary)
in which the Company or any Restricted Subsidiary has an ownership interest
constituting a Restricted Payment made after the Issue Date, an amount equal to
the lesser of the return of capital with respect to such Investment and the
initial amount of such Investment which was treated as a Restricted Payment, in
either case, less the cost of the disposition or repayment of such Investment.
The restrictions set forth in the immediately preceding paragraph, however,
will not prohibit (a) the payment of any dividend or redemption payment within
60 days after the date of declaration thereof, if at the date of declaration
such payment would have complied with the provisions of the Indenture; (b) a
Qualified Exchange; (c) a Required Regulatory Redemption; (d) with respect to
each tax year that the Company qualifies as an S Corporation under the Code, or
any similar provision of state or local law, distributions of Tax Amounts,
provided, however, that prior to any distribution of Tax Amounts, a
knowledgeable and duly authorized officer of the Company certifies, and counsel
reasonably acceptable to the Trustee opines, to the Trustee that the Company
qualifies as an S Corporation for Federal income tax purposes and for the states
in respect of which such distributions are being made (or so qualified for the
period or periods for which such Tax Amounts are computed); (e) for so long as
no Default or Event of Default shall have occurred and be continuing, Restricted
Payments in an amount not to exceed $10 million in the aggregate to pay for the
redemption of Capital Stock of the Company held by its directors or officers, or
by its stockholders, as of the Issue Date; (f) for so long as no Default or
Event of Default shall have occurred and be continuing, Restricted Payments in
the aggregate amount of up to $10 million, which amount shall increase by $10
million on each of the first four anniversaries of the Issue Date, provided that
the Consolidated Fixed Charge Coverage Ratio for the Reference Period
immediately preceding the date of making any such Restricted Payment permitted
solely by this clause (f) would be at least 3.00 to 1 on a pro forma basis, as
if such Restricted Payment were made on the first day of the Reference Period;
(g) for so long as no Default or Event of Default shall have occurred and be
continuing, loans or advances to officers, directors, employees or stockholders
of the Company or any Restricted Subsidiary in an aggregate amount not to exceed
$7.5 million at any time outstanding, provided that (A) such loan or advance is
used by the officer, director, employee or stockholder receiving such loan or
advance to purchase Capital Stock of the Company or any Restricted Subsidiary,
and (B) the repayment of such loan or advance is secured by a first priority
pledge of the Capital Stock so purchased; and (h) for so long as no Default or
Event of Default shall have occurred and be continuing, Permitted Investments.
"Tax Amounts" with respect to any year means an amount equal to (a) the
higher of (i) the product of (A) the taxable income of the Company for such year
as determined in good faith by its Board of Directors; and (B) the Tax
Percentage (as defined); and (ii) the product of (A) the alternative minimum
taxable income attributable to the Company for such year as determined in good
faith by its Board of Directors; and (B) the Tax Percentage, plus (b) any
deficiencies, penalties or interest payable by the Company's stockholders solely
as a result of the taxable income of the Company, less (c) to the extent not
previously taken into account, any income tax benefit attributable to the
Company which could be realized by the Company's stockholders in the current or
a prior taxable year (including, without limitation, tax losses, alternative
minimum tax credits, other tax credits and carryforwards and carrybacks
thereof); provided, however, that in no event shall such Tax Percentage exceed
the lesser of (1) the highest aggregate applicable effective marginal rate of
Federal, state and local income tax or, when applicable, alternative minimum
tax, to which a corporation doing business in Chicago, Illinois would be subject
in the relevant year of determination (as certified to the Trustee by a
nationally recognized tax accounting firm) plus 500 "Basis Points"; and (2)
60%. Any part of the Tax Amount not distributed in respect
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of a tax period for which it is calculated shall be available for distribution
in subsequent tax periods (whether or not the Company ceases to qualify as an S
Corporation prior to such distribution). The term "Tax Percentage" is the
highest aggregate applicable effective marginal rate of Federal, state and local
income tax or, when applicable, alternative minimum tax, to which an individual
resident of Chicago, Illinois would be subject in the relevant year of
determination (as certified to the Trustee by a nationally recognized tax
accounting firm). Distributions of Tax Amounts may be made from time to time
with respect to a tax year based on reasonable estimates, with a reconciliation
within 40 days of the earlier of (i) the Company's filing of the Internal
Revenue Service Form 1120S for the applicable taxable year; and (ii) the last
date such form is required to be filed (without regard to any extensions). The
stockholders of the Company will enter into a binding agreement with the Company
to reimburse the Company for certain positive differences between the
distributed amount and the Tax Amount, which difference must be paid at the time
of such reconciliation; provided, that in lieu thereof, the Company shall notify
all stockholders that any such positive differences will be set off against
future distributions of Tax Amounts.
Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries
The Company shall not, and shall not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, create, assume or suffer to exist any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends, in cash or otherwise, or make other
distributions on its Capital Stock or pay Indebtedness owed to the Company or
any other Restricted Subsidiary, (ii) make any loans or advances to the Company
or any other Restricted Subsidiary or (iii) transfer any of its assets to the
Company or any other Restricted Subsidiary, except (a) restrictions imposed by
the Notes or the Indenture, or restrictions imposed by other Senior Indebtedness
which are substantially the same as (and apply only to the same persons and
property as) such restrictions; (b) restrictions imposed by applicable Gaming
Law; and (c) restrictions under any Acquired Indebtedness not incurred in
violation of the Indenture or any agreement relating to any property, asset, or
business acquired by the Company or any of the Restricted Subsidiaries, which
restrictions existed at the time of such acquisition, were not incurred in
connection with or in anticipation of such acquisition and are not applicable to
any person, other than the person acquired, or to any property, asset or
business, other than the property, assets and business so acquired.
Notwithstanding the foregoing, neither (a) reasonable and customary provisions
restricting subletting or assignment of any lease entered into in the ordinary
course of business, consistent with industry practice; nor (b) Liens on assets
securing Senior Indebtedness not incurred in violation of the Indenture, shall
in and of themselves be considered a restriction on the ability of the
applicable Restricted Subsidiary to transfer such property or assets, as the
case may be.
Limitation on Liens
The Company shall not, and shall not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien in or on any right, title or interest to any of their respective
properties or assets, now owned or hereafter acquired, securing any obligation
unless the Notes are secured on an equal and ratable basis with such Lien, other
than Permitted Liens.
Limitation on Sale of Assets and Subsidiary Stock; Event of Loss
The Company shall not, and shall not cause or permit any of its Restricted
Subsidiaries, directly or indirectly, to, make any Asset Sale unless (a) no
Default or Event of Default shall have occurred and be continuing at the time
of, or would occur after giving effect, on a pro forma basis, to, such Asset
Sale; (b) the Board of Directors of the Company determines in good faith that
the Company or such Restricted Subsidiary, as applicable, receives fair market
value as consideration for such Asset Sale, as evidenced by an Officers'
Certificate delivered to the Trustee; and (c) at least 75% of the consideration
for such conveyance, sale, lease,
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transfer or other disposition consists of U.S. Legal Tender, Cash Equivalents or
securities of a company with a market capitalization of at least $500 million,
which securities are traded on a national securities exchange and are of a class
and series of securities with a minimum public float of $100 million. Within 360
days following an Asset Sale, the Company and its Restricted Subsidiaries must
apply (or enter into a binding contractual commitment to apply) the Net Cash
Proceeds therefrom (a) first, to the extent the Company or a Restricted
Subsidiary elects (or is required by the terms of any Senior Indebtedness), to
permanently repay Senior Indebtedness (for purposes of this clause, a repayment
of any amount owing under a revolving credit facility shall be deemed a
permanent repayment to the extent the amount represented by such repayment is
not drawn upon by the Company for a period of six months after such repayment);
(b) second, to the extent the Company or a Restricted Subsidiary elects, to
reinvest in additional assets that are part of a Related Business of the Company
or a Restricted Subsidiary; and (c) third, to the extent the Net Cash Proceeds,
after application of (a) and (b), exceed $10 million (the "Excess Proceeds"),
the Company shall make an offer (the "Asset Sale Offer") to all Holders to
purchase the Notes in the amount of the Excess Proceeds at 100% of the principal
amount thereof, plus accrued and unpaid interest to the date of payment (the
"Asset Sale Offer Price"). Each Asset Sale Offer shall remain open for twenty
(20) Business Days following its commencement and no longer, except to the
extent that a longer period is expressly required by applicable law (the "Asset
Sale Offer Period"). Upon expiration of the Asset Sale Offer Period, the
Company shall apply an amount equal to the Excess Proceeds received from an
Asset Sale included in such Asset Sale Offer to the purchase of all Notes
tendered (on a pro rata basis if the Excess Proceeds are insufficient to
purchase all Notes so tendered) at the Asset Sale Offer Price.
Upon an Event of Loss relating to property with a fair market value in
excess of $5.0 million, the Company and any Restricted Subsidiaries will apply
the Net Cash Proceeds therefrom in accordance with the provisions of the
preceding paragraph.
Limitation on Transactions with Affiliates
The Company shall not, and shall not cause or permit any of its Restricted
Subsidiaries, on or after the Issue Date, to enter into any transaction,
including any contract, arrangement, agreement, loan, advance, guarantee or
understanding and including any series of related transactions, with or for the
benefit of any Affiliate (an "Affiliate Transaction") unless such Affiliate
Transaction or series of related Affiliate Transactions are made in good faith
and (a) the terms of such Affiliate Transaction or series of related Affiliate
Transactions are fair and reasonable to the Company or such Restricted
Subsidiary, as applicable, and are at least as favorable to the Company or such
Restricted Subsidiary, as applicable, as the terms that could be obtained by the
Company or such Restricted Subsidiary, as applicable, in a comparable
transaction made on an arms' length basis between unaffiliated parties, (b) that
with respect to any Affiliate Transaction (including any series of related
Affiliate Transactions) involving consideration to either party in excess of
$2.0 million, the Company shall have delivered to the Trustee an Officer's
Certificate certifying that such Affiliate Transaction or series of related
Affiliate Transactions complies with clause (a) above, and (c) with respect to
any Affiliate Transaction (including any series of related Affiliate
Transactions) involving consideration to either party in excess of $5.0 million,
either (A) such Affiliate Transaction or series of Affiliate Transactions has
been approved by a majority of the disinterested directors of the Company or (B)
the Company delivers to the Trustee a written favorable opinion as to the
fairness of such transaction to the Company from a financial point of view, from
an independent investment banking firm of national reputation; provided, that
any transactions solely between or among the Company and its Restricted
Subsidiaries, between or among the Restricted Subsidiaries or between or among
the Company and its Unrestricted Subsidiaries shall not be deemed to be
Affiliate Transactions for purposes of this covenant (as long as in the case of
Unrestricted Subsidiaries, the Capital Stock which is not owned by any of the
Company, a Restricted Subsidiary or an Unrestricted Subsidiary, is not owned by
an Affiliate of the Company or any of its Restricted Subsidiaries).
Limitation on Mergers and Consolidations
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The Company shall not consolidate with or merge with or into another person
or, directly or indirectly, sell, lease or convey all or substantially all of
its assets (computed on a consolidated basis), whether in a single transaction
or a series of related transactions, to another person or group of affiliated
persons, unless (i) the resulting, surviving or transferee entity is a
corporation organized under the laws of the U.S., any state thereof or the
District of Columbia and expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Notes and the Indenture; (ii)
no Default or Event of Default shall exist or shall occur immediately after
giving effect on a pro forma basis to such transaction; (iii) immediately after
giving effect to such transaction, on a pro forma basis, the surviving or
transferee entity would immediately thereafter be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Consolidated Fixed Charge
Coverage Ratio provision contained in the covenant described under
"--Limitation on Incurrence of Indebtedness and Preferred Stock"; and (iv) such
transaction will not result in the loss of any Gaming License held by a
Significant Subsidiary of the Company. For purposes of this covenant, the
Consolidated Fixed Charge Coverage Ratio shall be determined on a pro forma
consolidated basis (after giving effect, on a pro forma basis, to the
transaction and any related incurrence of Indebtedness or Preferred Stock) for
the Reference Period which ended immediately preceding such transaction.
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall succeed to, and be substituted for, and
may exercise every right and power of the Company under the Indenture and the
Notes, with the same effect as if such successor corporation had been named
therein as the Company.
Limitation on Other Senior Subordinated Indebtedness
The Company shall not, and shall not cause or permit any of the Restricted
Subsidiaries to, create, incur, assume, guarantee or in any other manner become
liable with respect to any Indebtedness (other than the Notes and the
Guarantees) that is subordinate in right of payment to any Senior Indebtedness
of the Company or such Restricted Subsidiary, as applicable, unless such
Indebtedness is either (a) pari passu in right of payment with the Notes or the
Guarantee, as applicable or (b) subordinate in right of payment to the Notes or
the Guarantee, as applicable, in the same manner and at least to the same extent
as the Notes are subordinated to Senior Indebtedness of the Company or as such
Guarantee is subordinated to Senior Indebtedness of such Guarantor, as
applicable.
Limitation on Sale of Capital Stock of Restricted Subsidiaries
The Company shall not, and shall not cause or permit any of its Restricted
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Capital Stock of any Restricted Subsidiary to any person (other than the Company
or a Guarantor), unless (a) (i) such transfer, conveyance, sale, lease or other
disposition is of all of the Capital Stock of such Restricted Subsidiary or (ii)
after giving effect to such transfer, conveyance, sale, lease or other
disposition, the Company or the applicable Guarantor remains the owner of a
majority of the Capital Stock of such Restricted Subsidiary and (b) the Net Cash
Proceeds from such transfer, conveyance, sale, lease or other disposition are
applied in accordance with the covenant described above under the caption
"--Limitation on Sale of Assets and Subsidiary Stock; Event of Loss."
Limitation on Lines of Business
The Company shall not, and shall not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, engage in any line or lines of business
activity other than in a Related Business.
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Limitation on Designations of Unrestricted Subsidiaries
The Company may designate after the Issue Date any Subsidiary of the
Company (other than a Guarantor in existence on the Issue Date) as an
"Unrestricted Subsidiary" under the Indenture (a "Designation") only if, at the
time of Designation:
(i) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation;
(ii) the Company would be permitted to make an Investment at the time of
Designation (assuming the effectiveness of such Designation) in an amount (the
"Designation Amount") equal to the amount of the Company's Investment in such
Subsidiary on such date;
(iii) neither the Company nor any Restricted Subsidiary has any
Indebtedness with respect to which such Unrestricted Subsidiary is also an
obligor or guarantor; and
(iv) the Company would be permitted under the Indenture to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to the
covenant described under "--Limitation on Incurrence of Indebtedness and
Preferred Stock" at the time of such Designation (assuming the effectiveness of
such Designation).
In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment pursuant to the covenant
described under "--Limitation on Restricted Payments" for all purposes of the
Indenture in the Designation Amount.
The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "Revocation") if:
(i) no Default shall have occurred and be continuing at the time of and
after giving effect to such Revocation (unless the Revocation cures such
default); and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately following such Revocation would, if incurred at such time, have been
permitted to be incurred by the Company or its Restricted Subsidiaries for all
purposes of the Indenture.
All Designations and Revocations must be evidenced by Board Resolutions of
the Company delivered to the Trustee and an Officer's Certificate certifying
compliance with the foregoing provisions.
Limitation on Status as Investment Company
The Company and the Restricted Subsidiaries from becoming investment
companies (as that term is defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act")), or from otherwise becoming subject to
regulation under the Investment Company Act.
As used in this section, the phrase "directly or indirectly" shall not be
construed so as to prohibit an Unrestricted Subsidiary from undertaking the
otherwise prohibited action nor shall such phrase be construed to prohibit the
stockholder of an Unrestricted Subsidiary from voting its stock in favor of such
action.
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Reports
Whether or not the Company is subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, it shall deliver to the Trustee and to each
Holder and to prospective purchasers of Notes identified to the Company by the
Initial Purchaser, within 15 days after it is or would have been (if it were
subject to such reporting obligations) required to file such with the
Commission, (i) annual and quarterly financial statements substantially
equivalent to financial statements that would have been included in reports
filed with the Commission if the Company were subject to the requirements of
Section 13 or 15(d) of the Exchange Act including, with respect to annual
information only, a report thereon by a certified independent public accountant
as such would be required in such reports to the Commission and, in each case,
together with a management's discussion and analysis of financial condition and
results of operations which would be so required 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. The timely filing with the
Commission of Forms 10-Q, 10-K and 8-K, as applicable, shall satisfy the
requirements of (i) and (ii) above. In addition, whether or not required by the
rules and regulations of the Commission, the Company will file a copy of all
such information and reports with the Commission for public availability within
the time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. In addition, the
Company has agreed that, for so long as any Notes remain outstanding, they will
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.
Events of Default and Remedies
The Indenture defines an Event of Default as (i) the failure by the Company to
pay any installment of interest on the Notes as and when due and payable and the
continuance of any such failure for 30 days; (ii) the failure to pay all or any
part of the principal of, or premium, if any, on, the Notes when and as the same
become due and payable at maturity, redemption, by acceleration or otherwise, or
the failure by the Company or any Restricted Subsidiary to comply with any of
its obligations described under "--Limitation on Sale of Assets and Subsidiary
Stock; Event of Loss," "--Change of Control" or "--Limitation on Mergers and
Consolidations;" (iii) the failure by the Company to observe or perform any
other covenant or agreement contained in the Notes or the Indenture and, subject
to certain exceptions, the continuance of such failure for a period of 30 days
after written notice is given to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount of
the Notes outstanding; (iv) certain events of bankruptcy, insolvency or
reorganization in respect of the Company or any of its Significant Subsidiaries;
(v) default or defaults under one or more agreements, indentures or instruments
under which the Company or any Restricted Subsidiary then has outstanding
Indebtedness in excess of $10.0 million individually or in the aggregate and
either (a) such Indebtedness (or any payment of principal, interest or premium
thereon) is already due and payable or (b) such default or defaults results in
the acceleration of the maturity of such Indebtedness; (vi) final unsatisfied
judgments no longer subject to appeal not covered by insurance aggregating in
excess of $10.0 million at any one time rendered against the Company or any of
the Restricted Subsidiaries and not stayed, bonded or discharged within 60 days;
or (vii) the loss for 90 days of the legal right to conduct gaming operations at
any Casino which, if the Facility of which such Casino is a part were operated
by a single Subsidiary, would constitute a Significant Subsidiary. The Indenture
will provide that if a Default occurs and is continuing, the Trustee must,
within 90 days after the occurrence of such default, give to the Holders notice
of such default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv) above relating to the Company or any of the
Significant Subsidiaries) unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the Holders of 25% of the
aggregate principal amount of the Notes then outstanding, by notice in writing
to the Company (and to the Trustee if given by Holders) (an "Acceleration
Notice"), may declare all principal of, and accrued and unpaid interest on, the
Notes due and payable immediately. If an Event of Default specified in clause
(iv) above relating to the Company or any of the Significant Subsidiaries
occurs, all principal of, and accrued and unpaid interest on, the Notes will
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be immediately due and payable without any declaration or other act on the part
of Trustee or the Holders. The Holders of no less than a majority in aggregate
principal amount of Notes are generally authorized to rescind such acceleration
if all existing Events of Default, other than the non-payment of the principal
of, premium, if any, and interest on, the Notes which have become due solely by
such acceleration, have been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority of the aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any Default or Event of
Default, except a Default or Event of Default in the payment of principal of, or
interest on, any Note not yet cured, or a Default or Event of Default with
respect to any covenant or provision which cannot be modified or amended without
the consent of the Holder of each outstanding Note affected. Subject to the
provisions of the Indenture relating to the duties of the Trustee, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request, order or direction of any of the Holders, unless such
Holders have offered to the Trustee reasonable security or indemnity. Subject to
all provisions of the Indenture and applicable law, the Holders of a majority of
the aggregate principal amount of the Notes at the time outstanding will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred
on the Trustee.
Legal Defeasance and Covenant Defeasance
The Company may, at its option at any time within the final year of the
Stated Maturity of the Notes, elect to have its obligations discharged with
respect to the outstanding Notes ("Legal Defeasance"). Such Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented, and the Indenture shall cease to be of further effect
as to all outstanding Notes and Subsidiary Guarantees except as to (i) rights of
Holders to receive payments in respect of the principal of, premium, if any, and
interest on, such Notes when such payments are due solely from the trust fund
described below; (ii) the Company's obligations with respect to such Notes
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost or stolen Notes, and the maintenance of an office or agency for payment and
money for security payments held in trust; (iii) the rights, powers, trust,
duties, and immunities of the Trustee, and the Company's obligations in
connection therewith; and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have the
obligations of the Company and all Guarantors released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter, any failure to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default and Remedies" will no longer constitute an Event of Default with
respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, U.S. Legal Tender, non-callable Government
Securities or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest on, such Notes on the
stated date for payment thereof or on the redemption date of such principal or
installment of principal of, premium, if any, or interest on, such Notes, and
the Holders of Notes must have a valid, perfected, exclusive security interest
in such trust; (ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the U.S. reasonably acceptable
to the Trustee confirming that (A) the Company has received from, or there has
been published by the Internal Revenue Service a ruling; or (B) since the date
of the Indenture, there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the Holders of such Notes will not recognize income,
gain or loss for Federal income tax purposes as a result of such Legal
Defeasance and will be subject to 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; (iii) in the case of Covenant Defeasance, the
Company shall have delivered to the Trustee an opinion of counsel in the U.S.
reasonably acceptable to such
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Trustee confirming that the Holders of such Notes will not recognize income,
gain or loss for Federal income tax purposes as a result of such Covenant
Defeasance and will be subject to 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 on the date of such deposit or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit; (v) such Legal
Defeasance or Covenant Defeasance shall not result in a breach or violation of,
or constitute a default under, the Indenture or any other material agreement or
instrument to which the Company, the Guarantors or any of their respective
Subsidiaries is a party or by which the Company, the Guarantors or any of their
respective Subsidiaries is bound; (vi) 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 such Notes over any other
creditors of the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others; and (vii) the Company
shall have delivered to the Trustee an Officer's Certificate and an opinion of
counsel, each stating that all conditions precedent provided for or relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
Satisfaction and Discharge
The Indenture will cease to be of further effect as to all such outstanding
Notes when (i) either (a) all such Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid) have
been delivered to the Trustee for cancellation; or (b) all such Notes not
theretofore delivered to the Trustee for cancellation have become due and
payable and the Company or any Guarantor has irrevocably deposited or caused to
be deposited with the Trustee funds in an amount sufficient to pay and discharge
the entire indebtedness on the Notes not theretofore delivered to the Trustee
for cancellation, for principal of, premium, if any, and interest to the Stated
Maturity of, the Notes; (ii) the Company or any Guarantor has paid all other
sums payable under the Indenture; and (iii) the Company and each Guarantor has
delivered to the Trustee an Officers' Certificate and an opinion of counsel each
stating that all conditions precedent under the Indenture relating to the
satisfaction and discharge of the Indenture have been complied with.
Amendments and Supplements
The Indenture contains provisions permitting the Company, the Guarantors
and the Trustee, without the consent of the Holders, to enter into a
supplemental indenture for certain limited purposes including, among other
things, to cure any ambiguity, defect or inconsistency in the Indenture; to
provide for the assumption of the Company's obligations to the Holders by a
successor entity; or to make any change that does not adversely affect the
rights of any Holders. With the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding, the
Company, the Guarantors and the Trustee are permitted to amend or supplement the
Indenture or any supplemental indenture or modify the rights of the Holders;
provided, that no such modification may, without the consent of each Holder
affected thereby: (i) change the Stated Maturity of any Note; or (ii) reduce the
principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon the redemption thereof, or change
the place of payment where, or the coin or currency in which, any Note or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), or
reduce any Offer to Purchase Price; or (iii) alter the redemption provisions in
a manner adverse to the Holders; or (iv) make the Notes subordinate to any
Indebtedness or other claims; (v) change the covenant described under ''--Change
of Control'' above; or (vi) reduce the percentage in principal amount of the
outstanding Notes, the consent of whose Holders is required for any such
amendment, supplemental indenture or waiver provided for in the Indenture; or
(vii) modify any of the waiver provisions, except to increase any required
percentage or to provide that certain other
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provisions of the Indenture cannot be modified or waived without the consent of
the Holder of each outstanding Note affected thereby.
No Personal Liability of Partners, Stockholders, Officers, Directors
No direct or indirect owner, stockholder, employee, agent, officer or
director, as such, past, present or future of the Company or any of its
Subsidiaries or any successor entity shall have any personal liability in
respect of the obligations of the Company or any of its Subsidiaries under the
Indenture or the Notes by reason of his or its status as such owner,
stockholder, employee, agent, officer or director.
Certain Definitions
"Acceleration Notice" has the meaning set forth under "--Events of
Default and Remedies."
"Acquired Indebtedness" with respect to the Company means Indebtedness of
another person existing at the time such person becomes a Restricted Subsidiary
or is merged or consolidated into or with the Company or one of its Restricted
Subsidiaries, and not incurred in connection with or in anticipation of, such
merger or consolidation or of such person becoming a Restricted Subsidiary.
"Acquisition" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation or other transfer, and whether or not for
consideration.
"Adjusted Consolidated Net Income" means Consolidated Net Income, minus
100% of the amount of any writedowns, writeoffs, or negative extraordinary
charges not otherwise reflected in Consolidated Net Income during such period.
"Affiliate" means (i) any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
of the Restricted Subsidiaries; (ii) with respect to the Company and any
Restricted Subsidiary, so long as the Company is an S Corporation, any director
or stockholder of the Company or such Restricted Subsidiary; (iii) any spouse,
immediate family member, or other relative who has the same principal residence
of any person described in clauses (i) or (ii) above; and (iv) any trust in
which any person described in clauses (i) or (ii) above has a beneficial
interest. For purposes of this definition, the term "control" means (a) the
power to direct the management and policies of a person, directly or through one
or more intermediaries, whether through the ownership of voting securities, by
contract, or otherwise; or (b) the beneficial ownership of 10% or more of any
class of voting Capital Stock of a person (on a fully diluted basis) or of
warrants or other rights to acquire such class of Capital Stock (whether or not
presently exercisable).
"Affiliate Transaction" has the meaning set forth under "--Certain
Covenants--Limitation of Transactions with Affiliates."
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease or other disposition (including, without limitation, any merger,
consolidation or sale-leaseback transaction) to any person other than the
Company or a Restricted Subsidiary, in one or a series of related transactions,
of (i) any Capital Stock of any Restricted Subsidiary; (ii) all or substantially
all of the assets of any division or line of business of the Company or any
Restricted Subsidiary; or (iii) any other properties or assets of the Company or
any Restricted Subsidiary other than in the ordinary course of business. For the
purposes of this definition, the term "Asset Sale" will not include (a) any
sale of the Capital Stock of an Unrestricted Subsidiary or any other person
(other than a Restricted Subsidiary) in which the Company or any Restricted
Subsidiary has an ownership interest or any merger or consolidation involving
only an Unrestricted Subsidiary or any other person (other than a
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Restricted Subsidiary) in which the Company or any Restricted Subsidiary has an
ownership interest or any merger or consolidation involving only an Unrestricted
Subsidiary or any other person (other than a Restricted Subsidiary) in which the
Company or any Restricted Subsidiary has an ownership interest or any sale,
issuance, conveyance, transfer, lease or other disposition of properties or
assets governed by the provisions described under ''--Limitation on Mergers and
Consolidations''; (b) sales of property or equipment that have become worn out,
obsolete or damaged or otherwise unsuitable for use in connection with the
business of the Company or any Restricted Subsidiary, as the case may be; (c)
any sale, conveyance, transfer, lease or other disposition of any property or
asset either (i) in the ordinary course of business and consistent with past
practice or (ii) whether in one transaction or a series of related transactions,
involving assets with a fair market value not in excess of $2.0 million; (d) the
sale of the Company's airplane owned on the Issue Date; or (e) the sale,
transfer, lease, conveyance or other disposition of all or any portion of a
parcel of real estate located in Joliet, Illinois owned by the Company and its
Restricted Subsidiaries, comprised of approximately 350 acres, the legal
description of which is set forth on an exhibit to the Indenture (the ''Joliet
Real Estate'').
''Asset Sale Offer'' has the meaning set forth under ''--Certain
Covenants--Limitation on Sale of Assets and Subsidiary Stock; Events of Loss.''
''Asset Sale Offer Period'' has the meaning set forth under ''--Certain
Covenants--Limitation on Sale of Assets and Subsidiary Stock; Events of Loss.''
''Asset Sale Offer Price'' has the meaning set forth under ''--Certain
Covenants--Limitation on Sale of Assets and Subsidiary Stock; Events of Loss.''
''Average Life'' means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of the
products of the number of years from the date of determination to the date of
each successive scheduled principal (or redemption) payment of such security or
instrument and multiplied by the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
''Bank Indebtedness'' means any and all amounts payable from time to time
under or in respect of the Credit Facility, including principal, premium (if
any), interest, (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post-filing interest is allowed in such a proceeding), fees,
charges, expenses, reimbursement obligations, guarantees, indemnities and all
other amounts and other liabilities payable thereunder or in respect thereof.
''Beneficial Owner'' for purposes of the definition of Change of Control
has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange
Act, whether or not applicable, except that a ''person'' shall be deemed to have
''beneficial ownership'' of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time.
''Business Day'' means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
''Capital Stock'' means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
''Capitalized Lease Obligation'' means any obligation under a lease of (or
other agreement conveying the right to use) any property (whether real, personal
or mixed) required to be classified and accounted for as a capital lease
obligation under GAAP, and, for the purpose of the Indenture, the amount of such
obligation at any date shall be the capitalized amount thereof at such date,
determined in accordance with GAAP consistently applied.
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"Cash Equivalent" means (i) any evidence of Indebtedness with a maturity of
not more than one year issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (ii) time deposits and certificates of deposit and commercial paper or
bankers' acceptances with a maturity of not more than one year of any financial
institution that is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500,000,000; (iii)
commercial paper with a maturity of not more than one year issued by a
corporation that is not an Affiliate of the Company organized under the laws of
any state of the U.S. or the District of Columbia and rated at least A-1 by
Standard & Poor's Rating Services, a division of the McGraw Hill Companies, Inc.
or at least P-1 by Moody's Investor's Service, Inc.; and (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (i) and (ii) above entered into with any
financial institution meeting the qualifications specified in clause (ii) above.
"Casino" means a gaming establishment owned by the Company or a Restricted
Subsidiary, and containing at least 200 slot machines or at least 15 gaming
tables, or containing at least 10,000 square feet dedicated to the operation of
games of chance, and any hotel, building, restaurant, theater, parking
facilities, retail shops, land, equipment and other property or asset directly
ancillary thereto or used in connection therewith.
"Change of Control" means (i) any merger or consolidation of, or any sale,
transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of, the Company in each case on a consolidated
basis, in one transaction or a series of related transactions, if, immediately
after giving effect to such transaction, any "person" or "group" (as such terms
are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether
or not applicable), other than Excluded Persons or entities of which a majority
of voting power is owned by such Excluded Persons, is or becomes the "beneficial
owner," directly or indirectly, of more than 50% of the aggregate voting power
normally entitled to vote in the election of directors of the transferee; (ii)
the time that any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than Excluded Persons or entities of which a majority of voting power is owned
by such Excluded Persons, is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the aggregate voting power of all classes of
Capital Stock then outstanding of the Company normally entitled to vote in
elections of directors; or (iii) during any period of 12 consecutive months
after the Issue Date, individuals who at the beginning of any such 12-month
period constituted the Board of Directors of the Company (together with any new
directors whose election by such Board or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved), cease for any reason to constitute a majority of the Board of
Directors of the Company then in office.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder of Notes to require the Company to
repurchase such Notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of the Company and its
Subsidiaries taken as a whole to another person or group may be uncertain.
"Change of Control Offer" has the meaning set forth under "--Change of
Control."
"Change of Control Offer Period" has the meaning set forth under "--Change
of Control."
"Change of Control Purchase Date" has the meaning set forth under "--Change
of Control."
"Change of Control Purchase Price" has the meaning set forth under "--
Change of Control."
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"Consolidated Depreciation and Amortization Expense" means, for any period,
the total amount of depreciation and amortization expense and other non-cash
expenses (excluding any non-cash expense that represents an accrual, reserve or
amortization of a cash expenditure for a past, present or future period) for the
Company and its Restricted Subsidiaries (but excluding its Unrestricted
Subsidiaries or other persons other than its Restricted Subsidiaries, even
though such amounts may be included in a consolidated calculation in accordance
with GAAP) for such period on a consolidated basis as defined in accordance with
GAAP.
"Consolidated EBITDA" means, for any period, Consolidated Net Income for
such period adjusted to add thereto (to the extent deducted from net revenues in
determining Consolidated Net Income), without duplication, the sum of (i)
Consolidated Income Tax Expense; (ii) Consolidated Depreciation and Amortization
Expense; and (iii) Consolidated Fixed Charges.
"Consolidated Fixed Charge Coverage Ratio" on any date of determination
(the "Transaction Date") means the ratio, on a pro forma basis, of (a) the
aggregate amount of Consolidated EBITDA attributable to continuing operations
and businesses (exclusive of amounts attributable to operations and businesses
permanently discontinued or disposed of) for the Reference Period to (b) the
aggregate Consolidated Fixed Charges (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of, but only to
the extent that the obligations giving rise to such Consolidated Fixed Charges
would no longer be obligations contributing to Consolidated Fixed Charges
subsequent to the Transaction Date) during the Reference Period; provided, that
for purposes of such calculation: (i) Acquisitions or Asset Sales (or
transactions which would constitute Asset Sales but for the exclusions set forth
in clause (a), and in the last sentence, of the definition of "Asset Sales")
which occurred during the Reference Period or subsequent to the Reference Period
and on or prior to the Transaction Date shall be assumed to have occurred on the
first day of the Reference Period; (ii) transactions giving rise to the need to
calculate the Consolidated Fixed Charge Coverage Ratio shall be assumed to have
occurred on the first day of the Reference Period; (iii) the incurrence of any
Indebtedness or issuance of any Disqualified Capital Stock during the Reference
Period or subsequent to the Reference Period and on or prior to the relevant
Transaction Date (and the application of the proceeds therefrom to the extent
used to refinance or retire other Indebtedness) shall be assumed to have
occurred on the first day of such Reference Period; and (iv) the Consolidated
Fixed Charges attributable to interest on any Indebtedness or dividends on any
Disqualified Capital Stock bearing a floating interest (or dividend) rate shall
be computed on a pro forma basis as if the average rate in effect from the
beginning of the Reference Period to the relevant Transaction Date had been the
applicable rate for the entire period, unless such Person or any of its
Subsidiaries is a party to an Interest Swap Obligation (which shall remain in
effect for the 12-month period immediately following the Transaction Date) that
has the effect of fixing the interest rate on the date of computation, in which
case such rate (whether higher or lower) shall be used.
"Consolidated Fixed Charges" means, for any period, the aggregate amount
(without duplication) of (a) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued in accordance with GAAP (including, in
accordance with the following sentence, interest attributable to Capitalized
Lease Obligations) during such period in respect of all Indebtedness of the
Company and its Restricted Subsidiaries (but excluding its Unrestricted
Subsidiaries or other persons other than its Restricted Subsidiaries, even
though such amounts may be included in a consolidated calculation in accordance
with GAAP), including (i) original issue discount and non-cash interest payments
or accruals on any Indebtedness; (ii) the interest portion of all deferred
payment obligations, calculated in accordance with GAAP; and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptance financings and currency and Interest Swap Obligations, in each case
to the extent attributable to such period and determined on a consolidated basis
in accordance with GAAP; (b) one-third of the rental expense for such period
attributable to operating leases of the Company and its Restricted Subsidiaries;
and (c) the amount of dividends paid or payable by the Company or any of its
Restricted Subsidiaries in respect of Disqualified Capital Stock (other than by
Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by such person to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP; (y) interest
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expense attributable to any Indebtedness represented by the guaranty by such
person or a Restricted Subsidiary of such person of an obligation of another
person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed; and (z) any interest expense or premium for the period
from and after the Issue Date relating to the 10 3/4% Notes shall be excluded
from Consolidated Fixed Charges.
"Consolidated Income Tax Expense" means, for any period, the provision for
Federal, state, local and foreign income taxes of the Company and its Restricted
Subsidiaries (but excluding its Unrestricted Subsidiaries or other persons other
than its Restricted Subsidiaries, even though such amounts may be included in a
consolidated calculation in accordance with GAAP), for such period as determined
in accordance with GAAP.
"Consolidated Net Income" means, with respect to any period, the net income
(or loss) of the Company and its Restricted Subsidiaries (but excluding
Unrestricted Subsidiaries or other persons other than its Restricted
Subsidiaries, even though such amounts may be included in a consolidated
calculation in accordance with GAAP), determined on a consolidated basis in
accordance with GAAP, for such period, adjusted to exclude (only to the extent
included in computing such net income (or loss) and without duplication): (a)
all gains which are extraordinary (as determined in accordance with GAAP) or are
either unusual or nonrecurring (including, without limitation, any gain from the
sale or other disposition of assets outside the ordinary course of business or
from the sale of any Capital Stock, but gains from the sale of Capital Stock of
Unrestricted Subsidiaries (or other persons other than Restricted Subsidiaries)
or a merger or consolidation involving Unrestricted Subsidiaries (or other
persons other than Restricted Subsidiaries) shall be included in the calculation
of net income; (b) the portion of net income, if positive, of any Restricted
Subsidiary allocable to minority interests therein, except to the extent of the
amount of any dividends or distributions actually paid in cash to the Company or
a Restricted Subsidiary; (c) the net income, if positive, of any person acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition; and (d) any interest expense or premium for the period from and
after the Issue Date relating to the 10 3/4 Notes, and any interest income
relating to securities deposited in connection with the Covenant Defeasance
thereof.
"Credit Facility" means the $100.0 million revolving line of credit,
including a subfacility for the issuance of standby and documentary letters of
credit, established pursuant to a Credit Agreement to be dated as of June 18,
1998, as amended from time to time, among the Company, certain of the Company's
Subsidiaries, the lenders named therein and Wells Fargo Bank, National
Association, and any related documents or instruments and any extensions,
revisions, refinancings or replacements thereof by a bank or a syndicate of
institutional lenders.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designation" has the meaning set forth in "--Certain Covenants--Limitation
on Designations of Unrestricted Subsidiaries."
"Designation Amount" has the meaning set forth in "--Certain Covenants--
Limitation on Designations of Unrestricted Subsidiaries."
"Disqualified Capital Stock" means (a) except as set forth in (b), with
respect to any person, Capital Stock of such person that, by its terms or by the
terms of any security into which it is convertible, exercisable or exchangeable,
is, or upon the happening of an event or the passage of time would be, required
to be redeemed or repurchased (including at the option of the holder thereof) by
such person or any of its Subsidiaries, in whole or in part, on or prior to the
Stated Maturity of the Notes; and (b) with respect to any Subsidiary of such
person, any Capital Stock.
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"Event of Loss" means, with respect to any property or asset, any loss,
destruction or damage of such property or asset or any condemnation, seizure or
taking, by exercise of the power of eminent domain or otherwise, of any property
or asset, or confiscation or requisition of the use of such property or asset.
"Excess Proceeds" shall have the meaning set forth in "--Certain
Covenants--Limitation on Sale of Assets and Subsidiary Stock; Event of Loss."
"Excluded Persons" means collectively, the existing stockholders of the
Company as of the Issue Date and any of their respective estates, spouses,
heirs, ancestors, lineal descendants, legatees, and legal representatives and
the trustee of any bona fide trust of which one or more of the foregoing are the
sole beneficiaries.
"Existing Indebtedness" means Indebtedness outstanding on the date of the
Indenture.
"Facility" means one or more Casinos and related facilities operated by the
Company or any of its Restricted Subsidiaries that are located within a ten-mile
radius of one another.
"FF&E Indebtedness" means Indebtedness which is secured by a Lien upon any
tangible personal property acquired after the Issue Date, constituting operating
assets, which are financed, purchased or leased for the purpose of engaging in
or developing a Related Business.
"GAAP" means U.S. generally accepted accounting principles as in effect on
the Issue Date.
"Gaming Authority" means any Governmental Authority with appropriate
jurisdiction and authority relating to a Gaming License.
"Gaming Jurisdiction" means any foreign, Federal, state or local
jurisdiction in which the Company, any Restricted Subsidiary or any of their
respective Subsidiaries has a direct or indirect beneficial, legal or voting
interest in an entity that conducts casino gaming.
"Gaming Law" means any law, rule, regulation or ordinance governing gaming
activities, including the Illinois Riverboat Act and the Indiana Riverboat Act,
any administrative rules or regulations promulgated thereunder, and any of the
corresponding statutes, rules and regulations in each Gaming Jurisdiction.
"Gaming Licenses" means every license, franchise or other authorization on
the Issue Date or thereafter required to own, lease, operate or otherwise
conduct riverboat, dockside or land-based gaming in any Gaming Jurisdiction, and
any applicable liquor licenses.
"Governmental Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the U.S. or a foreign government, any state, province or any city or other
political subdivision or otherwise and whether now or hereafter in existence, or
any officer or official thereof, and any maritime authority.
"Guarantors" means all existing Restricted Subsidiaries of the Company and
all future Restricted Subsidiaries of the Company.
"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, with respect to any
person, (i) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such person or only to a portion
thereof); (ii) evidenced by bonds (other than surety or performance bonds),
notes, debentures or similar instruments; (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, except
such as would constitute trade payables to trade creditors in the ordinary
course of business that are not more than 90 days past their original due date
or are being contested in good faith; (iv) evidenced by bankers' acceptances or
similar instruments
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issued or accepted by banks; (v) for the payment of money relating to a
Capitalized Lease Obligation; or (vi) evidenced by a letter of credit or a
reimbursement obligation of such person with respect to any letter of credit;
(b) all net obligations of such person under Interest Swap Obligations and
foreign currency hedges; (c) all liabilities of others of the kind described in
the preceding clauses (a) or (b) that such person has guaranteed or that is
otherwise its legal liability; (d) all obligations to purchase, redeem or
acquire any Capital Stock; (e) all obligations secured by a Lien, to which the
property or assets (including, without limitation, leasehold interests and any
other tangible or intangible property rights) of such person are subject,
whether or not the obligations secured thereby shall have been assumed by or
shall otherwise be such person's legal liability, provided, that the amount of
such obligations shall be limited to the lesser of the fair market value of the
assets or property to which such Lien attaches and the amount of the obligation
so secured; and (f) any and all deferrals, renewals, extensions, refinancings
and refundings (whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a), (b), (c), (d) or (e), or this clause (f), whether or not between or
among the same parties.
"Interest Payment Date" means the stated due date of an installment of
interest on the Notes.
"Interest Swap Obligations" means the obligations of any person pursuant to
any arrangement with any other person whereby, directly or indirectly, such
person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such person to such other
person calculated by applying a fixed or a floating rate of interest on the same
notional amount or any other arrangement involving payments by or to such other
person based upon fluctuations in interest rates.
"Investment" by any person in any other person means (without duplication)
(a) the acquisition by such person (whether for cash, property, services,
securities or otherwise) of capital stock, bonds, notes, debentures, partnership
or other ownership interests or other securities, including any options or
warrants, of such other person or any agreement to make any such acquisition;
(b) the making by such person of any deposit with, or advance, loan or other
extension of credit to, such other person (including the purchase of property
from another person subject to an understanding or agreement, contingent or
otherwise, to resell such property to such other person) or any commitment to
make any such advance, loan or extension (but excluding accounts receivable
arising in the ordinary course of business that are not more than 30 days past
their original due date); (c) other than the Subsidiary Guarantees, the entering
into by such person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of such other
person; or (d) the making of any capital contribution by such person to such
other person.
"Issue Date" means the date of first issuance of the Notes under the
Indenture.
"Joliet Real Estate" shall have the meaning given to such term in the
definition of "Asset Sale" set forth above.
"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).
"Net Cash Proceeds" means the aggregate amount of U.S. Legal Tender or Cash
Equivalents received by the Company or a Restricted Subsidiary in the case of a
sale of Qualified Capital Stock and by the Company or a Restricted Subsidiary in
respect of an Asset Sale, less, in each case, the sum of all fees, commissions
and other (in the case of an Asset Sale, reasonable and customary) expenses
incurred in connection with such Asset Sale or sale of Qualified Capital Stock,
and, in the case of an Asset Sale only, less the amount (estimated reasonably
and in good faith by the Company or such Restricted Subsidiary) of income,
franchise, sales and
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other applicable taxes required to be paid by the Company or such Restricted
Subsidiary in connection with such Asset Sale.
"Net Proceeds" means the aggregate Net Cash Proceeds and fair market value
of property (valued at the fair market value thereof at the time of receipt in
good faith by the Board of Directors of the Company or the applicable Restricted
Subsidiary), other than securities of the Company or a Restricted Subsidiary,
received by the Company or a Restricted Subsidiary after payment of expenses,
commissions, discounts and the like incurred in connection therewith.
"Non-Recourse Indebtedness" means Indebtedness of a person to the extent
that under the terms thereof or any other document, instrument or filing no
personal recourse shall be had against such person for the payment of the
principal of, premium, if any, or interest on, such Indebtedness, and
enforcement of obligations on such Indebtedness is limited only to recourse
against interests in property and assets purchased with the proceeds of the
incurrence of such Indebtedness and as to which none of the Company or any
Restricted Subsidiary provides any credit support or is directly or indirectly
liable. Indebtedness shall not lose its characterization as Non-Recourse
Indebtedness solely as a result of a person being personally liable for losses
caused by misappropriation, fraud or wilful breaches of representations and
warranties.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offer to Purchase" means any Change of Control Offer or Asset Sale Offer.
"Offer to Purchase Price" means any Change of Control Purchase Price or
Asset Sale Offer Price.
"Officer's Certificate" means, with respect to the Company or any
Restricted Subsidiary, a certificate signed by two Officers of the Company or
such Restricted Subsidiary and otherwise complying with the requirements of the
Indenture.
"Payment Blockage Period" shall have the meaning set forth in "--
Subordination."
"Permitted Investments" means the aggregate of (a) any Investment in the
Company or in any Restricted Subsidiary; (b) any Investment in Cash Equivalents
or purchases by the Company or any Restricted Subsidiary of any of the Notes in
open market purchase transactions; (c) any Investment by the Company or any
Restricted Subsidiary in a Person, if as a result of such Investment (i) such
Person becomes a Restricted Subsidiary of the Company that is engaged in a
Related Business, 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 into, the Company or a Restricted Subsidiary and that is engaged in a
Related Business; (d) any Restricted Investment made as a result of the receipt
of non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "--Limitation on
Sale of Assets and Subsidiary Stock; Event of Loss"; (e) any acquisition of
assets solely in exchange for the issuance of Qualified Capital Stock of the
Company or its Restricted Subsidiaries; (f) any Investment of the Joliet Real
Estate or proceeds from the sale of the Joliet Real Estate; and (g) Investments,
the aggregate fair market value of which (measured on the date each such
Investment was made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause (g)
that are at the time outstanding, do not exceed $50.0 million.
"Permitted Liens" means any of the following:
(a) Liens existing on the date of the Indenture;
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(b) Liens securing Obligations of the Company or any of the Restricted
Subsidiaries under any Senior Indebtedness permitted to be incurred under the
Indenture;
(c) Liens to secure Obligations of the Company or any of the Restricted
Subsidiaries under any FF&E Indebtedness permitted to be incurred pursuant to
clause (e) of the covenant described under "--Certain Covenants--Limitation an
Incurrence of Indebtedness and Preferred Stock," that do not exceed $7.5 million
at any one time outstanding per Facility;
(d) Liens to secure Obligations of the Company or any of its Restricted
Subsidiaries under any Purchase Money Indebtedness or Non-Recourse Indebtedness
permitted to be incurred pursuant to clause (d) of the covenant described under
"--Certain Covenants--Limitation on Incurrence of Indebtedness and Preferred
Stock" in an amount not to exceed $7.5 million in the aggregate at any one time
outstanding;
(e) Liens to secure Obligations of the Company or any of the Restricted
Subsidiaries under any Refinancing Indebtedness incurred to refinance any
Indebtedness referred to in the foregoing clauses (a) through (d), provided that
(i) the Indebtedness to be refinanced was secured and (ii) the Lien does not
extend beyond the amount of Indebtedness to be refinanced;
(f) Liens for taxes, assessments or other governmental charges not yet due
or which are being contested in good faith and by appropriate proceedings by the
Company or the applicable Restricted Subsidiary if adequate reserves with
respect thereto are maintained on the books of the Company or such Restricted
Subsidiary, as applicable, in accordance with GAAP;
(g) statutory Liens of carriers, warehousemen, mechanics, landlords,
materialmen, repairmen or other like Liens arising by operation of law in the
ordinary course of business and consistent with industry practices and Liens on
deposits made to obtain the release of such Liens if (i) the underlying
obligations are not overdue; or (ii) such Liens are being contested in good
faith and by appropriate proceedings by the Company or the applicable Restricted
Subsidiary and adequate reserves with respect thereto are maintained on the
books of the Company or such Restricted Subsidiary as the case may be, in
accordance with GAAP;
(h) easements, rights-of-way, zoning and similar restrictions and other
similar encumbrances or title defects incurred in the ordinary course of
business and consistent with industry practices which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto (as such property is used by the Company
or a Restricted Subsidiary) or interfere with the ordinary conduct of the
business of the Company or a Restricted Subsidiary; provided, that any such
Liens are not incurred in connection with any borrowing of money or any
commitment to loan any money or to extend any credit; and
(i) Liens created by the Indenture.
"person" means any individual, limited liability company, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Preferred Stock" means, with respect to any person, Capital Stock of any
class or classes (however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such person, over Capital
Stock of any other class of such person.
"Purchase Money Indebtedness" means any Non-recourse Indebtedness of such
person owed to any seller or other person which is incurred to finance the
acquisition of any real or personal tangible property of a Related Business
within 90 days of such acquisition.
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"Qualified Capital Stock" means any Capital Stock of the Company or a
Restricted Subsidiary that is not Disqualified Capital Stock.
"Qualified Exchange" means any defeasance, redemption, repurchase or other
acquisition of Capital Stock or Indebtedness of a Guarantor with the Net
Proceeds received by such Guarantor from the substantially concurrent sale of
Qualified Capital Stock of such Guarantor or in exchange for Qualified Capital
Stock of such Guarantor.
"Redeemable Capital Stock" means any class or series of Capital Stock to
the extent that, either by its terms, by the terms of any security into which it
is convertible or exchangeable, or by contract or otherwise, is or upon the
happening of an event or passage of time would be, required to be redeemed prior
to the final Stated Maturity of the Notes or is redeemable at the option of the
holder thereof at any time prior to such Stated Maturity, or is convertible into
or exchangeable for debt securities at any time prior to such Stated Maturity.
"Redemption Date," when used with respect to any Note to be redeemed, means
the date fixed for such redemption pursuant to the Indenture and the form of
Note included therein.
"Reference Period" with regard to any person means the four full fiscal
quarters (or such lesser period during which such person has been in existence)
ended immediately preceding the relevant date upon which such determination is
to be made pursuant to the terms of the Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part; or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock of such person in a principal amount
or, in the case of Disqualified Capital Stock, liquidation preference, not to
exceed (after deduction of reasonable and customary fees and expenses incurred
in connection with the Refinancing) the lesser of (i) the principal amount or,
in the case of Disqualified Capital Stock, liquidation preference, of the
Indebtedness or Disqualified Capital Stock so Refinanced and (ii) if such
Indebtedness being Refinanced was issued with an original issue discount, the
accreted value thereof (as determined in accordance with GAAP) at the time of
such Refinancing; provided, that (A) Refinancing Indebtedness of any Restricted
Subsidiary shall only be used to Refinance outstanding Indebtedness or
Disqualified Capital Stock of such Restricted Subsidiary; (B) Refinancing
Indebtedness shall not have an Average Life less than that of the Indebtedness
or Disqualified Capital Stock to be so refinanced at the time of such
refinancing; (C) such Refinancing Indebtedness shall have no installment of
principal (or redemption payment) scheduled to come due earlier than the
scheduled maturity of any installment of principal of the Indebtedness (or
Disqualified Capital Stock) to be so refinanced which was scheduled to come due
on or prior to the Stated Maturity; and (D) if the Indebtedness or Disqualified
Capital Stock to be so refinanced was subordinate or junior in right of payment
to the Guarantee, then the Refinancing Indebtedness shall be subordinate or
junior in right of payment to such Guarantee to an extent no less favorable in
respect thereof to the Holders.
"Related Business" means the gaming business conducted (or proposed to be
conducted) by the Company, its Restricted Subsidiaries and their respective
Subsidiaries as of the Issue Date and any and all related businesses in support
of, ancillary to or attracting visitors to the gaming business of the Company,
its Restricted Subsidiaries and their respective Subsidiaries and additionally
expressly includes any riverboat, dockside or land-based gaming or horse racing
businesses or any business mandated by a Gaming Authority in order to obtain or
retain a Gaming License.
"Required Regulatory Redemption" shall have the meaning set forth under "--
Redemption--Required Regulatory Redemption."
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"Restricted Investment" means, in one or a series of related transactions,
any Investment, other than Investments in Cash Equivalents; provided, that a
Restricted Investment shall not include (i) the extension of credit to customers
of Casinos consistent with industry practice in the ordinary course of business;
and (ii) a guaranty by a Guarantor of Indebtedness incurred by another Guarantor
or the Company in accordance with the covenant described under "--Certain
Covenants--Limitation on Incurrence of Indebtedness and Preferred Stock."
"Restricted Payment" means, with respect to any person, (a) the declaration
or payment of any dividend or other distribution in respect of Capital Stock of
such person or any Restricted Subsidiary of such person; (b) any payment on
account of the purchase, redemption or other acquisition or retirement for value
of Capital Stock of such person or any Restricted Subsidiary of such person; (c)
any purchase, redemption, or other acquisition or retirement for value of, any
payment in respect of any amendment of the terms of or any defeasance of, any
subordinated Indebtedness, directly or indirectly, by such person or a
Restricted Subsidiary of such person prior to the scheduled maturity, and
scheduled repayment of principal, or scheduled sinking fund payment, as the case
may be, of such Indebtedness; and (d) any Restricted Investment by such person;
provided, however, that the term "Restricted Payment" does not include (i) any
dividend, distribution or other payment on or with respect to Capital Stock of
an issuer to the extent payable solely in shares of Qualified Capital Stock of
such issuer; and (ii) any Investment in the Company or any of the Restricted
Subsidiaries by any of their respective Subsidiaries.
"Restricted Subsidiary" means any Subsidiary of the Company that has not
been Designated by the Board of Directors of the Company, by a Board Resolution
delivered to the Trustee, as an Unrestricted Subsidiary pursuant to and in
compliance with the covenant described under "--Certain Covenants--Limitation
on Designations of Unrestricted Subsidiaries." Except in the case of the
current Guarantors, any such Designation may be Revoked by a Board Resolution of
the Board of Directors of the Company delivered to the Trustee, subject to the
provisions of such covenant.
"Revocation" shall have the meaning set forth in "--Certain Covenants--
Limitation on Designations of Unrestricted Subsidiaries."
"Senior Indebtedness" means (i) the Bank Indebtedness, and (ii) the
principal of, premium, if any, and interest on any Indebtedness of the Company,
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to any Indebtedness of the Company. Notwithstanding the foregoing,
"Senior Indebtedness" shall not include, to the extent constituting
Indebtedness, (i) Indebtedness evidenced by the Notes, (ii) Indebtedness that is
subordinate or junior in right of payment to any Indebtedness of the Company,
(iii) Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11, U.S. Code, is without recourse to the
Company, (iv) Indebtedness which is represented by Redeemable Capital Stock, (v)
Indebtedness for goods, materials or services purchased in the ordinary course
of business or Indebtedness consisting of trade payables or other current
liabilities (other than any current liabilities owing under the Credit Facility
or the current portion of any long-term Indebtedness which would constitute
Senior Indebtedness but for the operation of this clause (v)), (vi) Indebtedness
of or amounts owed by the Company for compensation to employees or for services
rendered to the Company, (vii) Indebtedness of or amounts owed by the Company or
a Restricted Subsidiary to the Company or another Restricted Subsidiary, (viii)
any liability for Federal, state, local or other taxes owed or owing by the
Company, (ix) Indebtedness of the Company to any other Subsidiary of the Company
and (x) that portion of any Indebtedness which at the time of issuance is issued
in violation of the Indenture.
"Significant Subsidiary" means any Restricted Subsidiary (i) the assets of
which (after intercompany eliminations) exceed 10% of the assets of the Company
and its Restricted Subsidiaries, considered as a whole, or (ii) the Consolidated
Net Income of which (before income taxes and extraordinary items) exceeds 10% of
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the Consolidated Net Income of the Company and its Restricted Subsidiaries,
considered as a whole, or (iii) that holds a Gaming License with respect to any
Casino, if the Facility of which the Casino is a part (were such facility
operated by a single Restricted Subsidiary) would be a Significant Subsidiary as
set forth in (i) or (ii) above.
"Stated Maturity," when used with respect to any Note, means July 1, 2006.
"Subordinated Indebtedness" means Indebtedness of a Restricted Subsidiary
that is subordinated in right of payment to the Subsidiary Guaranty of such
Restricted Subsidiary to any extent.
"Subsidiary," with respect to any person, means (i) a corporation at least
a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person, by such person and one or more Subsidiaries of such person or by
one or more Subsidiaries of such person or (ii) any other person (other than a
corporation) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest.
"10 3/4% Notes" means the 10 3/4% Senior Notes due 2002 issued pursuant to
the terms of an indenture, dated April 7, 1994 among Empress River Casino
Finance Corporation, as issuer, the Guarantors named therein and First Trust
National Association, as Trustee.
"Unrestricted Subsidiary" means a Subsidiary of the Company (other than a
Guarantor) designated as such pursuant to and in compliance with the covenant
described under "--Certain Covenants--Limitation on Designations of
Unrestricted Subsidiaries." Any such Designation may be Revoked by a Board
Resolution of the Company delivered to the Trustee, subject to the provisions of
such covenant.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debts.
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BOOK-ENTRY; DELIVERY AND FORM
The Old Notes offered and sold to qualified institutional buyers (as
defined under Rule 144A) ("QIBs") were each registered in book-entry form, are
represented by a global note in fully registered form without interest coupons,
which was deposited with the Trustee as custodian for DTC and registered in the
name of Cede & Co. or such other nominee as DTC may designate.
The Old Notes offered and sold to persons outside the United States who
received such Old Notes pursuant to sales in accordance with Regulation S were
each initially represented by a global note certificate in fully registered form
without interest coupons (the "Offshore Global Old Note"). The Offshore Global
Old Note was deposited with the Trustee as custodian for DTC and registered in
the name of Cede & Co. Prior to the expiration of the "40-day restricted period"
within the meaning of Rule 903 of Regulation S, transfers of interest in the
Offshore Global Old Note were only effected through records maintained by DTC,
Cedel Bank, societe anonyme ("Cedel") or Euroclear System ("Euroclear").
The certificates representing the New Notes will be issued in fully
registered form without interest coupons. Except as described below, the New
Notes will be deposited with, or on behalf of, DTC, and registered in the name
of Cede & Co as DTC's nominee, in the form of a global New Note certificate (the
"Global New Note") or will remain in the custody of the Trustee pursuant to the
FAST Balance Certificate between DTC and the Trustee.
Holders of New Notes who elect to take physical delivery of their
certificates instead of holding their interest through the Global New Note
(collectively referred to herein as the "Non-Global Holders") will be issued in
registered form a certificated New Note ("Certificated New Note"). Upon the
transfer of any Certificated New Note initially issued to a Non-Global Holder,
such Certificated New Note will, unless the transferee requests otherwise or the
Global New Note has previously been exchanged in whole for Certificated New
Notes, be exchanged for an interest in the Global New Note.
The Global New Note. The Company expects that, pursuant to procedures
established by DTC, (a) upon deposit of the Global New Note, DTC or its
custodian will credit on its internal system the principal amount at maturity of
New Notes of the individual beneficial interests represented by such Global New
Note to the respective accounts of persons who have accounts with DTC and (b)
ownership of beneficial interests in the Global New Note will be shown on, and
the transfer of ownership thereof will be effected only through, records
maintained by DTC or its nominee (with respect to interests of Participants (as
defined herein)) and the records of Participants (with respect to interests of
persons other than Participants). Ownership of beneficial interests in the
Global New Note will be limited to persons who have accounts with DTC
("Participants") or persons who hold interests through Participants. QIBs may
hold their interests in the Global New Note directly through DTC if they are
Participants in such system, or indirectly through organizations which are
Participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
New Notes, DTC or such nominee, as the case may be, will be considered the sole
owner and holder of the New Notes represented by such Global New Note for all
purposes under the Indenture. No beneficial owner of an interest in the Global
New Note will be able to transfer such interest except in accordance with DTC's
procedures, in addition to those provided for under the Indenture with respect
to the New Notes.
Payments of the principal of or premium and interest on the Global New Note
will be made to DTC or its nominee, as the case may be, as the registered owner
thereof. None of the Company, the Trustee or any paying agent under the
Indenture will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global New Note or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interest.
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The Company expects that DTC or its nominee, upon receipt of any payment of
the principal of or premium and interest on the Global New Note, will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global New Note
as shown on the records of DTC or its nominee. The Company also expects that
payments by Participants to owners of beneficial interests in the Global New
Note held through such Participants will be governed by standing instructions
and customary practice as is now the case with securities held for the accounts
of customers registered in the names of nominees for such customers. Such
payments will be the responsibility of such Participants.
Transfers between Participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in federal funds. If a holder requires physical delivery of a
Certificated New Note for any reason, including to sell New Notes to persons in
states that require physical delivery of the New Notes or to pledge such
securities, such holder must transfer its interest in the Global New Note in
accordance with normal procedures of DTC and with the procedures set forth in
the Indenture.
DTC has advised the Company that DTC will take any action permitted to be
taken by a holder of New Notes (including the presentation of New Notes for
exchange as described below) only at the direction of one or more Participants
to whose account the DTC interests in the Global New Note are credited and only
in respect of such portion of the aggregate principal amount of New Notes as to
which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Indenture, DTC will exchange
the Global New Note for Certificated New Notes, which it will distribute to its
Participants.
DTC has advised the Company as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
Participants and facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in
accounts of its Participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ("Indirect
Participants").
Although DTC, Euroclear and Cedel are expected to follow the foregoing
procedures in order to facilitate transfers of interest in the Global New Notes
among Participants of DTC, they are under no obligation to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Company nor the Trustee will have any responsibility for the performance by DTC,
Euroclear and Cedel or the Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations.
Certificated New Notes. Interests in the Global New Note will be exchangeable
or transferable, as the case may be, for Certificated Notes if (i) DTC notifies
the Company that it is unwilling or unable to continue as depositary for such
Global New Note, or DTC ceases to be a "Clearing Agency" registered under the
Exchange Act, and a successor depositary is not appointed by the Company within
90 days, or (ii) an Event of Default has occurred and is continuing with respect
to such New Notes. Upon the occurrence of any of the events described in the
preceding sentence, the Company will cause the appropriate Certificated New
Notes to be delivered.
REGISTRATION RIGHTS
Pursuant to the Registration Rights Agreement with the Initial Purchasers, the
Company agreed to file with the Commission the Exchange Offer Registration
Statement of which this Prospectus is a part on an appropriate form under the
Securities Act with respect to an offer to exchange the Old Notes for the New
Notes. Upon the
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effectiveness of the Exchange Offer Registration Statement, the Company will
offer to the holders of Old Notes who are able to make certain representations
the opportunity to exchange their Old Notes for New Notes. If (i) the Company is
not permitted to file the Exchange Offer Registration Statement or to consummate
the Exchange Offer because the Exchange Offer is not permitted by applicable law
or Commission policy, (ii) the Exchange Offer is not for any other reason
consummated within 180 days after the Issue Date, (iii) any holder of Old Notes
notifies the Company within a specified time period that (a) due to a change in
applicable law or Commission policy it is not entitled to participate in the
Exchange Offer, (b) due to a change in applicable law or Commission policy it
may not resell the New Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales by
such holder or (c) it is a broker-dealer and owns Old Notes acquired directly
from the Company or (iv) the holders of a majority of the Old Notes may not
resell the New Notes to be acquired by them in the Exchange Offer to the public
without restriction under the Securities Act and without restriction under
applicable blue sky or state securities laws, the Company will file with the
Commission the Shelf Registration Statement to cover resales of the Transfer
Restricted Notes (as defined herein) by the holders thereof. The Company will
use its best efforts to cause the applicable registration statement to be
declared effective as promptly as possible by the Commission. For purposes of
the foregoing, "Transfer Restricted Notes" means each Old Note until (i) the
date on which such Old Note has been exchanged by a person other than a broker-
dealer for a New Note in the Exchange Offer, (ii) following the exchange by a
broker-dealer in the Exchange Offer of an Old Note for a New Note, the date on
which such New Note is sold to a purchaser who receives from such broker-dealer
on or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Old Note has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement, (iv) the date on which such
Old Note is distributed to the public pursuant to Rule 144(k) under the
Securities Act (or any similar provision then in force, but not Rule 144A under
the Securities Act), (v) such Old Note shall have been otherwise transferred by
the holder thereof and a New Note not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent disposition of
such Old Note shall not require registration or qualification under the
Securities Act or any similar state law then in force or (vi) such Old Note
ceases to be outstanding.
Under existing Commission interpretations, the New Notes would, in general, be
freely transferable after the Exchange Offer without further registration under
the Securities Act; provided, that in the case of broker-dealers participating
in the Exchange Offer, a prospectus meeting the requirements of the Securities
Act must be delivered upon resale by such broker-dealers in connection with
resales of the New Notes. The Company has agreed, for period of 180 days after
consummation of the Exchange Offer, to make available a prospectus meeting the
requirements of the Securities Act to any such broker-dealer for use in
connection with any resale of any New Notes acquired in the Exchange Offer. A
broker-dealer who delivers such a prospectus to purchasers in connection with
such resales will be subject to certain of the civil liability provisions under
the Securities Act and will be bound by the provisions of the Registration
Rights Agreement (including certain indemnification rights and obligations).
Each holder of Old Notes who wishes to exchange such Old Notes for New Notes
in the Exchange Offer will be required to make certain representations,
including representations that: (i) the holder is not an "affiliate" of the
Company as defined in Rule 405 of the Securities Act, (ii) the holder is not a
broker-dealer that acquired Old Notes directly from the Company in order to
resell them pursuant to Rule 144A of the Securities Act or any other available
exemption under the Securities Act, (iii) the holder will acquire the New Notes
in the ordinary course of business and (iv) the holder is not participating, and
does not intend to participate, and has no arrangement or understanding with any
person to participate, in the distribution of the New Notes.
If the holder is a broker-dealer that will receive New Notes for its own
account in exchange for Old Notes that were acquired as a result of market-
making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes.
105
<PAGE>
The Company has agreed to pay all expenses incident to the Exchange Offer and
will indemnify the Initial Purchasers against certain liabilities, including
liabilities under the Securities Act.
The Registration Rights Agreement provides that (i) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, the Company will
use its best efforts to file the Exchange Offer Registration Statement with the
Commission on or prior to 45 days after the Issue Date (which requirement the
Company has met), (ii) unless the Exchange Offer would not be permitted by
applicable law or Commission policy, the Company will use its best efforts to
have the Exchange Offer Registration Statement declared effective by the
Commission on or prior to 105 days after the Issue Date, (iii) unless the
Exchange Offer would not be permitted by applicable law or Commission policy,
the Company will use its best efforts to have the Exchange Offer Registration
Statement remain effective until the closing of the Exchange Offer, (iv) unless
the Exchange Offer would not be permitted by applicable law or Commission
policy, the Company will commence the Exchange Offer and use its best efforts to
issue, on or prior to 135 days after the Issue Date, New Notes in exchange for
all Old Notes tendered prior thereto in the Exchange Offer and (v) if obligated
to file the Shelf Registration Statement, the Company will use its best efforts
to file the Shelf Registration Statement prior to the later of (a) 105 days
after the Issue Date or (b) 30 days after such filing obligation arises and use
its best efforts to cause the Shelf Registration Statement to be declared
effective by the Commission on or prior to 60 days after such obligation arises;
provided, that if the Company has not consummated the Exchange Offer within 180
days of the Issue Date, then the Company will file the Shelf Registration
Statement with the Commission on or prior to the 181st day after the Issue Date.
The Company shall use its best efforts to keep such Shelf Registration Statement
continuously effective, supplemented and amended until the second anniversary of
the Issue Date or such shorter period that will terminate when all the Transfer
Restricted Notes covered by the Shelf Registration Statement have been sold
pursuant thereto. A holder of Old Notes who intends to sell such Old Notes
pursuant to the Shelf Registration Statement will be required to be named as a
selling securityholder in the related prospectus and to deliver such prospectus
to purchasers, will be subject to certain of the civil liability provisions
under the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement applicable to such holder
(including certain indemnification and contribution obligations).
If (i) the Company fails to file any of the registration statements required
by the Registration Rights Agreement on or before the date specified for such
filing, (ii) any of such registration statements are not declared effective by
the Commission on or prior to the date specified for such effectiveness (the
"Effectiveness Target Date"), subject to certain limited exceptions, (iii) the
Company fails to consummate the Exchange Offer within 30 days of the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter, subject to certain
limited exceptions, ceases to be effective or usable in connection with the
Exchange Offer or resales of Transfer Restricted Notes, as the case may be,
during the periods specified in the Registration Rights Agreement (each such
event referred to in clauses (i) through (iv) above, a "Registration Default"),
then the interest rate on the Transfer Restricted Notes will accrue at a rate
per annum equal to an additional one quarter of one percent (0.25%) of the
principal amount of the Notes upon the occurrence of each Registration Default,
which rate will increase by one quarter of one percent (0.25%) each 90-day
period that such Additional Interest continues to accrue under any such
circumstance, with an aggregate maximum increase in the interest rate equal to
one percent (1%) per annum. Following the cure of all Registration Defaults, the
accrual of additional interest will cease and the interest rate will revert to
the original rate.
The summary herein of certain provisions of the Registration Rights Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy which is filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.
106
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material federal income tax
considerations of the issuance of New Notes and the Exchange Offer. This summary
does not discuss all aspects of federal income taxation that may be relevant to
particular holders of Note, especially in light of a holder's personal
investment circumstances, or to certain types of holders subject to special
treatment under the federal income tax laws (for example, life insurance
companies, tax-exempt organizations and foreign corporations and individuals who
are not citizens or residents of the United States) and does not discuss any
aspects of state, local or foreign taxation. This discussion is limited to those
holders who will hold the Notes as "capital assets" (generally, property held
for investment) within the meaning of Section 1221 of the Internal Revenue Code
of 1986, as amended (the "Code").
This summary is based upon laws, regulations, rulings and decisions now in
effect and upon proposed regulations, all of which are subject to change
(possibly with retroactive effect) by legislation, administrative action or
judicial decision.
Exchange Offer. The exchange of Old Notes for New Notes pursuant to the
Exchange Offer should not be treated as a taxable "exchange" because the New
Notes should not be considered to differ materially in kind or extent from the
Old Notes. Rather, the New Notes received by a holder of the Old Notes should be
treated as a continuation of the Old Notes in the hands of such holder. As a
result, there should be no gain or loss to holders exchanging the Old Notes for
the New Notes pursuant to the Exchange Offer.
Interest. A holder will be required to include in gross income the stated
interest on the Old Notes or the New Notes in accordance with the holder's
method of tax accounting.
Tax Basis. Generally, a holder's tax basis in an Old Note will initially be
the holder's purchase price for the Old Note and will be decreased by the amount
of any principal payments received. If a holder exchanges an Old Note for a New
Note pursuant to the Exchange Offer, the tax basis of the New Note immediately
after such exchange should equal the holder's tax basis in the Old Note
immediately prior to the exchange.
Sale or Redemption. The sale, exchange, redemption or other disposition of an
Old Note or a New Note (other than pursuant to the Exchange Offer) generally
will be a taxable event. A holder generally will recognize gain or loss equal to
the difference between (i) the amount of cash plus the fair market value of any
property received upon such sale, exchange, redemption or other taxable
disposition of an Old Note or a New Note (other than in respect of accrued
interest thereon) and (ii) the holder's adjusted tax basis in such Old Note or
New Note. Such gain or loss generally will be capital gain or loss, provided
that the holder has held the Note as a capital asset. The recently enacted
Taxpayer Relief Act of 1997 made certain changes to the Code with respect to
taxation of capital gains of taxpayers other than corporations. In general, the
maximum tax rate for non-corporate taxpayers on long-term capital gains has been
lowered to 20% from the previous 28% rate for most capital assets (including the
Old or New Notes) held for more than 18 months. For taxpayers in the 15% regular
tax bracket, the maximum tax rate on long-term capital gains is now 10%. Capital
gain on such assets for non-corporate holders having a holding period of more
than one year but not more than 18 months will be subject to a maximum tax rate
of 28%. The holding period of each New Note would include the holding period of
the Old Notes exchanged therefor. Recently enacted legislation eliminates the
maximum 28% rate for non-corporate holders with a holding period of more than
one year but not more than 18 months. The law is effective retroactively for a
disposition after January 1, 1998, and imposes the maximum rate of 20% on such
capital assets held more than one year.
Purchasers of Notes at Other than Original Issuance. The foregoing summary
does not discuss special rules which may affect the treatment of purchasers that
acquire Notes other than at original issuance, including those provisions of the
Code relating to the treatment of "market discount" and "acquisition premium."
Any
107
<PAGE>
such Purchaser should consult its tax advisor as to the consequences to him of
the acquisition, ownership and disposition of Old Notes and the New Notes.
Backup Withholding. Unless a holder or other payee provides its correct
taxpayer identification number (employer identification number or social
security number) to the Company (as payor) and certifies that such number is
correct, under the federal income tax backup withholding rules, generally 31% of
(1) the interest paid on the Notes, and (2) proceeds of sale or other
disposition of the Notes must be withheld and remitted to the United States
Department of the Treasury. Therefore, each holder should complete and sign the
Substitute Form W-9 included so as to provide the information and certification
necessary to avoid backup withholding. In addition, backup withholding in the
amount of 31% on the interest paid on the Notes must be withheld and remitted if
the Company is notified by the Internal Revenue Service that the payee has under
reported interest income. However, certain exchanging holders (including, among
others, certain foreign individuals) are not subject to these backup withholding
and reporting requirements. In order for a foreign individual to qualify as an
exempt foreign recipient, that exchanging holder must submit a statement, signed
under penalties of perjury, attesting to that individual's exempt foreign
status.
Withholding is not an additional federal income tax. Rather, the federal
income tax liability of a person subject to withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
THE FOREGOING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY. EACH
HOLDER OF NOTES OR NEW NOTES SHOULD CONSULT SUCH HOLDER'S TAX ADVISOR AS TO THE
SPECIFIC TAX CONSEQUENCES TO SUCH HOLDER OF THE EXCHANGE OFFER, INCLUDING THE
APPLICATION OF AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
108
<PAGE>
PLAN OF DISTRIBUTION
Pursuant to the Exchange Offer, each Participating Broker-Dealer must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. This Prospectus may be used by a Participating Broker-Dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that it will make this Prospectus
available to any Participating Broker-Dealer for use in connection with any such
resale and Participating Broker-Dealers shall be authorized to deliver this
Prospectus for a period not exceeding 90 days after the Expiration Date.
The Company will not receive any proceeds from any sales of the New Notes by
Participating Broker-Dealers. New Notes received by Participating Broker-Dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time, in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Notes or a combination
of such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from such Participating Broker-Dealer or the purchasers of any such New Notes.
Any broker-dealer that resells New Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such New Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that by acknowledging that it will deliver and
by delivering a prospectus, a Participating Broker-Dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
The Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any Participating Broker-Dealer
that reasonably requests such documents in the Letter of Transmittal. See "The
Exchange Offer."
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the New
Notes offered hereby will be passed upon for the Company by D'Ancona & Pflaum,
Chicago, Illinois.
EXPERTS
The combined financial statements of the Company as of December 31, 1997 and
1996, and for each of the three years in the period ended December 31, 1997,
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
upon the authority of such firm as experts in accounting and auditing.
109
<PAGE>
INDEX TO COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
------------------------------ ----
<S> <C>
Combined Balance Sheet at March 31, 1998 (unaudited)............................................... F-2
Combined Statements of Income for the three months ended March 31, 1998 and 1997 (unaudited)....... F-3
Combined Statements of Cash Flows for the three months ended March 31, 1998 and 1997 (unaudited)... F-4
Notes to Combined Financial Statements for the three months ended March 31, 1998 and 1997
(unaudited)..................................................................................... F-5
Report of Independent Auditors..................................................................... F-7
Combined Balance Sheets at December 31, 1997 and 1996.............................................. F-8
Combined Statements of Income for the years ended December 31, 1997, 1996, and 1995................ F-9
Combined Statements of Stockholders' Equity for the years ended December 31, 1997, 1996, and 1995.. F-10
Combined Statements of Cash Flows for the years ended December 31, 1997, 1996, and 1995............ F-11
Notes to Combined Financial Statements for the years ended December 31, 1997, 1996 and 1995........ F-12
</TABLE>
F-1
<PAGE>
EMPRESS ENTERTAINMENT, INC.
COMBINED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
March 31,
1998
-------------
Assets
Current assets:
<S> <C>
Cash and cash equivalents...................................................... $ 77,511,415
Marketable securities, at fair value which approximates cost................... 16,082,714
Accounts receivable, less allowance for doubtful accounts of $1,964,000........ 2,897,303
Interest receivable............................................................ 321,073
Inventories.................................................................... 883,305
Prepaid expenses............................................................... 1,281,587
------------
Total current assets........................................................ 98,977,397
Property and equipment:
Land........................................................................... 9,139,658
Building and improvements...................................................... 69,440,117
Riverboat...................................................................... 53,845,141
Leasehold improvements......................................................... 45,416,048
Furniture, fixtures and equipment.............................................. 50,849,527
Construction in progress....................................................... 8,849,073
------------
237,539,564
Less: Accumulated depreciation................................................. (48,567,606)
------------
Property and equipment, net...................................................... 188,971,958
Noncompete agreement, less accumulated amortization of $3,368,056................ 381,944
Deferred financing cost, less accumulated amortization of $2,823,955............. 2,841,302
Other assets, less accumulated amortization of $1,433,533........................ 11,271,880
------------
Total assets................................................................ $302,444,481
============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable............................................................... $ 3,204,122
Accrued payroll and related expenses........................................... 6,970,923
Other accrued liabilities...................................................... 15,592,373
Interest payable............................................................... 8,116,505
Current portion of long-term debt.............................................. 17,432,792
------------
Total current liabilities................................................... 51,316,715
Notes payable.................................................................... 186,000,000
Stockholders' equity:
Common stock of Empress Casino Joliet Corporation; no par value; 2,000 shares
authorized; 1,150 shares issued and outstanding; at stated value............. 11,500,000
Common stock of Empress Entertainment, Inc.; $.01 par value; 6,000 shares
authorized; 1,179.245 shares issued and outstanding.......................... 12
Additional paid-in capital..................................................... 5,047,605
Retained earnings.............................................................. 48,580,149
------------
65,127,766
------------
Total liabilities and stockholders' equity.................................. $302,444,481
============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-2
<PAGE>
EMPRESS ENTERTAINMENT, INC.
COMBINED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenues
Casino............................... $91,337,267 $88,429,519
Food and beverage.................... 5,323,992 4,976,225
Hotel................................ 350,387 329,537
Parking.............................. 272,697 333,342
Gift shop............................ 371,559 483,370
Other................................ 607,960 617,692
----------- -----------
98,263,862 95,169,685
Less: Promotional allowances......... (1,401,678) (1,143,223)
----------- -----------
96,862,184 94,026,462
Operating expenses
Casino............................... 15,056,427 15,708,658
Gaming and admission taxes........... 30,220,561 27,123,183
Food and beverage.................... 6,344,062 6,140,840
Admissions, parking and gift shop.... 888,708 1,264,494
Hotel................................ 222,401 231,269
Advertising and sales................ 4,247,933 3,827,668
General and administrative........... 7,759,936 6,551,569
Security and surveillance............ 1,730,410 1,802,107
Facility and property................ 4,789,896 5,055,569
Depreciation and amortization........ 4,690,893 4,717,181
----------- -----------
75,951,227 72,422,538
----------- -----------
Income from operations............ 20,910,957 21,603,924
Other income (expense)
Interest expense..................... (5,300,715) (5,658,554)
Interest income...................... 981,557 1,061,667
----------- -----------
Income before state income taxes.. 16,591,799 17,007,037
Provision for state income taxes..... 83,267 78,827
----------- -----------
Net income........................ $16,508,532 $16,928,210
=========== ===========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-3
<PAGE>
EMPRESS ENTERTAINMENT, INC.
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income..................................................................... $ 16,508,532 $ 16,928,210
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization............................................... 4,867,932 4,894,220
Changes in operating assets and liabilities:
Accounts and interest receivable......................................... 1,071,036 1,274,144
Inventories.............................................................. 122,317 52,711
Prepaid expenses......................................................... 605,523 233,506
Accounts payable......................................................... (331,514) 502,204
Interest payable......................................................... 4,042,552 3,987,854
Accrued payroll and related expenses..................................... (385,484) (85,734)
Other accrued liabilities................................................ 3,398,697 (149,901)
------------ ------------
Net cash provided by operating activities............................. 29,899,591 27,637,214
Cash flows from investing activities:
Purchase of investments........................................................ (16,082,714) (20,509,965)
Proceeds from the sale of investments.......................................... 10,010,028 23,723,828
Purchase of property and equipment............................................. (7,242,038) (2,036,288)
------------ ------------
Net cash (used in) provided by investing activities................... (13,314,724) 1,177,575
Cash flows from financing activities:
Payments on borrowings......................................................... (5,090,995) (9,635,074)
Stockholder distributions...................................................... (7,239,479) (8,830,064)
------------ ------------
Net cash used in financing activities................................. (12,330,474) (18,465,138)
Net increase in cash and cash equivalents........................................ 4,254,393 10,349,651
Cash and cash equivalents, beginning of year..................................... 73,257,022 45,464,963
------------ ------------
Cash and cash equivalents, end of period......................................... $ 77,511,415 $ 55,814,614
============ ============
Supplemental disclosure of cash flow information:
Interest paid.................................................................. $ 1,081,125 $ 1,184,007
Income taxes paid.............................................................. 250,000 475,000
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-4
<PAGE>
EMPRESS ENTERTAINMENT, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
For the three months ended March 31, 1998 and 1997
(Unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The combined financial statements of Empress Entertainment, Inc. (the
"Company") include the accounts of four affiliated entities, Empress Casino
Joliet Corporation ("Empress Joliet") incorporated on December 26, 1990,
Empress River Casino Finance Corporation ("Empress Finance") incorporated on
January 7, 1994, Empress Entertainment, Inc. (f/k/a LMC Leasing, Ltd.),
incorporated on January 27, 1994, and Empress Casino Hammond Corporation
("Empress Hammond") incorporated on November 25, 1992. All significant
intercompany transactions have been eliminated.
The Company is engaged in the business of providing riverboat gaming and
related entertainment to the public. Empress Joliet was granted a three year
operating license from the Illinois Gaming Board on July 9, 1992, which was
renewed in July 1998 and must be renewed each year thereafter, to operate
the Empress I and Empress II riverboat casinos located on the Des Plaines River
in Joliet, Illinois. Empress Hammond was granted a five-year operating license,
with annual renewals thereafter, from the Indiana Gaming Commission on June 21,
1996 to operate the Empress III riverboat casino located on Lake Michigan in
Hammond, Indiana. Empress III commenced operations on June 28, 1996. The
majority of the Company's customers reside in the Chicago metropolitan area.
The accompanying unaudited combined financial statements do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. Interim results may not
necessarily be indicative of results which may be expected for any other interim
period or for the year as a whole. For further information, refer to the
combined financial statements and footnotes thereto for the year ended December
31, 1997 included elsewhere in the Prospectus. The accompanying unaudited
combined financial statements contain all adjustments which are, in the opinion
of management, necessary to present fairly the financial position and the
results of operations for the periods indicated. Such adjustments include only
normal recurring accruals.
Revenue and Promotional Allowances
In accordance with industry practice, the Company recognizes as casino
revenue the net win from gaming activities, which is the difference between
gaming wins and losses.
The retail value of food, beverage and other services, which were provided
to customers without charge, has been included in the respective revenue
classifications and then deducted as a promotional allowance. The estimated
direct costs of providing such complimentary services are included in operating
expenses and totaled approximately $0.6 million and $0.5 million for the three
months ended March 31, 1998 and 1997, respectively.
Revenues from food, beverage, gift shop and related services are recognized
at the time the related service is performed.
F-5
<PAGE>
EMPRESS ENTERTAINMENT, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
2. Commitments
In June 1996, the Company executed a number of agreements which secure its
rights to operate in the City of Hammond at the Hammond marina. Significant
among these commitments, as of March 31, 1998, are the financial obligations of
the Company which include, but are not limited to, the following:
. An annual payment to the City of Hammond of the greater of $3.0 million
or certain percentages of adjusted gross receipts as follows:
--4.0% up to $125.0 million;
--6.0% over $125.0 million to $200.0 million; and
--4.0% in excess of $200.0 million.
. A passenger payment to the Hammond Port Authority in the sum of $1.00 per
passenger.
. An annual payment to the City of Hammond for police and fire purposes of
$1.0 million.
. Contributions to the City of Whiting and civic organizations in Whiting
for public safety and to promote economic development in the total sum of
$1.25 million. Payments to be made in equal installments over five years
commenced June 1996.
. Construction of a 200 room hotel and conference center with an estimated
cost of $10.0 million.
. Commercial development within the greater Hammond area with an estimated
cost of $10.0 million to be completed within 5 years of the date of the
Certificate of Suitability. No amounts have been expended as of March 31,
1998.
. Renovate existing housing and construction of new market rate housing in
the greater Hammond area with an estimated cost $5.0 million to be
completed within 5 years of the date of the Certificate of Suitability. No
amounts have been expended as of March 31, 1998.
3. Year 2000
The Company has determined that it may need to modify portions of its
software so that its computer systems will function properly with respect to
dates in the year 2000 and beyond. The Company also has initiated discussions
with its software providers to ensure that those parties have appropriate plans
to remediate year 2000 issues where their systems interface with the Company's
system or otherwise impact its operations. The Company is assessing the extent
to which its operations are vulnerable should those organizations fail to
properly remediate its computer systems.
F-6
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Empress Entertainment, Inc.
We have audited the accompanying combined balance sheets of Empress
Entertainment, Inc. as of December 31, 1997 and 1996, and the related combined
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the combined financial position of Empress
Entertainment, Inc. at December 31, 1997 and 1996, and the combined results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Chicago, Illinois
April 7, 1998, except for
Note 10 as to which the
date is June 18, 1998
F-7
<PAGE>
EMPRESS ENTERTAINMENT, INC.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents.................................................. $ 73,257,022 $ 45,464,963
Marketable securities, at fair value which approximates cost............... 10,010,028 30,241,843
Accounts receivable, less allowance for doubtful accounts of $1,762,000
and $1,528,000, respectively............................................. 3,789,455 3,146,188
Interest receivable........................................................ 499,957 741,126
Inventories................................................................ 1,005,622 1,311,034
Prepaid expenses........................................................... 1,887,110 3,637,170
------------ ------------
Total current assets.................................................... 90,449,194 84,542,324
Property and equipment:
Land and improvements...................................................... 9,139,658 9,103,320
Building and improvements.................................................. 69,407,747 68,776,417
Riverboats, docks and improvements......................................... 53,768,016 53,373,138
Leasehold improvements..................................................... 45,416,048 37,392,320
Furniture, fixtures and equipment.......................................... 49,857,048 46,289,959
Construction in progress................................................... 2,709,009 47,676
------------ ------------
230,297,526 214,982,830
Less: Accumulated depreciation............................................. (44,386,127) (28,258,788)
------------ ------------
Property and equipment, net.................................................. 185,911,399 186,724,042
Non-compete agreement, less accumulated amortization of $3,055,556 and
$1,805,556, respectively.................................................... 694,444 1,944,444
Deferred financing costs, less accumulated amortization of $2,646,916 and
$1,938,759, respectively.................................................... 3,018,341 3,726,498
Other assets, less accumulated amortization of $1,236,619 and $462,420,
respectively................................................................ 11,468,794 11,372,654
------------ ------------
Total assets............................................................ $291,542,172 $288,309,962
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable........................................................... $ 3,535,636 $ 2,944,600
Accrued payroll and related expenses....................................... 7,356,407 6,374,090
Other accrued liabilities.................................................. 12,193,675 10,831,078
Interest payable........................................................... 4,073,953 4,225,481
Bank line of credit........................................................ -- 19,600,000
Current portion of long-term debt.......................................... 18,523,788 26,540,296
------------ ------------
Total current liabilities............................................... 45,683,459 70,515,545
Long-term debt............................................................... 190,000,000 168,183,457
Stockholders' equity:
</TABLE>
F-8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Common stock of Empress Casino Joliet Corporation; no par value; 2,000
shares authorized; 1,150 shares issued and outstanding; at stated value.. 11,500,000 11,500,000
Common stock of Empress Entertainment, Inc.; $.01 par value; 6,000 and
3,000 shares authorized; 1,179.245 and 1,150 shares issued and
outstanding, respectively................................................ 12 12
Additional paid-in capital................................................. 5,047,605 5,047,605
Retained earnings.......................................................... 39,311,096 33,063,343
------------ ------------
55,858,713 49,610,960
------------ ------------
Total liabilities and stockholders' equity.............................. $291,542,172 $288,309,962
============ ============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-9
<PAGE>
EMPRESS ENTERTAINMENT, INC.
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Revenues
Casino............................... $346,048,799 $263,039,586 $202,334,313
Food and beverage.................... 27,344,287 17,990,942 14,094,879
Admissions, parking and gift shop.... 3,527,033 2,680,538 11,958,453
Hotel................................ 1,484,236 524,274 --
Other................................ 2,542,231 1,630,874 2,133,341
------------ ------------ ------------
380,946,586 285,866,214 230,520,986
Less: Promotional allowances......... (11,302,593) (7,204,548) (15,909,716)
------------ ------------ ------------
369,643,993 278,661,666 214,611,270
Operating expenses
Casino............................... 64,799,119 48,110,983 30,659,248
Gaming and admission taxes........... 107,992,842 73,126,648 47,146,219
Food and beverage.................... 26,903,259 18,204,758 12,467,219
Admissions, parking and gift shop.... 4,585,876 5,704,813 5,038,836
Hotel................................ 937,504 447,832 --
Advertising and sales................ 19,554,500 12,889,608 9,195,912
General and administrative........... 32,728,734 18,679,502 15,011,889
Pre-opening.......................... -- 5,671,960 1,300,530
Security and surveillance............ 7,461,046 5,608,128 3,782,362
Facility and property................ 21,183,925 16,166,991 10,618,338
Depreciation and amortization........ 18,848,950 13,895,776 16,892,216
------------ ------------ ------------
304,995,755 218,506,999 152,112,769
------------ ------------ ------------
Income from operations............ 64,648,238 60,154,667 62,498,501
Other income (expense)
Interest expense..................... (21,153,957) (18,274,497) (16,351,561)
Interest income...................... 3,323,865 3,487,434 5,238,655
------------ ------------ ------------
Income before state income taxes.. 46,818,146 45,367,604 51,385,595
Provision for state income taxes..... 513,798 447,338 743,418
------------ ------------ ------------
Net income........................ $ 46,304,348 $ 44,920,266 $ 50,642,177
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-10
<PAGE>
EMPRESS ENTERTAINMENT, INC.
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Additional Total
Common Paid-in Retained Stockholders'
Stock Capital Earnings Equity
----------- ---------- ------------- --------------
<S> <C> <C> <C> <C>
Balance at December 31, 1994........ $11,500,012 $4,929,138 $ 16,942,123 $ 33,371,273
Cash distributions to stockholders.. -- -- (47,168,269) (47,168,269)
Net income.......................... -- -- 50,642,177 50,642,177
----------- ---------- ------------ ------------
Balance at December 31, 1995........ 11,500,012 4,929,138 20,416,031 36,845,181
Sale and issuance of common stock... -- 118,467 -- 118,467
Cash distributions to stockholders.. -- -- (32,272,954) (32,272,954)
Net income.......................... -- -- 44,920,266 44,920,266
----------- ---------- ------------ ------------
Balance at December 31, 1996........ 11,500,012 5,047,605 33,063,343 49,610,960
Cash distributions to stockholders.. -- -- (40,056,595) (40,056,595)
Net income.......................... -- -- 46,304,348 46,304,348
----------- ---------- ------------ ------------
Balance at December 31, 1997........ $11,500,012 $5,047,605 $ 39,311,096 $ 55,858,713
=========== ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-11
<PAGE>
EMPRESS ENTERTAINMENT, INC.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1997 1996 1995
------------- -------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 46,304,348 $ 44,920,266 $ 50,642,177
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization......................... 19,557,108 14,603,930 17,600,373
Other................................................. 124,928 274,770 52,287
Allowance on advances to Hammond Port Authority....... -- -- (1,600,000)
Changes in operating assets and liabilities:
Advances to Hammond Port Authority................. -- -- (650,000)
Cash on deposit.................................... -- -- 500,000
Accounts and interest receivable................... (402,098) (1,465,088) (865,022)
Inventories........................................ 305,412 (519,859) (427,605)
Prepaid expenses................................... 1,750,060 (104,646) (281,005)
Accounts payable................................... 591,036 (109,450) (6,359,777)
Interest payable................................... (151,528) 194,231 (9,985)
Accrued payroll and related expenses............... 982,317 3,314,705 (1,439,364)
Other accrued liabilities.......................... 1,262,595 3,191,958 (525,394)
------------ ------------- ------------
Net cash provided by operating activities....... 70,324,178 64,300,817 56,636,685
Cash flows from investing activities:
Purchase of investments.................................. (62,847,480) (61,495,163) (80,743,757)
Proceeds from the sale of investments.................... 83,079,295 57,539,099 59,674,069
Increase in other assets................................. (480,142) (4,849,730) (2,776,560)
Decrease in restricted cash.............................. -- 23,610,936 10,788,426
Purchase of property and equipment....................... (16,137,037) (105,988,320) (7,389,889)
Issuance of non-compete agreement........................ -- -- (3,750,000)
------------ ------------- ------------
Net cash provided by (used in) investing
activities..................................... 3,614,636 (91,183,178) (24,197,711)
Cash flows from financing activities:
Stockholder distributions................................ (40,056,595) (32,272,954) (47,168,269)
Sale of common stock..................................... -- 118,467 --
Payments on borrowings................................... (34,765,295) (2,990,570) (1,539,576)
Proceeds from borrowings................................. 28,965,332 66,680,592 --
Deferred financing costs................................. (290,197) -- --
------------ ------------- ------------
Net cash (used in) provided by financing
activities..................................... (46,146,755) 31,535,535 (48,707,845)
Net increase (decrease) in cash and cash equivalents....... 27,792,059 4,653,174 (16,268,871)
Cash and cash equivalents, beginning of year............... 45,464,963 40,811,789 57,080,660
------------ ------------- ------------
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Cash and cash equivalents, end of year..................... $ 73,257,022 $ 45,464,963 $ 40,811,789
============ ============= ============
Supplemental disclosure of cash flow information:
Interest paid............................................ $ 20,635,718 $ 18,950,400 $ 16,190,396
Income taxes paid........................................ 475,000 825,000 865,000
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-13
<PAGE>
EMPRESS ENTERTAINMENT, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
For the Three Years Ended December 31, 1997
1. Summary of Significant Accounting Policies
Basis of Presentation
The combined financial statements of Empress Entertainment, Inc. (the
"Company") (formerly referred to as Empress Casinos), include the accounts of
four affiliated entities, Empress Casino Joliet Corporation ("Empress Joliet")
incorporated on December 26, 1990, Empress River Casino Finance Corporation
("Empress Finance") incorporated on January 7, 1994, Empress Entertainment,
Inc. (f/k/a LMC Leasing, Ltd.) incorporated on January 27, 1994 and its wholly
owned subsidiary, Empress Casino Hammond Corporation ("Empress Hammond")
incorporated on November 25, 1992. All significant intercompany transactions
have been eliminated.
The Company is engaged in the business of providing riverboat gaming and
related entertainment to the public. The Company was granted a three year
operating license from the Illinois Gaming Board on July 9, 1992, which was
renewed on July 9, 1995, 1996 and 1997, and must be renewed each year thereafter
to operate the Empress I and Empress II riverboat casinos located on the Des
Plaines River in Joliet, Illinois. The Company was granted a five year operating
license, with annual renewals thereafter, from the Indiana Gaming Commission on
June 21, 1996 to operate the Empress III riverboat casino located on Lake
Michigan in Hammond, Indiana. Empress III commenced operations on June 28, 1996.
The majority of the Company's customers reside in the Chicago metropolitan area.
Empress Joliet owns and operates the Empress I and Empress II riverboats in
Joliet, Illinois. Empress Hammond operates the Empress III riverboat in Hammond,
Indiana. The Company was originally incorporated for the sole purpose to build
and lease a riverboat casino (the "Empress III") to Empress Hammond. On
November 14, 1997, the Company became the parent of Empress Hammond through a
share exchange (the Exchange) which qualified as a transfer of a company under
common control. Prior to November 14, 1997, the Company and Empress Hammond were
affiliated through common ownership, at which time the Company leased the
riverboat casino Empress III to Empress Hammond. Accordingly, the Exchange has
been accounted for at historical cost in a manner similar to a pooling of
interests. Empress Finance was incorporated for the sole purpose of issuing
$150.0 million 10 3/4% Senior Notes due 2002 (the "10 3/4% Notes") and is
owned by Empress Joliet (60%) and the Company (40%). These financial statements
have been prepared as if this Exchange had occurred as of December 31, 1994.
Each of the four affiliated entities are owned directly or indirectly by
the same individuals and trusts with the exception of one shareholder which has
a 2.33% ownership in Empress Joliet only, and one shareholder which owns 2.48%
of the Company only.
The preparation of the financial statements, in conformity with generally
accepted accounting principles, necessarily requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements as well as revenues and expenses during the reporting
period. Actual amounts when ultimately realized could differ from those
estimates.
F-14
<PAGE>
EMPRESS ENTERTAINMENT, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Reclassifications
Certain amounts in prior years' financial statements have been reclassified to
conform to the 1997 presentation.
Cash Equivalents and Concentrations of Cash
The Company considers all highly liquid investments purchased with a maturity
of three months or less to be cash equivalents. Cash equivalents are placed
primarily with high-credit-quality financial institutions and are invested in
short-term corporate and U.S. Government obligations.
Marketable Securities
Marketable securities consist principally of investment grade commercial paper
with original maturities at date of purchase beyond three months and less than
twelve months. Such marketable securities are carried at fair value, which
approximates original cost, due to the short period of time to maturity.
Advertising Costs
All advertising costs are expended as incurred.
Inventories
Inventories, which consist of food, beverage, gift shop and promotional items
are recorded at the lower of cost (determined by the first in, first out method)
or market.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using
the straight-line method over the following estimated useful lives:
<TABLE>
<CAPTION>
<S> <C>
Building and improvements.................. 20--31 years
Leasehold improvements..................... 20 years
Riverboats, docks and improvements......... 20 years
Furniture, fixtures and equipment.......... 5 years
</TABLE>
The Company capitalized interest of $0.1 million and $1.6 million in 1997 and
1996, respectively.
Revenue and Promotional Allowances
In accordance with industry practice, the Company recognizes as casino revenue
the net win from gaming activities, which is the difference between gaming wins
and losses.
F-15
<PAGE>
EMPRESS ENTERTAINMENT, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
The retail value of food, beverage and other services, which were provided
to customers without charge, has been included in the respective revenue
classifications and then deducted as a promotional allowance. The estimated
direct costs of providing such complimentary services are included in operating
expenses and totaled approximately $3.4 million, $2.7 million, and $9.2 million
in 1997, 1996 and 1995, respectively.
Revenues from food, beverage, gift shop and related services are recognized
at the time the related service is performed.
Non-compete Agreement
A non-compete agreement for $3.8 million was entered into in July, 1995 and
is being amortized on a straight-line basis over three years. A separate non-
compete agreement for $30.7 million was entered into in October, 1992 and was
fully amortized as of December 31, 1995.
Income Taxes
The stockholders of the Company have elected, under Subchapter S of the
Internal Revenue Code, to include the Company's income in their individual
income tax returns. Accordingly, the Company is not subject to Federal income
taxes. The Company continues to be subject to certain state income taxes.
F-16
<PAGE>
EMPRESS ENTERTAINMENT, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Pre-opening Expense
Pre-opening expenses, which consist principally of lease payments and
professional fees, were expensed as incurred.
2. Other Assets
Other assets consist of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
Licensing costs................. $10,003,337 $ 9,803,337
Development related legal fees.. 1,970,044 1,589,903
Loan acquisition costs.......... 613,565 323,367
Organizational costs............ 118,467 118,467
----------- -----------
12,705,413 11,835,074
Accumulated amortization........ (1,236,619) (462,420)
----------- -----------
$11,468,794 $11,372,654
=========== ===========
</TABLE>
Licensing costs represent amounts paid or committed to be paid to various
municipalities and organizations in connection with the granting of the
operating license from the Indiana Gaming Commission (see Note 8). Such assets
as well as the development related legal fees are being amortized on a straight-
line basis over 20 years.
Approximately $0.1 million and $3.4 million, for 1997 and 1996,
respectively, of these other assets were recorded based on an unconditional
commitment and a corresponding accrual was made. These assets are not reflected
on the Statement of Cash Flows.
3. Other Accrued Liabilities
Other accrued liabilities consist of the following:
<TABLE>
<CAPTION>
December 31,
------------------------
1997 1996
----------- -----------
<S> <C> <C>
Property taxes................... $ 2,398,256 $ 483,003
Empress Club program............. 1,585,138 800,431
Gaming and admission taxes....... 1,506,868 1,320,762
Progressive jackpots............. 1,027,032 977,669
Sales and use taxes.............. 881,073 235,748
Development related commitments.. 875,000 3,443,750
Chip and token float............. 756,110 540,921
State income taxes............... 455,001 416,238
Other............................ 2,709,197 2,612,556
----------- -----------
$12,193,675 $10,831,078
=========== ===========
</TABLE>
EMPRESS ENTERTAINMENT, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
4. Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
10 3/4% Notes...................... $150,000,000 $150,000,000
Credit Facility.................... 56,000,000 39,000,000
Other.............................. 2,523,788 5,723,753
------------ ------------
208,523,788 194,723,753
Current portion of long-term debt.. 18,523,788 26,540,296
------------ ------------
$190,000,000 $168,183,457
============ ============
</TABLE>
Empress Finance issued the 10 3/4% Notes pursuant to a public offering on
April 7, 1994. The 10 3/4% Notes are irrevocably and unconditionally guaranteed
on a senior unsecured basis by the Company, Empress Joliet, Empress Hammond and
all of its future subsidiaries.
Interest on the 10 3/4% Notes is payable semiannually on April 1 and
October 1 of each year. The 10 3/4% Notes are due and payable on April 1, 2002.
The Company and all of its future subsidiaries may be required to repay all or a
portion of the 10 3/4% Notes upon the occurrences of certain repurchase events
described in the 1994 Indenture (the "1994 Indenture") which was entered into
by the Company in connection with this offering.
Certain provisions of the 1994 Indenture restrict, among other things, the
Company's ability to: (i) incur additional indebtedness; (ii) pay certain
dividends or make certain other restricted payments and investments; (iii) enter
into transactions with affiliates; and (iv) merge, consolidate, or transfer
substantially all of the Company's assets.
In June 1997, the Company entered into a $60.0 million Amended and Restated
Credit Facility (the "Existing Credit Facility") which will expire June 30,
2000. The Existing Credit Facility was issued in replacement and substitution
for the original $50.0 million credit facility issued on April 12, 1996. Under
the terms of the Existing Credit Facility, the Company is required to meet
certain financial and other covenants. The initial use of the funds was for the
construction of the Empress Hammond facility and for working capital purposes.
Interest on the Existing Credit Facility is paid quarterly and is based
upon a variable rate based on the Federal Reserve's funds rate. The rate at
December 31, 1997 was 7.72%. The amount outstanding under the Existing Credit
Facility as of December 31, 1997 was $56.0 million. Beginning on December 31,
1997, on the last banking day of each March, June, September and December the
principal amount of the Existing Credit Facility will be reduced by $4.0 million
with a balloon payment of $20.0 million at June 30, 2000.
As of December 31, 1997, the Company had two unused bank lines of credit
available totaling $6.0 million. As of December 31, 1996, the Company had used
$19.6 million of a $20.0 million line of credit. Interest on the $20.0 million
bank line of credit was based on the Federal Reserve fund rate. The rate at
December 31, 1996 was 6.57%. The entire portion of the outstanding balance of
the $20.0 million line of credit was paid in full on June 30, 1997.
The other financing represents vendor financing of gaming equipment.
Interest on the equipment financing is based upon a variable rate of 3% over
prime and is paid monthly. The principal balance due as of December 31, 1997 was
approximately $2.5 million. The entire principal balance is due and payable in
1998.
F-17
<PAGE>
The total fair value of the 10 3/4% Notes was approximately $162.0 million
as of December 31, 1997. Fair value was determined based on the quoted market
price of the 10 3/4% Notes. The carrying value of all other debt instruments
approximates fair value.
F-18
<PAGE>
EMPRESS ENTERTAINMENT, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
Aggregate maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
1998................. $ 18,523,788
1999................. 16,000,000
2000................. 24,000,000
2001................. --
2002................. 150,000,000
------------
$208,523,788
============
</TABLE>
5. Lease Commitments
The Company entered into a lease providing for the right to use the site of
the development and the parking structure which was conveyed to the City of
Hammond upon completion. The lease expires on the fifth anniversary of the
Company's procurement of its operating license from the Indiana Gaming
Commission (see Note 1). The term of the lease will be automatically extended
for periods equal to each renewal period of the operating license provided that
the total term will not exceed seventy-five (75) years. The Company has paid in
full the rent for the amount of $1.00 per year for the term of the lease
($75.00).
The Company pays to the Hammond Port Authority (''HPA'') an amount equal to
the aggregate of the annual rental being charged by the HPA for each boat slip
that is removed or taken out of operation as a result of the operation of the
Empress III. These rental amounts will be the same as the rental amounts charged
to other users of similar boat slips. The annual amount paid in 1997 and 1996
was approximately $0.3 million and $0.4 million, respectively.
Rent expense for the years ended December 31, 1997, 1996, and 1995 was
approximately $0.8 million, $0.8 million, and $0.3 million respectively.
6. Related Party Transactions
The Company engages businesses owned by certain stockholders of the Company
to provide certain services. The amounts paid for insurance brokerage provided
by such businesses were $2.7 million, $2.8 million, and $1.5 million, for the
years ended December 31, 1997, 1996, and 1995, respectively. The amounts paid
for construction services by such businesses were approximately $0.6 million,
$0.5 million, and $0.9 million, for the years ended December 31, 1997, 1996, and
1995, respectively. The amounts paid for fuel purchases and related
transportation by such businesses were $0.5 million, $0.7 million, and $0.5
million for the years ended December 31, 1997, 1996, and 1995, respectively.
7. 401(k) Plan
In 1993, the Company adopted a 401(k) plan covering substantially all of
its employees. The Company's contribution to the plan is based on a
discretionary percentage of employee contributions and may include an additional
discretionary amount. The Company incurred approximately $0.4 million, $0.3
million and $0.4 million of contribution expense related to the plan for the
years ended December 31, 1997, 1996, and 1995, respectively.
F-19
<PAGE>
EMPRESS ENTERTAINMENT, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(Continued)
8. Commitments
In June 1996, the Company executed a number of agreements which secure its
rights to operate in the City of Hammond at the Hammond marina. Significant
among the commitments, as of December 31, 1997, are the financial obligations of
the Company which include, but are not limited to the following:
. An annual payment to the City of Hammond of the greater of $3.0 million or
certain percentages of adjusted gross receipts as follows:
--4.0% up to $125.0 million;
--6.0% over $125.0 million to $200.0 million; and
--4.0% in excess of $200.0 million.
. A passenger payment to the HPA in the sum of $1.00 per passenger.
. An annual payment to the City of Hammond for police and fire purposes of
$1.0 million.
. Contributions to the City of Whiting and civic organizations in Whiting for
public safety and to promote economic development in the total sum of $1.25
million. Payments to be made in equal installments over five years
commenced June 1996.
. Construction of a 200 room hotel and conference center with an estimated
cost of $10.0 million.
. Commercial development within the greater Hammond area with an estimated
cost of $10.0 million to be completed within 5 years of the date of the
Certificate of Suitability. No amounts have been expended as of December
31, 1997.
. Renovate existing housing and construction of new market rate housing in
the greater Hammond area with an estimated cost of $5.0 million to be
completed within 5 years of the date of the Certificate of Suitability. No
amounts have been expended as of December 31, 1997.
9. Year 2000 (Unaudited)
The Company has determined that it may need to modify portions of its
software so that its computer systems will function properly with respect to
dates in the year 2000 and beyond. The Company also has initiated discussions
with its software providers to ensure that those parties have appropriate plans
to remedy Year 2000 issues where their systems interface with the Company's
system or otherwise impact its operations. The Company is assessing the extent
to which its operations are vulnerable should those organizations fail to
properly remedy its computer systems.
10. Subsequent Event
On June 18, 1998, the Company issued $150.0 million of Senior Subordinated
Notes which mature in 2006 and have an interest rate of 8 1/8%. The proceeds
from the Notes were used to purchase U.S. Treasury Securities to effect a
covenant defeasance on the Company's 10 3/4% Notes. Concurrently with the
issuance of the Notes, the Company effected a reorganization to which Empress
Joliet and Empress Finance became wholly-owned subsidiaries of the Company.
Empress Hammond, Empress Joliet and Empress Finance are all guarantors of the
Notes. Audited financial information of those guarantor subsidiaries' has been
omitted because the Notes are guaranteed on a joint, several and unconditional
basis by all direct and indirect subsidiaries of the parent, which has no
significant operations or assets separate from its investments in its
subsidiaries.
F-20
<PAGE>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus and,
if given or made, such information or representations must not be relied upon
as having been authorized by the Company, any Guarantor or the Exchange Agent.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, any of the Notes offered hereby in any jurisdiction where, or to
any person to whom, it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus nor any sale hereunder shall, in any
circumstances, create an implication that the information herein is correct as
of anytime subsequent to the date hereof or that there has been no change in the
facts set forth in this Prospectus or in the affairs of the Company since such
date.
---------
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Prospectus Summary......................................... 1
Risk Factors............................................... 16
The Exchange Offer......................................... 28
Use of Proceeds............................................ 40
Capitalization............................................. 41
Selected Combined Financial Data........................... 42
Management's Discussion and Analysis of
Financial Condition And Results of
Operations............................................... 44
Business................................................... 50
Regulatory Matters......................................... 58
Management................................................. 64
Certain Transactions....................................... 71
Principal Stockholders..................................... 73
Description of Certain Other Indebtedness.................. 75
Description of the New Notes............................... 76
Book-Entry; Delivery and Form.............................. 103
Registration Rights........................................ 104
Certain Federal Income
Tax Considerations....................................... 107
Plan of Distribution....................................... 109
Legal Matters.............................................. 109
Independent Auditors....................................... 109
Index to Combined Financial Statements..................... F-1
</TABLE>
Until ____, 1998 (90 days as of the date this Prospectus), all dealers effecting
transactions in the registered securities, whether or not participating in the
distribution, may be required to deliver a Prospectus.
$150,000,000
LOGO
Empress Entertainment, Inc.
8 1/8% Senior Subordinated Notes due 2006
------------
PROSPECTUS
------------
, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
The by-laws of the Company, Empress Hammond, Empress Joliet and Empress
Finance provide that each corporation will have the power to indemnify any
person who is or was a director, officer, employee or agent of the corporation,
or who is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, or other enterprise to the fullest extent permitted by law.
The Company and Empress Finance are each incorporated under the laws of the
State of Delaware. The Company's and Empress Finance's respective Certificates
of Incorporation provide that a director of such corporation shall not be
personally liable to such corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director to the fullest extent permitted by
law. The effect of this provision in the Company's and Empress Finance's
respective Certificates of Incorporation is to eliminate the rights of the
corporation and its stockholders (through stockholders' derivative suits on
behalf of the Company or Empress Finance) to recover monetary damages against a
director for breach of the fiduciary duty of care as a director (including
breaches resulting from negligent or grossly negligent behavior) except in
certain limited situations. This provision does not limit or eliminate the
rights of the Company or Empress Finance or any of their respective stockholders
to seek non-monetary relief such as an injunction or rescission in the event of
a breach of a director's duty of care. These provisions do not alter the
liability of directors under Federal securities laws.
Section 145 of the Delaware General Corporation Law empowers a corporation,
subject to certain qualifications and limitations, to indemnify its directors
and officers against expenses (including attorneys' fees), judgments, fines and
certain amounts paid in settlements actually and reasonably incurred by them in
connection with any suit or proceeding to which they are a party so long as they
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. The Company's and Empress Finance's respective Certificates of
Incorporation and by-laws provide that such entity shall indemnify its directors
and such of its officers, employees and agents as the Board of Directors may
determine from time to time, to the fullest extent permitted by applicable law.
Empress Hammond is incorporated under the laws of the State of Indiana.
Sections 23-1-37-8 and 23-1-37-13 of the Indiana Business Corporation Law
empower a corporation to indemnify its directors and officers against liability
incurred by them in connection with any suit or proceeding to which they are a
party so long as their conduct was in good faith and (i) in the case of conduct
in the director's or officer's capacity as a director or officer, as the case
may be, in a manner the individual reasonably believed to be in the best
interests of the corporation; (ii) in all other cases, in a manner the
individual reasonably believed to be not opposed to the best interests of the
corporation; and (iii) with respect to criminal proceedings, the individual
either (A) had reasonable cause to believe his conduct was lawful; or (B) had no
reasonable cause to believe his conduct was unlawful. In addition, unless
limited by its articles of incorporation, a corporation shall indemnify a
director or officer who is wholly successful, on the merits or otherwise, in the
defense of any proceeding to which the director or officer was a party because
the director or officer was a director or officer of the corporation against
reasonable expenses incurred by the director or officer in connection with the
proceeding. Section 23-1-35-1(e) of the Indiana Business Corporation Law
provides that a director of an Indiana corporation is not liable for any action
taken as a director, or any failure to take any action, unless (1) the director
has breached or failed to perform the duties of the director's office in
II-1
<PAGE>
compliance with the statute, and (2) the breach or failure to perform
constitutes willful misconduct or recklessness. Empress Hammond's by-laws
provide that Empress Hammond shall indemnify its directors and its officers,
employees and agents in accordance with the provisions of the Indiana Business
Corporation Law.
Empress Joliet is incorporated under the laws of the State of Illinois. The
Illinois Business Corporation Act was amended effective January 1, 1994 to
permit an Illinois corporation's articles of incorporation to limit its
directors' personal exposure to liability for monetary damages. As a result
thereof, Empress Joliet amended its Articles of Incorporation to provide that a
director of Empress Joliet shall not be personally liable to Empress Joliet or
its shareholders for monetary damages for breach of fiduciary duty as a director
to the fullest extent permitted by law. The effect of this provision in Empress
Joliet's Articles of Incorporation is to eliminate the rights of Empress Joliet
and its shareholders (through shareholders' derivative suits on behalf of
Empress Joliet) to recover money damages against a director for breach of the
fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior) except in certain limited situations.
This provision would not limit or eliminate the rights of each of Empress Joliet
or its shareholders to seek non-monetary relief such as an injunction or
recession in the event of a breach of a director's duty of care. The provision
would not alter the liability of directors under Federal securities laws.
Section 8.75 of the Business Corporation Act of 1983 of the State of
Illinois, as amended, empowers a corporation, subject to certain qualifications
and limitations, to indemnify its directors and officers against expenses
(including attorney's fees), judgments, fines and certain amounts paid in
settlements actually and reasonably incurred by them in connection with any suit
or proceeding to which they are a party, or are threatened to be made a party
of, so long as they acted in good faith and in a manner they reasonably believed
to be in or not opposed the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe their
conduct to have been unlawful. Empress Joliet's by-laws provide that Empress
Joliet shall have the power to indemnify its officers, directors, employees and
agents to the full extent permitted by law.
Item 21. Exhibits and Financial Statement Schedules
(a) Exhibits
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(a) Exhibits
The exhibits filed as part of this registration statement are as follows:
EXHIBIT NO. EXHIBIT
- ----------- -------
- -----------
1.1 Purchase Agreement, dated June 11, 1998 among Empress Entertainment,
Inc. (the "Company"), Empress Casino Hammond Corporation ("Empress
Hammond"), Empress Casino Joliet Corporation ("Empress Joliet"),
Empress River Casino Finance Corporation ("Empress Finance") and
Hammond Residential, L.L.C. ("Hammond Residential" and together with
Empress Hammond, Empress Joliet and Empress Finance, collectively, the
"Guarantors"), Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Wasserstein Perella Securities, Inc. (the
"Initial Purchasers").
II-2
<PAGE>
2.1 Agreement and Plan of Merger, dated June 1, 1998, of New Empress
Joliet, Inc. into Empress Joliet.
2.2 Articles of Merger, filed June 5, 1998, between New Empress Joliet,
Inc. into Empress Joliet (included in Exhibit 3.5).
2.3 Stock Purchase Agreement, dated June 12, 1998, between the Company
and Empress Joliet.
2.4 Termination of Lease, dated June 17, 1998, between the Company and
Empress Hammond.
2.5 Bill of Sale for the Empress III, dated June 17, 1998 executed by
the Company.
3.1 Amended Certificate of Incorporation of the Company, as amended as of
May 28, 1998.
3.2 By-Laws of the Company.
3.3 Restated Articles of Incorporation of Empress Hammond as amended as
of March 11, 1996.
3.4 By-Laws of Empress Hammond.
3.5 Articles of Incorporation of Empress Joliet.
3.6 By-Laws of Empress Joliet.
3.7 Certificate of Incorporation of Empress Finance.
3.8 By-Laws of Empress Finance.
3.9 Certificate of Organization of Hammond Residential as of February 23,
1998.
3.10 Operating Agreement of Hammond Residential.
4.1 Indenture, dated June 18, 1998, among the Company, the Guarantors and
U.S. Bank Trust National Association, as Trustee, including forms of
the Old Notes and the New Notes issued pursuant to such Indenture.
4.2 Registration Rights Agreement, dated June 18, 1998, by and among the
Company, the Guarantors, and the Initial Purchasers.
4.3 Indenture, dated April 1, 1994, among Empress Finance, the Company
(f/k/a LMC Leasing, Ltd.), Empress Hammond (f/k/a Lake Michigan
Charters, Ltd.), Empress Joliet (f/k/a Empress River Casino
Corporation) and U.S. Bank Trust National Association (f/k/a First
Trust National Association), as Trustee, including a form the Notes.
4.4 Supplemental Indenture to the 1994 Indenture dated November 6, 1997
among Empress Finance, the Company, Empress Hammond, Empress Joliet,
New Empress Hammond, Inc. and First Trust National Association, as
Trustee.
4.5 Supplemental Indenture No. 2 to the 1994 Indenture dated February 23,
1998 among Empress Finance, the Company, Empress Hammond, Empress
Joliet, Hammond Residential and U.S. Bank Trust National Association,
as Trustee.
4.6 Supplemental Indenture No. 3 to the 1994 Indenture dated April 29,
1998 among Empress Finance, the Company, Empress Hammond, Empress
Joliet, New Empress Joliet, Inc., Hammond Residential and U.S. Bank
Trust National Association, as Trustee.
4.7 Supplemental Indenture No. 4 to the 1994 Indenture dated June 10, 1998
among Empress Finance, the Company, Empress Hammond, Empress Joliet,
New Empress Joliet, Inc., Hammond Residential and U.S. Bank Trust
National Association, as Trustee.
4.8 Credit Agreement, dated as of June 17, 1998 by and among the Company,
Empress Hammond, Empress Joliet and Wells Fargo Bank, National
Association ("Wells Fargo").
4.8(a) Closing Agreement among the Company, Empress Hammond, Empress Joliet
and Wells Fargo, dated June 17, 1998.
4.8(b) $100,000,000 Revolving Credit Promissory Note executed by the Company,
Empress Joliet and Empress Hammond in favor of Wells Fargo, as Agent
Bank, dated June 17, 1998.
4.8(c) $5,000,000 Swingline Note executed by the Company, Empress Joliet and
Empress Hammond in favor of Wells Fargo, dated June 17, 1998.
4.8(d) Senior Mortgage with Absolute Assignment of Leases and Rents executed
by Empress Hammond in favor of Wells Fargo, as Agent Bank, dated June
17, 1998.
4.8(e) First Preferred Ship Mortgage executed by Empress Hammond with respect
to Empress III in favor of Wells Fargo, as Agent Bank dated as of June
17, 1998.
4.8(f) Security Agreement between the Company and Wells Fargo, as
administrative and collateral agent, dated as of June 17, 1998.
4.8(g) Security Agreement between Empress Hammond and Wells Fargo, as
administrative and collateral agent, dated as of June 17, 1998.
4.8(h) Security Agreement and Pledge of Stock (Indiana) between the Company
and Wells Fargo, as Agent Bank dated as of June 17, 1998.
4.8(i) Trademark Security Agreement by the Company and Empress Hammond dated
June 17, 1998.
4.8(j) Certificate and Indemnification Regarding Hazardous Substances by
Empress Entertainment and Empress Hammond dated June 17, 1998
(included in Exhibit 4.8(o)).
4.8(k) Senior Mortgage with Absolute Assignment of Leases and Rents, Security
Agreement and Fixture Filing executed by Empress Joliet in favor of
Wells Fargo, dated as of June 30, 1998.
4.8(l) First Preferred Fleet Mortgage executed by Empress Joliet with respect
to Empress I and Empress II in favor of Wells Fargo, as Agent Bank,
dated as of June 30, 1998.
4.8(m) Security Agreement and Pledge of Stock (Illinois) between the Company
and Wells Fargo, as Agent Bank, dated as of June 30, 1998.
4.8(n) Trademark Security Agreement by Empress Joliet dated as of June 30,
1998.
4.8(o) Certificate and Indemnification Regarding Hazardous Materials by
Empress Joliet dated as of June 30, 1998.
5.1* Form of Opinion of D'Ancona & Pflaum, dated ________, 1998.
9.1 Amended and Restated Stockholders Agreement dated April 18, 1998 by
and among the Company and each of the stockholders of the Company.
9.2 First Amendment dated June 1, 1998 to the Company's Amended and
Restated Stockholders Agreement.
9.3 Voting Trust Agreement dated May 3, 1993 among Peter A. Ferro, Jr.,
John T. Ferro and James J. Ferro.
9.4 Voting Trust Agreement Amendment No. 1, dated September 6, 1993
among Peter A. Ferro, Jr., John T. Ferro and James J. Ferro.
10.1 Tax Reimbursement Agreement, dated June 18, 1998, by and between the
Company and each of the Stockholders of the Company.
10.2 Guaranty executed by Empress Hammond in favor of the holders of the
Notes.
10.3 Guaranty executed by Empress Joliet in favor of the holders of the
Notes.
10.4 Guaranty executed by Empress Finance in favor of the holders of the
Notes.
10.5 Guaranty executed by Hammond Residential in favor of the holders of
the Notes.
10.6 Contract dated November 20, 1997 between Empress Joliet and Gas City,
Ltd.
10.7 Trademark License Agreement dated June 30, 1997 between Empress Joliet
and Empress Hammond.
10.8 Consulting Agreement dated January 1, 1998 between Empress Hammond and
William J. Sabo.
10.9 Consulting Agreement dated January 1, 1998 between Empress Joliet and
William J. Sabo.
10.10 Hammond Riverboat Gaming Project Development Agreement by and among
the City of Hammond, Indiana, City of Hammond, Department of
Redevelopment and Empress Casino Hammond Corporation, dated as of June
21, 1996.
10.11 Lease by and between the City of Hammond, Department of Redevelopment
and Empress Hammond, dated as of June 19, 1996.
10.12 License Agreement by and between Hammond Port Authority and Empress
Hammond, dated as of June 21, 1996.
10.13 License Agreement by and between Department of Waterworks of the City
of Hammond and the City of Hammond, Indiana and Empress Hammond.
10.14 Employment Agreement dated March 7, 1997 between Empress Hammond and
Peter A. Ferro, Jr.
10.15 Employment Agreement dated March 7, 1997 between Empress Joliet and
Peter A. Ferro, Jr.
10.16 Allocation Agreement dated March 7, 1997 between Empress Hammond and
Empress Joliet.
10.17 Employment Agreement dated June 12, 1997 between Empress Hammond and
Joseph J. Canfora.
10.18 Employment Agreement dated June 12, 1997 between Empress Joliet and
Joseph J. Canfora.
10.19 Long Term Incentive Bonus Agreement dated June 12, 1997 between
Empress Hammond and Joseph J. Canfora.
10.20 Long Term Incentive Bonus Agreement dated June 12, 1997 between
Empress Joliet and Joseph J. Canfora.
10.21 Allocation Agreement dated June 12, 1997 between Empress Hammond and
Empress Joliet.
10.22 Employment Agreement dated March 12, 1998 between Empress Joliet and
John G. Costello.
10.23 Employment Agreement dated March 12, 1998 between Empress Joliet and
Michael W. Hansen.
10.24 Employment Agreement dated March 12, 1998 between Empress Joliet and
David F. Fendrick.
10.25 Employment Agreement dated March 12, 1998 between Empress Hammond and
Rick. Mazer.
12.1 Computation of Ratio of Earnings to Fixed Charges.
21.1 List of Subsidiaries of the Company.
23.1 Consent of Ernst & Young LLP.
23.2* Consent of D'Ancona & Pflaum (included in their opinion filed as
Exhibit 5.1).
24.1 Powers of Attorney (included as part of the signature page hereof).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939 of U.S. Bank Trust National Association.
27.1 Financial Data Schedule
27.2 Financial Data Schedule
99.1 Form of Letter of Transmittal for the New Notes.
99.2 Guidelines for Certification of Taxpayer Identification Numbers on
Substitute Form W-9.
99.3 Form of Notice of Guaranteed Delivery.
* To be filed with an Amendment to the Registration Statement.
(b) Financial Statement Schedule
The following financial statement schedule for the years 1997, 1996 and
1995 is submitted herewith:
Schedule II Valuation and Qualifying Accounts
All other schedules are either not required under the related instructions
or are not applicable, and therefore have been omitted.
Item 22. Undertakings
Each of the undersigned registrants hereby undertakes:
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(a) Each of the undersigned registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)
(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Each of the undersigned registrants hereby undertakes:
(1) To respond to requests for information that is incorporated
by reference into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of
this form, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to
the effective date of the Registration Statement through the date of
responding to the request.
(2) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Empress Entertainment, Inc. has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in Chicago,
Illinois on July 29, 1998.
EMPRESS ENTERTAINMENT, INC.
By: /s/ Peter A. Ferro, Jr.
--------------------------------------------
Peter A. Ferro, Jr., Chief Executive Officer
Each person whose signature appears below constitutes and appoints Peter A.
Ferro, Jr. and Michael W. Hansen, or either of them, as such person's true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons on behalf
of Empress Entertainment, Inc. and in the capacities set forth below set forth
below on July 29, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Peter A. Ferro, Jr.
- ---------------------------------- Director and Chief Executive Officer
Peter A. Ferro, Jr.
/s/ Joseph A. Canfora
- ---------------------------------- President
Joseph A. Canfora
/s/ John G. Costello
- ---------------------------------- Vice President, Chief Financial and
John G. Costello Accounting Officer and Treasurer
/s/ Michael W. Hansen
- ---------------------------------- Vice President and Chief Legal Officer
Michael W. Hansen and Secretary
/s/ Charles P. Hammersmith, Jr.
- ---------------------------------- Director
Charles P. Hammersmith, Jr.
</TABLE>
II-4
<PAGE>
/s/ Robert W. Kegley, Sr.
- ---------------------------------- Director
Robert W. Kegley, Sr.
/s/ Thomas J. Lambrecht
- ---------------------------------- Chairman of the Board of Directors
Thomas J. Lambrecht
/s/ William J. McEnery
- ---------------------------------- Director
William J. McEnery
/s/ Edward T. McGowan
- ---------------------------------- Director
Edward T. McGowan
/s/ William J. Sabo
- ---------------------------------- Director
William J. Sabo
II-5
<PAGE>
Pursuant to the Requirements of the Securities Act of 1933, as amended,
Empress Casino Hammond Corporation has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
__________, Illinois, on July 29, 1998.
EMPRESS CASINO HAMMOND
CORPORATION
By: /s/ Peter A. Ferro, Jr.
----------------------------------------
Peter A. Ferro, Jr., Chief Executive Officer
Each person whose signature appears below constitutes and appoints Peter A.
Ferro, Jr. and Michael W. Hansen, or either of them, as such person's true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons on behalf
of Empress Casino Hammond Corporation and in the capacities such forth below on
July 29, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Peter A. Ferro, Jr.
- ---------------------------------- Director and Chief Executive Officer
Peter A. Ferro, Jr.
/s/ Joseph A. Canfora
- ---------------------------------- President
Joseph A. Canfora
/s/ John G. Costello
- ---------------------------------- Vice President, Chief Financial Officer
John G. Costello and Treasurer
/s/ Michael W. Hansen
- ---------------------------------- Vice President, Chief Legal Officer
Michael W. Hansen and Secretary
</TABLE>
II-6
<PAGE>
/s/ Charles P. Hammersmith, Jr.
- ---------------------------------- Director
Charles P. Hammersmith, Jr.
/s/ Robert W. Kegley, Sr.
- ---------------------------------- Director
Robert W. Kegley, Sr.
/s/ Thomas J. Lambrecht
- ---------------------------------- Chairman of the Board of Directors
Thomas J. Lambrecht
/s/ William J. McEnery
- ---------------------------------- Director
William J. McEnery
/s/ Edward T. McGowan
- ---------------------------------- Director
Edward T. McGowan
/s/ William J. Sabo
- ---------------------------------- Director
William J. Sabo
II-7
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
Empress Casino Joliet Corporation has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in
Chicago, Illinois on July 29, 1998.
EMPRESS CASINO JOLIET CORPORATION
By: /s/ Peter A. Ferro, Jr.
------------------------------------------
Peter A. Ferro, Jr., Chief Executive Officer
Each person whose signature appears below constitutes and appoints Peter A.
Ferro, Jr. and Michael W. Hansen, or either of them, as such person's true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
behalf of Empress Casino Joliet Corporation and in the capacities set forth
below on July 29, 1998.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Peter A. Ferro, Jr.
- ---------------------------------- Director and Chief Executive Officer
Peter A. Ferro, Jr.
/s/ Joseph A. Canfora
- ---------------------------------- President
Joseph A. Canfora
/s/ John G. Costello
- ---------------------------------- Vice President, Chief Financial Officer
John G. Costello and Treasurer
/s/ Michael W. Hansen
- ---------------------------------- Vice President, Chief Legal Officer and
Michael W. Hansen Secretary
/s/ Charles P. Hammersmith, Jr.
- ---------------------------------- Director
Charles P. Hammersmith, Jr.
/s/ Robert W. Kegley, Sr.
- ---------------------------------- Director
Robert W. Kegley, Sr.
/s/ Thomas J. Lambrecht
- ---------------------------------- Chairman of the Board of Directors
Thomas J. Lambrecht
/s/ William J. McEnery
- ---------------------------------- Director
William J. McEnery
/s/ Edward T. McGowan
- ---------------------------------- Director
Edward T. McGowan
/s/ William J. Sabo
- ---------------------------------- Director
William J. Sabo
</TABLE>
II-8
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
Empress River Casino Finance Corporation has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Chicago, Illinois on July 29, 1998.
EMPRESS RIVER CASINO FINANCE
CORPORATION
By: /s/ Peter A. Ferro, Jr.
------------------------------
Peter A. Ferro, Jr., President
Each person whose signature appears below constitutes and appoints Peter A.
Ferro, Jr. and Michael W. Hansen, or either of them, as such person's true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
behalf of Empress River Casino Finance Corporation and in the capacities set
forth below on July 29, 1998.
Signature Title
--------- -----
/s/ Peter A. Ferro, Jr.
- ---------------------------------- Director and President
Peter A. Ferro, Jr.
/s/ John G. Costello
- ---------------------------------- Vice President, Chief Financial Officer
John G. Costello and Treasurer
/s/ Michael W. Hansen
- ---------------------------------- Vice President, Chief Legal Officer
Michael W. Hansen and Secretary
/s/ Charles P. Hammersmith, Jr.
- ---------------------------------- Director
Charles P. Hammersmith, Jr.
/s/ Robert W. Kegley, Sr.
- ---------------------------------- Director
Robert W. Kegley, Sr.
II-9
<PAGE>
/s/ Thomas J. Lambrecht
- ---------------------------------- Chairman of the Board of Directors
Thomas J. Lambrecht
/s/ William J. McEnery
- ---------------------------------- Director
William J. McEnery
/s/ Edward T. McGowan
- ---------------------------------- Director
Edward T. McGowan
/s/ William J. Sabo
- ---------------------------------- Director
William J. Sabo
Pursuant to the requirements of the Securities Act of 1933, as amended,
Hammond Residential, L.L.C. has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in Chicago,
Illinois on July 29, 1998.
HAMMOND RESIDENTIAL, L.L.C.
By: /s/ Peter A. Ferro, Jr.
----------------------------------------
Peter A. Ferro, Jr., Chief Executive Officer
Each person whose signature appears below constitutes and appoints Peter A.
Ferro, Jr. and Michael W. Hansen, or either of them, as such person's true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
behalf of Hammond Residential, L.L.C. and in the capacities set forth below on
July 29, 1998.
Signature Title
--------- -----
/s/ Peter A. Ferro, Jr.
- ---------------------------------- Director of Empress Hammond, the Sole
Peter A. Ferro, Jr. Member of Hammond Residential and Chief
Executive Officer
/s/ John G. Costello
- ---------------------------------- Vice President and Chief Financial Officer
John G. Costello of Hammond Residential
/s/ Michael W. Hansen
- ---------------------------------- Vice President and Chief Legal Officer of
Michael W. Hansen Hammond Residential
/s/ Charles P. Hammersmith, Jr.
- ---------------------------------- Director of Empress Hammond, the Sole
Charles P. Hammersmith, Jr. Member of Hammond Residential
/s/ Robert W. Kegley, Sr.
- ---------------------------------- Director of Empress Hammond, the Sole
Robert W. Kegley, Sr. Member of Hammond Residential
/s/ Thomas J. Lambrecht
- ---------------------------------- Chairman of the Board of Directors of
Thomas J. Lambrecht Empress Hammond, the Sole Member of Hammond
Residential
/s/ William J. McEnery
- ---------------------------------- Director of Empress Hammond, the Sole
William J. McEnery Member of Hammond Residential
/s/ Edward T. McGowan
- ---------------------------------- Director of Empress Hammond, the Sole
Edward T. McGowan Member of Hammond Residential
/s/ William J. Sabo
- ---------------------------------- Director of Empress Hammond, the Sole
William J. Sabo Member of Hammond Residential
II-10
<PAGE>
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Col. A Col. B Col. C Col. D Col. E
- ------------------------------------------------------------------------------------------------------------------------------------
Additions
-------------------------------------
(1) (2)
Balance at Charged to
Beginning Charged to Other Accounts- Deductions-- Balance at
Description of Period Costs and -Describe Describe End of Period
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts: Write-Offs
----------
Year ended December 31, 1997.. $1,527,774 $652,984 $419,342 $1,761,416
Year ended December 31, 1996.. 1,170,265 587,080 229,571 1,527,774
Year ended December 31, 1995.. 1,112,394 117,390 59,519 1,170,265
</TABLE>
<PAGE>
EXHIBIT 1.1
Empress Entertainment, Inc.
(a Delaware corporation)
$150,000,000 8 1/8% Senior Subordinated Notes Due 2006
PURCHASE AGREEMENT
------------------
June 11, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Wasserstein Perella Securities, Inc.
as Representatives of the several Initial Purchasers
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Empress Entertainment, Inc., a Delaware corporation (the "Company"),
confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), Wasserstein Perella Securities, Inc.
("Wasserstein") and each of the other Initial Purchasers named in Schedule A
hereto (collectively, the "Initial Purchasers," which term shall also include
any initial purchaser substituted as hereinafter provided in Section 11 hereof),
for whom Merrill Lynch and Wasserstein are acting as representatives (in such
capacity, the "Representatives"), with respect to the issue and sale by the
Company and the purchase by the Initial Purchasers, acting severally and not
jointly, of the respective principal amounts set forth in said Schedule A of
$150,000,000 aggregate principal amount of the Company's 8 1/8% Senior
Subordinated Notes Due 2006 (the "Securities"). The Securities, the Exchange
Securities (as defined in the Registration Rights Agreement) and the Private
Exchange Securities (as defined in the Registration Rights Agreement) are to be
issued pursuant to an indenture to be dated as of June 18, 1998 (the
"Indenture") among the Company, the Guarantors (as defined in the Indenture) and
U.S. Bank Trust, National Association, as trustee (the "Trustee"). The
Securities, the Exchange Securities and the Private Exchange Securities will be
guaranteed (the
<PAGE>
"Guarantees") by Empress Casino Hammond Corporation, an Indiana corporation
("Empress Hammond"), Hammond Residential, L.L.C., an Indiana limited liability
company ("Hammond Residential" and, together with Empress Hammond, the "Indiana
Companies"), Empress Casino Joliet Corporation, an Illinois corporation
("Empress Joliet"), Empress River Casino Finance Corporation, a Delaware
corporation ("Finance" and, together with the Indiana Companies and Empress
Joliet, the "Guarantors") and all future Restricted Subsidiaries (as defined in
the Indenture) of the Company, as further provided in the Indenture. Securities
issued in book-entry form will be issued to Cede & Co. as nominee of The
Depository Trust Company ("DTC") pursuant to a letter agreement, to be dated as
of the Closing Time (as defined in Section 2(b)) (the "DTC Agreement"), among
the Company, the Trustee and DTC.
Each of the Company and each Guarantor understands that the Initial
Purchasers propose to make an offering of the Securities on the terms and in the
manner set forth herein and agrees that the Initial Purchasers may resell,
subject to the conditions set forth herein, all or a portion of the Securities
to purchasers ("Subsequent Purchasers") at any time after the date of this
Agreement. The Securities are to be offered and sold through the Initial
Purchasers without being registered under the Securities Act of 1933, as amended
(the "1933 Act"), in reliance upon exemptions therefrom. Pursuant to the terms
of the Securities and the Indenture, investors that acquire Securities may only
resell or otherwise transfer such Securities if such Securities are hereafter
registered under the 1933 Act or if an exemption from the registration
requirements of the 1933 Act is available (including the exemption afforded by
Rule 144A ("Rule 144A") or Regulation S ("Regulation S") of the rules and
regulations promulgated under the 1933 Act by the Securities and Exchange
Commission (the "Commission")).
The Company has prepared and delivered to each Initial Purchaser copies of
a preliminary offering memorandum dated June 1, 1998 (the "Preliminary Offering
Memorandum") and has prepared and will deliver to each Initial Purchaser, on the
date hereof or the next succeeding day, copies of a final offering memorandum
dated June 11, 1998 (the "Final Offering Memorandum"), each for use by such
Initial Purchaser in connection with its solicitation of purchases of, or
offering of, the Securities. "Offering Memorandum" means, with respect to any
date or time referred to in this Agreement, the most recent offering memorandum
(whether the Preliminary Offering Memorandum or the Final Offering Memorandum,
or any amendment or supplement to either such document), including exhibits
thereto and any documents incorporated therein by reference, which has been
prepared and delivered by the Company to the Initial Purchasers in connection
with their solicitation of purchases of, or offering of, the Securities.
Capitalized terms not otherwise defined herein have the meanings given such
terms in the Offering Memorandum.
The holders of Securities (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of a
registration rights agreement, to be dated as of June 18, 1998 (the
"Registration Rights Agreement"), between the Company and the Initial
Purchasers. Pursuant to the Registration Rights Agreement, the Company will
agree to file with
2
<PAGE>
the Commission under the circumstances set forth therein (i) a registration
statement under the 1993 Act registering the Exchange Securities to be offered
in exchange for the Securities and to use its best efforts to cause such
registration statement to be declared effective and/or (ii) a shelf registration
statement pursuant to Rule 415 under the 1933 Act relating to the resale of the
Securities by holders thereof or, if applicable, relating to the resale of
Private Exchange Securities by the Initial Purchasers and to use its best
efforts to cause such shelf registration statement to be declared effective.
This Agreement, the Indenture, the Securities, the Exchange Securities, the
Private Exchange Securities, the Guarantees and the Registration Rights
Agreement are sometimes referred to herein collectively as the "Operative
Documents."
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the Offering
Memorandum (or other references of like import) shall be deemed to mean and
include all such financial statements and schedules and other information which
are incorporated by reference in the Offering Memorandum.
SECTION 1. Representations and Warranties.
------------------------------
(a) Representations and Warranties by the Company and the Guarantors.
Each of the Company and each Guarantor, jointly and severally, represents and
warrants to each Initial Purchaser as of the date hereof and as of the Closing
Time referred to in Section 2(b) hereof, and agrees with each Initial Purchaser
as follows:
(i) Similar Offerings. Neither the Company nor any Guarantor has,
-----------------
directly or indirectly, solicited any offer to buy or offered to sell, and
neither the Company nor any Guarantor will, directly or indirectly, solicit
any offer to buy or offer to sell, in the United States or to any United
States citizen or resident, any security which is or would be integrated
with the sale of the Securities in a manner that would require the
Securities to be registered under the 1933 Act.
(ii) Offering Memorandum. The Offering Memorandum does not, and at
-------------------
the Closing Time will not, include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and agreement shall
not apply to statements in or omissions from the Offering Memorandum made
in reliance upon and in conformity with information furnished to the
Company in writing by any Initial Purchaser through the Representatives
expressly for use in the Offering Memorandum.
(iii) Independent Accountants. The accountants who certified the
-----------------------
financial statements and supporting schedules included in the Offering
Memorandum are
3
<PAGE>
independent certified public accountants with respect to the Company and
the Guarantors within the meaning of Regulation S-X under the 1933 Act.
(iv) Financial Statements. The combined financial statements,
--------------------
together with the related schedules and notes, included in the Offering
Memorandum present fairly in all material respects the combined financial
position of the Company and the Guarantors at the dates indicated and the
combined statement of operations, stockholders' equity and cash flows of
the Company and the Guarantors for the periods specified; and said
financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules, if any,
included in the Offering Memorandum present fairly in all material respects
in accordance with GAAP the information required to be stated therein. The
selected combined financial data and the summary combined financial data
included in the Offering Memorandum present fairly in all material respects
the information shown therein and have been compiled on a basis consistent
with that of the audited combined financial statements included in the
Offering Memorandum. The statistical information and other market-related
data included in the Offering Memorandum present fairly, in all material
respects, the information and data shown therein and are derived from
sources the Company believes are accurate.
(v) No Material Adverse Change in Business. Since the respective
--------------------------------------
dates as of which information is given in the Offering Memorandum, except
as otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and the Guarantors considered
as one enterprise (a "Material Adverse Effect"), whether or not arising in
the ordinary course of business, (B) there have been no transactions
entered into by the Company or any of the Guarantors, other than those in
the ordinary course of business, which are material with respect to the
Company and the Guarantors considered as one enterprise and would be
required to be described in a registration statement on Form S-1 under the
1933 Act, and (C) except in accordance with and consistent with past
practice, there has been no dividend or distribution of any kind declared,
paid or made by the Company or any of the Guarantors on any class of its
capital stock.
(vi) Good Standing of the Company and the Guarantors. Each of the
-----------------------------------------------
Company and each Guarantor has been duly organized and is validly existing
as a corporation or limited liability company, as applicable, in good
standing under the laws of the state of its incorporation or formation, as
applicable, and has the corporate power and authority (or, in the case of
Hammond Residential, the power and authority) to own, lease and operate its
properties and to conduct its business as described in the Offering
Memorandum and to enter into and perform its obligations under the
Operative Documents, the Credit Facility and the Fourth Supplemental
Indenture to the 1994 Indenture (as defined below) and to consummate the
Reorganization and the Covenant Defeasance; and each of the Company and
each Guarantor is duly qualified as a
4
<PAGE>
corporation or limited liability company, as applicable, to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
or to be in good standing would not result in a Material Adverse Effect.
(vii) Capitalization of the Guarantors. All of the issued and
--------------------------------
outstanding capital stock of each Guarantor has been duly authorized and
validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity other than a
pledge of stock of the Indiana Companies to Bank of America National Trust
and Savings Association which shall be released in connection with the
Closing of the Offering and re-pledged, together with the capital stock of
each of the other Guarantors, to Wells Fargo Bank under the Credit
Facility; and none of the outstanding shares of capital stock of any
Guarantor was issued in violation of any preemptive or similar rights
arising by operation of law, or under the charter or by-laws of any
Guarantor or under any agreement to which the Company or any Guarantor is a
party. Neither the Company nor any Guarantor owns any securities or
interests (debt or equity) in any person or entity other than the
Guarantors other than Cash Equivalents (as defined in the 1994 Indenture).
(viii) Capitalization of the Company. The authorized, issued and
-----------------------------
outstanding capital stock of the Company was, on March 31, 1998, as set
forth in the Offering Memorandum in the column entitled "Actual" under the
caption "Capitalization"; all of the issued and outstanding capital stock
of the Company has been duly authorized and validly issued, is fully paid
and non-assessable; and none of the issued and outstanding shares of
capital stock of the Company was issued in violation of any preemptive
rights or similar rights arising by operation of law or under the charter
or by-laws of the Company or under any agreement to which the Company is a
party.
(ix) Authorization of Agreement. This Agreement has been duly
--------------------------
authorized, executed and delivered by each of the Company and each
Guarantor.
(x) Authorization of Credit Facility. The Credit Facility has been
--------------------------------
duly authorized by each of the Company and each Guarantor to the extent
each is a party thereto, and, at the Closing Time, will have been duly
executed and delivered by the Company and each Guarantor (other than
Empress Joliet) to the extent each is a party thereto, and will constitute
a valid and binding agreement of the Company and each Guarantor (except
Empress Joliet) to the extent each is a party thereto, enforceable against
each of them other than Empress Joliet, to the extent each is a party
thereto, in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers and conveyances), reorganization,
moratorium or other similar laws relating to
5
<PAGE>
or affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(xi) Authorization of the Indenture. The Indenture has been duly
------------------------------
authorized by each of the Company and each Guarantor and, at the Closing
Time, will have been duly executed and delivered by each of the Company and
each Guarantor and will constitute a valid and binding agreement of each of
the Company and each Guarantor, enforceable against each of them in
accordance with its terms, except as the enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers and conveyances), reorganization, moratorium or
other similar laws relating to or affecting enforcement of creditors'
rights generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law). On the date
hereof, at the date of the Offering Memorandum, and any amendment or
supplement thereto (if different), and at the Closing Time, the Indenture
will conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended, and the rules and regulations of the
Commission promulgated pursuant thereto (collectively, the "TIA"), which
would be applicable to an Indenture qualified under the TIA.
(xii) Authorization of Registration Rights Agreement. The
----------------------------------------------
Registration Rights Agreement has been duly authorized by the Company and,
at the Closing Time, will have been duly executed and delivered by the
Company and will constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers and
conveyances), reorganization, moratorium or other similar laws relating to
or affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(xiii) Authorization of Reorganization. The Reorganization has been
-------------------------------
duly authorized by the Company and each Guarantor to the extent each is a
party thereto and has been duly effected by the Company and each Guarantor
to the extent each is a party thereto as described in the Offering
Memorandum.
(xiv) Authorization of Covenant Defeasance. The Covenant Defeasance
------------------------------------
has been duly authorized by the Company and each Guarantor and, at the
Closing Time, will have been duly effected by the Company and each
Guarantor as described in the Offering Memorandum. The Covenant Defeasance
will have been effected in compliance with the TIA and the terms of the
1994 Indenture.
(xv) Authorization of Fourth Supplemental Indenture. The Fourth
----------------------------------------------
Supplemental Indenture to that certain indenture dated as of April 1, 1994,
by and among Finance, the Guarantors named therein and U.S. Bank Trust
National Association f/k/a First Trust National Association, as trustee
(the "1994 Indenture") has been duly authorized by the
6
<PAGE>
Company and each Guarantor and has been duly executed and delivered by each
of the Company, each Guarantor and the trustee under the 1994 Indenture
(the "1994 Trustee") and constitutes a valid and binding agreement of each
of the Company, each Guarantor and of the 1994 Trustee, enforceable against
each of the Company, each Guarantor and the 1994 Trustee in accordance with
its terms.
(xvi) Authorization of the Securities and the Guarantees. The
--------------------------------------------------
Securities and the Guarantees have been duly authorized by the Company and
each Guarantor, respectively, and, at the Closing Time, will have been duly
executed by the Company and each Guarantor and, when authenticated in the
manner provided for in the Indenture and delivered against payment of the
purchase price therefor will constitute valid and binding obligations of
the Company and each Guarantor, enforceable against the Company and each
Guarantor, in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers and conveyances),
reorganization, moratorium or other similar laws relating to or affecting
enforcement of creditors' rights generally, or by general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law), and will be in the form contemplated by, and entitled to
the benefits of, the Indenture.
(xvii) Authorization of the Exchange Securities and the Private
--------------------------------------------------------
Exchange Securities. The Exchange Securities and the Private Exchange
-------------------
Securities have been duly authorized by the Company and, when executed by
the Company and authenticated in the manner provided for in the Indenture
and delivered in exchange for the Securities in accordance with the terms
of the Registration Rights Agreement, will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers and conveyances), reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and will be
in the form contemplated by, and entitled to the benefits of, the
Indenture.
(xviii) Description of Operative Documents. The Securities, the
----------------------------------
Exchange Securities, the Private Exchange Securities, the Registration
Rights Agreement and the Indenture will conform in all material respects to
the respective statements relating thereto and descriptions thereof
contained in the Offering Memorandum and will be in substantially the
respective forms previously delivered to the Initial Purchasers.
(xix) Absence of Defaults and Conflicts. Neither the Company nor any
---------------------------------
Guarantor is in violation of its charter, operating agreement or by-laws,
as applicable, or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, including, without limitation, the 1994 Indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other
7
<PAGE>
agreement or instrument to which the Company or any Guarantor is a party or
by which any of them may be bound, or to which any of the property or
assets of the Company or any Guarantor is subject (collectively,
"Agreements and Instruments") except for such defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of each of the Operative Documents, the Credit Facility, the
Fourth Supplemental Indenture to the 1994 Indenture and any other agreement
or instrument entered into or issued or to be entered into or issued by the
Company or any Guarantor in connection with the transactions contemplated
hereby or thereby or in the Offering Memorandum and the consummation of the
Reorganization and the Covenant Defeasance and of the transactions
contemplated herein, in any other Operative Document and in the Offering
Memorandum (including the issuance and sale of the Securities and the use
of the proceeds from the sale of the Securities as described in the
Offering Memorandum under the caption "Use of Proceeds" and the issuance
and delivery of the Exchange Securities and the Private Exchange
Securities, if any) and compliance by the Company and each Guarantor with
its obligations hereunder or under any other Operative Document, the Credit
Facility or the Fourth Supplemental Indenture to the 1994 Indenture have
been duly authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or a default or a Repayment
Event (as defined below), other than as contemplated in the Offering
Memorandum, under, or result in the creation or imposition of any lien,
charge or encumbrance upon, any property or assets of the Company or any
Guarantor pursuant to, the Agreements and Instruments, nor will such action
result in any violation of the provisions of the charter or by-laws of the
Company or any Guarantor or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any Guarantor (including, without limitation, the Indiana Gaming
Commission and the Illinois Gaming Board) or any of their respective assets
or properties except for such violations which would not, singly or in the
aggregate, have a Material Adverse Effect. As used herein, a "Repayment
Event" means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) in excess of $5 million the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any Guarantor.
(xx) Absence of Labor Dispute. No labor dispute with the employees
------------------------
of the Company or any Guarantor exists or, to the knowledge of any of the
Company or any Guarantor, is imminent, and neither the Company nor any
Guarantor is aware of any existing or imminent labor disturbance by the
employees of any of the Company's or any Guarantor's principal suppliers or
contractors, which, in either case, may reasonably be expected to result in
a Material Adverse Affect.
(xxi) Absence of Proceedings. Except as disclosed in the Offering
----------------------
Memorandum, there is no action, suit, proceeding, inquiry or investigation
before or by any court or governmental agency or body, domestic or foreign,
now pending, or, to the
8
<PAGE>
knowledge of the Company or any Guarantor, threatened, against or affecting
the Company or any Guarantor which might reasonably be expected to result
in a Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the consummation of the Reorganization, the
Covenant Defeasance or the transactions contemplated by any of the
Operative Documents or the Credit Facility or the performance by the
Company or any Guarantor of its obligations under any of the Operative
Documents or under the Credit Facility. The aggregate of all pending legal
or governmental proceedings to which the Company or any Guarantor is a
party or of which any of their respective property or assets is the subject
which are not described in the Offering Memorandum, including ordinary
routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
(xxii) Possession of Intellectual Property. The Company and the
-----------------------------------
Guarantors own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and neither the Company nor any Guarantor has
received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any Guarantor therein, and which infringement or conflict (if
the subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xxiii) Absence of Further Requirements. Except for (A) the approval
-------------------------------
of the Credit Facility by the Illinois Gaming Board, (B) approvals
(including approvals by the Illinois Gaming Board and the Indiana Gaming
Commission), which approvals have been obtained to the extent required by
Indiana law or Illinois law, as applicable, and such approvals have not
been revoked, modified or suspended, (C) UCC filings to be made pursuant to
the Credit Facility and the Reorganization, (D) filings with the U.S. Coast
Guard with respect to the Credit Facility and the Reorganization and (E)
filings required to satisfy the Company's obligations under the
Registration Rights Agreement, no filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency (including, without limitation,
Indiana Gaming Commission and the Illinois Gaming Board) is necessary or
required in connection with the offering, issuance or sale of the
Securities, the Exchange Securities, the Private Exchange Securities or the
Guarantees, the consummation of the Reorganization and the Covenant
Defeasance, the execution, delivery and performance by each of the Company
and each Guarantor of its obligations under each of the Operative
Documents, the Credit Facility and the Fourth Supplemental Indenture to the
1994 Indenture or the consummation of the transactions contemplated by any
of the foregoing.
9
<PAGE>
(xxiv) Possession of Licenses and Permits. Except for such failures
----------------------------------
as would not, singly or in the aggregate, result in a Material Adverse
Effect, (a) the Company and the Guarantors possess such permits, licenses,
approvals, consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies (including, without limitation, the Illinois
Gaming Board and the Indiana Gaming Commission) necessary to conduct the
business now operated by them; (b) the Company and the Guarantors are in
compliance with the terms and conditions of all such Governmental Licenses;
(c) all of the Governmental Licenses are valid and in full force and
effect; and (d) neither the Company nor any Guarantor has received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xxv) Title to Property. The Company and the Guarantors have good
-----------------
and marketable title to all real property owned by the Company and such
Guarantors, respectively, and good title to all other material properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any kind
except such as (a) are described in the Offering Memorandum or (b) do not,
singly or in the aggregate, materially affect the value of such property
and do not interfere with the use made and proposed to be made of such
property by the Company or any Guarantor; and all of the leases and
subleases material to the business of the Company and the Guarantors,
considered as one enterprise, and under which the Company or any Guarantor
holds properties described in the Offering Memorandum, are in full force
and effect, and neither the Company nor any Guarantor has any notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any Guarantor under any of the leases or subleases
mentioned above, or affecting or questioning the rights of such the Company
or any Guarantor to the continued possession of the leased or subleased
premises under any such lease or sublease.
(xxvi) Tax Returns. Each of the Company and each Guarantor has filed
-----------
all federal, state, local and foreign tax returns that are required to be
filed or has duly requested extensions thereof and has paid all taxes
required to be paid by it and any related assessments, fines or penalties,
except for any such tax, assessment, fine or penalty that is being
contested in good faith and by appropriate proceedings; and adequate
charges, accruals and reserves have been provided for in the financial
statements referred to in Section 1(a)(iv) above in respect of all federal,
state, local and foreign taxes for all periods as to which the tax
liability of the Company or any of the Guarantors has not been finally
determined or remains open to examination by applicable taxing authorities.
Each of the Company and each Guarantor has filed all other tax returns that
are required to have been filed by it pursuant to applicable foreign,
state, local or other law except insofar as the failure to file such
returns would not result in a Material Adverse Effect, and has paid all
taxes due pursuant to such returns or pursuant to any assessment
10
<PAGE>
received by the Company or any Guarantor, except for such taxes, if any, as
are being contested in good faith and as to which adequate reserves have
been provided. The charges, accruals and reserves on the books of the
Company and the Guarantors in respect of any income and corporation tax
liability for any years not finally determined are adequate to meet any
assessments or reassessments for additional income tax for any years not
finally determined, except to the extent of any inadequacy that would not
result in a Material Adverse Effect. The Company's election to be taxed as
an S Corporation under the Internal Revenue Code of 1986, as amended, is
valid and in effect and has been valid and in effect at all times since its
date of incorporation or formation and is not affected by the
Reorganization. Each Guarantors' election to be taxed as a Qualified
Subchapter S Corporation is valid and in effect and is not affected by the
Reorganization.
(xxvii) Environmental Laws. Except for such matters as are disclosed
------------------
in the Offering Memorandum or where the failure of the following would not
result, singly or in the aggregate, in a Material Adverse Effect, (A)
neither the Company nor any Guarantor is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance, code,
policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the release
or threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
and the Guarantors have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance with
their requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any Guarantor and
(D) there are no events or circumstances that might reasonably be expected
to form the basis of an order for cleanup or remediation, or an action,
suit or proceeding by any private party or governmental body or agency,
against or affecting the Company or any Guarantor relating to Hazardous
Materials or Environmental Laws.
(xxviii) Investment Company Act. Neither the Company nor any
----------------------
Guarantor is, and upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as described
in the Offering Memorandum, neither the Company nor any Guarantor will be,
an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940,
as amended (the "1940 Act").
11
<PAGE>
(xxix) Rule 144A Eligibility. Assuming the accuracy of the Initial
---------------------
Purchaser's covenant in Section 6(a)(i), the Securities are eligible for
resale pursuant to Rule 144A and will not be, at the Closing Time, of the
same class as securities listed on a national securities exchange
registered under Section 6 of the 1934 Act, or quoted on a U.S. automated
interdealer quotation system.
(xxx) No General Solicitation. None of the Company, its
-----------------------
affiliates, as such term is defined in Rule 501(b) under the 1933 Act
("Affiliates"), or any person acting on its or any of their behalf (other
than the Initial Purchasers, as to whom the Company makes no
representation) has engaged or will engage, in connection with the offering
of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the 1933 Act or has
offered or will offer prior to the Closing Time (as defined in Section 2(b)
hereof) the Securities in any manner involving a public offering within the
meaning of Section 4(2) of the 1933 Act.
(xxxi) No Registration Required. Subject to compliance by the
------------------------
Initial Purchasers with the representations and warranties set forth in
Section 2 and the procedures set forth in Section 6 hereof, it is not
necessary in connection with the offer, sale and delivery of the Securities
to the Initial Purchasers and to each Subsequent Purchaser in the manner
contemplated by this Agreement and the Offering Memorandum to register the
Securities under the 1933 Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the "1939 Act").
(xxxii) No Directed Selling Efforts. With respect to those
---------------------------
Securities sold in reliance on Regulation S, (A) none of the Company, its
Affiliates or any person acting on its or their behalf (other than the
Initial Purchasers, as to whom the Company makes no representation) has
engaged or will engage in any directed selling efforts within the meaning
of Regulation S and (B) each of the Company and its Affiliates and any
person acting on its or their behalf (other than the Initial Purchasers, as
to whom the Company makes no representation) has complied and will comply
with the offering restrictions requirement of Regulation S.
(xxxiii) Indiana Gaming Commission. (i) Empress Hammond has
-------------------------
received a riverboat owner's license (the "Indiana License") from the
Indiana Gaming Commission to operate the Hammond Facility; (ii) the Indiana
License is in full force and effect; (iii) Empress Hammond is in compliance
with the Indiana License and with the rules and regulations of the Indiana
Gaming Commission relating thereto; (iv) neither the Company nor Empress
Hammond has received any notice of proceedings relating to the revocation
or modification of the Indiana License, has any reason to believe that the
Indiana Gaming Commission is considering modifying, limiting, conditioning,
suspending, revoking, or not renewing the Indiana License, or has any
reason to believe there is an existing basis for the Indiana Gaming
Commission to deny the renewal of the Indiana License; (v) each of the
Company and Empress Hammond has complied with all applicable requirements
of the Indiana Gaming Commission with respect to the issuance of the
Securities, the
12
<PAGE>
Exchange Securities, the Private Exchange Securities and the Guarantees as
contemplated by the Operative Documents, the consummation of the
Reorganization and the Covenant Defeasance, the execution, delivery and
performance of each of the Operative Documents, the Fourth Supplemental
Indenture to the 1994 Indenture and the Credit Facility and the
consummation of the transactions contemplated by any of the foregoing and
neither the Company nor Empress Hammond has entered into any contract,
commitment or arrangement (nor will the Company of Empress Hammond enter
into any contract, commitment or arrangement in connection with the
transactions described in the Offering Memorandum) that requires approval
by the Indiana Gaming Commission, which approval has not been obtained;
(vi) each of applicable the persons listed under the caption Management in
the Offering Memorandum (except as disclosed in the Offering Memorandum)
has all Governmental Approvals necessary with respect to being employed in
gaming operations in the State of Indiana and holding the positions
described under such caption and (vii) no holder or beneficial owner of the
Securities, the Exchange Securities or the Private Exchange Securities must
be licensed, qualified or found suitable under Indiana gaming laws solely
by virtue of holding or beneficially owning any principal amount of the
Securities, the Exchange Securities or the Private Exchange Securities.
(xxxiv) Illinois Gaming Board. (i) Empress Joliet has received a
---------------------
riverboat owner's license (the "Illinois License") from the Illinois Gaming
Board to operate the Joliet Facility; (ii) the Illinois License is in full
force and effect; (iii) Empress Joliet is in compliance with the Illinois
License and with the rules and regulations of the Illinois Gaming Board
relating thereto; (iv) neither the Company nor Empress Joliet has received
any notice of proceedings relating to the revocation or modification of the
Illinois License, has any reason to believe that the Illinois Gaming Board
is considering modifying, limiting, conditioning, suspending, revoking, or
not renewing the Illinois License, or has any reason to believe there is an
existing basis for the Illinois Gaming Board to deny the renewal of the
Illinois License; (v) each of the Company and Empress Joliet has complied
with all applicable requirements of the Illinois Gaming Board with respect
to the issuance of the Securities, the Exchange Securities, the Private
Exchange Securities and the Guarantees as contemplated by the Operative
Documents, the consummation of the Reorganization and the Covenant
Defeasance, the execution, delivery and performance of each of the
Operative Documents, the Fourth Supplemental Indenture to the 1994
Indenture and the consummation of the transactions contemplated by any of
the foregoing and neither the Company nor Empress Joliet has entered into
any contract, commitment or arrangement (nor will the Company of Empress
Joliet enter into any contract, commitment or arrangement in connection
with the transactions described in the Offering Memorandum) that requires
approval by the Illinois Gaming Board except for the Credit Facility, which
approval has not been obtained; (vi) each of the applicable persons listed
under the caption Management in the Offering Memorandum (except as
disclosed in the Offering Memorandum) has all Governmental Approvals
necessary with respect to being employed in gaming operations in the State
of Illinois and holding the positions described under such caption; and
(vii) no holder or beneficial owner of the
13
<PAGE>
Securities, the Exchange Securities or the Private Exchange Securities must
be licensed, qualified or found suitable under Illinois gaming laws solely
by virtue of holding or beneficially owning any principal amount of the
Securities, the Exchange Securities or the Private Exchange Securities.
(xxxv) Internal Controls. Each of the Company and each Guarantor
-----------------
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance with
management's general or specific authorization, (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets, (C) access to assets is permitted only in
accordance with management's general or specific authorization and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(xxxvi) Insurance. Each of the Company and each Guarantor carries
---------
or is entitled to the benefits of insurance, with, to the Company's
knowledge, financially sound and reputable insurers, in such amounts and
covering such risks as the Company's management deems sufficient and all
such insurance is in full force and effect.
(xxxvii) Registration Rights. Except as described in the Offering
-------------------
Memorandum, there are no persons with registration rights or other similar
rights to have any securities registered by the Company or any Guarantor
under the 1933 Act.
(xxxviii) Solvency. Each of the Company and each Guarantor is, and
--------
immediately after the Closing Time will be, Solvent. As used herein, the
term "Solvent" means, with respect to the Company or any Guarantor, as the
case may be, on a particular date, that on such date (A) the fair market
value of the assets of the Company or the Guarantor, as the case may be, is
greater than the total amount of liabilities (including contingent
liabilities) of the Company or the Guarantor, as the case may be, (B) the
present fair salable value of the assets of the Company or the Guarantor,
as the case may be, is greater than the amount that will be required to pay
the probable liabilities of the Company or the Guarantor, as the case may
be, on its debts as they become absolute and matured, (C) the Company or
the Guarantor, as the case may be, is able to realize upon its assets and
pay its debts and other liabilities, including contingent obligations, as
they mature, and (D) the Company or the Guarantor, as the case may be, does
not have unreasonably small capital.
(xxxix) Events of Default. No event of default exists under any
-----------------
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument constituting Senior Indebtedness (as defined in the
Indenture).
(xl) Certain Relationships. Except for those described in the
---------------------
Offering Memorandum, no relationship, direct or indirect, exists between or
among any of the
14
<PAGE>
Company, any Guarantor or any affiliate of the Company or any Guarantor, on
the one hand, and any director, officer, stockholder, customer or supplier
of any of them, on the other hand, which would be required to be described
in a registration statement on Form S-1 under the 1933 Act.
(xli) Offering Materials. Neither the Company nor any Guarantor
------------------
has distributed and, prior to the later to occur of (i) the Closing Time
and (ii) completion of the distribution of the Securities, will not
distribute any offering material in connection with the offering and sale
of the Securities other than any preliminary offering memorandum, the
Offering Memorandum or other materials, if any, approved by the
Representatives.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any Guarantor delivered to the Representatives or to counsel for the
Initial Purchasers shall be deemed a representation and warranty by the Company
to each Initial Purchaser as to the matters covered thereby.
SECTION 2. Sale and Delivery to Initial Purchasers; Closing.
------------------------------------------------
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Initial Purchaser, severally and not jointly, and each
Initial Purchaser, severally and not jointly, agrees to purchase from the
Company, at the price set forth in Schedule B, the aggregate principal amount of
Securities set forth in Schedule A opposite the name of such Initial Purchaser,
plus any additional principal amount of Securities which such Initial Purchaser
may become obligated to purchase pursuant to the provisions of Section 11
hereof.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the office of D'Ancona
& Pflaum, 30 North LaSalle Street, Suite 2900, Chicago, Illinois 60602, or at
such other place as shall be agreed upon by the Representatives and the Company,
at 10:00 A.M. on or before the fifth business day after the date hereof (unless
postponed in accordance with the provisions of Section 11), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called the "Closing Time").
Payment shall be made to, or for the benefit of, the Company by wire
transfer of immediately available funds to a bank account designated by the
Company, against delivery to the Representatives for the respective accounts of
the Initial Purchasers of the Securities to be purchased by them. It is
understood that each Initial Purchaser has authorized the Representatives, for
its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Securities which it has agreed to purchase. Merrill
Lynch, individually and not as representative of the Initial Purchasers, may
(but shall not be obligated to) make payment of the purchase price for the
Securities to be purchased by any Initial Purchaser whose funds have not been
received by the Closing Time, but such payment shall not relieve such
15
<PAGE>
Initial Purchaser from its obligations hereunder. The certificates representing
the Securities shall be registered in the name of Cede & Co. pursuant to the DTC
Agreement and shall be made available for examination and packaging by the
Initial Purchasers in The City of New York not later than 10:00 A.M. on the last
business day prior to the Closing Time.
(c) Qualified Institutional Buyer. Each Initial Purchaser severally and
not jointly represents and warrants to, and agrees with, the Company that it is
a "qualified institutional buyer" within the meaning of Rule 144A under the 1933
Act (a "Qualified Institutional Buyer") and an "accredited investor" within the
meaning of Rule 501(a) under the 1933 Act (an "Accredited Investor").
SECTION 3. Covenants of the Company. The Company covenants with each
------------------------
Initial Purchaser as follows:
(a) Offering Memorandum. The Company, as promptly as possible, will
furnish to each Initial Purchaser, without charge, such number of copies of the
Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as such Initial Purchaser may reasonably request.
(b) Notice and Effect of Material Events. The Company will immediately
notify each Initial Purchaser, and confirm such notice in writing, of (x) any
filing made by the Company of information relating to the offering of the
Securities with any securities exchange or any other regulatory body in the
United States or any other jurisdiction, and (y) prior to the completion of the
placement of the Securities by the Initial Purchasers as evidenced by a notice
in writing from the Initial Purchasers to the Company, any material changes in
or affecting the earnings, business affairs or business prospects of the Company
and the Guarantors taken as one entity which (i) make any statement in the
Offering Memorandum false or misleading or (ii) are not disclosed in the
Offering Memorandum. In such event or if during such time any event shall occur
as a result of which it is necessary, in the reasonable opinion of the Company,
its counsel, the Initial Purchasers or counsel for the Initial Purchasers, to
amend or supplement the Final Offering Memorandum in order that the Final
Offering Memorandum not include any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances then existing, the Company will
forthwith amend or supplement the Final Offering Memorandum by preparing and
furnishing to each Initial Purchaser an amendment or amendments of, or a
supplement or supplements to, the Final Offering Memorandum (in form and
substance satisfactory in the reasonable opinion of counsel for the Initial
Purchasers) so that, as so amended or supplemented, the Final Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company will
advise each Initial Purchaser promptly of any proposal to amend or supplement
the Offering
16
<PAGE>
Memorandum and will not effect such amendment or supplement without the prior
written consent of the Initial Purchasers. Neither the consent of the Initial
Purchasers, nor the Initial Purchaser's delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company will use
its best efforts, in cooperation with the Initial Purchasers, to qualify the
Securities for offering and sale under the applicable securities laws of such
jurisdictions as the Representatives may designate and will maintain such
qualifications in effect as long as required for the sale of the Securities;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is not so qualified or to
subject itself to taxation in respect of doing business in any jurisdiction in
which it is not otherwise so subject. The Company will notify the Initial
Purchasers promptly of (i) the receipt of any comments from any state securities
commission or any other regulatory authority that relate to the Preliminary
Offering Memorandum or the Offering Memorandum and (ii) the suspension of
qualification of the Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purpose by any state securities commission
or any other regulatory authority. The Company shall use its best efforts to
prevent the issuance of any stop order or order suspending the qualification or
exemption of the Securities under any state securities or Blue Sky laws, and, if
at any time any state securities commission or any other regulatory authority
shall issue an order suspending the qualification or exemption of the Securities
under any state securities or Blue Sky laws, the Company shall use every
reasonable effort to obtain the withdrawal or lifting of such order at the
earliest possible time.
(e) Reports and Information to Initial Purchasers. The Company will, so
long as any of the Securities are outstanding, deliver to the Initial
Purchasers, without charge, a copy of each report or such other publicly
available information furnished to holders of the Securities, or filed with the
Commission, whether or not required by law or pursuant to the Indenture, and
such other publicly available information concerning the Company as the Initial
Purchasers may reasonably request, at the same time as such reports or other
information are furnished to such holders. The Company will furnish, for one
year from the date hereof, to the Initial Purchasers and the Trustee, within 45
days of the end of its first three fiscal quarters and within ninety days of the
end of its fourth fiscal quarter, a report meeting the requirements of Form 10-Q
(or, as to the fourth quarter, Form 10-K) under the Exchange Act.
(f) Rating of Securities. The Company shall take all reasonable action
necessary to enable Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc. ("S&P"), Moody's Investors Service, Inc. ("Moody's") and Duff and Phelps
("Duff") to provide their respective credit ratings of the Securities.
(g) DTC. The Company will cooperate with the Representative(s) and use
its best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities
17
<PAGE>
of DTC and to be designated as "PORTAL Securities" in accordance with the rules
and regulations of the National Association of Securities Dealers, Inc.
("NASD").
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Offering
Memorandum under "Use of Proceeds".
(i) Restriction on Sale of Securities. During a period of 120 days from
the date of the Offering Memorandum, the Company will not, without the prior
written consent of Merrill Lynch, directly or indirectly, issue, sell, offer or
agree to sell, grant any option for the sale of, or otherwise dispose of, any
other debt securities of the Company or securities of the Company that are
convertible into, or exchangeable for, the Securities or such other debt
securities, except for the Exchange Securities, the Private Exchange Securities
and the Covenant Defeasance.
(j) Indiana and Illinois Gaming Boards. Each of the Company and the
Guarantors will use their best efforts to comply with the conditions contained
in the Indiana License and the Illinois License and to comply with the terms and
conditions of such licenses and the rules and regulations of the Illinois Gaming
Board and the Indiana Gaming Board.
(k) Management Approvals. The Company will use its best efforts from time
to time to obtain any required approvals by each of the Indiana Gaming
Commission and the Illinois Gaming Board for itself and for the persons listed
under the caption "Management" in the Offering Memorandum, to the extent
required.
(l) Consummation of Transactions. The Company will use its best efforts
to do and perform all things required to be done and performed under this
Agreement by it prior to or after the Closing Time and to satisfy all conditions
precedent to the delivery of the Securities, the Exchange Securities, the
Private Exchange Securities and the Guarantees.
(m) Redemption of 10 3/4% Notes. The Company will redeem all of the
outstanding 10 3/4% Notes on April 1, 1999.
SECTION 4. Payment of Expenses.
-------------------
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and any filing of the Offering Memorandum (including
financial statements and any schedules or exhibits and any document incorporated
therein by reference) and of each amendment or supplement thereto, (ii) the
preparation, printing and delivery to the Initial Purchasers of this Agreement,
the Indenture, the Registration Rights Agreement and such other documents as may
be required in connection with the offering, purchase, sale and delivery of the
Securities, the Exchange Securities and the Private Exchange Securities, (iii)
the preparation, issuance and delivery of the certificates for the Securities,
the Exchange Securities and the Private Exchange Securities to the Initial
Purchasers, including any charges of DTC in connection therewith; (iv) the fees
and
18
<PAGE>
disbursements of the Company's counsel, accountants and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Initial Purchasers in connection therewith
(but all other fees and expenses of counsel for the Initial Purchasers shall be
borne by the Initial Purchasers) and in connection with the preparation of the
Blue Sky Survey, any supplement thereto, (vi) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities, the Exchange Securities and
the Private Exchange Securities, (vii) any fees payable in connection with the
rating of the Securities, and (viii) any fees payable to the review by the NASD
in connection with the initial and continued designation of the Securities as
"PORTAL securities."
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of
their reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of outside counsel for the Initial Purchasers.
SECTION 5. Conditions of Initial Purchasers' Obligations. The
---------------------------------------------
obligations of the Initial Purchasers hereunder are subject to the
representations and warranties of the Company and the Guarantors contained in
Section 1 hereof or in certificates of any officer of the Company or any of the
Guarantors delivered pursuant to the provisions hereof being true and correct,
to the performance by each of the Company and the Guarantors of its covenants
and other obligations hereunder, and to the following further conditions:
(a) Opinion of Counsel for Company. At the Closing Time, the
Representatives shall have received the favorable opinion, dated as of the
Closing Time, of D'Ancona & Pflaum and Ice Miller Donadio & Ryan, each counsel
for the Company, in form and substance satisfactory to counsel for the Initial
Purchasers, together with signed or reproduced copies of such opinion for each
of the other Initial Purchasers, to the effect set forth in Exhibits A and B
hereto, respectively, and to such further effect as counsel to the Initial
Purchasers may reasonably request.
(b) Opinion of Counsel for Initial Purchasers. At the Closing Time, the
Representatives shall have received the favorable opinion, dated as of the
Closing Time, of Mayer, Brown & Platt, counsel for the Initial Purchasers,
together with signed or reproduced copies of such letter for each of the other
Initial Purchasers with respect to the matters set forth in (i), (ii), (vi)
through (x), inclusive, and (xi) (solely as to due authorization) of Exhibit A
and the penultimate paragraph of Exhibit A hereto. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York and the federal law of the United States,
upon the opinions of counsel satisfactory to the Representatives. Such counsel
may also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
19
<PAGE>
(c) Officers' Certificate. At the Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Offering Memorandum, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and the Guarantors considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the Chief Executive
Officer, President or a Vice President of the Company and of the chief financial
or chief accounting officer of the Company, dated as of the Closing Time, to the
effect that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of the Closing Time,
and (iii) each of the Company and each Guarantor has complied in all material
respects with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Time.
(d) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Ernst & Young LLP a
letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Initial Purchasers containing statements and information of
the type ordinarily included in accountants' "comfort letters" to Initial
Purchasers with respect to the financial statements and certain financial
information contained in the Offering Memorandum.
(e) Bring-down Comfort Letter. At the Closing Time, the Representatives
shall have received from Ernst & Young LLP a letter, in form and substance
satisfactory to the Representatives, dated as of the Closing Time, to the effect
that they reaffirm the statements made in the letter furnished pursuant to
subsection (d) of this Section, except that the specified date referred to shall
be a date not more than three business days prior to the Closing Time.
(f) Maintenance of Rating. At the Closing Time, the Securities shall be
rated at least B1 by Moody's, B+ by S&P and BB by Duff, and the Company shall
have delivered to the Representatives a letter dated the Closing Time, from each
such rating agency, or other evidence satisfactory to the Representatives,
confirming that the Securities have such ratings; and since the date of this
Agreement, there shall not have occurred a downgrading in the rating assigned to
the Securities or any of the Company's other securities by any nationally
recognized securities rating agency, and no such securities rating agency shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Securities or any of the Company's
other securities.
(g) PORTAL. At the Closing Time, the Securities shall have been
designated for trading on PORTAL.
(h) Indenture. The Company and the Trustee shall have entered into the
Indenture.
20
<PAGE>
(i) Registration Rights Agreement. The Company and the Initial Purchasers
shall have entered into the Registration Rights Agreement.
(j) Tax Opinion of Counsel for Company. At the Closing Time, the Trustee
shall have received the favorable opinion, dated as of the Closing Time, of
D'Ancona & Pflaum, counsel for the Company, in form and substance satisfactory
to counsel for the Trustee that the holders of the 10 3/4% Notes will not
recognize income, gain or loss for Federal income tax purposes as a result of
the Covenant Defeasance and will be subject to 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;
(k) Covenant Defeasance. At the Closing Time, the Company shall have (i)
irrevocably deposited with the Trustee, in trust, for the benefit of the holders
of the 10 3/4% Notes, U.S. legal tender or non-callable government securities
(or a combination thereof), in such amounts as are sufficient to pay the
principal of, premium and interest on the 10 3/4% Notes on the Redemption Date
and (ii) effected the Covenant Defeasance, and the Chief Financial Officer of
the Company shall have delivered to the Representatives a certificate to the
effect that such U.S. legal tender or non-callable government securities (or a
combination thereof) has been so deposited with the Trustee and that the
Covenant Defeasance has been effected in accordance with the terms of the 1994
Indenture.
(l) Closing of Credit Facility. At or prior to the Closing Time, the
Company shall have entered into the Credit Facility, which shall be in form and
substance satisfactory to the Representatives.
(m) Reorganization. At or prior to the Closing Time, the Company shall
have effected the Reorganization.
(n) Use of Proceeds. The Company shall have applied the net proceeds from
the Offering as described in the Offering Memorandum.
(o) Business Entity Application Form. At the Closing Time, the Company
shall have filed a Business Entity Application Form with respect to its
ownership of Empress Joliet with the Illinois Gaming Board.
(p) Additional Documents. At the Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Initial Purchasers.
21
<PAGE>
(q) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Company at
any time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 7 and 8 shall survive any such termination and remain in
full force and effect.
SECTION 6. Subsequent Offers and Resales of the Securities.
-----------------------------------------------
(a) Offer and Sale Procedures. Each of the Initial Purchasers and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Institutional Accredited Investors or
--------------------------------------------------------------
Qualified Institutional Buyers. Offers and sales of the Securities will be
------------------------------
made only by the Initial Purchasers or Affiliates thereof qualified to do
so in the jurisdictions in which such offers or sales are made. Each such
offer or sale shall only be made (A) in the case of Securities resold or
otherwise transferred pursuant to Rule 144A, to persons whom the offeror or
seller reasonably believes to be qualified institutional buyers (as defined
in Rule 144A under the Securities Act) or (B) to non-U.S. persons outside
the United States to whom the offeror or seller reasonably believes offers
and sales of the Securities may be made in reliance upon Regulation S under
the 1933 Act.
(ii) No General Solicitation. The Securities will be offered by
-----------------------
approaching prospective Subsequent Purchasers on an individual basis. No
general solicitation or general advertising (within the meaning of Rule
502(c) under the 1933 Act) will be used in the United States in connection
with the offering of the Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a non-bank
---------------------------------
Subsequent Purchaser of a Security acting as a fiduciary for one or more
third parties, in connection with an offer and sale to such purchaser
pursuant to clause (i) above, each third party shall, in the judgment of
the applicable Initial Purchaser, be a Qualified Institutional Buyer or a
non-U.S. person outside the United States.
(iv) Subsequent Purchaser Notification. Each Initial Purchaser will
---------------------------------
take reasonable steps to inform, and cause each of its U.S. Affiliates to
take reasonable steps to inform, persons acquiring Securities from such
Initial Purchaser or affiliate, as the case may be, in the United States
that the Securities (A) have not been and will not be registered under the
1933 Act, (B) are being sold to them without registration under the 1933
Act in reliance on Rule 144A or in accordance with another exemption from
registration under the 1933 Act, as the case may be, and (C) may not be
offered, sold or otherwise transferred except (1) to the Company, (2)
outside the United States in accordance with Rule 904 of Regulation S, or
(3) inside the United States (x) in accordance with Rule 144A to a person
whom the seller reasonably believes is a
22
<PAGE>
Qualified Institutional Buyer that is purchasing such Securities for its
own account or for the account of a Qualified Institutional Buyer to whom
notice is given that the offer, sale or transfer is being made in reliance
on Rule 144A, (y) pursuant to an effective registration statement under the
1933 Act or (z) in accordance with the exemption from registration under
the 1933 Act provided by Rule 144, if available.
(v) Restrictions on Transfer. The transfer restrictions and the
------------------------
other provisions set forth in Section 2.03 of the Indenture, including the
legend required thereby, shall apply to the Securities except as otherwise
agreed by the Company and the Initial Purchasers. Following the sale of the
Securities by the Initial Purchasers to Subsequent Purchasers pursuant to
the terms hereof, the Initial Purchasers shall not be liable or responsible
to the Company for any losses, damages or liabilities suffered or incurred
by the Company, including any losses, damages or liabilities under the 1933
Act, arising from or relating to any resale or transfer of any Security by
such Subsequent Purchaser or any purchaser thereafter.
(vi) Delivery of Offering Memorandum. Each Initial Purchaser will
-------------------------------
deliver to each purchaser of the Securities from such Initial Purchaser, in
connection with its original distribution of the Securities, a copy of the
Offering Memorandum, as amended and supplemented at the date of such
delivery.
(b) Covenants of the Company. The Company covenants with each Initial
Purchaser as follows:
(i) Due Diligence. In connection with the original distribution of
-------------
the Securities, the Company agrees that, prior to any offer or resale of
the Securities by the Initial Purchasers, the Initial Purchasers and
counsel for the Initial Purchasers shall have the right to make reasonable
inquiries into the business of the Company and the Guarantors. The Company
also agrees to provide answers to each prospective Subsequent Purchaser of
Securities who so requests concerning the Company and the Guarantors (to
the extent that such information is available or can be acquired and made
available to prospective Subsequent Purchasers without unreasonable effort
or expense and to the extent the provision thereof is not prohibited by
applicable law) and the terms and conditions of the offering of the
Securities, as provided in the Offering Memorandum.
(ii) Integration. The Company agrees that it will not and will
-----------
cause its Affiliates not to make any offer or sale of securities of the
Company of any class if, as a result of the doctrine of "integration"
referred to in Rule 502 under the 1933 Act, such offer or sale would render
invalid (for the purpose of (i) the sale of the Securities by the Company
to the Initial Purchasers, (ii) the resale of the Securities by the Initial
Purchasers to Subsequent Purchasers or (iii) the resale of the Securities
by such Subsequent Purchasers to others) the exemption from the
registration requirements of the
23
<PAGE>
1933 Act provided by Section 4(2) thereof, by Rule 144A or by Regulation S
thereunder or otherwise.
(ii) Rule 144A Information. The Company agrees that, in order to
---------------------
render the Securities eligible for resale pursuant to Rule 144A under the
1933 Act, while any of the Securities, including the Exchange Securities
and Private Exchange Securities, remain outstanding, it will make
available, upon request, to any holder of Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4),
unless the Company furnishes information to the Commission pursuant to
Section 13 or 15(d) of the 1934 Act (such information, whether made
available to holders or prospective purchasers or furnished to the
Commission, is herein referred to as "Additional Information").
(iv) Restriction on Repurchases. Until the expiration of two years
--------------------------
after the original issuance of the Securities, the Company will not, and
will cause its Affiliates not to, purchase or agree to purchase or
otherwise acquire any Securities which are "restricted securities" (as such
term is defined under Rule 144(a)(3) under the 1933 Act), whether as
beneficial owner or otherwise (except as agent acting as a securities
broker on behalf of and for the account of customers in the ordinary course
of business in unsolicited broker's transactions) unless, immediately upon
any such purchase, the Company or any Affiliate shall submit such
Securities to the Trustee for cancellation.
(v) Legends. The Company will cause each Security to bear the
-------
following legend until such legend shall no longer be necessary or
advisable because the Securities are no longer subject to the restrictions
on transfer described therein:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN
AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR
24
<PAGE>
904 OF REGULATION S, (2) AGREES THAT IT WILL NOT PRIOR TO
(X) THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF
TIME AS PERMITTED BY RULE 144(k) UNDER THE SECURITIES ACT OR
ANY SUCCESSOR PROVISION THEREUNDER) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF (OR OF ANY PREDECESSOR OF THIS
SECURITY) OR THE LAST DAY ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR
ANY PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE,
IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAWS (THE "RESALE
RESTRICTION TERMINATION DATE"), AGREES NOT TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY, EXCEPT (A) TO ISSUER OR
ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) INSIDE
THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
(E) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE 904
OF REGULATION S OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND;
25
<PAGE>
PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE TRANSFER
AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER,
SALE OR OTHER TRANSFER, PURSUANT TO CLAUSES (D), (E) OR (F)
ABOVE TO REQUIRE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND OTHER INFORMATION SATISFACTORY TO THE
COMPANY, THE TRUSTEE AND THE TRANSFER AGENT AND REGISTRAR.
THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.
(c) Resale Pursuant to Rule 903 of Regulation S or Rule 144A. Each
Initial Purchaser understands that the Securities have not been and will not be
registered under the 1933 Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the 1933 Act or pursuant to an exemption from
the registration requirements of the 1933 Act. Each Initial Purchaser
represents and agrees, that, except as permitted by Section 6(b) above, it has
offered and sold Securities and will offer and sell Securities (i) as part of
their distribution at any time and (ii) otherwise until forty days after the
later of the date upon which the offering of the Securities commences and the
Closing Time, only in accordance with Rule 903 of Regulation S or Rule 144A
under the 1933 Act. Accordingly, neither the Initial Purchasers, their
affiliates nor any persons acting on their behalf have engaged or will engage in
any directed selling efforts with respect to Securities, and the Initial
Purchasers, their affiliates and any person acting on their behalf have complied
and will comply with the offering restriction requirements of Regulation S.
Each Initial Purchaser agrees that, at or prior to confirmation of a sale of
Securities (other than a sale of Securities pursuant to Rule 144A), it will have
sent to each distributor, dealer or person receiving a selling concession, fee
or other remuneration that purchases Securities from it or through it during the
restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under the United
States Securities Act of 1933 (the "Securities Act") and may not be offered
or sold within the United States or to or for the account or benefit of
U.S. persons (i) as part of their distribution at any time and (ii)
otherwise until forty days after the later of the date upon which the
offering of the Securities commenced and the date of closing, except in
either case in accordance with Regulation S or Rule 144A under the
Securities Act. Terms used above have the meaning given to them by
Regulation S."
26
<PAGE>
Terms used in the above paragraph have the meanings given to them by Regulation
S.
Each Initial Purchaser severally represents and agrees that it has not
entered and will not enter into any contractual arrangements with respect to the
distribution of the Securities, except with its affiliates or with the prior
written consent of the Company.
SECTION 7. Indemnification.
---------------
(a) Indemnification of Initial Purchasers. The Company agrees and each
Guarantor agrees, jointly and severally, to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Memorandum or the Final Offering Memorandum (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
7(d) below) any such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Merrill Lynch expressly for use in the Offering
Memorandum (or any amendment thereto).
(b) Indemnification of Company, Directors and Officers. Each Initial
Purchaser severally agrees to indemnify and hold harmless the Company, each
Guarantor and their respective directors, and each person, if any, who controls
the Company or a Guarantor within
27
<PAGE>
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Offering Memorandum in reliance upon and in conformity
with written information furnished to the Company by such Initial Purchaser
through Merrill Lynch expressly for use in the Offering Memorandum.
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 7(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 7(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
--------
however, that counsel to the indemnifying party shall not (except with the
- -------
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. Neither party shall, without the
prior written consent of the other parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 7 or Section 8 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 7(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
28
<PAGE>
SECTION 8. Contribution. If the indemnification provided for in Section
------------
7 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses with respect to which such indemnified party would be entitled to
indemnification by the express terms of Section 7, referred to therein, then
each indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchasers on
the other hand from the offering of the Securities pursuant to this Agreement or
(ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company on the one hand and of the Initial Purchasers on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Initial Purchasers on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities.
The relative fault of the Company on the one hand and the Initial
Purchasers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Initial Purchasers and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 8. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 8 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, no Initial Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed pursuant
to this Agreement were offered pursuant to this Agreement exceeds the amount of
any damages which such Initial Purchaser has otherwise been
29
<PAGE>
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls an
Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such Initial
Purchaser, and each director of the Company or a Guarantor and each person, if
any, who controls the Company or a Guarantor within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company or the Guarantor. The Initial Purchasers'
respective obligations to contribute pursuant to this Section 8 are several in
proportion to the principal amount of Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 9. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Initial Purchaser or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Initial Purchasers.
SECTION 10. Termination of Agreement.
-------------------------
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Offering
Memorandum, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and the Guarantors considered as one enterprise, whether or not arising
in the ordinary course of business, or (ii) if there has occurred any material
adverse change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading generally on the American Stock Exchange or the New York Stock
Exchange or in the NASDAQ National Market System has been suspended or limited,
or minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal, New York, Illinois or Indiana authorities.
30
<PAGE>
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 7 and 8 shall survive such termination and remain in full force and effect.
SECTION 11. Default By One or More of The Initial Purchasers. If one
------------------------------------------------
or more of the Initial Purchasers shall fail at the Closing Time to purchase the
Securities which it or they are obligated to purchase under this Agreement (the
"Defaulted Securities"), the Representatives shall have the right, but not the
obligation, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting Initial Purchasers, or any other Initial Purchasers, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser.
No action pursuant to this Section shall relieve any defaulting Initial
Purchaser from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Company shall have the right
to postpone the Closing Time for a period not exceeding seven days in order to
effect any required changes in the Offering Memorandum or in any other documents
or arrangement.
SECTION 12. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the Initial
Purchasers shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Christopher
Turner; notices to the Company shall be directed to it at 2300 Empress Drive,
Joliet, IL 60436, attention of Peter A. Ferro, Jr.
SECTION 13. Parties. This Agreement shall inure to the benefit of and be
-------
binding upon the Initial Purchasers, the Company and the Guarantors and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Initial Purchasers, the Company and the Guarantors and their respective
successors and the controlling persons and officers and directors referred to in
Sections 7 and 8 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Initial
Purchasers, the Company and the Guarantors and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Securities from any Initial Purchaser shall be deemed to be a
successor by reason merely of such purchase.
31
<PAGE>
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
----------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings herein
------------------
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
32
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Initial Purchasers, the Company and the Guarantors in accordance with its
terms.
Very truly yours,
EMPRESS ENTERTAINMENT, INC.
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR
Title: CHIEF EXECUTIVE OFFICER
EMPRESS CASINO HAMMOND
CORPORATION
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR
Title: CHIEF EXECUTIVE OFFICER
HAMMOND RESIDENTIAL, LLC
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR
Title: CHIEF EXECUTIVE OFFICER
EMPRESS CASINO JOLIET
CORPORATION
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR
Title: CHIEF EXECUTIVE OFFICER
EMPRESS RIVER CASINO
FINANCE CORPORATION
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR
Title: PRESIDENT
S-1
<PAGE>
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
WASSERSTEIN PERELLA SECURITIES, INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ Christopher Y. Terrel
-------------------------------
Authorized Signatory
For themselves and as Representatives of the other Initial Purchasers named in
Schedule A hereto.
S-2
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
<S> <C>
Principal
Amount of
Name of Initial Purchaser Securities
------------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . $75,000,000
Wasserstein Perella Securities, Inc. . . . . . . . . . . . . . . .
$75,000,000
------------
Total . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . $150,000,000
============
</TABLE>
Sch A - 1
<PAGE>
SCHEDULE B
Empress Entertainment, Inc.
$150,000,000 Senior Subordinated Notes Due 2006
1. The initial public offering price of the Securities shall be 100% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Initial Purchasers for the
Securities shall be 97.625% of the principal amount thereof.
3. Merrill Lynch shall also receive an advisory fee of $356,250 to be
paid by the Company out of the proceeds of the offering.
4. The interest rate on the Securities shall be 8 1/8% per annum.
5. The Securities will be redeemable at the option of the Company, in
whole or in part, at any time on or after July 1, 2002, at the following
redemption prices (expressed as percentages of the principal amount) set forth
below, plus accrued and unpaid interest thereon, if any, to the date of
redemption, if redeemed during the 12-month period commencing July 1 of the
years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.063%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.708%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.354%
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%
</TABLE>
5. On or prior to July 1, 2001, the Company may, at its option, use the
net proceeds of an Equity Offering (as defined in the Indenture) to redeem up to
35% of the originally issued aggregate principal amount of the Securities, at a
redemption price in cash equal to 108 1/8% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to the date of redemption;
provided, however, that not less than $97.5 million in aggregate principal
amount of Securities is outstanding following such redemption. Notice of any
such redemption must be given not later than 60 days after the consummation of
the related Equity Offering.
<PAGE>
6. The Securities will be redeemable, in whole or in part, at any
time, at 100% of the principal amount thereof, plus accrued and unpaid interest
to the redemption date, (i) pursuant to, and in accordance with, any order of
any Governmental Authority (as defined in the Indenture) with appropriate
jurisdiction and authority relating to a Gaming License (as defined in the
Indenture) (a "Gaming Authority"), or (ii) to the extent necessary in the
reasonable, good faith judgment of the Board of Directors of the Company to
prevent the loss, failure to obtain or material impairment or to secure the
reinstatement of, any Gaming License, which if lost, impaired or not obtained or
reinstated would reasonably be expected to have a material adverse effect on the
Company and its Restricted Subsidiaries (as defined in the Indenture),
considered as a whole, or would restrict the ability of the Company or any of
its Restricted Subsidiaries to conduct business in any Gaming Jurisdiction (as
defined in the Indenture), in the case of each of (i) and (ii) where such
redemption or acquisition is required because the Holder or beneficial owner of
such Note is required to be found suitable, or otherwise qualify, under any
Gaming Laws and is not found suitable or so qualified.
<PAGE>
EXHIBIT A
Legal Opinion of D'Ancona & Pflaum
Based upon the foregoing and subject to the further qualifications and
limitations hereafter expressed, we are of the opinion that:
1. Each of the Company, Empress Joliet, Empress Hammond and Finance is validly
existing as a corporation and in good standing under the laws of the state of
its incorporation. Hammond Residential has been duly organized and is validly
existing as a limited liability company in good standing under the laws of the
State of Indiana.
2. Each of the Company, Empress Joliet, Empress Hammond, Finance and Hammond
Residential has the requisite power and authority to enter into and perform its
obligations under the Operative Documents, the Credit Facility and the Fourth
Supplemental Indenture to the 1994 Indenture to the extent each is a party
thereto and to consummate the Reorganization and the Covenant Defeasance to
the extent each is a party thereto.
3. The Company is duly qualified as a foreign corporation to transact
business and is in good standing in the States of Illinois and Indiana, and
Finance is duly qualified as a foreign corporation to transact business and is
in good standing in the State of Illinois. To our knowledge, Empress Hammond and
Empress Joliet are not qualified to do business in any foreign jurisdiction.
4. Based solely upon our review of the Company's corporate minute book and
stock ledger, all of the issued and outstanding capital stock of the Company has
been duly authorized and validly issued, and to our knowledge, are fully paid
and nonassessable, and to our knowledge, none of the outstanding shares of
capital stock of the Company were issued in violation of the preemptive or other
rights of any security holder of the Company.
5. To our knowledge, (a) all of the issued and outstanding capital stock of
each of Empress Joliet, Empress Hammond and Finance has been duly authorized and
validly issued, (b) is fully paid and non-assessable, and (c) based solely upon
our review of the organizational documents, corporate minute book and stock
ledger of each of Empress Joliet, Empress Hammond and Finance, is owned by the
Company free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity other than (i) liens under the Credit Facility;
(ii) restrictions contained in the Company's Amended and Restated Stockholders'
Agreement; and (iii) applicable restrictions of Gaming Authorities. Based solely
on our review of the organizational documents of Hammond Residential, Hammond
Residential is wholly owned by Empress Hammond.
6. The Purchase Agreement has been duly authorized, executed and delivered
by each of the Company and the Guarantors.
<PAGE>
7. The Credit Facility has been duly authorized by each of the Company,
Empress Hammond and Empress Joliet and has been executed and delivered by each
of the Company, Empress Hammond and Empress Joliet and (assuming the due
authorization, execution and delivery thereof by the Banks) constitutes a valid
and binding agreement of each of the Company, Empress Hammond and Empress
Joliet, enforceable against each of them in accordance with its terms, subject,
as to Empress Joliet, to the approval of the Illinois Gaming Board.
8. The Indenture has been duly authorized, executed and delivered by the
Company and each of the Guarantors and (assuming the due authorization,
execution and delivery thereof by the Trustee) constitutes a valid and binding
agreement of the Company and each of the Guarantors, enforceable against each of
them in accordance with its terms.
9. The Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and each Guarantor and (assuming the due authorization,
execution and delivery thereof by the Initial Purchasers) constitutes a valid
and binding agreement of the Company and each Guarantor, enforceable against
the Company and each Guarantor in accordance with its terms.
10. The Reorganization has been duly authorized by the Company and each
Guarantor to the extent each is a party thereto, and has been duly effected in
the manner described in the Offering Memorandum.
11. The Covenant Defeasance has been duly authorized by Empress Finance, the
Company and each other Guarantor to the extent each is a party thereto. The
Covenant Defeasance has been duly effected in compliance with the terms of the
1994 Indenture as described in the Offering Memorandum.
12. The Fourth Supplemental Indenture to the 1994 Indenture has been duly
authorized, executed and delivered by the Company and each of the Guarantors and
constitutes a valid and binding agreement of the Company and each of the
Guarantors enforceable against the Company and each of the Guarantors in
accordance with its terms.
13. The Securities are in the form contemplated by the Indenture, have been
duly authorized by the Company, and, when executed by the Company and
authenticated by the Trustee in the manner provided in the Indenture (assuming
the due authorization, execution and delivery of the Indenture by the Trustee)
and delivered against payment of the purchase price therefor, will constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, and the holders thereof will be entitled to the
benefits of the Indenture.
14. The Guarantees are in the form contemplated by the Indenture, have been
duly authorized by each of the Guarantors, and, when executed by each of the
Guarantors and authenticated by the Trustee in the manner provided in the
Indenture (assuming the due authorization, execution and delivery of the
Indenture by the Trustee), will constitute valid and binding obligations of
<PAGE>
each of the Guarantors, enforceable against each of the Guarantors in accordance
with their terms, and the holders thereof will be entitled to the benefits of
the Indenture.
15. The Exchange Securities and the Private Exchange Securities have been duly
authorized by the Company and, when executed by the Company and authenticated in
the manner provided for in the Indenture and delivered in exchange for the
Securities in accordance with the terms of the Registration Rights Agreement,
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, and the holders thereof will
be entitled to the benefits of the Indenture.
16. Empress Joliet has all requisite approvals from all Federal and state
governmental authorities (including, without limitation, the Illinois Gaming
Board, but excluding any blue sky qualifications and approvals and the filing of
a Form D with the Securities and Exchange Commission) (a) to offer and sell the
Securities and to enter into and perform its Guarantee, as contemplated in the
Offering Memorandum, (b) to execute, deliver and perform its obligations under
the Operative Documents and the Fourth Supplemental Indenture to the 1994
Indenture, to the extent it is a party thereto, and (c) to consummate the
Reorganization, the Covenant Defeasance and the transactions contemplated
thereby, to the extent it is a party thereto.
17. The Company has such permits, licenses, approvals, consents and other
authorizations from, and no filings are required that have not already been made
with, Federal and state governmental authorities (other than the filing of a
Form D with the Securities and Exchange Commission and blue sky qualifications
and approvals) as are necessary (a) to offer and sell the Securities as
contemplated in the Offering Memorandum, (b) to execute, deliver and perform its
obligations under the Operative Documents and the Fourth Supplemental Indenture
to the 1994 Indenture, to the extent it is a party thereto, (c) to consummate
the Reorganization, the Covenant Defeasance and the transactions contemplated
thereby and (d) to execute, deliver and perform the Credit Agreement.
18. To our knowledge, except for regulations adopted by the Illinois Gaming
Board which are applicable to all Illinois riverboat operators, the Illinois
Gaming Board has not issued any order or decree impairing, restricting or
prohibiting and has not otherwise impaired, restricted or prohibited (i) the
payment of dividends or distributions by Empress Joliet or any other Guarantor
or (ii) the commencement or continuation of the business of the Company or any
other Guarantor as presently or proposed to be conducted.
19. No holder or beneficial owner of the Securities, the Exchange Securities or
the Private Exchange Securities must be licensed, qualified or found suitable
under Illinois gaming laws solely by virtue of holding or beneficially owning
any principal amount of the Securities, the Exchange Securities or the Private
Exchange Securities.
20. To our knowledge, except as disclosed in the Offering Memorandum, there is
not pending or threatened any action, suit or proceeding to which the Company or
any Guarantor is a party, or to which the property of the Company or any
Guarantor is subject, before or brought by any court or governmental agency or
body, which might reasonably be expected to result in a Material
<PAGE>
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the consummation of the Covenant Defeasance, the transactions
contemplated in the Operative Documents or the performance by the Company or any
Guarantor of its obligations under any of the Operative Documents.
21. The information in the Offering Memorandum under "Description of the
Notes", "Plan of Distribution", "Illinois Regulatory Matters" and "Description
of Certain Other Indebtedness" to the extent that it constitutes matters of law,
summarises of legal matters, the Company's or any Guarantor's charter or bylaws
or legal proceedings, or legal conclusions, has been reviewed by us and is
correct in all material respects.
22. To our knowledge, neither the Company nor any Guarantor is in violation of
its charter or bylaws and no default by the Company or any of the Guarantors
exists in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument that is described
or referred to in the Offering Memorandum.
23. Based upon the representations of the Initial Purchasers contained in the
Purchase Agreement, it is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchasers in the manner contemplated
by the Purchase Agreement and the Offering Memorandum to register any of the
Securities under the 1933 Act or to qualify the Indenture under the Trust
Indenture Act.
24. The execution, delivery and performance of each of the Operative Documents,
the Credit Facility and the Fourth Supplemental Indenture to the 1994 Indenture
by the Company and each Guarantor and the consummation of the Reorganization,
the Covenant Defeasance or of the transactions contemplated in the Operative
Documents or the Credit Facility and compliance by the Company and each
Guarantor with its obligations under the Operative Documents, the Credit
Facility and the Fourth Supplemental Indenture to the 1994 Indenture does not,
whether with or without the giving of notice or lapse of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as defined in
Section 1(a)(iii) of the Purchase Agreement) under any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to us, to which the Company or any Guarantor is a
party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any Guarantor is subject (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would not
have a Material Adverse Effect and except as contemplated in connection with the
Refinancing), nor does such action result in any violation of the provisins of
the charter or by-laws of the Company or any Guarantor, or any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Guarantor or any of their respective
properties, assets or operations (except for such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a Material
Adverse Effect).
<PAGE>
25. Neither the Company nor any Guarantor is an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined in the
1940 Act.
26. Nothing has come to our attention that would lead us to believe that the
Offering Memorandum (except for financial statements and schedules and other
financial data included or incorporated by reference therein as to which we
render no opinion), contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Offering Memorandum or any
amendment or supplement thereto (except for financial statements and schedules
and other financial data included or incorporated by reference therein, as to
which we render no opinion), at the time the Offering Memorandum was issued, at
the time any such amended or supplemented Offering Memorandum was issued or at
the Closing Time, included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
<PAGE>
EXHIBIT B
Legal Opinion of Ice Miller Donadio & Ryan
See the attached.
<PAGE>
[LETTERHEAD OF ICE MILLER DONADIO & RYAN APPEARS HERE]
June 18, 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith, Incorporated
Wasserstein Perella Securities , Inc.
as Representatives of the several Initial Purchasers
c/o merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner, & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
We have acted as special Indiana regulatory for empress Entertainment, Inc.
("Company") and Empress Casino Hammond Corporation ("Empress Hammond") in
connection with the issuance and sale by the Company of $150,000,000 aggregate
principal amount of Senior Subordinated Notes due 2006 ("Original Notes"), to be
issued under an Indenture, dated as of June 18,1998, by and among the
Company, as Issuer, and Empress Hammond as one of Subsidiary Guarantors,
the other Subsidiary Guarantors, and U.S. Bank Trust, National Association as
Trustee ("Indenture"). The Company and you have advice us that you will purchase
the Securities, and thereafter the Company will register Exchange Securities and
you will thereafter resell Private Exchange Securities (Notes"). This option is
delivered to you pursuant to Section 5(a) of the Purchase Agreement by and among
you, for yourselves and as Representative of the other Initial Purchasers, the
Company, Empress Hammond and the other subsidiary Guarantors, dated June 11,1998
("Purchase Agreement"). Unless specifically otherwise defined herein, terms
define in the Purchase Agreement shall have the same meaning herein.
In connection with this option, we have examined copies of the following
documents;
(i) the Purchase Agreement;
(ii) the Indenture;
(iii) the Registration Rights Agreement.
<PAGE>
Merrill Lynch & Co.
Page 2
June 18, 1998
(iv) the Preliminary Offering Memorandum dated June 1, 1998, and a Final
Offering 'memorandum dated June 17, 1998 ("Offering Memorandum"); and
(v) Resolution 1998-16, which was approved by the Indiana Gaming
Commission on May 6, 1998.
The Indenture, the Purchase Agreement, and the Registration Rights
Agreement are hereinafter referred to as Transaction Documents.
ASSUMPTIONS
-----------
In rendering our opinion, we have assumed, with your permission, without
investigation or verification of any kind:
(a) the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of such copies;
(b) each party to the Transaction Documents has been duly organized and is
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization;
(c) each party to the Transaction Documents has full internal corporate
power and authority to enter into, execute, deliver, receive and perform its
obligations under each of the Transaction Documents; the entry into, execution,
delivery, receipt, and performance thereof by such parties have been duly
authorized by all requisite action on the part of such parties; and each of the
Transaction Documents has been duly entered into, executed, received and
delivered by such parties; and
(d) each of the Transaction Documents is enforceable against each party
thereto.
OPINIONS
--------
Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that
1. Each of the Company and Empress Hammond has such permits
licenses, approvals, consents and other authorizations from
the Indiana Gaming Commission as are necessary to (a) offer
and sell the Securities, the Exchange Securities, the
Private Exchange Securities and the Guarantees, as
<PAGE>
Merrill Lynch & Co.
Page 3
June 18, 1998
contemplated in the Offering Memorandum, and (b) execute,
deliver and perform their respective obligations under the
Operative Documents, the Credit Facility and the Fourth
Supplemental Indenture to the 1994 Indenture, and no other
permits, licenses, approvals or other authorizations of the
State of Indiana or any agencies thereof (other than those
that may be required under the Blue Sky laws or Blue Sky
regulations of the State of Indiana) are required for the
Company and Empress Hammond to offer and sell the Notes.
2. No holder or beneficial owner of the Notes must be licensed,
qualified or found suitable under Indiana Gaming Laws solely
by virtue of holding or beneficially owning any principal
amount of the Securities, the Exchange Securities or the
Private Exchange Securities. The term "Indiana Gaming Laws"
means the Riverboat Gambling Act in Article 33 of the Title
4 of the Indiana Code and rules of the Indiana Gaming
Commission.
3. The Indiana Gaming Commission has not issued any order or
decree, other than rules applicable to all riverboat owner
licensees, impairing, restricting or prohibiting and, to
such counsel's knowledge, has not issued an order or decree
applicable solely to Empress Hammond or the Company that
would otherwise impair, restrict or prohibit (i) the payment
of dividends or distributions by Empress Hammond or the
Company or (ii) the commencement or continuation of the
business of the Company or Empress Hammond as presently or
proposed to be conducted.
4. The information in the Offering Memorandum under "Regulatory
Matters--Indiana" insofar as such statements purport to
summarize certain provisions of laws and regulations of the
State of Indiana, fairly summarize the matters therein
described.
LIMITATIONS, QUALIFICATIONS AND EXCEPTIONS
------------------------------------------
The opinions expressed herein are subject to, qualified and limited by, and
based on the following:
A. Notwithstanding anything herein to the contrary, the exercise of
certain remedies by the Company or Empress Hammond or the holder of a Note(s),
other than the judicial remedy of foreclosure under the Transaction Documents
that constitute real estate and fixtures (other than fixtures that may be
considered gaming equipment) and which is not operated after foreclosure and
title transfer thereof as a gaming operation, is subject to the prior compliance
with any and all
<PAGE>
Merrill Lynch & Co.
Page 4
June 18, 1998
applicable application, licensing, approval and other requirements of the State
of Indiana including, without limitation, receipt of all consents, approvals and
authorizations which are required from the IGC.
B. The qualification "to our knowledge" means that during the course of
our representation in connection with the transactions contemplated by the
Transaction Documents no information has come to the attention of the attorneys
who participated in the representation which would give us actual knowledge of
such facts. However, except to the extent otherwise described herein, we have
not undertaken any independent review or investigation to determine the
existence or absence of such facts or circumstances which you have advised us
that we are entitled to rely upon, and no inference as to the existence or
absence of such facts or circumstances should be drawn from our representation.
C. Notwithstanding any statements contained elsewhere in this letter, we
express no opinion and make no statements concerning or with respect to the
possible application of or compliance by the Company or Empress Hammond with
various building codes, zoning ordinances, building permit requirements,
environmental laws and other similar statutes, laws, ordinance, codes and
regulations affecting the development, construction, condition, use and/or
occupancy of the Property; provided, however, this paragraph C is not intended
to qualify or limit the opinion contained in paragraph 1.
D. The opinion expressed in paragraph 3 are limited and qualified by the
Indiana Gaming Commission rule at 68 IAC 15-3 which rule prohibits a riverboat
licensee, including Empress Hammond, from making distributions to its partners,
shareholders, itself, or any affiliate, if the distribution will impair the
financial viability of the riverboat gambling operation. This rule at 68 IAC 15-
3 does not prohibit distributions to partners or shareholders for the payment of
federal or state taxes, or both.
E. The opinions expressed in this letter speak as to the documents,
facts, and the law in existence as of the date hereof and at not time subsequent
hereto. We express no opinion as to the effect of prior or subsequent activities
of the parties to the Transaction Documents in or with respect to the State of
Indiana, other than those described herein.
The opinions expressed herein are matters of professional judgment and are
not a guarantee of result. We are qualified to practice law only in the State of
Indiana and do not express any opinion concerning any law other than the
internal laws of the State of Indiana. No expansion of our opinions may be made
by implication or otherwise. We express no opinions other than as herein
expressly set forth. We do not undertake to advise you of any matter within the
scope of this letter that comes to
<PAGE>
Merrill Lynch & Co.
Page 5
June 18, 1998
our attention after the date of this letter and disclaim any responsibility to
advise you of any future changes in law or fact that may affect the opinions set
forth herein.
The opinions expressed in this letter are rendered to you in connection
with the transactions described above and may not be relied upon by you in any
other context or for any other purpose. The opinions expressed in this letter
may not be relied upon by any person other than the addressees without our prior
written consent. This letter may not be quoted in whole or in part nor may
copies thereof (other than transcript copies) be furnished or delivered to any
other person (other than your counsel) without our prior written consent.
Very truly yours,
/s/ ICE, Miller, Donadio and Ryan
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
OF
NEW EMPRESS JOLIET, INC.,
an Illinois corporation
INTO
EMPRESS CASINO JOLIET CORPORATION
an Illinois corporation
This AGREEMENT AND PLAN OF MERGER, dated as of the 1st day of June, 1998,
by and among New Empress Joliet, Inc., an Illinois corporation (the "Merging
Corporation"), Empress Casino Joliet Corporation, an Illinois corporation
(referred to herein as ("Empress Joliet" or the "Surviving Corporation"), and
Empress Entertainment, Inc., a Delaware corporation ("Entertainment"). The
Merging Corporation and the Surviving Corporation are sometimes referred to as
the "Constituent Corporations."
WHEREAS, the Merging Corporation and the Surviving Corporation are
corporations duly organized and existing under the laws of the State of
Illinois, and Entertainment is a corporation duly organized and existing under
the laws of the State of Delaware and the parent of the Merging Corporation; and
WHEREAS, the Boards of Directors of the Constituent Corporations and
Entertainment deem it advisable for the general welfare and advantage of the
Constituent Corporations and their stockholders that the Constituent
Corporations merge into a single corporation pursuant to this Agreement and the
Illinois Business Corporation Act.
NOW, THEREFORE, the parties agree that the Constituent Corporations shall
be merged on the following terms and conditions:
1. The Merger. At the Effective Time (as defined below) of the merger,
the Merging Corporation shall be merged with and into Empress Joliet and the
separate existence of the Merging Corporation shall cease (the "Merger").
Following the consummation of the Merger, Empress Joliet shall continue its
corporate existence as the wholly-owned subsidiary of Entertainment. The name of
the Surviving Corporation following the Effective Time shall be "Empress Casino
Joliet Corporation."
2. Effective Time. The parties hereto shall cause the Merger to be
consummated by filing a certificate of merger (the "Certificate of Merger") with
the Secretary of State of Illinois, in such form as required by, and executed in
accordance with the relevant provisions of, the Illinois Business Corporation
Act. The effective time of the Merger shall be upon filing with the Secretary of
State of Illinois (the "Effective Time").
1
<PAGE>
3. Articles of Incorporation and By-Laws.
(a) The Articles of Incorporation of Empress Joliet at the effective
time of the Merger shall be the Articles of Incorporation of the Surviving
Corporation until amended as provided by law.
(b) The By-Laws of Empress Joliet at the effective time of the Merger
shall be the By-Laws of the Surviving Corporation until altered or amended in
accordance with the provisions thereof and Delaware law.
4. Directors and Officers. Subject to applicable law, the initial
directors and officers of the Surviving Corporation immediately after the
Effective Time shall be those persons who are the directors and officers of
Empress Joliet immediately prior to the Effective Time, to hold office until
their respective successors are duly elected or appointed and qualified, or
their earlier death, resignation or removal.
5. Condition to Merger. Each of the following shall be a condition
precedent to the filing of the Certificate of Merger:
(a) Entertainment and its stockholders shall have executed and
delivered an Amended and Restated Stockholders Agreement (the "Stockholders
Agreement") substantially similar to the existing stockholders agreement between
Empress Joliet and the shareholders of Empress Joliet, or in such other form
approved by Entertainment and at least 75% of its stockholders.
(b) The stockholders of Entertainment and the shareholders of Empress
Joliet shall have approved the Merger in accordance with applicable law and,
with respect to the shareholders of Empress Joliet, the provisions of the
Empress Joliet Shareholders Agreement.
6. Terms of Merger.
(a) From and after the Effective Time of the Merger, the Surviving
Corporation shall possess all the rights, privileges, immunities, and franchises
of a public, as well as of a private nature, of each of the Constituent
Corporations; and all property, real, personal and mixed, and all debts due on
whatever account, including subscriptions to shares and all other choses in
action, and all and every other interest, of or belonging to or due to each of
the Constituent Corporations, shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed; and the title
to any real estate, or any interest therein, vested in any of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger,
provided, however, that the Surviving Corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of each of the
Constituent Corporations, and any claim existing or action or preceding pending
by or against either of the Constituent Corporations may be prosecuted to
judgment as if the Merger had not taken place, or
2
<PAGE>
the Surviving Corporation may be substituted in its place, and neither the
rights of creditors nor any liens upon the property of either of the Constituent
Corporations shall be impaired by the Merger.
(b) As of the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, (i) each share of Common Stock of
Empress Joliet issued and outstanding immediately prior to the Effective Time
shall be canceled and converted into the right to receive 0.53 shares of the
Common Stock of Entertainment and 0.12 shares of the Non-Voting Common Stock of
Entertainment, (ii) each share of capital stock of the Merging Corporation
issued and outstanding immediately prior to the Effective Time shall be canceled
and extinguished and be converted into and become one fully paid and
nonassessable share of Common Stock of the Surviving Corporation; and (iii) each
share of Common Stock of Entertainment and each share of Non-Voting Common Stock
of Entertainment issued and outstanding immediately prior to the Effective Time
shall be canceled and converted into the right to receive one share of the
Common Stock of Entertainment and one share of the Non-Voting Common Stock of
Entertainment, respectively; provided, however, that the shares of the Common
Stock and Non-Voting Common Stock of Entertainment to be issued upon conversion
shall not be issued to a shareholder unless and until such shareholder has
executed and delivered to Entertainment the Amended and Restated Stockholders
Agreement or an agreement to be bound by the provisions thereof.
(c) The Surviving Corporation shall pay all expenses of carrying the
Plan into effect and accomplishing the Merger provided for herein.
(d) The proper officers and directors of the Constituent Corporations
and Entertainment shall execute and deliver all such documents and take all such
actions as may be necessary or advisable, or as may be requested by the
Surviving Corporation or Entertainment from time to time, in order to vest fully
all the property rights of the Constituent Corporations in the Surviving
Corporation and otherwise carry out this Plan.
(e) Anything herein or elsewhere to the contrary notwithstanding, this
Plan may be abandoned by the mutual consent of the Constituent Corporations and
Entertainment, evidenced by appropriate resolutions of their respective Board of
Directors, at any time prior to the Effective Time of the Merger.
(f) Promptly after the Effective Time, the Surviving Corporation shall
duly and properly file an election to be a Qualified Subchapter S Subsidiary.
*****
3
<PAGE>
IN WITNESS WHEREOF, Entertainment and each of the Constituent Corporations
has caused this Agreement to be signed by its duly authorized officer on the day
and year first above written.
EMPRESS CASINO JOLIET CORPORATION EMPRESS ENTERTAINMENT, INC.
By:_______________________________ By:_______________________________
Name:_____________________________ Name:_____________________________
Its:______________________________ Its:______________________________
NEW EMPRESS JOLIET, INC.
By:_______________________________
Name:_____________________________
Its:______________________________
4
<PAGE>
Exhibit 2.3
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT is dated as of June __, 1998, between Empress
Entertainment, Inc., a Delaware corporation ("Purchaser"), and Empress Casino
Joliet Corporation, an Illinois corporation ("Seller").
WHEREAS, Seller is the owner of Sixty (60) shares (the "Securities") of the
common stock of Empress River Casino Finance Corporation (the "Company");
WHEREAS, the Seller purchased the Securities for a $1.00 per share and the
financial statements of the Company reflect the fair market value of the
Securities to be $1.00 per share, and in the judgment of the Board of Directors
of the Company the fair market value of the Securities remains equal to the
original capital contribution of $1.00 per share;
WHEREAS, Purchaser wishes to purchase and Seller wishes to sell the
Securities on the terms and conditions set forth below.
In consideration of the following mutual covenants and conditions and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Sale of Securities to the Purchaser. On the terms and subject to the
conditions of this Agreement, Seller hereby sells, and Purchaser hereby
purchases, the Securities. The purchase price for the Securities is $60.00
("Purchase Price").
2. Closing Deliveries. Concurrently herewith, Purchaser shall deliver to
Seller the Purchase Price by cash or check and Seller shall deliver stock
certificate(s) representing the Securities, together with stock powers duly
endorsed for transfer to Purchaser.
3. Representations and Warranties of Seller. Seller represents and warrants
to Purchaser as follows:
a. Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois.
b. Authorization: Enforceability. Seller has full power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby. All necessary actions required to authorize
Seller's execution and delivery of this Agreement have been duly
taken, made or obtained. This Agreement constitutes
<PAGE>
the valid and legally binding obligation of Seller, enforceable
against Seller in accordance with its terms.
c. No Breach. The execution and delivery of this Agreement by Seller,
and the sale and delivery of the Securities to Purchaser pursuant
hereto, do not and will not violate the Seller's articles of
incorporation or by-laws, and do not and will not (i) conflict with or
result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) result in the creation of any lien,
security interest, charge or encumbrance upon the Securities pursuant
to, (iv) result in the violation of, or (v) require any authorization,
consent approval, exemption or other action by or notice to any court
or administrative or governmental body pursuant to, any law, statute,
rule or regulation to which Seller is subject (other than the federal
and state securities law, as to which no representation or warranty is
made by Seller), or any order, judgment or decree to which Seller or
any of its assets are subject.
d. Ownership of Securities. Seller is the record and beneficial owner of
the Securities and has good and valid title thereto, free and clear of
any liens, claims, charges or encumbrances. Upon the purchase of the
Securities by Purchaser at the Closing, Purchaser will acquire good
title thereto, free and clear of any lien, claim, charge or
encumbrance whatsoever.
4. Representations and Warranties of the Purchaser. Purchaser represents and
warrants to Seller that:
a. Organization of Buyer. Purchaser is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware.
b. Authorization: Enforceability. Purchaser has full power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby. All necessary actions and proceedings required to
authorize Purchaser's execution, delivery and performance of this
Agreement have been duly taken, made or obtained. This Agreement
constitutes the valid and legally binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms.
c. No Breach. The execution and delivery of this Agreement by Purchaser,
and the acquisition of the Securities by Purchaser pursuant hereto, do
not and will not violate the Purchaser's certificate of incorporation
or by-laws, and do not and will not (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, security
interest, charge or encumbrance upon the assets of Purchaser pursuant
to, (iv) result in the violation of, or (v) require any authorization,
consent, approval,
2
<PAGE>
exemption or other action by notice to any court or administrative or
governmental body pursuant to, any law, statute, rule or regulation to
which Purchaser is subject, any agreement or other instrument to which
Purchaser is a party or by which Purchaser is bound, or any order,
judgment or decree to which Purchaser or any of his assets are
subject.
d. Investment Intent. The Securities acquired by Purchaser hereunder are
being acquired for its own account and are not acquired with a view
to, or in connection with, any distribution thereof in violation of
any securities laws. The Securities will not be resold by Purchaser
unless they are subsequently registered under the Securities Act of
1933, or an exemption from such registration is available.
6. Further Assurances. Each party shall, at any time after the date hereof,
execute and deliver to the other party such additional documents and
instruments, and take such other actions, as such other party may
reasonably request in order to completely effectuate this Agreement.
7. Remedies. Any person having rights under any provision of this Agreement
will be entitled to enforce such rights specifically, to recover damages
caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.
8. Amendments and Waivers. No modifications, amendment or waiver of any
provision of this Agreement will be effective against any party to this
Agreement unless such modification, amendment or waiver is approved in
writing by such party. The failure of any party to enforce any of the
provisions of this Agreement will in no way be construed as a waiver of
such provision and will not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its
terms.
10. Successors and Assigns. All covenants and agreements in this Agreement by
or on behalf of any of the parties hereto will bind and inure to the
benefit of the respective successors and assigns of the parties hereto
whether so expressed or not; provided that Seller may not assign or
delegate its rights or obligations under this Agreement without the prior
written consent of Purchaser.
11. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
3
<PAGE>
12. Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together will constitute one and
the same agreement.
15. Governing Law. All questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed
by the internal law, and not the law of conflicts, of the State of
Illinois.
*****
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
SELLER:
EMPRESS CASINO JOLIET CORPORATION
By:
--------------------------------------------
Peter A. Ferro, Jr., Chief Executive Officer
PURCHASER:
EMPRESS ENTERTAINMENT, INC.
By:
--------------------------------------------
Peter A. Ferro, Jr., Chief Executive Officer
5
<PAGE>
EXHIBIT 2.4
TERMINATION OF LEASE
THIS TERMINATION is made as of this ______ day of June, 1998, between
Empress Entertainment, Inc., a Delaware corporation ("Empress Entertainment")
f/k/a LMC Leasing, Ltd., and Empress Casino Hammond Corporation, an Indiana
corporation ("Empress Hammond") f/k/a Lake Michigan Charters, Ltd.
W I T N E S S E T H :
WHEREAS, Empress Entertainment and Empress Hammond entered into that
certain Bareboat Charter Party Agreement dated June 30, 1997 (hereinafter
referred to as the "Lease") for lease of a whole riverboat casino vessel known
as the "Empress III" (Official Number 103574), together with its engines,
machinery, masts, cables, chains, rigging, tackling, fittings, tools, pumps and
pumping equipment, boats and anchors, and all additions, improvements and
replacements made in or to said vessel or any part or appurtenance thereof (all
of the foregoing being hereinafter collectively referred to as the "Vessel"),
located in the City of Hammond, State of Indiana;
WHEREAS, Empress Entertainment and Empress Hammond desire to terminate the
Lease for the Vessel as more fully set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree to terminate the
Lease under the following conditions:
1. TERMINATION DATE. The Lease shall terminate on and as of the date hereof
(the "Termination Date"), in the same manner and with the same effect as if
that date had been originally fixed in the Lease for the expiration of the
term.
2. OUTSTANDING RENT AND OTHER CHARGES. Empress Hammond shall pay to Empress
Entertainment all rent and other charges as specified in the Lease through
the Termination Date. Any rent and other charges payable with respect to
any period prior to the Termination Date, which rent or charges cannot be
ascertained prior to the Termination Date, shall be paid by Empress Hammond
after the Termination Date, upon demand by Empress Entertainment.
3. FURTHER ASSURANCES. Each party agrees to cooperate with the other and to
execute and deliver all such further instruments and documents and do all
such further
<PAGE>
acts and things as such party may be reasonably requested to do from time
to time by the other party in order to carry out the provisions and
objectives of this Termination.
IN WITNESS WHEREOF, this Termination is executed as of the day and year
first written above.
EMPRESS ENTERTAINMENT, INC. EMPRESS CASINO HAMMOND
CORPORATION
By:___________________________ By:________________________________
Title:________________________ Title:_____________________________
Date:_________________________ Date:______________________________
<PAGE>
EXHIBIT 2.5
Department of Transportation U.S. Coast Guard
CG-1340 (REV. 9-92)
OMB APPROVED 2115-0110
BILL OF SALE
This Section for Coast Guard Use Only
RECORDED:
BOOK: PAGE:
PORT (IF NOT FILING PORT)
DOCUMENTATION OFFICER
1. VESSEL NAME:
EMPRESS III
2. OFFICIAL NUMBER OR HULL ID NUMBER:
1035754
3. NAME(S) AND ADDRESS(ES) OF SELLERS:
EMPRESS ENTERTAINMENT, INC.
[address]
__________________________________, Delaware
3A. TOTAL INTEREST OWNED (IF LESS THAN 100%) ______________%
4. NAME(S) AND ADDRESS(ES) OF BUYER(S) AND INTEREST TRANSFERRED TO EACH:
EMPRESS CASINO HAMMOND CORPORATION
[address]
_________________________________, Indiana
4A. TOTAL INTEREST TRANSFERRED (100% UNLESS OTHERWISE SPECIFIED)
______________%
<PAGE>
4B. MANNER OF OWNERSHIP. UNLESS OTHERWISE STATED HEREIN, THIS BILL OF SALE
CREATES A TENANCY IN COMMON, WITH EACH TENANT OWNING AN EQUAL UNDIVIDED
INTEREST. CHECK ONLY ONE OF THE FOLLOWING BLOCKS TO SHOW ANOTHER FORM OF
OWNERSHIP.
___ JOINT TENANCY WITH RIGHT OF SURVIVORSHIP
___ TENANCY BY THE ENTIRETIES
___ COMMUNITY PROPERTY
___ OTHER (DESCRIBE)
5. CONSIDERATION RECEIVED:
(ONE DOLLAR AND OTHER VALUABLE CONSIDERATION UNLESS OTHERWISE STATED)
6. I (WE) DO HEREBY SELL TO THE BUYER(S) NAMED ABOVE, THE RIGHT, TITLE AND
INTEREST IDENTIFIED IN BLOCK 4 OF THIS BILL OF SALE, IN THE PROPORTION SPECIFIED
HEREIN.
VESSEL IS SOLD FREE AND CLEAR OF ALL LIENS, MORTGAGES, AND OTHER ENCUMBRANCES OF
ANY KIND AND NATURE, EXCEPT AS STATED ON THE REVERSE HEREOF. VESSEL IS SOLD
TOGETHER WITH AN EQUAL INTEREST IN THE MASTS, BOWSPRIT, SAILS, BOATS, ANCHORS,
CABLES, TACKLE, FURNITURE, AND ALL OTHER NECESSARIES THERETO APPERTAINING AND
BELONGING, EXCEPT AS STATED ON THE REVERS HEREOF.
7. SIGNATURES OF SELLER(S) OR PERSON(S) SIGNING ON BEHALF OF SELLER(S).
____________________________
8. DATE SIGNED:
____________________________
9. NAME(S) OF PERSON(S) SIGNING ABOVE, AND LEGAL CAPACITY IN WHICH SIGNED
(E.G., OWNER, AGENT, TRUSTEE, EXECUTOR)
<PAGE>
_____________________________________________________________________
10. ACKNOWLEDGMENT (TO BE COMPLETED BY NOTARY PUBLIC OR OTHER OFFICIAL
AUTHORIZED BY A LAW OF A STATE OR THE UNITED STATES TO TAKE OATHS.)
ON _______________ THE PERSON(S) NAMED IN SECTION 9
ABOVE ACKNOWLEDGED EXECUTION OF THE FOREGOING INSTRUMENT
IN THEIR STATED CAPACITY(IES) FOR THE PURPOSE THEREIN CONTAINED.
STATE:_________________________
COUNTY:________________________
NOTARY PUBLIC_______________________
MY COMMISSION EXPIRES_______________
PREVIOUS EDITION OBSOLETE SN 7530-00-F01-1029
<PAGE>
EXHIBIT 3.1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE PAGE 1
____________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "LMC LEASING, LTD.", FILED IN THIS OFFICE ON THE TWENTY-SEVENTH
DAY OF JANUARY, A.D. 1994, AT 11 O'CLOCK A.M.
[SEAL]
[SEAL] /s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
2373222 8100 AUTHENTICATION: 9134498
981226953 DATE: 06-12-98
<PAGE>
CERTIFICATE OF INCORPORATION
OF
LMC LEASING, LTD.
**************
THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
FIRST: The name of the Corporation is LMC LEASING, LTD.
SECOND: The registered office of the Corporation is to be located at 1209
Orange Street in the City of Wilmington in the County of New Castle, in the
State of Delaware. The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock which the Corporation is
authorized to issue is Three Thousand (3,000) shares of common stock, $0.01 par
value per share.
FIFTH: The name and address of the Incorporator is as follows:
NAME ADDRESS
---- -------
Mark S. Albert c/o D'Ancona & Pflaum
30 N. LaSalle Street
Suite 2900
Chicago, IL 60602
<PAGE>
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders.
(1) The number of directors of the Corporation shall from time to time be
fixed by, or in the manner provided in, the by-laws. Election of directors need
not be by ballot unless the by-laws so provide.
(2) The Board of Directors shall have power without the assent or vote of
the stockholders to make, alter, amend, change, add to or repeal the by-laws of
the Corporation; to authorize and cause to be executed mortgages and liens on
all or any part of the property of the Corporation; to determine the use and
disposition of any surplus or net profits; and to fix the times for the
declaration and payment of dividends.
(3) The directors in their discretion may submit any contract or act for
approval or ratification at any annual meeting of the stockholders or at any
meeting of the stockholders called for the purpose of considering any such act
or contract, and any contract or act that shall be approved or be ratified by
the vote of the holders of a majority of the stock of the Corporation which is
represented in person or by proxy at such meeting and entitled to vote thereat
(provided that a lawful quorum of stockholders are present in person or by
proxy) shall be as valid and as binding upon the Corporation and upon all the
2
<PAGE>
stockholders as though it had been approved or ratified by every stockholder of
the Corporation, whether or not the contract or act would otherwise be open to
legal attack because of directors' interest, or for any other reason.
(4) In addition to the powers and authorities expressly conferred upon the
directors of the corporation, either by this Certificate or by Statute, the
directors are hereby empowered to exercise all such powers and do all such acts
as may be exercised or done by the Corporation, so long as such actions do not
violate applicable law, this Certificate, and any by-laws of the Corpo ration
from time to time enacted by the stockholders of the Corporation; provided,
however, that no by-laws shall invalidate any prior act of the directors which
would have been valid if such by-laws had not been enacted.
SEVENTH: The Corporation shall, to the fullest extent permitted by law,
indemnify all persons whom it may indemnify pursuant thereto.
EIGHTH: The liability of the Corporation's directors to the Corporation or
its stockholders shall be eliminated to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as the same may be amended and
supplemented. No amendment to or repeal of this ARTICLE EIGHTH shall apply to or
have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
3
<PAGE>
TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of January,
1994.
/s/ Mark S. Albert
-----------------------------------
Mark S. Albert
4
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE PAGE 1
____________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF CHANGE OF
REGISTERED AGENT OF "LMC LEASING, LTD.", FILED IN THIS OFFICE ON THE SECOND DAY
OF DECEMBER A.D. 1996, AT 9 O'CLOCK A.M.
[SEAL]
[SEAL] /s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
2373222 8100 AUTHENTICATION: 9134497
981226953 DATE: 06-12-98
<PAGE>
CERTIFICATE OF CHANGE OF LOCATION OF REGISTERED OFFICE
AND OF REGISTERED AGENT
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
LMC LEASING, LTD.
2. The registered office of the corporation within the State of Delaware
is hereby changed to 1013 Centre Road, City of Wilmington 19805, County of New
Castle.
3. The registered agent of the Corporation within the State of Delaware
is hereby changed to Corporation Service Company, the business office of which
is identical with the registered office of the Corporation is hereby changed.
4. The Corporation has authorized the changed hereinbefore set forth by
resolution of its Board or Directors.
Signed: October 23, 1996
------------
[SIGNATURE ILLEGIBLE]^^
------------------------------
President
William J. Sabo
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE PAGE 1
____________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "LMC LEASING, LTD.", FILED IN THIS OFFICE ON THE TWENTY-THIRD DAY OF
DECEMBER, A.D. 1997, AT 6 O'CLOCK P.M.
[SEAL]
[SEAL] /s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
2373222 8100 AUTHENTICATION: 9134496
981226953 DATE: 06-12-98
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LMC LEASING, LTD.
* * * * * * * *
LMC LEASING, LTD., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation by unanimous
written consent dated November 10, 1997, duly adopted a resolution proposing and
declaring advisable the following amendment to the Certificate of Incorporation
of said corporation:
RESOLVED, that subject to the approval of the shareholders of the
Corporation, Article Fourth of the Certificate of Incorporation of the
Corporation is hereby amended to be and read as follows:
"Fourth: A. The total number of shares of stock which the
Corporation is authorized to issue is Six Thousand (6,000) shares, Three
Thousand (3,000) of which shall be classified as Common Shares, par value
$0.01 per share, and Three Thousand (3,000) of which shall be classified as
Non-Voting Common Shares, par value $0.01 per share.
B. The Common Shares and the Non-voting common Shares shall be
identical in all respects, except that unless specifically required by the
Delaware General Corporation Law pertaining to voting by class, the Non-
Voting Common Shares shall have no voting rights."
SECOND: That in lieu of holding a meeting and vote of stockholders, the
stockholders entitled to vote have given unanimous written consent to said
amendment in accordance with the provisions of Section 228 of the General
Corporation Law of the State of Delaware.
THIRD: That said amendment was duly adopted in accordance with the
applicable provisions of Sections 228 and 242 of the General Corporation Law of
the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, said LMC LEASING, LTD. has caused this certificate
to be signed by Peter A. Ferro, Jr., its Chief Executive Officer, and attested
by Michael W. Hansen, its Secretary, this 22nd day of December, 1997.
By: /s/ Peter A. Ferro
--------------------------------------------
Peter A. Ferro, Jr., Chief Executive Officer
ATTEST:
/s/ Michael W. Hansen
- ----------------------------
Michael W. Hansen, Secretary
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE PAGE 1
____________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "LMC LEASING, LTD.", CHANGING ITS NAME FROM "LMC LEASING, LTD.", TO "EMPRESS
ENTERTAINMENT, INC.", FILED IN THIS OFFICE ON THE TWENTY-EIGHTH DAY OF MAY, A.D.
1998, AT 1 O'CLOCK P.M.
[SEAL]
[SEAL] /s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
2373222 8100 AUTHENTICATION: 9134495
981226953 DATE: 06-12-98
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LMC LEASING, LTD.
**************
LMC LEASING, LTD. a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation at a special
meeting of the Board of Directors duly held and convened on May 1, 1998 adopted
a resolution proposing and declaring advisable an amendment to the Certificate
of Incorporation of said corporation, declaring said amendment to be advisable
and directing that said amendment be considered at a special meeting of
stockholders. The resolution setting forth the proposed amendment is as follows:
"RESOLVED, that Article 1 of the Certificate of Incorporation of the
Corporation, is hereby amended to be and read as follows:
"1. The name of the corporation is Empress Entertainment, Inc."
SECOND: That in a lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware and written notice of the adoption of the amendment has been given as
provided in Section 228 of the General Corporation Law of the State of Delaware
to every stockholder entitled to such notice.
<PAGE>
THIRD: That said amendment was duly adopted in accordance with the
applicable provisions of Sections 242 and 228 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said LMC Leasing, Ltd. has caused this certificate to
be signed by John G. Costello, its Vice President, and attested by Michael W.
Hansen, its Secretary, this 28th day of May, 1998.
By: [SIGNATURE ILLEGIBLE]^^
---------------------------------
Vice President
ATTEST:
Michael W. Hansen
- --------------------------------
Secretary
2
<PAGE>
EXHIBIT 3.2
B Y - L A W S
OF
EMPRESS ENTERTAINMENT, INC.
(F/K/A LMC LEASING, LTD.)
----------------
ARTICLE I
---------
OFFICES
-------
SECTION 1. The registered office of the corporation shall be established
and maintained at the office of The Corporation Trust Company, in the city of
Wilmington, in the County of New Castle, in the State of Delaware. The
Corporation Trust Company shall be the registered agent of the corporation. The
corporation may have other offices, either within or without the State of
Delaware, at such place or places as the board of directors may from time to
time appoint or the business of the corporation may require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
SECTION 1. All annual meetings of the stockholders shall be held at such
place, within or without the State of Delaware, and at such time as may be fixed
or designated from time to time by the board of directors and shall be stated in
the notice of the meeting. At each annual meeting of stockholders, the
stockholders entitled to vote at such meeting shall elect a board of directors
and may transact such other corporate business as shall be stated in the notice
of the meeting or as may be otherwise properly brought before the meeting.
Special meetings of stockholders for any purpose may be held at such place,
within or without the State of Delaware, and at such time as stated in the
notice of the meeting or in a duly executed waiver of notice thereof. The
stockholders entitled to vote at any such special meeting may transact any
corporate business that is stated in the notice of the meeting or as may be
otherwise properly brought before the special meeting.
SECTION 2. Annual meetings of stockholders, commencing with the year 1995,
shall be held on the fourth Wednesday of December, at 10:00 a.m., or such other
day and at such other time as shall be designated from time to time by the board
of directors and shall be stated in the notice of the meeting. If the date of
the annual meeting shall fall upon a legal holiday, the meeting shall be held on
the next succeeding business day.
SECTION 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
<PAGE>
SECTION 4. At least ten days before every meeting of stockholders, the
officer in charge of the stock ledger of the corporation shall prepare a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares owned by each stockholder as set forth in the stock ledger of the corpora
tion. Such list shall be open to examination by any stockholder for any purpose
germane to the meeting during ordinary business hours for a period of at least
ten days prior to the meeting at a place where the meeting is to be held. The
list shall also be made available during the entire meeting and may be inspected
by any stockholder who is present.
SECTION 5. Unless otherwise prescribed by statute or by the certificate of
incorporation, special meetings of the stockholders for any purpose or purposes
may be called by the chairman of the board, if elected, or the president, and
shall be called by the chairman of the board, if elected, the president or the
secretary at the request in writing of a majority of the members of the board of
directors, or at the request in writing of stockholders owning a majority of the
shares of any class of the capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
SECTION 6. Written notice of a special meeting shall state the place, date
and hour of the meeting, and the purpose or purposes for which the meeting is
called, and shall be given to each stockholder entitled to vote at such meeting
not less than ten nor more than sixty days before the date of the meeting.
SECTION 7. Business transacted at any special meeting of stockholders
shall be limited to the purpose or purposes stated in the notice of the meeting
or any other purpose properly brought before such special meeting.
SECTION 8. Except as otherwise provided by statute or by the certificate
of incorporation, the holders of the issued and outstanding shares of stock of
the corporation which are entitled to cast a majority of the votes at any
meeting of stockholders, present in person or represented by proxy, shall
constitute a quorum at all meetings of stockholders for the transaction of
business. No business may be conducted at any meeting of stockholders unless a
quorum is present. If such a quorum shall not be present or represented at any
meeting of the stockholders, the stockholders entitled to vote at any such
meeting, present in person or represented by proxy, shall have power to adjourn
the meeting, without notice other than an announcement at the meeting, until a
quorum shall be present or represented. At such time at which a quorum shall be
present or represented, any business may be transacted at such meeting which
might have been transacted at the originally scheduled meeting as if the
stockholders had been properly notified of such meeting. If the adjournment of
the originally scheduled meeting is for more than thirty days, or if after the
adjournment of the originally scheduled meeting a new record date is fixed for
the subsequent meeting, a notice of the
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subsequent meeting shall be given to each stockholder of record entitled to vote
at the subsequent meeting.
SECTION 9. When a quorum is present at any meeting of stockholders, a
majority of the votes cast by holders of stock having voting power at such
meeting, present in person or represented by proxy, shall decide any question
properly brought before such meeting, unless the question is one upon which
applicable law or the certificate of incorporation requires a different vote, in
which case the vote required by such law or provision shall govern.
SECTION 10. At every meeting of stockholders, each stockholder shall be
entitled to vote in person or by proxy, but no proxy shall be valid longer than
three years from its date, unless such proxy specifically provides for a longer
survival period.
SECTION 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any meeting of stockholders, or any action
which may be taken at any meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken is signed by the holders of outstanding stock
having not less than the minimum number of votes necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing to such action.
SECTION 12. The board of directors, in advance of any meeting of
stockholders, may appoint one or more persons to act as inspectors at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at the meeting of stockholders may, and on the request of any
stockholder entitled to vote at such meeting, shall, appoint one or more
inspectors. In case any person appointed as an inspector fails to appear or act
as an inspector of such meeting, such vacancy may be filled by the board of
directors in advance of the meeting of stockholders or at the meeting of
stockholders by the person presiding at such meeting. Each inspector, before
performing his duties, shall take and sign an oath to faithfully execute the
duties of inspector at such meeting of stockholders with strict impartiality and
according to the best of his ability.
The inspectors shall determine: the aggregate number of shares outstanding,
the voting power of each share, the number of shares represented at the meeting
of stockholders, the existence or nonexistence of a quorum, and the validity and
effect of proxies. In addition, the inspectors shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the results of any vote, and perform any other acts as are proper to
conduct an election or vote with fairness to all stockholders. Upon the request
of the person presiding at the meeting of stockholders or any stockholder
entitled to vote at such meeting, the inspectors shall make a report in writing
of any
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challenge or any question or matter determined by them and execute a certificate
of any fact found by them. Any report or certificate made by the inspectors
shall be prima facie evidence of the facts stated therein and of the vote
certified by them.
ARTICLE III
-----------
DIRECTORS
---------
SECTION 1. The number of directors which shall constitute the entire board
of directors shall be not less than five nor more than eleven. The initial board
of directors shall consist of eight directors. Thereafter, within the limits
specified above, the number of directors may be increased or decreased from time
to time pursuant to a resolution of the board of directors or by the
stockholders at the annual meeting. Directors shall be elected at the annual
meeting of stock holders and each director shall be elected to serve until the
next annual meeting of stockholders and until his successor is elected and
qualified, or until his earlier resignation or removal. Directors need not be
stockholders.
SECTION 2. Vacancies of the board of directors and newly created
directorships shall be filled by a majority vote of the members of the board of
directors then in office, or by the sole remaining director, as the case may be.
If there are no directors remaining in office, then an election of directors may
be held in the manner provided by statute or by these by-laws.
SECTION 3. The corporation shall be managed by and under the direction of
its board of directors, which may exercise all such powers of the corporation
and do all such lawful acts as are not otherwise required by statute, the
certificate of incorporation or these by-laws, to be exercised or done by the
stockholders. Without limiting the generality of the foregoing, the board of
directors is specifically granted the authority to approve the hiring of all
employees of the corporation.
MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------
SECTION 4. The board of directors may hold both regular or special
meetings within or without the State of Delaware.
SECTION 5. The first meeting of each newly elected board of directors
shall be held at the same place as the annual meeting of stockholders,
immediately following the adjournment of such meeting. No notice of such meeting
of directors shall be required to be delivered to the newly elected directors in
order to legally constitute a meeting, provided a quorum shall be present.
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<PAGE>
SECTION 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board of directors.
SECTION 7. Special meetings of the board of directors may be called by the
chairman of the board, if elected, or the president, either personally or upon
the written request of at least two directors, in each case upon three (3) days
prior written notice delivered to each director.
SECTION 8. At all meetings of the board of directors, a majority of the
entire board of directors then in office shall constitute a quorum for the
transaction of business. No action may be taken at a meeting of the board of
directors unless a quorum is present. Except as may be otherwise specifically
provided by statute or by the certificate of incorporation, the act of a
majority of the directors present at any meeting of directors at which a quorum
is present shall constitute the act of the board of directors. If a quorum shall
not be present at any meeting of the board of directors, the directors present
may adjourn the meeting without notice other than an announcement at the
meeting, until a quorum shall be present.
SECTION 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or at any committee thereof, may be taken without a
meeting if all members of the board of directors or any committee thereof, as
the case may be, consent to such action in writing.
SECTION 10. Unless otherwise restricted by the certificate of incorporation
or these by-laws, the board of directors or any committee thereof, may
participate in a meeting of the board of directors or any committee thereof, as
the case may be, by means of a telephone conference or similar communication
equipment, whereby all persons participating in the meeting can hear each other.
Such participation in a meeting shall constitute presence in person at the
meeting.
COMMITTEES OF DIRECTORS
-----------------------
SECTION 11. The board of directors may designate one or more committees.
Each committee shall consist of one or more of the directors. The board of
directors may designate one or more directors as alternate members of any
committee who may replace any absent or disqualified member at any meeting of
the committee. All committees of the board of directors may only be established
by an affirmative vote of the number of directors of the corporation equal to a
majority of the entire board of directors.
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Any committee established by the board of directors may exercise all the
powers which are set forth in the resolution of the board of directors
establishing such committee. Notwithstanding the foregoing, no committee shall
have the power or authority to amend the certificate of incorporation; adopt an
agreement of merger or consolidation; recommend to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property or
assets; recommend to the stockholders a dissolution of the corporation or a
revocation of a dissolution; amend the by-laws of the corporation; or declare a
dividend or authorize the issuance of stock.
SECTION 12. Each committee may keep regular minutes of its meetings and
report such minutes to the board of directors, if required.
COMPENSATION OF DIRECTORS
-------------------------
SECTION 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The corporation may reimburse the
directors for their expenses, if any, incurred by them in connection with
attending meetings of the board of directors. No such payment shall prohibit a
director from serving in any other capacity with the corporation and receiving
compensation therefor from the corporation. Members of committees may be
entitled to receive similar compensation and reimbursement of expenses for
attending committee meetings.
REMOVAL OF DIRECTORS
--------------------
SECTION 14. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any director or directors may be removed, with
or without cause, by the holders of shares entitled to cast a majority of the
votes for the election of directors. A director elected or appointed by the
holders of a particular class of stock may be removed only by the vote of the
holders of a majority of the shares of such class.
ARTICLE IV
----------
NOTICES
-------
SECTION 1. Whenever applicable statutes, the certificate of incorporation
or these by-laws requires that notice be given to any director or stockholder,
such notice may be given in writing or by mail (addressed to such director or
stockholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid), and such notice shall be deemed to be given at
the time when it is deposited in the United States mail. Notice to directors may
also be given personally in writing or by telegram or facsimile.
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SECTION 2. Whenever any notice is required to be given under applicable
statutes, the certificate of incorporation or these by-laws, a written waiver of
such notice, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed sufficient notice
pursuant to such applicable statute, the certificate of incorporation or these
by-laws.
ARTICLE V
---------
OFFICERS
--------
SECTION 1. The officers of the corporation shall be appointed by the board
of directors and may consist of a chairman of the board, a president, a vice
president, a secretary and a treasurer. The board of directors may also appoint
additional vice presidents, and one or more assistant secretaries and assistant
treasurers. Any number of offices may be held by the same person, unless the
certificate of incorporation or these by-laws provide otherwise.
SECTION 2. At the first meeting of each newly elected board of directors
held after each annual meeting of stockholders, the board of directors shall
choose a president, a treasurer and a secretary, and may choose a chairman of
the board, one or more vice presidents one or more assistant secretaries and one
or more assistant treasurers. The board of directors may appoint such other
officers and agents as it deems necessary or desirable from time to time.
SECTION 3. The officers of the corporation shall hold office until their
successors are chosen and qualified and shall exercise such powers and perform
such duties as are granted to them in these by-laws or as is determined from
time to time by the board of directors. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of the
number of directors equal to a majority of the entire board of directors. Any
vacancy occurring in any office of the corporation may be filled by the board of
directors.
CHAIRMAN OF THE BOARD
---------------------
SECTION 4. The chairman of the board, if elected and serving, shall be the
chief executive officer of the corporation and shall supervise and control the
business and affairs of the corporation. The chairman shall preside at all
meetings of the stockholders and the board of directors. The chairman may sign,
with the secretary or any other authorized officer of the corporation,
certificates for shares of the corporation, and, when authorized by the board of
directors, any deeds, mortgages, bonds, contracts or other instruments to be
entered into by the corporation. The chairman shall also perform such other
duties as may be prescribed to him or her from time to time by the board of
directors.
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<PAGE>
PRESIDENT
---------
SECTION 5. In the event that a chairman has not been elected, the
president shall perform all of the duties of the chairman which are set forth in
Section 4 of this Article V. In the event that a chairman has been elected, the
president shall be the chief operating officer of the corporation and, subject
to the direction of the chairman, shall supervise and control the operations of
the corporation. In the absence of the chairman, the president shall preside at
all meetings of the stockholders and the board of directors. In the absence of
the chairman or in the event the chairman is unable or unwilling to act, the
president shall perform the duties of the chairman set forth in Section 4 of
this Article V. The president may sign, with the secretary or any other
authorized officer of the corporation, certificates for shares of the
corporation, and, when authorized by the board of directors, any deeds,
mortgages, bonds, contracts or other instruments to be entered into by the
corporation. The president shall also perform all other duties incident to the
office of president and chief operating officer and such other duties as may be
prescribed to him or her from time to time by the chairman or the board of
directors.
VICE PRESIDENTS
---------------
SECTION 6. In the absence of the president or in the event the president
is unable or unwilling to act, the vice president (or if there is more than one
vice president, any vice president) shall perform the duties of the president
set forth in Section 5 of this Article V, including, without limitation, the
duties of the chairman if and as assumed by the president as a result of the
chairman's absence or inability or refusal to act. Any vice president may sign,
with the secretary or any other authorized officer of the corporation,
certificates for shares of the corporation and, when authorized by the board of
directors, any deeds, mortgages, bonds, contracts or other instruments to be
entered into by the corporation. Each vice president shall perform such other
duties as may be assigned to him or her from time to time by the chairman, the
president or the board of directors.
TREASURER
---------
SECTION 7. The board of directors may require the treasurer to give a bond
to the corporation as security for the faithful discharge of such treasurer's
duties in such sum and with such surety or sureties as the board of directors
shall determine. The Treasurer shall (a) have charge and custody of, and shall
be responsible for, all funds and securities of the corporation; (b) receive and
give receipts for moneys due and payable to the corporation from any source
whatsoever; (c) deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with the provisions of these by-laws; and (d) perform all other duties incident
to the office of treasurer and such other duties as may be assigned to him
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or her from time to time by the chairman, the president, any vice president or
the board of directors.
SECRETARY
---------
SECTION 8. The secretary shall: (a) keep records of corporate action,
including the minutes of meetings of the stockholders and the board of
directors, in one or more books maintained for such purpose; (b) see that all
notices required to be given pursuant to applicable laws, the certificate of
incorporation or these by-laws are properly given; (c) be custodian of the
corporate records and of the seal of the corporation and see that, as required
by any applicable law, the seal of the corporation is affixed to all
certificates of shares of the corporation and to all documents, the execution
and delivery of which is properly authorized by the board of directors; (d) keep
a register of the post office address of each stockholder; (e) sign, with the
chairman, the president or any vice president, certificates for shares of the
corporation and, when authorized by the board of directors, any deeds,
mortgages, bonds contracts, or other instruments to be entered into by the
corporation; (f) maintain and update the stock transfer books of the
corporation; and (g) perform all other duties incident to the office of
secretary and such other duties as may be assigned to him or her from time to
time by the chairman, the president, any vice president or the board of
directors.
ASSISTANT TREASURERS AND
ASSISTANT SECRETARIES
---------------------
SECTION 9. The board of directors may require an assistant treasurer, if
elected, to give a bond to the corporation as security for the faithful
discharge of such assistant treasurer's duties in such sums and with such
sureties as the board of directors shall determine. The assistant secretaries,
if any, may sign, with the chairman, the president or any vice president,
certificates for shares of the corporation and, when authorized by the board of
directors, any deeds, mort gages, bonds, contracts or other instruments to be
entered into by the corporation. The assistant treasurers and assistant
secretaries shall perform such duties as shall be assigned to them by the
treasurer or the secretary, respectively, or by the chairman, the president, any
vice president or the board of directors.
SALARIES
--------
SECTION 10. The salaries of the officers of the corporation shall be fixed
from time to time by the board of directors. No officer of the corporation shall
be prevented from receiving a salary from the corporation if such officer is
also a director of the corporation.
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ARTICLE VI
----------
CERTIFICATE OF STOCK
--------------------
SECTION 1. Every holder of shares of stock of the corporation shall be
issued a certificate, signed by the chairman, if elected, the president or any
vice president, and the secretary or any assistant secretary, certifying the
number of shares owned by such holder of stock in the corporation.
Certificates may be issued for partly paid shares and, if so issued, the
face or back of the certificates issued shall state the total amount of the
consideration to be paid for such shares and the amount paid thereon as of the
date of the issuance of such certificate.
If the corporation is authorized to issue more than one class of stock or
more than one series of any class of stock, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate issued by the corporation to
represent such class or series of stock; provided that, except as otherwise
required by applicable laws, in lieu of the foregoing requirements, the
corporation may set forth on the face or back of the certificate issued by the
corporation to represent such class or series of stock, a statement that the
corporation will furnish without charge to each stockholder who so requests, a
statement setting forth the powers, designations, preferences and relative,
participating, optional or other special rights of each class or series of stock
and the qualifications, limitations or restrictions of such preferences and/or
rights.
SECTION 2. Any of the signatures on a certificate representing shares of
the corporation may be a facsimile signature. If any officer, transfer agent or
registrar who has signed a certificate representing shares of the corporation
shall have ceased to be an officer, transfer agent or registrar of the
corporation before such certificate was issued, such certificate may be issued
by the corporation with the same effect as if such person was an officer,
transfer agent or registrar of the corporation as of the date such certificate
was issued.
LOST CERTIFICATES
-----------------
SECTION 3. Upon receipt of an affidavit of a holder of shares of the
corporation certifying that such holder's certificate or certificates
representing such shares of the corporation have been lost, stolen, or
destroyed, the board of directors may direct a new certificate or certificates
to be issued to such holder of shares as a replacement certificate for any
certificate or certificates alleged to have been lost, stolen or destroyed. In
connection with the issuance of any replacement certificate or certificates, the
board of directors may, in its discretion and as condition precedent to the
issuance thereof,
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<PAGE>
require the owner of such lost, stolen or destroyed certificate or certificates,
or his legal representatives, as the case may be, to either (a) advertise that
such certificate or certificates have been lost, stolen or destroyed, as the
case may be, in such a manner as the board of directors may determine, in its
sole discretion; and/or (b) give the corporation a bond, in such sum as the
board of directors may determined which shall serve as security against any
claim that may be made against the corporation with respect to the certificate
or certificates alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
-----------------
SECTION 4. Upon the surrender to the corporation or the transfer agent of
the corpora tion of a certificate of shares of the corporation duly endorsed for
transfer or accompanied by proper evidence of succession, assignation or
authority to transfer, the corporation shall issue a new certificate to the
person entitled to such new certificate, cancel the old certificate and record
the transfer of shares upon its books; provided, however, that the corporation's
obligations under this paragraph shall be subject to applicable Federal and
state securities laws, other applicable laws, the certificate of incorporation,
and any legends and stop transfer instructions set forth on such old
certificate.
FIXING RECORD DATE
------------------
SECTION 5. In order for the corporation to determine the stockholders
entitled to (a) notice of, or to vote at, any meeting of stockholders or any
adjournment thereof; (b) consent to corporate action in writing without a
meeting; (c) receive payment of any dividend or other distribution or allotment
of any rights; (d) exercise any rights in respect to any change, conversion or
exchange of stock; or (e) take any other lawful action, the board of directors
may fix a record date in advance of any such action, which shall not be more
than sixty nor less than ten days before the date of any meeting of
stockholders, nor more than sixty days prior to any other action taken or to be
taken. A determination of stockholders of record entitled to notice of, or to
vote at, a meeting of stockholders, shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
REGISTERED STOCKHOLDERS
-----------------------
SECTION 6. The corporation shall recognize the person or persons
registered on its books as the owner or owners of shares of stock of the
corporation to receive dividends, to vote as such owner, and to be held liable
for calls and assessments with respect to such shares. The corporation shall not
be bound to recognize any claim to, or interest in, the shares of the
corporation on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by applicable
laws.
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ARTICLE VII
-----------
GENERAL PROVISIONS
------------------
DIVIDENDS
---------
SECTION 1. Subject to applicable law and the certificate of incorporation,
(a) the board of directors, at any regular or special meeting, may declare
dividends upon the capital stock of the corporation; and (b) dividends may be
paid in cash, property, or shares of the capital stock of the corporation.
SECTION 2. Prior to the payment of any dividend, the board of directors
may set aside out of any funds of the corporation available for dividends, as a
reserve or reserves to meet contingencies, for equalizing dividends, for
repairing or maintaining any property of the corporation, or for such other
purpose or purposes as the board of directors determines is in the best
interests of the corporation, such sum or sums as the board of directors
determines, from time to time, in its sole discretion. The board of directors
may modify or abolish any such reserve in the same manner in which it was
created.
ANNUAL STATEMENT
----------------
SECTION 3. The board of directors shall present to the stockholders a full
and clear statement of the business and condition of the corporation at each
annual meeting of stockholders and at any special meeting of the stockholders
when called for by vote of the stockholders.
CHECKS
------
SECTION 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers, person or persons as the board of
directors may designate from time to time.
FISCAL YEAR
-----------
SECTION 5. The fiscal year of the corporation shall be fixed by a
resolution of the board of directors.
SEAL
----
SECTION 6. The corporate seal of the corporation shall have inscribed
thereon the name of the corporation and the words "CORPORATE SEAL DELAWARE". The
seal of the corporation may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
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INDEMNIFICATION
---------------
SECTION 7. (a) Indemnification of Officers, Directors, Employees and
-----------------------------------------------------
Agents; insurance. Any person who was or is a party or is threatened to made a
- ------------------
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprises,
shall be indemnified by the corporation against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not, of
---- ----------
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery of Delaware or the Court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of Delaware,
or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) hereof, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
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(d) Any indemnification pursuant to paragraphs (a) and (b) of this Section
7 of this Article VII (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
the first two paragraphs of this Section 7. Such determination shall be made by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or if such a quorum is
not obtainable (or, even if obtainable a quorum of disinterested directors so
directs) by independent legal counsel in written opinion, or by the
stockholders.
(e) Expenses (including attorney's fees) incurred by a director, officer,
employee or agent of the corporation in defending a civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Section 7.
(f) The indemnification and advancement of expenses provided by this
Section 7 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any by-
law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall, unless otherwise provided when authorized
or ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(g) The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provision of this Section 7.
(h) For the purpose of this Section 7, all words and phrases used herein
shall have the meanings ascribed to them under Section 145 of the General
Corporation Law of the State of Delaware.
14
<PAGE>
ARTICLE VIII
------------
AMENDMENTS
----------
SECTION 1. These by-laws may be altered, amended or repealed or new by-
laws may be adopted by (a) the stockholders at any regular meeting of the
stockholders or, at any special meeting of the stockholders if notice of such
alteration, amendment, repeal or adoption of new by-laws is contained in the
notice of such special meeting; or (b) if such power is granted to the board of
directors by the certificate of incorporation, the board of directors, at any
meeting of the board of directors. If the power to adopt, amend or repeal by-
laws is granted to the board of directors by the certificate of incorporation,
such grant shall not divest or limit the power of the stockholders to adopt,
amend or repeal the by-laws.
15
<PAGE>
EXHIBIT 3.3
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
LAKE MICHIGAN CHARTERS, LTD.
I, JOSEPH H. HOGSETT, Secretary of State of Indiana, hereby certify that
Articles of Incorporation of the above corporation, have been presented to me at
my office accompanied by the fees prescribed by law; that I have found such
Articles conform to law; all as prescribed by the provisions of the Indiana
Business Corporation Law, as amended.
NOW, THEREFORE, I have hereby issue to such Corporation this Certificate of
Incorporation, and further certify that its corporate existence will begin
November 25, 1992.
In Witness Whereof, I have hereunto set my
hand and affixed the seal of the State of
Indiana, at the City of Indianapolis, this
Twenty-fifth day of November, 1992
--------------------------------------------------
JOSEPH H. HOGSETT, Secretary of State
By
------------------------------------------------
Deputy
<PAGE>
ARTICLES OF INCORPORATION OF
State Form 4159 (R7 / 8-89)
Approved by State Board of Accounts - 1989
Provided by: JOSEPH H. HOGSETT
Secretary of State
Room 155, State House
Indianapolis, Indiana 46204
(317) 232-6576
Indiana Code 23-1-21-2
FILING FEE $90.00
INSTRUCTIONS: Use 8 1/2 x 11 inch white paper for inserts.
Filing requirements - Present original and
one copy to the address in the upper right
corner of this form.
- --------------------------------------------------------------------------------
ARTICLES OF INCORPORATION OF
- --------------------------------------------------------------------------------
(Indicate the appropriate act)
The undersigned desiring to form a corporation (herein after referred to as
"Corporation") pursuant to the provisions of:
[X] Indiana Business Corporation Law [ ] Indiana Professional Corporation
Act 1983
As amended, executes the following Articles of Incorporation:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ARTICLE I - NAME
- --------------------------------------------------------------------------------
Name of Corporation
Lake Michigan Charters, Ltd.
- --------------------------------------------------------------------------------
(The name must contain the word "Corporation," "Incorporated," "Limited,"
"Company" or an abbreviation of one of those words.)
- --------------------------------------------------------------------------------
ARTICLE II - REGISTERED OFFICE AND AGENT
- --------------------------------------------------------------------------------
(The street address of the corporation's initial registered office in Indiana
and the name of its initial registered agent at that office is:)
- --------------------------------------------------------------------------------
Name of Agent
Robert Berg
- --------------------------------------------------------------------------------
Street Address of Registered Office Zip Code
2230 Indianapolis Blvd., Whiting, Indiana 46394
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ARTICLE III - AUTHORIZED SHARES
- --------------------------------------------------------------------------------
Number of shares: 10,000
----------------------------------
If there is more than one class of shares, shares with
rights and preferences, list such information on
"Exhibit A."
- --------------------------------------------------------------------------------
ARTICLE IV - INCORPORATORS
The name(s) and address(es) of the incorporator(s) of the corporation:
- --------------------------------------------------------------------------------
NAME NUMBER AND STREET CITY STATE ZIP CODE
OR BUILDING
- --------------------------------------------------------------------------------
Martin J. McNally 16327 South Pulaski Markham Il. 60426
- --------------------------------------------------------------------------------
In Witness Whereof, the undersigned being all the incorporators of said
corporation execute these Articles of Incorporation and verify, subject to
penalties of perjury, that the statements contained herein are true.
this 23rd day of November, 1992.
- --------------------------------------------------------------------------------
Signature Printed Name
Martin J. McNally Martin J. McNally
- --------------------------------------------------------------------------------
Signature Printed Name
- --------------------------------------------------------------------------------
Signature Printed Name
- --------------------------------------------------------------------------------
This instrument was prepared by (Name)
Martin J. McNally
- --------------------------------------------------------------------------------
Address (Number, Street, City and State) Zip Code
16327 South Pulaski, Markham, Illinois 60426
- --------------------------------------------------------------------------------
<PAGE>
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
ARTICLES OF AMENDMENT
To Whom These Presents Come, Greeting:
WHEREAS, there has been presented to me at this office, Articles of Amendment
for:
LAKE MICHIGAN CHARTERS, LTD.
and said Articles of Amendment have been prepared and signed in accordance with
the provisions of the Indiana Business Corporation Law, as amended.
The name of the corporation is amended as follows:
EMPRESS CASINO HAMMOND CORPORATION
NOW, THEREFORE, I SUE ANNE GILROY, Secretary of State of Indiana, hereby certify
that I have this day filed said articles in this office.
The effective date of these Articles of Amendment is March 11, 1996.
In Witness Whereof, I have hereunto set my
hand and affixed the seal of the State of
Indiana, at the City of Indianapolis, this
Eleventh day of March, 1996.
<PAGE>
ARTICLES OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF
LAKE MICHIGAN CHARTERS, LTD.
----------------------------
The above corporation (hereinafter referred to as the "Corporation")
existing pursuant to the Indiana Business Corporation Law (the "Act"), desiring
to give notice of corporate action effectuating amendment of certain provisions
of its Articles of Incorporation, sets forth the following facts:
ARTICLE I
NAME OF CORPORATION
-------------------
The name of the Corporation is Lake Michigan Charters, Ltd.
ARTICLE II
AMENDMENT
---------
Section 1. The date of incorporation of the Corporation is November 25,
1992.
Section 2. The name of the Corporation following this amendment is Empress
Casino Hammond Corporation.
Section 3. The exact text of Article 1 of the Articles of Incorporation is
now as follows:
"The name of the Corporation is Empress Casino
Hammond Corporation."
ARTICLE III
MANNER OF ADOPTION AND VOTE
---------------------------
The Board of Directors and the shareholders of the Corporation entitled to
vote with respect to the Articles of Amendment adopted the proposed amendment.
The amendment was adopted at a meeting of the Board of Directors held on January
17, 1996. The amendment was then adopted by written consent effective January
17th, 1996 and executed by the holders of
<PAGE>
100% of the shares of common stock of the Corporation entitled to vote with
respect to the amendment.
The designation, number of outstanding shares, number of votes entitled to
be cast by each voting group entitled to vote separately on the amendment, the
number of votes of each voting group represented, and the number of votes cast
for and against the amendment by each voting group entitled to vote separately
on the amendment at the meeting is set forth below:
Designation of Each Voting Group Common
Number of Outstanding Shares 1,150
Number of Votes Entitled to Be Cast 1,150
Number of Votes Represented at Meeting 1,150
Number of Votes in Favor 1,150
Number of Votes Against 0
The number of votes cast for the amendment by each voting group entitled to
vote thereon was sufficient for approval by that voting group.
The manner of the adoption of the Articles of Amendment and the vote by
which they were adopted constitute full legal compliance with the provisions of
the Act, the Articles of Incorporation, and the Bylaws of the Corporation.
IN WITNESS WHEREOF, the undersigned officer executes these Articles of
Amendment of the Articles of Incorporation of the Corporation, and verifies
subject to the penalties of perjury that the facts contained herein are true,
this 11th day of March, 1996.
LAKE MICHIGAN CHARTERS, LTD.
By: /s/ Kevin D. Larson
---------------------------------------
Kevin D. Larson, President
This instrument was prepared by Richard J. Thrapp, Attorney at Law, ICE MILLER
DONADIO & RYAN, One American Square, Box 82001, Indianapolis Indiana 46282-0002
-2-
<PAGE>
CERTIFICATE OF ASSUMED BUSINESS NAME
------------------------------------
1. Name of the Corporation: Empress Casino Hammond Corporation
2. Date of Organization: November 25, 1992
3. Principal Office Address of the Corporation:
1111 Calumet Avenue, Hammond, Indiana 49320
4. Assumed Business Name: Lake Michigan Charters, Ltd.
5. Address at which the Corporation will do business under the assumed
business name:
1111 Calumet Avenue, Hammond, Indiana 40320
EMPRESS CASINO HAMMOND CORPORATION
By: /s/ Kevin D. Larson
------------------------------------
Kevin D. Larson, President
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
Subscribed and sworn or attested to before me, this 11th day of March, 1996.
/s/ Margaret Taylor
------------------------------------------
Notary Public
Margaret Taylor
------------------------------------------
Printed Name
My Commission Expires:
July 20, 1997
- -----------------------------
My County of Resident is:
Johnson
- -----------------------------
This instrument was prepared by Richard J. Thrapp, Attorney at Law, ICE MILLER
DONADIO & RYAN, One American Square, Box 82001, Indianapolis, Indiana 46282-0002
<PAGE>
[LOGO] ARTICLES OF AMENDMENT OF THE ARTICLES OF INCORPORATION
State Form 38333R / Corporate Form No. 102 (June 1984)
Articles of Amendment (Amending Individual Articles Only)
Prescribe by Edwin J. Simcox, Secretary of State of Indiana
Recording Requirements-Recording of Articles of Amendment in the Office of the
County Recorder is generally no longer required by the India General Corporation
Act. However, if the name of the corporation is changed by this amendment, a
certified copy of the certificate of Amendment must be filed with the recorder
of every county in which the corporation owns real estate.
Instructions: Present 2 Originally Signed and Fully Executed Copies to:
SECRETARY OF STATE
Room 155, State House
Indianapolis, Indiana 46204
(317) 232-6576
ARTICLES OF AMENDMENT
OF THE
ARTICLES OF INCORPORATION
OF
- --------------------------------------------------------------------------------
The undersigned officers of
EMPRESS CASINO HAMMOND CORPORATION
- --------------------------------------------------------------------------------
(hereinafter referred to as the "Corporation") existing pursuant to the
provisions of:
(Indicate appropriate act)
|X| Indiana General Corporation Act
| | Indiana Professional Corporation Act of 1983
as amended (hereinafter referred to as the "Act"), desiring to give notice of
corporate action effectuating amendment of certain provisions of Articles of
Incorporation, certify the following facts:
- --------------------------------------------------------------------------------
ARTICLE I Amendment(s)
- --------------------------------------------------------------------------------
SECTION 1 The date of incorporation of the corporation is:
November 25, 1992
- --------------------------------------------------------------------------------
SECTION 2 The name of the corporation following this amendment to the Articles
of Incorporation is:
EMPRESS CASINO HAMMOND CORPORATION
- --------------------------------------------------------------------------------
SECTION 3
The exact text of Article(s) III of the Articles of Incorporation is now as
follows:
A. The corporation is authorized to issue Eleven Thousand (11,000) shares,
Ten Thousand (10,000) of which shall be classified as Common Shares and
One Thousand (1,000) of which shall be classified as Non-Voting Common
Shares.
B. The Common Shares and the Non-Voting Common Shares shall be identical in
all respects, except that unless specifically required by the Indiana
Business Corporation Law pertaining to voting by class, the Non-Voting
Common shares shall have no voting rights.
<PAGE>
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
ARTICLES OF AMENDMENT
To Whom These Presents Come, Greeting:
WHEREAS, there has been presented to me at this office, Articles of Amendment
for:
EMPRESS CASINO HAMMOND CORPORATION
and said Articles of Amendment have been prepared and signed in accordance with
the provisions of the Indiana Business Corporation Law, as amended.
NOW, THEREFORE, I, SUE ANNE GILROY, Secretary of State of Indiana, hereby
certify that I have this day filed said articles in this office.
The effective date of these Articles of Amendment is September 05, 1996.
In Witness Whereof, I have hereunto set my
hand and affixed the seal of the State of
Indiana, at the City of Indianapolis, this
Fifth day of September, 1996.
/s/ signature illegible
-----------------------------------------
Deputy
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
[LOGO] CERTIFICATE OF ASSUMED BUSINESS NAME -------------------------------
State Form 30353 (R4 / 3-87) Provided by: EVAN BAYH
Approved by State Board of Accounts 1987 Secretary of State of Indiana
155 State House
Indianapolis, Indiana 46204
(317) 232-6576
------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
INSTRUCTIONS: (CORPORATIONS ONLY)
This certificate must first be recorded in the office of County Recorder of each county in which a place of business
or office is located. A copy of the certificate, certified by the County Recorder, must be filed with the Secretary of
State, Indiana Code 23-15-1-1
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Fee for filing with the Secretary of State: $30.00 or $45.00, if a certificate issued by the Secretary of State is desired.
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
1. Name of Corporation 2. Date of Incorporation/Admission
Empress Casino Hammond Corporation November 25, 1992
- ----------------------------------------------------------------------------------------------------------------------------
3. Principal Office Address of the Corporation (Street, City, State and Zip Code)
825 Empress Drive, Hammond, IN 46320
- ----------------------------------------------------------------------------------------------------------------------------
4. Assumed Business Name(s)
Hammond Empress
- ----------------------------------------------------------------------------------------------------------------------------
5. Address at which the Corporation will do business under assumed business name (Street, City, State and Zip Code)
825 Empress Drive, Hammond, IN 46320
- ----------------------------------------------------------------------------------------------------------------------------
6. Signature Name Printed
/s/ WILLIAM SABO William Sabo
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
STATE OF ILLINOIS
SS:
COUNTY OF GRUNDY
Subscribed and sworn or attested to before me, this 25th day of November, 1996.
- ----------------------------------------------------------------------------------------------------------------------------
Notary Public /s/ Cindy Starks
- ----------------------------------------------------------------------------------------------------------------------------
My Notarial Commission Expires: 8/23/00
- ----------------------------------------------------------------------------------------------------------------------------
My County of Residence is: Grundy
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
I, MORRIS W. CARTER, Recorder of LAKE County, State of Indiana, certify that the foregoing is a true copy of the
Certificate of Assumed Business Name recorded in my office on the 14th day of January, 1997.
- ----------------------------------------------------------------------------------------------------------------------------
Recorder Signature /s/ MORRIS W. CARTER
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
This instrument was prepared by:
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------------------
OFFICIAL SEAL
CINDY STARKS
NOTARY PUBLIC, STATE OF ILLINOIS
MY COMMISSION EXPIRES: 08/23/00
- ----------------------------------
<PAGE>
ARTICLES OF MERGER[LOGO] SUE ANNE GILROY
SECRETARY OF STATE
CORPORATIONS DIVISION
302 W. Washington Street, Rm. 5078
Indianapolis, IN 46204
Telephone: (317) 232-6576
Indiana Code 23-1-40-1 ct. seq.
INSTRUCTIONS: Use 8-1/2" x 11" white FILING FEE: $90.00
paper for inserts.
Present original and two (2)
copies to address in upper
right corner of this form.
Please TYPE or PRINT.
Upon completion of filing the
Secretary of State will issue
a receipt.
- --------------------------------------------------------------------------------
ARTICLES OF MERGER/SHARE EXCHANGE
OF
NEW EMPRESS HAMMOND, INC. 1997 101563
-------------------------------------------------------------------------
(hereinafter "the nonsurviving corporation(s)")
- --------------------------------------------------------------------------------
INTO
EMPRESS CASINO HAMMOND CORPORATION 1992 111047
-------------------------------------------------------------------------
(hereinafter "the surviving corporation")
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ARTICLE I - SURVIVING CORPORATION
- --------------------------------------------------------------------------------
The name of the corporation surviving the merger is: Empress Casino Hammond
Corporation
----------------------
and such name [_] has [x] has not (designate which) been changed as a result
of the merger.
- --------------------------------------------------------------------------------
a. The surviving corporation is a domestic corporation existing pursuant to
the provisions of the Indiana Business Corporation Law incorporated on
November 25, 1992
-----------------------
b. The surviving corporation is a foreign corporation incorporated under the
laws of the State of ________________________ and [_] qualified [_] not
qualified (designate which) to do business in Indiana.
If the surviving corporation is qualified to do business in Indiana, state
the date of qualification: ________________________
(If Application for Certificate of Authority is filed concurrently herewith
state "Upon approval of Application for Certificate of Authority".)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ARTICLE II - NONSURVIVING CORPORATION(S)
- --------------------------------------------------------------------------------
The name, state of incorporation, and date of incorporation or qualification
(if applicable) respectively, of each Indiana domestic corporation and
Indiana qualified foreign corporation, other than the survivor, which is
party to the merger are as follows:
- --------------------------------------------------------------------------------
Name of Corporation
New Empress Hammond, Inc.
- --------------------------------------------------------------------------------
State of Domicile Date of Incorporation or qualification in Indiana
Indiana (if applicable)
October 27, 1997
- --------------------------------------------------------------------------------
Name of Corporation
- --------------------------------------------------------------------------------
State of Domicile Date of Incorporation or qualification in Indiana
(if applicable)
- --------------------------------------------------------------------------------
Name of Corporation
- --------------------------------------------------------------------------------
State of Domicile Date of Incorporation or qualification in Indiana
(if applicable)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ARTICLE III - PLAN OF MERGER OR SHARE EXCHANGE
- --------------------------------------------------------------------------------
The Plan of Merger or Share Exchange, containing such information as
required by Indiana Code 23-1-40-1(b), is set forth in "Exhibit A",
attached hereto and made a part hereof.
- --------------------------------------------------------------------------------
(IND. - 1173 - 10/18/96)
<PAGE>
ARTICLE IV - MANNER OF ADOPTION AND VOTE OF SURVIVING CORPORATION (Must complete
Section 1 or 2)
- --------------------------------------------------------------------------------
[_] Shareholder vote not required.
The merger/share exchange was adopted by the incorporators or board of directors
without shareholder action and shareholder action was not required.
- --------------------------------------------------------------------------------
[X] Vote of shareholders
The designation (i.e., common, preferred or any classification where different
classes of stock exist), number of outstanding shares, number of votes entitled
to be cast by each voting group entitled to vote separately on the merger/share
exchange and the number of votes of each voting group represented at the meeting
is set forth below:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
TOTAL A B C
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DESIGNATION OF EACH VOTING GROUP (i.e. preferred and common) Non-Voting
Common and Non-Voting Common Common Common
- ----------------------------------------------------------------------------------------------------
NUMBER OF VOTES SHARES OUTSTANDING 1,179.245 1,150 29.245
- ----------------------------------------------------------------------------------------------------
NUMBER OF VOTES ENTITLED TO BE CAST 1,179.245 1,150 29.245
- ----------------------------------------------------------------------------------------------------
NUMBER OF VOTES REPRESENTED AT MEETING 1,179.245 1,150 29.245
- ----------------------------------------------------------------------------------------------------
SHARES VOTED IN FAVOR 1,179.245 1,150 29.245
- ----------------------------------------------------------------------------------------------------
SHARES VOTED AGAINST 0 0 0
- ----------------------------------------------------------------------------------------------------
</TABLE>
ARTICLE V - MANNER OF ADOPTION AND VOTE OF NONSURVIVING CORPORATION (Must
complete Section 1 or 2)
- --------------------------------------------------------------------------------
[_] Shareholder vote not required.
The merger/share exchange was adopted by the incorporators or board of directors
without shareholder action and shareholder action was not required.
- --------------------------------------------------------------------------------
[X] Vote of shareholders
The designation (i.e., common, preferred or any classification where different
classes of stock exist), number of outstanding shares, number of votes entitled
to be cast by each voting group entitled to vote separately on the merger/share
exchange and the number of votes of each voting group represented at the meeting
is set forth below:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
TOTAL A B C
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DESIGNATION OF EACH VOTING GROUP (i.e. preferred and common)
Common Common
- ----------------------------------------------------------------------------------------------------
NUMBER OF VOTES SHARES OUTSTANDING 100 100
- ----------------------------------------------------------------------------------------------------
NUMBER OF VOTES ENTITLED TO BE CAST 100 100
- ----------------------------------------------------------------------------------------------------
NUMBER OF VOTES REPRESENTED AT MEETING 100 100
- ----------------------------------------------------------------------------------------------------
SHARES VOTED IN FAVOR 100 100
- ----------------------------------------------------------------------------------------------------
SHARES VOTED AGAINST 0 0
- ----------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
In Witness Whereof, the undersigned being the Chief Executive Officer
-------------------------------
of the surviving corporation executes these Articles of Merger/Share Exchange
and verifies, subject to penalties of perjury that the statements contained
herein are true, this 31st day of October , 19 97 .
-------- ----------- ----
Signature Printed Name
/s/ Peter A. Ferro, Jr. Peter A. Ferro, Jr.
<PAGE>
AGREEMENT AND PLAN OF MERGER
OF
NEW EMPRESS HAMMOND, INC.
an Indiana corporation
INTO
EMPRESS CASINO HAMMOND CORPORATION,
an Indiana corporation
AGREEMENT AND PLAN OF MERGER, dated as of the 31st day of October, 1997, by
and between New Empress Hammond, Inc., an Indiana corporation (the "Merging
Corporation") and Empress Casino Hammond Corporation, an Indiana corporation
(referred to herein as ("ECHC" or the "Surviving Corporation"). The Merging
Corporation and the Surviving Corporation are sometimes referred to as the
"Constituent Corporations."
WHEREAS, the Merging Corporation and the Surviving Corporation are
corporations duly organized and existing under the laws of the state of Indiana;
and
WHEREAS, the holdings of each of the shareholders of LMC Leasing, Inc., a
Delaware corporation which is the parent of the Merging Corporation, and ECHC
are identical; and
WHEREAS, the Boards of Directors of the Constituent Corporations deem it
advisable for the general welfare and advantage of the Constituent Corporations
and their stockholders that the Constituent Corporations merge into a single
corporation pursuant to this Agreement and the applicable laws of the State of
Indiana;
NOW, THEREFORE, the parties agree that the Constituent Corporations shall
be merged on the following terms and conditions:
1. The Merger. At the Effective Time (as defined below) of the merger,
the Merging Corporation shall be merged with and into ECHC and the separate
existence of the Merging Corporation shall cease (the "Merger"). Following the
consummation of the Merger, ECHC shall continue its corporate existence as the
wholly-owned subsidiary of LMC Leasing, Ltd., a Delaware corporation. The name
of the Surviving Corporation following the Effective Time shall be "Empress
Casino Hammond Corporation."
2. Effective Time. The parties hereto shall cause the Merger to be
consummated by filing a certificate of merger (the 'Certificate of Merger") with
the Secretary of State of Indiana, in such form as required by, and executed in
accordance with the relevant provisions of, the Indiana Business Corporation Law
(the date and time of the filing of the Certificate of Merger being the
"Effective Time").
<PAGE>
3. Articles of Incorporation and By-Laws.
(a) The Articles of Incorporation of ECHC at the effective time of the
Merger shall be the Articles of Incorporation of the Surviving Corporation until
amended as provided by law.
(b) The By-Laws of ECHC at the effective time of the Merger shall be
the By-Laws of the Surviving Corporation until altered or amended in accordance
with the provisions thereof and Indiana law.
4. Directors and Officers. Subject to applicable law, the initial
directors and officers of the Surviving Corporation immediately after the
Effective Time shall be those persons who are the directors and officers of ECHC
immediately prior to the effective Time, to hold office until their respective
successors are duly elected or appointed and qualified, or their earlier death,
resignation or removal.
5. Terms of Merger.
(a) From and after the effective time of the Merger, the surviving
Corporation shall possess all the rights, privileges, immunities, and franchises
of a public, as well as of a private nature, of each of the Constituent
Corporations; and all property, real, personal and mixed, and all debts due on
whatever account, including subscriptions to shares and all other choses in
action, and all and every other interest, of or belonging to or due to each of
the Constituent Corporations, shall be taken and deemed to be transferred to and
vested in the Surviving Corporation without further act or deed; and the title
to any real estate, or any interest therein, vested in any of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger,
provided, however, that the Surviving Corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of each of the
Constituent Corporations, and any claim existing or action or preceding pending
by or against either of the Constituent Corporations may be prosecuted to
judgment as if the Merger had not taken place, or the Surviving Corporation may
be substituted in its place, and neither the rights of creditors nor any liens
upon the property of either of the constituent Corporations shall be impaired by
the Merger.
(b) As of the effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, (i) each share of Common Stock of
ECHC outstanding immediately prior to the effective Time shall be canceled for
no consideration and be deemed of no further force and effect; (ii) each share
of Non-Voting Common Stock of ECHC outstanding immediately prior to the
effective Time shall be canceled for no consideration be deemed of no further
force and effect; and (iii) each share of Common Stock of the Merging
Corporation outstanding immediately prior to Effective time shall be converted
into one fully paid and nonassessable share of Common Stock of the Surviving
Corporation.
<PAGE>
(c) The Surviving Corporation shall pay all expenses of carrying the
Plan into effect and accomplishing the Merger provided for herein.
(d) The proper officers and directors of the Constituent Corporations
shall execute and deliver all such documents and take all such actions as may be
necessary or advisable, or as may be requested by the Surviving Corporation from
time to time, in order to vest fully all the property rights of the Constituent
Corporations in the Surviving Corporation and otherwise carry out this Plan.
(e) Anything herein or elsewhere to the contrary notwithstanding, this
Plan may be abandoned by the mutual consent of the Constituent Corporations,
evidenced by appropriate resolutions of the respective Board of Directors, at
any time prior to the effective Time of the Merger.
IN WITNESS WHEREOF, each of the Constituent Corporations has caused this
Agreement to be signed by its duly authorized officer on the day and year first
above written.
EMPRESS CASINO HAMMOND CORPORATION
By: /s/ PETER A. FERRO, JR.
------------------------------------
Name: Peter A. Ferro, Jr.
Its: Chief Executive Officer
NEW EMPRESS HAMMOND, INC.
By: /s/ JOSEPH J. CANFORA
------------------------------------
Name: Joseph J. Canfora
Its: President
<PAGE>
- -----------------------------------------------------------------------
[LOGO]
STATE OF INDIANA
Office of the Secretary of State
I hereby certify that this is a true and complete copy of the
fifteen (15) page document(s) as filed in this office.
DATED June 12, 1998
/s/ (signature illegible)
----------------------------------
Secretary of State
BY
-------------------------------
This Certification Stamp replaces
our previous Certification System.
- -----------------------------------------------------------------------
<PAGE>
EXHIBIT 3.4
B Y - L A W S
OF
EMPRESS CASINO HAMMOND CORPORATION
ARTICLE I
---------
OFFICES
-------
SECTION 1. The corporation shall continuously maintain in the State of
Indiana a registered office and a registered agent whose office is identical
with such registered office and may have other offices within or without the
State of Indiana, at such place or places as the board of directors may from
time to time appoint or the business of the corporation may require.
ARTICLE II
----------
MEETINGS OF SHAREHOLDERS
------------------------
SECTION 1. All meetings of the shareholders for the election of directors
shall be held at such place as may be fixed from time to time by the board of
directors, or at such place either within or without the State of Indiana as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting. Meetings of shareholders for any other purpose may be
held at such time and place, within or without the State of Indiana, as shall be
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
If the date of the annual meeting shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At each annual
meeting, the shareholders entitled to vote shall elect a board of directors and
they may transact such other corporate business as shall be stated in the notice
of the meeting.
SECTION 2. Annual meetings of shareholders, commencing with the year 1993,
shall be held on the fourth Wednesday of December or such other day and at such
other time as shall be designated from time to time by the board of directors
and stated in the notice of the meeting, at which they shall elect by a
plurality vote a board of directors and transact such other business as may
properly be brought before the meeting.
SECTION 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
<PAGE>
SECTION 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least five days before every meeting of
shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, showing the ad dress of each
stockholder and the number of shares registered by each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least five days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
SECTION 5. Special meetings of the shareholders for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the chairman of the board, if one is so elected,
or the president and shall be called by the chairman of the board, if one is so
elected, the president or secretary at the request in writing of a majority of
the board of directors, or at the request in writing of shareholders owning at
least 25% of the shares of any class of the capital stock of the corporation
issued and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting.
SECTION 6. Written notice of a special meeting stating the place, date and
hour of the meeting, and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting to each stockholder entitled to vote at such meeting.
SECTION 7. Business transacted at any special meeting of shareholders
shall be limited to the purposes stated in the notice.
SECTION 8. The holders of such number of the shares of issued and
outstanding stock as are entitled to cast a majority of the votes thereat,
present in person or represented by proxy, shall constitute a quorum at all
meetings of the shareholders for the transaction of business except as otherwise
provided by statute or by the articles of incorporation. If, however, such
quorum shall not be present or represented at any meeting of the shareholders,
the shareholders, entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than one
hundred and twenty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
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<PAGE>
SECTION 9. When a quorum is present at any meeting, a majority of the
votes cast by holders of stock having voting power present in person or
represented by proxy shall decide any question (other than election of
directors) brought before such meeting, unless the question is one upon which by
express provision of the statutes or of the articles of incorporation, a
different vote is required in which case such express provision shall govern and
control the decision of such question.
SECTION 10. Each stockholder shall at every meting of the shareholders be
entitled to vote in person or by proxy, but no proxy shall be voted on after
three years from its date, unless the proxy provides for a longer period.
SECTION 11. Unless otherwise provided in the articles of incorporation,
any action required to be taken at any annual or special meeting of shareholders
of the corporation, or any action which may be taken at any annual or special
meeting of such shareholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those shareholders who
have not consented in writing.
SECTION 12. The board of directors, in advance of any shareholders'
meeting, may appoint one or more inspectors to act at the meeting or any
adjournment thereof. If inspectors are not so appointed, the person presiding at
the shareholders' meeting may, and on the request of any stockholder entitled to
vote thereat shall, appoint one or more inspectors. In case any person appointed
fails to appear or act, the vacancy may be filled by appointment made by the
board of directors in advance of the meeting or at the meeting by the persons
presiding thereat. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath to faithfully execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability.
The inspectors shall determine the number of shares outstanding and the
voting power of each, the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all shareholders. On request of the person presiding at
the meeting or any stockholder entitled to vote thereat, the inspectors shall
make a report in writing of any challenge, question or matter determined by them
and execute a certificate of any fact found by them. Any report or certificate
made by them shall be prima facie evidence of the facts stated and of the vote
as certified by them.
3
<PAGE>
ARTICLE III
-----------
DIRECTORS
---------
SECTION 1. The number of directors which shall constitute the whole board
of directors shall be not less than five nor more than eleven. The first board
shall consist of eight directors. Thereafter, within the limits above specified,
the number of directors shall be determined by resolution of the board of
directors or by the shareholders at the annual meeting. The directors shall be
elected at the annual meeting of the shareholders, except as provided in Section
2 of this Article, and each director shall be elected to serve until his
successor is elected and qualified or until his earlier resignation or removal.
Directors need not be shareholders.
SECTION 2. Vacancies and newly created directorships which directorships
are to be filled by the vote of a majority of the directors then in office, or
by a sole remaining director so elected. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
Directors chosen under this section shall hold office until the next annual
meeting of the shareholders of the corporation, and until their successors shall
be elected and qualified.
SECTION 3. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the articles of incorporation or by these by-laws directed or required to be
exercised or done by the shareholders. Without in any way limiting the
generality of the foregoing, the board of directors is specifically granted the
authority to approve the hiring of all salaried employees of the corporation. No
such salaried employee may be hired without such prior approval.
MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------
SECTION 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Indiana.
SECTION 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
shareholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the share holders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special
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meetings of the board of directors, or as shall be specified in a written waiver
signed by all of the directors.
SECTION 6. Regular meetings of the directors may be held without notice at
such time and at such place as shall from time to time be determined by the
board.
SECTION 7. Special meetings of the board may be called by the chairman of
the board, if one is so elected, or the president on three (3) days' notice to
each director, either personally or by mail or by telegram; special meetings
shall be called by the president or secretary in like manner and on like notice
on the written request of two directors unless the board consists of only one
director; in which case special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of the sole
director.
SECTION 8. At all meetings of the board a majority of the whole board
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the articles of incorporation. If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat, may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
SECTION 9. Unless otherwise restricted by the articles of incorporation or
these by-laws any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof, may be taken without a meeting,
if all members of the board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of the
proceedings of the board or committee.
Section 10. Unless otherwise restricted by the articles of incorporation or
these By-Laws, members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of the board of directors,
or any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall con stitute presence in
person at the meeting.
COMMITTEES OF DIRECTORS
-----------------------
SECTION 11. The Board of Directors may, by resolution or resolutions passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee.
5
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In the absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the board
of directors, or in these By-Laws, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the articles of incorpora tion,
adopting an agreement of merger or consolidation, recommending to the
shareholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the shareholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
By-Laws of the corporation; and, unless the resolution, these By-Laws, or the
articles of incorporation expressly so provide, no such committee shall have the
power or authority to declare a dividend or to authorize the issuance of stock.
SECTION 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors.
COMPENSATION OF DIRECTORS
-------------------------
SECTION 13. Unless otherwise restricted by the articles of incorporation
or these by-laws, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, for
attendance at each meeting of the board of directors. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings.
REMOVAL OF DIRECTORS
--------------------
SECTION 14. Unless otherwise restricted by the articles of incorporation
or by law, any director or the entire board of directors may be removed, with or
without cause, by the holders of shares entitled to cast a majority of the votes
for the election of directors. A director elected or appointed by the holders of
a particular class of stock may be removed only by the vote of the holders of a
majority of the shares of such class.
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ARTICLE IV
----------
NOTICES
-------
SECTION 1. Whenever, under the provisions of the statutes or of the
articles of incorporation or of these by-laws, notice is required to be given to
any director or stockholder, it shall not be construed to mean personal notice,
but such notice may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telegram or facsimile.
SECTION 2. Whenever any notice is required to be given under the
provisions of the statutes or of the articles of incorporation or of these by-
laws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
---------
OFFICERS
--------
SECTION 1. The officers of the corporation shall be chosen by the board of
directors and may be a chairman of the board, a president, a vice president, a
secretary and a treasurer. The board of directors may also choose additional
vice presidents, and one or more assistant secretaries and assistant treasurers.
Any number of offices may be held by the same person, unless the articles of
incorporation or these by-laws otherwise provide.
SECTION 2. The board of directors at its first meeting after each annual
meeting of shareholders may choose a chairman of the board, and shall choose a
president, one or more vice presidents, a secretary, a treasurer, one or more
assistant secretaries and one or more assistant treasurers.
SECTION 3. The board of directors may appoint such other officers and
agents as it may deem necessary who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the board.
SECTION 4. The salaries of all officers of the corporation shall be fixed
by the board of directors.
SECTION 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the
board of directors
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<PAGE>
may be removed at any time by the affirmative vote of a majority of the whole
board of directors. Any vacancy occurring in any office of the corporation shall
be filled by the board of directors.
CHAIRMAN OF THE BOARD
---------------------
SECTION 6. The chairman of the board of directors, if a chairman of the
board of directors has been elected and is serving, shall be the chief executive
officer of the corporation and shall in general supervise and control all of the
business and affairs of the corporation. The chairman shall preside at all
meetings of the shareholders and board of directors. He or she may sign, with
the secretary or any other proper officer of the corporation thereunto
authorized, certificates for shares of the corporation, and, when authorized by
the board of directors, any deeds, mortgages, bonds, contracts or other
instruments. The chairman shall perform such other duties as may be prescribed
by the board of directors from time to time.
PRESIDENT
---------
SECTION 7. In the event that a chairman has not been elected, then all of
the duties of the chairman, subject to the restrictions set forth in Section 6
of this Article V with respect to the chairman, shall be performed by the
president. In the event that a chairman has been elected, the president shall be
the chief operating officer of the corporation and shall, subject to direction
by the chairman, in general supervise and control all of the operations of the
corporation. In the absence of the chairman, the president shall preside at all
meetings of the shareholders and of the board of directors. In the absence of
the chairman or in the event of his or her inability or refusal to act, the
president shall perform the duties of the chairman and, when so acting, shall
have all the powers of and be subject to all the restrictions upon the chairman.
The president may sign, with the secretary, an assistant secretary or any other
proper officer of the corporation thereunto duly authorized by the board of
directors, certificates for shares of the corporation, any deeds, mortgages,
bonds, contracts or other instruments which the board of directors has
authorized to be executed except in cases where the execution thereof shall be
expressly delegated by the board of directors or by these by-laws to some other
officer or agent of the corporation or shall be required by law to be otherwise
executed. In general, the president shall perform all duties incident to the
office of president and chief operating officer of the corporation and such
other duties as may be prescribed from time to time by the board of directors or
the chairman, if one is so elected.
VICE PRESIDENTS
---------------
SECTION 8. In the absence of the president or in the event of his or her
inability or refusal to act, the vice president (or in the event there be more
than one vice president, the vice presidents in the order designated, or in the
absence of any designa-
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tion, then in the order of their election) shall perform the duties of the
president, including, without limitation, the duties of the chairman if and as
assumed by the president as a result of the absence of the chairman or his or
her inability or refusal to act, and the vice president, when so acting, shall
have all of the powers and be subject to all the restrictions upon the
president. Any vice president may sign, with the secretary or an assistant
secretary, certificates for shares of the corporation. Each vice president shall
perform such other duties as from time to time may be assigned to him or her by
the chairman, the president or the board of directors.
TREASURER
---------
SECTION 9. If required by the board of directors, the treasurer shall
give a bond for the faithful discharge of his or her duties in such sum and with
such surety or sureties as the board of directors shall determine. He or she
shall have charge and custody of and be responsible for all funds and securities
of the corporation, receive and give receipts for moneys due and payable to the
corporation from any source whatsoever, and deposit all such moneys in the name
of the corporation in such banks, trust companies or other depositories as shall
be selected in accordance with the provisions of these by-laws. The treasurer
shall in general perform all the duties incident to the office of treasurer and
such other duties as from time to time may be assigned to him or her by the
chairman, the president or the board of directors.
SECRETARY
---------
SECTION 10. The secretary shall: (a) keep records of corporate action,
including the minutes of meetings of the shareholders and the board of directors
in one or more books provided for that purpose; (b) see that all notices are
duly given in accordance with the provisions of these by-laws or as required by
law; (c) be custodian of the corporate records and of the seal of the
corporation and see that the seal of the corporation is affixed to all
certificates for shares prior to the issuance thereof and to all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized in accordance with the provisions of these by-laws; (d) keep a
register of the post office address of each stockholder which shall be furnished
to the secretary by such stockholder; (e) sign, with the chairman, the president
or a vice president, certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the board of directors; (f)
have general charge of the stock transfer books of the corporation; and (g) in
general, perform all duties incident to the office of secretary and such other
duties as from time to time may be assigned to him or her by the chairman, the
president or the board of directors.
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<PAGE>
ASSISTANT TREASURERS AND
ASSISTANT SECRETARIES
---------------------
SECTION 11. The assistant treasurers shall, if required by the board of
directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the board of directors shall determine. The assistant
secretaries as thereunto authorized by the board of directors may sign, with the
chairman, the president or a vice president, certificates for shares of the
corporation, the issuance of which shall have been authorized by a resolution of
the board of directors. The assistant treasurers and assistant secretaries in
general shall perform such duties as shall be assigned to them by the treasurer
or the secretary, respectively, or by the president, the chairman of the board
or the board of directors.
SALARIES
--------
SECTION 12. The salaries of the officers of the corporation shall be fixed
from time to time by the board of directors and no officer shall be prevented
from receiving such salary by reason of the fact that he or she is also a
director of the corporation.
ARTICLE VI
----------
CERTIFICATE FOR SHARES
----------------------
SECTION 1. Every holder of shares in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman of the board, if one is so elected, or the president or a vice
president, and the treasurer or an assistant treasurer, or the secretary or an
assistant secretary, of the corporation, certifying the number of shares owned
by him in the corporation.
Certificates may be issued for partly paid shares and in such case upon the
face or back of the certificates issued to represent any such partly paid
shares, the total amount of the consideration to be paid therefor, and the
amount paid thereon shall be specified.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock; provided that, except as
otherwise provided in section 202 of the General Corporation Law of Indiana, in
lieu of the foregoing requirements there may be set forth on the face or back of
the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so request the
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powers, designations, preferences and relative, participating, optional or other
special rights of each class or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
SECTION 2. Any of or all the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued be the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
-----------------
SECTION 3. The board of directors may direct a new certificate or
certificates to be issued in the place of any certificate or certificates
theretofore issued by the corporation, alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as condition precedent to the issuance thereof, require the owner
of such lost, stolen or destroyed certificate or certificates, or his legal
representatives, to advertise the same in such manner as it shall require and/or
to give the corporation a bond, in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
-----------------
SECTION 4. Upon surrender to the corporation or the transfer agent of the
corpora tion of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its book;
provided, however, that such duty shall be subject to Federal and state
securities and other applicable laws, the articles of incorporation, and any
legends and stop transfer instructions with respect to such old certificate.
FIXING RECORD DATE
------------------
SECTION 5. In order that the corporation may determine the shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determi-
11
<PAGE>
nation of shareholders of record entitled to notice of or to vote at a meeting
of shareholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED SHAREHOLDERS
-----------------------
SECTION 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Indiana.
ARTICLE VII
-----------
GENERAL PROVISIONS
------------------
DIVIDENDS
---------
SECTION 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the articles of incorporation, if any, may be declared by the
board of directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital stock, subject to
the provisions of the articles of incorporation.
SECTION 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
----------------
SECTION 3. The board of directors shall present at each annual meeting,
and at any special meeting of the shareholders when called for by vote of the
shareholders, a full and clear statement of the business and condition of the
corporation.
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CHECKS
------
SECTION 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers, person or persons as the board of
directors may from time to time designate.
FISCAL YEAR
-----------
SECTION 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
----
SECTION 6. The corporate seal shall have inscribed thereon the name of the
corpora tion and the words "CORPORATE SEAL Indiana". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
INDEMNIFICATION
---------------
SECTION 7. (a) Indemnification of Officers, Directors, Employees and
-----------------------------------------------------
Agents; insurance. Any person who was or is a party or is threatened to made a
- -----------------
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprises,
shall be indemnified by the corporation against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction of upon a plea of nolo contendere or its equivalent shall not, of
---- ----------
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses
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(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery of Indiana, or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) hereof, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification pursuant to paragraphs (a) and (b) of this Section
7 (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in the first two paragraphs
of this Section 7. Such determination shall be made by the Board of Directors by
a majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or if such a quorum is not obtainable (or, even if
obtainable a quorum of disinterested directors so directs) by independent legal
counsel in written opinion, or by the shareholders.
(e) Expenses (including attorney's fees) incurred by a director, officer,
employee or agent of the corporation in defending a civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Section 7.
(f) The indemnification and advancement of expenses provided by this
Section 7 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any By-
Law, agreement, vote of shareholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall, unless otherwise provided when authorized
or ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
14
<PAGE>
(g) The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provision of this Section 7.
(h) For the purpose of this Section 7, all words and phrases used herein
shall have the meanings ascribed to them under Chapter 37 of the Business
Corporation Law of the State of Indiana.
ARTICLE VIII
------------
AMENDMENTS
----------
SECTION 1. These by-laws may be altered, amended or repealed or new By-
Laws may be adopted by the shareholders or by the board of directors, when such
power is conferred upon the board of directors by the articles of incorporation,
at any regular meeting of the shareholders or of the board of director or at any
special meeting of the shareholders or board of directors if notice of the such
alteration, amendment, repeal or adoption of new by-laws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal by-laws
is conferred upon the board of directors by the articles of incorporation, it
shall not divest or limit the power of the shareholders to adopt, amend or
repeal by-laws.
15
<PAGE>
EMPRESS CASINO HAMMOND CORPORATION
ADDENDUM TO BY-LAWS
By-Law amendments adopted: June 17, 1996
CHIEF EXECUTIVE OFFICER
SECTION 13. Subject to the direction and control of the board of
directors, the chief executive officer shall have charge of the over all
business, affairs and policies of the corpora tion; he shall see that the
resolutions and directions of the board of directors are carried into effect
except in those instances in which that responsibility is specifically assigned
to some other person by the board of directors from time to time. The Chief
Executive Officer may sign, with the secretary or any assistant secretary or any
other officer of the corporation thereunto duly authorized by the board of
directors, certificates for shares of the corporation, any deeds, mortgages,
bonds, contracts or other instruments which the board of directors has
authorized to be executed except in cases where the execution thereof shall be
expressly delegated by the board of directors or by these by-laws to some other
officer or agent of the corporation or shall be required by law to be otherwise
executed. In general, the chief executive officer shall perform all duties
incident to the office of chief executive officer of the corporation and such
other duties as may be prescribed from time to time by the board of directors.
In the absence of the chair man, or in the event of the chairman's inability to
act, the chief executive officer shall preside at all meetings of the
shareholders and of the board of directors.
CHIEF OPERATING OFFICER
SECTION 14. The chief operating officer of the corporation shall be the
principal operating officer of the corporation and, subject to the control of
the board of directors and the president of the corporation, shall have general
and active management of the day-to-day business of the corporation. He shall
ensure that the businesses of the corporation are managed in a cohesive,
consistent and complementary manner and shall assist in the identification,
building and integration into the corporation of new business opportunities to
ensure the continued growth and development of the corporation. In the absence
of the chief executive officer and the president, the chief operating officer
shall perform the duties of and shall be vested with all the powers of the chief
executive officer and the president. The chief operating officer may sign, with
the secretary, an assistant secretary or any other officer of the corporation
thereunto duly authorized by the board of directors, any deeds, mortgages,
bonds, contracts or other instruments which the board of directors has
authorized to be executed except in cases where the execution thereof shall be
expressly delegated by the board of directors or by these by-laws to some other
officer or agent of the corporation or shall be required by law to be otherwise
executed.
<PAGE>
CHIEF FINANCIAL OFFICER
SECTION 15. The chief financial officer of the corporation shall be the
treasurer of the corporation and shall have overall responsibility for the
management and protection of the assets of the corporation. He shall direct the
timely preparation, interpretation and dissemination of financial information
for the corporation, shall establish and maintain internal controls required to
safeguard the assets and integrity of the corporation, and shall see to timely
responses to internal and external audit recommendations. The chief financial
officer shall have overall charge and custody of and be responsible for all
funds and securities of the corporation and for the receipt and disbursement
thereof. He shall supervise the chief accounting officer of the corpora tion. If
required by the board of directors, the chief financial officer shall give a
bond for the faithful discharge of his duties in such sum and with such surety
or sureties as the board of directors shall determine.
CHIEF LEGAL OFFICER
SECTION 16. The chief legal officer, subject to the control of the chief
executive officer and the president of the corporation, shall supervise and
control the legal matters of the corpora tion. He shall be a licensed attorney
in good standing and shall be responsible for providing and coordinating expert
legal advise in connection with the laws and regulations governing the business
of the corporation. He shall be the general supervisor of all employees of the
corpora tion who deal with legal matters.
<PAGE>
EXHIBIT 3.5
File Number 5622 192 1
----------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[PICTURE]
Whereas, ARTICLES OF INCORPORATION OF
DES PLAINES RIVER ENTERTAINMENT CORP.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefor. I, Jim Edgar, Secretary of State of the State of Illinois by
virtue of the powers vested in me by law do hereby issue this certificate and
attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I thereto set my hand and cause to be affixed the
Great Seal of the State of Illinois at the City of Springfield this 26th day of
DECEMBER A.D. 1990 and of the Independence of the United States the two hundred
and 15th.
/s/ Jim Edgar
-------------------------------
SECRETARY OF STATE
<PAGE>
B.C.A. 2.10 (Rev. Jul 1984) File #
- -------------------------------- --------------------------------
Statement Deposit This Space For Use By
Secretary of State
Payment trust made by Certified Date 12-26-90
Check, Cashier's Check, Illinois License Fee $ .50
Attorney's Check, Illinois Franchise Tax $ 25.00
C.P.A.'s Check or Money order Filing Fee $ 75.00
payable to "Secretary of State" Clerk $100.50
- -------------------------------- --------------------------------
JIM EDGAR
Secretary of State
State of Illinois
ARTICLES OF INCORPORATION
Pursuant to the provisions of "The Business Corporation Act of 1983", the
undersigned incorporator(s) hereby adopt the following Articles of
Incorporation.
<TABLE>
<S> <C>
ARTICLE ONE The name of the corporation is Des Plaines River Entertainment Corp.
-------------------------------------------------------------
Shall contain the work "corporation", "company" "incorporated
---------------------------------------------------------------------------------------------
Limited or an abbreviation thereof
ARTICLE TWO The name and address of the initial registered agent and its registered office are:
Registered Agent Benjamin Beiler
----------------------------------------------------------------------------
First Name Middle Name Last Name
Registered Office One IBM Plaza
----------------------------------------------------------------------------
Number Street
Chicago 60611 Cook
----------------------------------------------------------------------------
City Zip Code County
ARTICLE THREE The purpose or purposes for which the corporation is organized are:
If not sufficient space to cover this point, add one or more sheets of this size
</TABLE>
To engage in any lawful act or activity for which corporations
may be organized under the Illinois Business Corporation act.
ARTICLE FOUR Paragraph 1: The authorized shares shall be:
<TABLE>
<CAPTION>
<S> <C> <C>
Class Par Value per share Number of shares authorized
---------------------------------------------------------------------------------------------------------------------
Common NPV 1,000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Paragraph 2: The preferences, qualifications, limitations, restrictions and the special or relative rights in respect of
the shares of each class are:
If not sufficient space to cover this point, add one or more sheets of this size
</TABLE>
ARTICLE FIVE The number of shares to be issued initially, and the
consideration to be received by the corporation therefore, are:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
*Par Value Number of shares Consideration to be
Class per share proposed to be issued received therefor
---------------------------------------------------------------------------------------------------------------------
Common NPV 100 $ 100.00
---------------------------------------------------------------------------------------------------------------------
$
---------------------------------------------------------------------------------------------------------------------
$
---------------------------------------------------------------------------------------------------------------------
$
---------------------------------------------------------------------------------------------------------------------
TOTAL $ 100.00
---------------------
</TABLE>
* A declaration as to a "par value" is optional. This space may be marked "n/a"
when no reference to a par value is
<PAGE>
ARTICLE SIX OPTIONAL
The number of directors constituting the initial board of
directors of the corporation is _______ and the names and
addresses of the persons who are to serve as directors until the
first annual meeting of shareholders or until their successors be
elected and qualify are:
<TABLE>
<CAPTION>
<S> <C>
Name Residential Address
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
ARTICLE SEVEN Optional
(a) It is estimated that the value of all property to be owned by the corporation $_____
for the following year wherever located will be:
(b) It is estimated that the value of the property to be located within the State of $_____
Illinois during the following year will be:
(c) It is estimated that the gross amount of business which will be transacted by the $_____
corporation during the following year will be:
(d) It is estimated that the gross amount of business which will be transacted from $_____
places of business in the State of Illinois during the following year will be:
</TABLE>
ARTICLE EIGHT OTHER PROVISIONS
Attach a separate sheet of this size for any other provision to
be included in the Articles of Incorporation, e.g., authorizing
preemptive rights; denying cumulative voting; regulating internal
affairs; voting majority requirements; fixing a duration other
than perpetual; etc.
NAMES & ADDRESS OF INCORPORATORS
The undersigned incorporator(s) hereby declare(s), under penalties of
perjury, that the statements made in the foregoing Article of Incorporation are
true.
Dated: December 21, 1990
---------------------
Signatures and Names Post office Address
1. /s/ Nancy L. Nelson 1. One IBM Plaza
----------------------------- -----------------------------
Signatures Street
Nancy L. Nelson Chicago, IL 60611
----------------------------- -----------------------------
Name (please print) City, Town State Zip
2. 2.
----------------------------- -----------------------------
Signatures Street
----------------------------- -----------------------------
Name (please print) City, Town State Zip
3. 3.
----------------------------- -----------------------------
Signatures Street
----------------------------- -----------------------------
Name (please print) City, Town State Zip
(Signature must be in ink on original document Carbon copy, ??? or rubber stamp
signature may only be conformed copies)
Note: If a corporation acts as incorporator, the name of the corporation and
the state of incorporation shall be shown and the execution shall be by its
President of Vice President and verified by him, and attested by its Secretary
or an Assistant Secretary.
Form BCA - 2.10
File No. _____________________
================================================================================
ARTICLES OF INCORPORATION
FEE SCHEDULE
* The initial license fee for a domestic corporation is computed at the
rate of 1/20th of 1 percent (.50 per $1,000) of the amount of stated
capital and paid-in surplus, with a minimum of .50.
* The initial franchise tax is assessed at the rate of 1/10th of 1 percent
($1.00 per $1,000) on the stated capital and paid-in surplus represented in
this state, with a minimum of $25.00 and a maximum of $1,000.000.
* The Filing fee is $75.00
The minimum total fees due fee (licence fee (plus) franchise tax (plus) filing
fee) where all the property and business is in Illinois, or where the
corporation elects to pay on that basis is $100.50. If you would like the fees
computed for you, please call the Department of Business Services in
Springfield.
RETURN TO:
Department of Business Services
Corporation Division
Secretary of State
Springfield, Illinois 62756
Telephone (217) 782-6961
================================================================================
<PAGE>
Exhibit 3.5
File Number 5622 192 1
----------
STATE OF ILLINOIS
OFFICE OF
THE SECRETARY OF STATE
[PICTURE]
Whereas, ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF
DES PLAINES RIVER ENTERTAINMENT CORP.
INCORPORATED UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE
OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF
ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefor, I, George H, Ryan, Secretary of State of the State of Illinois by
virtue of the powers vested in me by law do hereby issue this certificate and
attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois at the City of Springfield this 6th day of
FEBRUARY A.D. 1991 and of the Independence of the United States the two hundred
and 15th.
[SEAL] /s/ George H. Ryan
-------------------------------
SECRETARY OF STATE
<PAGE>
Form BCA-10.30 File # 5622-1921-1
- --------------------------------------------------------------------------------
George H. Ryan SUBMIT IN DUPLICATE
Secretary of State ----------------------
Department of Business Services This space for use by
Springfield, IL 62756 Secretary of State
Telephone (217) 782-6961
Date 2-6-91
Remit payment in check or money Franchise Tax $
order, payable to "Secretary of State" Filing Fee $
Penalty $ 25
Approved:
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
1. CORPORATE NAME: Des Plaines River Entertainment Corp.
-------------------------------------------------------------
(Note 1)
2. MANNER OF ADOPTION:
The following amendment of the Articles of Incorporation was adopted
on February 5, 1991 in the manner indicated below. ("X" one box only).
[X] By a majority of the incorporators, provided no directors were named
in the articles of incorporation and no directors have been elected:
or by a majority of the board of directors, in accordance with Section
10.10, the corporation having issued no shares as of the time of
adoption of this amendment;
(Note 2)
[_] By a majority of the board of directors, in accordance with Section
10.15 shares having been issued by shareholder action not being
required for the adoption of the amendment;
(Note 3)
[_] By the shareholders, in accordance with Section 10.20, a resolution of
the board of directors having been duly adopted and submitted to the
shareholders. At a meeting of shareholders, not less than the minimum
number of votes required by statute and by the articles of
incorporation were voted in favor of the amendment;
(Note 4)
[_] By the shareholders, in accordance with Sections 10 20 and 7.10 a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. A Consent in writing has been signed by
Shareholders having not less than the minimum number of votes required
by statute and by the articles of incorporation. Shareholders who have
not consented in writing have been given notice in accordance with
Section 7.10;
(Note 4)
[_] By the shareholders, in accordance with Sections 10.20 and 7.10 a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. A consent a in writing has been signed
by all the shareholders entitled to vote on this amendment.
(Note 4)
(INSERT AMENDMENT)
(Any article being amended is required to be set forth in its entirety.)
(Suggested language for an amendment to change the corporate name is RESOLVED,
that the Articles of Incorporation be amended to read as follows:) Resolved,
that the Articles of Incorporation be amended to read as follows: Article One:
The name of the corporation is Des Plaines River Entertainment Corporation.
- --------------------------------------------------------------------------------
(NEW NAME)
All changes other than name include on page 2
<PAGE>
Resolution
<PAGE>
3. The manner in which any exchange, reclassification or cancellation of
issued shares, or a reduction of the number of authorized shares of any
class below the number of issued shares of that class, provided for or
effected by this amendment, is as follows: ( If not applicable, insert "No
change")
4. (a) The manner in which said amendment effects a change in the amount of
paid-in capital (Paid-in capital replaces the terms Stated Capital and
Paid-in Surplus and is equal to the total of these accounts) is as follows:
(If not applicable, insert "No change")
(b) The amount of paid-in capital (Paid-in Capital replaces the terms
Stated Capital and Paid-in Surplus and is equal to the total of these
accounts) as changed by this amendment is as follows" (If not applicable,
insert "No change")
Before Amendment After Amendment
Paid-in Capital $_______________ $______________
(Complete either Item 5 or 6 below)
5. The undersigned corporation has caused this statement to be signed by its
duly authorized officers, each of whom affirms, under penalties of perjury,
that the facts stated herein are true.
<TABLE>
<S> <C>
Dated __________________________, 19___ __________________________________________________
(Exact Name of Corporation)
attested by________________________________________________ by_______________________________________________
(Signature of Secretary or Assistant Secretary) (Signature of President or Vice President)
_________________________________________________ ________________________________________________
(Type or Print Name and Title) (Type or Print Name and Title)
</TABLE>
6. If amendment is authorized by the incorporators, the incorporators must
sign below.
OR
If amendment is authorized by the directors and there are no officers, then
a majority of the directors or such directors as may be designated by the
board, must sign below.
The undersigned affirms, under the penalties of perjury, that the facts
stated herein are true.
Dated: February 5, 1991
-----------------
/s/ Nancy L. Nelson
- --------------------------------------------------------------------------------
Nancy L. Nelson
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
NOTES and INSTRUCTIONS
NOTE 1: State the true exact corporate name as it appears on the records of
the office of the Secretary of State. BEFORE any amendments herein
reported.
NOTE 2: Incorporators are permitted to adopt amendments ONLY before any shares
have been issued and before any directors have been named or elected.
((S) 10.10)
NOTE 3. Directors may adopt amendments without shareholder approval in only
six instances, as follows:
(a) to remove the names and addresses of directors named in the
articles of incorporation;
(b) to remove the name and address of the initial registered agent and
registered office , provided a statement pursuant to (S) 5.10
is also filed;
(c) to split the issued whole shares and unissued authorized shares by
multiplying them by a whole number, so long as no class or series
is adversely affected thereby;
(d) to change the corporate name by substituting the word
"corporation" "incorporated" "company", "limited", or the
abbreviation "corp", "inc.", "co.", or "ltd." for a similar word
or abbreviation in the name, or by adding a geographical
attribution to the name;
(e) to reduce the authorized shares of any class pursuant to a
cancellation statement filed in accordance with (S) 9.05
(f) to restate the articles of incorporation as currently amended.
((S) 10.15)
NOTE 4. All amendments not adopted under (S) 10.10 or (S) 10.15 require (1)
that the board of directors adopt a resolution setting forth the
proposed amendment and (2) that the shareholders approve the
amendment.
Shareholder approval may be (1) by vote at a shareholders' meeting
(either annual or special) or (2) by consent in writing, without a
meeting.
To be adopted, the amendment must receive the affirmative vote or
consent of the holders of at least 2/3 of the outstanding shares
entitled to vote on the amendment (but if class voting applies, then
also at least a 2/3 vote within each class is required).
The articles of incorporation may supersede the 2/3 vote requirement
by specifying any smaller or larger vote requirement not less than a
majority of the outstanding shares entitled to vote and not less than
a majority within each class when class voting applies.
((S)10.20)
NOTE 5. When shareholder approval is by consent, all shareholder must be given
notice of the proposed amendment at least 5 days before the consent is
signed. If the amendment is adopted, shareholders who have not signed
the consent must be promptly notified of the passage of the amendment.
((S)7.10 & 10.20)
<PAGE>
File Number 5622-192-1
State of Illinois
Office of
The Secretary of State
[INSERT ART]
Whereas,
ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF
DES PLAINES RIVER ENTERTAINMENT CORPORATION INCORPORATED UNDER THE LAWS OF THE
STATE OF ILLINOIS HAVE BEEN FILED IN THE OFFICE OF THE SECRETARY OF STATE AS
PROVIDED BY THE BUSINESS CORPORATION ACT OF ILLINOIS, IN FORCE JULY 1, A.D.
1984.
Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois,
by virtue of the powers invested in me by law, do hereby issue this certificate
and attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the city of Springfield, this
28th day of February A.D. 1996 and of the Independence of the United
States the two hundred and 16th.
[INSERT SEAL OF
THE STATE OF
ILLINOIS]
/s/ George H. Ryan
Secretary of State
<PAGE>
Form BCA-10.30 ARTICLES OF AMENDMENT
(Rev. Jan 1991) File # 5622-192-1
- --------------------------------------------------------------------------------
George H. Ryan FEB 28 1992 SUBMIT IN DUPLICATE
Secretary of State -------------------------
Department of Business Services GEORGE H. RYAN This space for use by
Springfield, IL 62756 SECRETARY OF STATE Secretary of State
Telephone (217) 782-5961 PAID
- --------------------------------- Date 2-28-92
Remit payment in check or money Franchise Tax $
order, payable to "Secretary of State Filing Fee $25
Penalty $
Approved: MJ
- --------------------------------------------------------------------------------
MAR 5 1992
1. CORPORATE NAME: Des Plaines River Entertainment Corporation
------------------------------------------------------------
(Note 1)
2. MANNER OF ADOPTION:
The following amendment of the Articles of Incorporation was adopted
on January 8, 1992 in the manner indicated below ("X" one box only)
[_] By a majority of the incorporators, provided no directors were named in
the articles of incorporation and no directors have been elected: or by
a majority of the board of directors, in accordance with Section 10.10
the corporation having issued no shares as of the time of adoption of
this amendment;
(Note 2)
[_] By a majority of the board of directors in accordance with Section
10.15 shares having been issued by shareholder action not being
required for the adoption of the amendment:
(Note 3)
[X] By the shareholders, in accordance with Section 10.20, a resolution of
the board of directors having been duly adopted and submitted to the
shareholders. At a meeting of shareholders, not less than the minimum
number of votes required by statute and by the articles of
incorporation were voted in favor of the amendment:
(Note 4)
[_] By the shareholders in accordance with Sections 10.20 and 7.10 a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. A consent in writing has been signed by
shareholders having not less than the minimum number of votes required
by a statute and by the articles of incorporation. Shareholders who
have not consented in writing have been given notice in accordance with
Section 7.10.
(Note 4)
[_] By the shareholders in accordance with Sections 10.20 and 7.10 a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. A consent in writing has been signed by
all the shareholders entitled to vote on this amendment.
(Note 4)
(INSERT AMENDMENT)
(Any article being amended is required to be set forth in its entirety.)
(Suggested language for an amendment to change the corporate name is RESOLVED.
that the Articles of Incorporation be amended to read as follows:) Resolved,
that the Articles of Incorporation be amended to read as follows: "ARTICLE ONE:
The name of the Corporation is Empress River Casino Corporation.
________________________________________________________________________________
(NEW NAME)
All changes other than name, include on page 2
(over)
<PAGE>
Resolution
<PAGE>
3. The manner in which any exchange, reclassification or cancellation of
issued shares or a reduction of the number of authorized shares of any
class below the number of issued shares of the class, provided for the
effected by this amendment, is as follows: if not applicable, insert "No
change")
4. (a) The manner in which said amendment effects a change in the amount of
paid-in capital (Paid-in capital replaces the terms Stated Capital and
Paid-in Surplus and is equal to the total of these accounts) is as follows:
(If not applicable, insert "No change")
(b) The amount of paid-in capital (Paid-in Capital replaces the terms
Stated Capital and Paid-in Surplus and is equal to the total of these
accounts) as changed by this amendment is as follows" (If not applicable,
insert "No change")
Before Amendment After Amendment
Paid-in Capital $_______________ $______________
(Complete either Item 5 or 6 below)
5. The undersigned corporation has caused this statement to be signed by its
duly authorized officers, each of whom affirms, under penalties of perjury,
that the facts stated herein are true.
Dated: February 12, 1992 Des Plaines River Entertainment
Corporation
(Exact Name of Corporation)
attested by /s/ Peter A. Ferro, Jr. By /s/ William Sabo
-------------------------- -------------------------
(Signature of Secretary or (Signature of President
Assistant Secretary) or Vice President)
6. If amendment is authorized by the incorporators, the incorporators must
sign below.
OR
If amendment is authorized by the directors and there are no officers, then
a majority of the directors or such directors as may be designated by the
board, must sign below.
The undersigned affirms, under the penalties of perjury, that the facts
stated herein are true.
Dated _______________________, 19____
_____________________________________ ___________________________________
_____________________________________ ___________________________________
_____________________________________ ___________________________________
_____________________________________ ___________________________________
<PAGE>
NOTES and INSTRUCTIONS
NOTE 1: State the true exact corporate name as it appears on the records of the
office of the Secretary of State BEFORE any amendments herein reported.
NOTE 2: Incorporators are permitted to adopt amendments ONLY before any shares
have been issued and before any directors have been named or elected.
(Section 10.10)
NOTE 3: Directors may adopt amendments without shareholder approval in only
six instances, as follows:
(a) to remove the names and addresses of directors named in the
articles of incorporation;
(b) to remove the name and address of the initial registered agent and
registered office, provided a statement pursuant to Section 5.10 is
also filed;
(c) to split the issued whole shares and unissued authorized shares by
multiplying them by a whole number, so long as no class or series
is adversely affected thereby;
(d) to change the corporate name by substituting the word "corporation"
"incorporated" "company", "limited", or the abbreviation "corp",
"inc.", "co.", or "ltd." for a similar word or abbreviation in the
name, or by adding a geographical attribution to the name;
(e) to reduce the authorized shares of any class pursuant to a
cancellation statement filed in accordance with Section 9.05
(f) to restate the articles of incorporation as currently amended.
(Section 10.15)
NOTE 4: All amendments not adopted under Section 10.10 or Section 10.15
require (1) that the board of directors adopt a resolution setting
forth the proposed amendment and (2) that the shareholders approve the
amendment.
Shareholder approval may be (1) by vote at a shareholders' meeting
(either annual or special) or (2) by consent in writing, without a
meeting.
To be adopted, the amendment must receive the affirmative vote or
consent of the holders of at least 2/3 of the outstanding shares
entitled to vote on the amendment (but if class voting applies, then
also at least a 2/3 vote within each class is required).
The articles of incorporation may supersede the 2/3 vote requirement
by specifying any smaller or larger vote requirement not less than a
majority of the outstanding shares entitled to vote and not less than
a majority within each class when class voting applies.
(Section 10.20)
NOTE 5: When shareholder approval is by consent, all shareholder must be given
notice of the proposed amendment at least 5 days before the consent is
signed. If the amendment is adopted, shareholders who have not signed
the consent must be promptly notified of the passage of the amendment.
(Sections 7.10 & 10.20)
<PAGE>
File Number 5622-192-1
State of Illinois
Office of
The Secretary of State
[LOGO]
Whereas, ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF
EMPRESS RIVER CASINO CORPORATION INCORPORATED UNDER THE LAWS OF THE STATE OF
ILLINOIS HAVE BEEN FILED IN THE OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY
THE BUSINESS CORPORATION ACT OF ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois,
by virtue of the powers vested in me by law, do hereby issue this certificate
and attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the City of Springfield, this
29th day of June A.D. 1992 and of the Independence of the United
States the two hundred and 16th.
[LOGO]
/s/ George H. Ryan
------------------
SECRETARY OF STATE
<PAGE>
Form BCA-10.30 ARTICLES OF AMENDMENT
(Rev. Jan. 1991) File # 5622-192-1
- --------------------------------------------------------------------------------
George H. Ryan
Secretary of State SUBMIT IN DUPLICATE
Department of Business Services
Springfield, IL 62756 --------------------
Telephone (217) 782-6961 This space for use by
- --------------------------------- Secretary of State
Remit payment in check or money Date 6-29-92
order, payable "Secretary of State"
Franchise Tax $
Filing Fee $25.00
Penalty $
Approved: /s/ MJ
- --------------------------------------------------------------------------------
1. CORPORATE NAME: Empress River Casino Corporation
---------------------------------------------------------------------------
(Note 1)
2. MANNER OF ADOPTION:
The following amendment of the Articles of Incorporation was adopted
on June 9, 1992 in the manner indicated below. ("X" one box only)
[_] By a majority of the incorporators, provided no directors were named
in the articles of incorporation and no directors have been elected;
or by a majority of the board of directors, in accordance with Section
10.10, the corporation having issued no shares as of the time of
adoption of this amendment;
(Note 2)
[_] By a majority of the board of directors, in accordance with Section
10.15, shares having been issued by shareholder action not being
required for the adoption of the amendment;
(Note 3)
[X] By the shareholders, in accordance with Section 10.20, a resolution of
the board of directors having been duly adopted and submitted to the
shareholders. At a meeting of shareholders, not less than the minimum
number of votes required by statute and by the articles of
incorporation were voted in favor of the amendment;
(Note 4)
[_] By the shareholders, in accordance with Sections 10.20 and 7.10, a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. A consent in writing has been signed by
shareholders having not less than the minimum number of votes required
by statute and by the articles of incorporation. Shareholders who
have not consented in writing have been given notice in accordance
with Section 7.10;
(Note 4)
[_] By the shareholders, in accordance with Sections 10.20 and 7.10, a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. A consent in writing has been signed by
all the shareholders entitled to vote on this amendment.
(Note 4)
(INSERT AMENDMENT)
(Any article being amended is required to be set forth in its entirety.)
(Suggested language for an amendment to change the corporate name is RESOLVED,
that the Articles of Incorporation be amended to read as follows:)
- --------------------------------------------------------------------------------
(NEW NAME)
RESOLVED, that the Articles of Incorporation be amended to read as follows:
"Article Four Paragraph 1: The authorized shares shall be:
Common NPV 2,000"
All changes other than name, include on page 2
<PAGE>
3. The manner in which any exchange, reclassification or cancellation of
issued shares, or a reduction of the number of authorized shares of any
class below the number of issued shares of that class, provided for or
effected by this amendment, is as follows: (If not applicable, insert "No
change")
No change
4. (a) The manner in which said amendment effects a change in the amount of
paid-in capital (Paid-in capital replaces the terms Stated Capital and
Paid-in Surplus and is equal to the total of these accounts) is as follows:
(If not applicable, insert "No change")
No change
(b) The amount of paid-in capital (Paid-in Capital replaces the terms
Stated Capital and Paid-in Surplus and is equal to the total of these
accounts) as changed by this amendment is as follows: (If not applicable,
insert "No change")
No change
Before Amendment After Amendment
Paid-in Capital $_______________ $______________
(Complete either Item 5 or 6 below)
5. The undersigned corporation has caused this statement to be signed by its
duly authorized officers, each of whom affirms, under penalties of perjury,
that the facts stated herein are true.
<TABLE>
<CAPTION>
<S> <C>
Dated: June 9 , 1992 Empress River Casino Corporation
-------------------------------------------- ----- --------------------------------------------
(Exact Name of Corporation)
attested by /s/ Peter A. Ferro, Jr. By /s/ William J. Sabo
----------------------------------------------- ------------------------------------------
(Signature of Secretary or Assistant Secretary) (Signature of President or Vice President)
Peter A. Ferro, Jr., Secretary William Sabo, President
----------------------------------------------- --------------------------------------------
(Type or Print Name and Title) (Type or Print Name and Title)
</TABLE>
6. If amendment is authorized by the incorporators, the incorporators must
sign below.
OR
If amendment is authorized by the directors and there are no officers, then
a majority of the directors or such directors as may be designated by the
board, must sign below.
The undersigned affirms, under the penalties of perjury, that the facts
stated herein are true.
Dated , 19
--------------------------- ----
---------------------------------------- ---------------------------------
---------------------------------------- ---------------------------------
---------------------------------------- ---------------------------------
---------------------------------------- ---------------------------------
<PAGE>
NOTES and INSTRUCTIONS
NOTE 1: State the true exact corporate name as it appears on the records of the
office of the Secretary of State, BEFORE any amendments herein
reported.
NOTE 2: Incorporators are permitted to adopt amendments ONLY before any shares
have been issued and before any directors have been named or elected.
((S) 10.10)
NOTE 3: Directors may adopt amendments without shareholder approval in only six
instances, as follows:
(a) to remove the names and addresses of directors named in the
articles of incorporation;
(b) to remove the name and address of the initial registered agent
and registered office, provided a statement pursuant to (S) 5.10
is also filed;
(c) to split the issued whole shares and unissued authorized shares
by multiplying them by a whole number, so long as no class or
series is adversely affected thereby;
(d) to change the corporate name by substituting the word
"corporation", "incorporated", "company", "limited", or the
abbreviation "corp.", "inc.", "co.", or "ltd." for a similar word
or abbreviation in the name, or by adding a geographical
attribution to the name;
(e) to reduce the authorized shares of any class pursuant to a
cancellation statement filed in accordance with (S) 9.05;
(f) to restate the articles of incorporation as currently amended.
((S) 10.15)
NOTE 4: All amendments not adopted under (S) 10.10 or (S) 10.15 require (1)
that the board of directors adopt a resolution setting forth the
proposed amendment and (2) that the shareholders approve the amendment.
Shareholder approval may be (1) by vote at a shareholders' meeting
(either annual or special) or (2) by consent, in writing, without a
meeting.
To be adopted, the amendment must receive the affirmative vote or
consent of the holders of at least 2/3 of the outstanding shares
entitled to vote on the amendment (but if class voting applies, then
also at least a 2/3 vote within each class is required).
The articles of incorporation may supercede the 2/3 vote requirement by
specifying any smaller or larger vote requirement not less than a
majority of the outstanding shares entitled to vote and not less than a
majority within each class when class voting applies. ((S) 10.20)
NOTE 5: When shareholder approval is by consent, all shareholders must be given
notice of the proposed amendment at least 5 days before the consent is
signed. If the amendment is adopted, shareholders who have not signed
the consent must be promptly notified of the passage of the amendment.
((S)(S) 7.10 & 10.20)
<PAGE>
File Number 5622-192-1
State of Illinois
Office of
The Secretary of State
[LOGO]
Whereas, ARTICLES OF MERGER OF EMPRESS RIVER CASINO CORPORATION INCORPORATED
UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE OFFICE OF THE
SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF ILLINOIS, IN
FORCE JULY 1, A.D. 1984.
Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois,
by virtue of the powers vested in me by law, do hereby issue this certificate
and attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the City of Springfield, this
4th day of April A.D. 1994 and of the Independence of the United
States the two hundred and 18th.
[LOGO]
/s/ George H. Ryan
------------------
SECRETARY OF STATE
<PAGE>
Form BCA-11.25 ARTICLES OF MERGER
(Rev. Jan. 1991) CONSOLIDATION OR EXCHANGE File # 5622-192-1
- --------------------------------------------------------------------------------
George H. Ryan SUBMIT IN DUPLICATE
Secretary of State -----------------------
Department of Business Services FILED This space for use by
Springfield, IL 62756 APR 4 1994 PAID Secretary of State
Telephone (217) 782-6961
- ------------------------------- GEORGE H. RYAN APR 5 1994
DO NOT SEND CASH! SECRETARY OF STATE
Remit payment in check or money Date 4/4/94
order, payable to "Secretary of
State." Filing Fee $100.00
Filing Fee is $100, but if Approved xxx
merger or consolidation of more
than 2 corporations. $50 for
each additional corporation.
- --------------------------------------------------------------------------------
1. Names of the corporations proposing to merge and the state of country of
their incorporation:
Name of Corporation State or Country of Incorporation
Empress River Casino Corporation Illinois 5622-192-1
- --------------------------------------- ---------------------------------------
River Casino Corporation Delaware 5750-147-2
- --------------------------------------- ---------------------------------------
- --------------------------------------- ---------------------------------------
- --------------------------------------------------------------------------------
2. The laws of the state or country under which each corporation is
incorporated permit such merger, consolidation or exchange.
- --------------------------------------------------------------------------------
3. (a) Name of the surviving corporation: Empress River Casino Corporation
(b) it shall be governed by the laws of: Illinois
- --------------------------------------------------------------------------------
4. Plan of merger is as follows:
If not sufficient space to cover this point, add one or more sheets of this
size.
SEE ATTACHED EXHIBIT A
EXPEDITED
APR 04 1994
SECRETARY OF STATE
<PAGE>
- --------------------------------------------------------------------------------
5. Plan of merger was approved, as to each corporation not organized in
Illinois, in compliance with the exchange laws of the state under which it
is organized, and (b) as to each Illinois corporation as follows:
(The following items are not applicable to mergers under Section 11.30 --
90% owned subsidiary provisions. See Article 7.)
(Only "X" one box for each corporation)
<TABLE>
<CAPTION>
<S> <C> <C>
By the shareholders, a By written consent of the By written consent of ALL
resolution of the board shareholders having not the shareholders entitled
of directors having been less than the minimum to vote on the action, in
duly adopted and submitted number of votes required accordance with Section 7.10
to a vote at a meeting of by statute and by the & Section 11.20
shareholders. Not less articles of incorporation.
than the minimum number of Shareholders who have not
votes required by statute consented in writing have
and by the articles of been given notice in
incorporation voted in accordance with Section
favor of the action taken. 7.10 (Section 11.220)
(Section 11.20)
Name of Corporation
- ------------------- -------------------------- ------------------------- --------------------------
Empress River Casino Corporation [_] [_]
- ----------------------------
(No shareholder approval is [_] [_] [_]
- ----------------------------
required in accordance with [_] [_] [_]
- ----------------------------
the provision of Section [_] [_] [_]
- ----------------------------
11.20(c) of the BCA) [_] [_] [_]
- ----------------------------
- ----------------------------
</TABLE>
- --------------------------------------------------------------------------------
6. (Not applicable if surviving, new or acquiring corporation is an Illinois
corporation)
It is agreed that, upon and after the issuance of a certificate of merger,
consolidation or exchange by the Secretary of State of the State of
Illinois:
a. The surviving, new or acquiring corporation may be served with process
in the State of Illinois in any proceeding for the enforcement of any
obligation of any corporation organized under the laws of the State of
Illinois which is a party to the merger, consolidation or exchange and
in any proceeding for the enforcement of the rights of a dissenting
shareholder of any such corporation organized under the laws of the
State of Illinois against the surviving new or acquiring corporation.
b. The Secretary of State of the State of Illinois shall be and hereby is
irrevocably appointed as the agent of the surviving, new or acquiring
corporation to accept service of process in any such proceedings, and
c. The surviving, new, or acquiring corporation will promptly pay to the
dissenting shareholders of any corporation organized under the laws of
the State of Illinois which is a party to the merger, consolidation or
exchange the amount, if any, to which they shall be entitled under the
provisions of The Business Corporation Act of 1983" of the State of
Illinois with respect to the rights of dissenting shareholders.
- --------------------------------------------------------------------------------
<PAGE>
7. (Complete this item if reporting a merger under (S) 11.30 - 90% owned
subsidiary provisions.)
a. The number of outstanding shares of each class of each merging
subsidiary corporation and the number of such shares of each class
owned immediately prior to the adoption of the plan of merger by the
parent corporation, are:
Total Number of Shares Number of Shares of Each Class
Outstanding Owned Immediately Prior to
Name of Corporation of Each Class Merger by the Parent Corporation
- --------------------- ------------------------ ---------------------------------
- --------------------- ------------------------ ---------------------------------
- --------------------- ------------------------ ---------------------------------
- --------------------- ------------------------ ---------------------------------
- --------------------- ------------------------ ---------------------------------
b. The date of mailing a copy of the plan of merger and notice of the
right to dissent to the shareholders of each merging subsidiary
corporation was ______________, 19 _____.
Was written consent for the merger or written waiver of the 30-day
period by the holders of all the outstanding shares of all subsidiary
corporations received? [_] Yes [_] No
(If the answer is "No," the duplicate copies of the Articles of Merger
may not be delivered to the Secretary of State until after 30 days
following the mailing of a copy of the plan of merger and of the
notice of the right to dissent to the shareholders of each merging
subsidiary corporation.)
8. The undersigned corporation has caused these articles to be signed by its
duly authorized offices, each of whom affirms, under penalties of perjury, that
the facts stated herein are true.
Dated: March 18, 1994 Empress River Casino Corporation
----------------------------------
(Exact Name of Corporation)
attested by /s/ Peter A. Ferro, Jr. by /s/ Kevin D. Larsen
-------------------------------- -------------------------------
(Signature of Secretary or (Signature of President
Assistant Secretary) or Vice President)
Peter A. Ferro, Jr. Kevin D. Larsen, President
-------------------------------- ---------------------------------
(Type or Print Name and Title) (Type or Print Name and Title)
Dated: March 18, 1994 River Casino Corporation
----------------------------------
(Exact name of Corporation)
attested by /s/ Charles P. Hammersmith, Jr. by /s/ Peter A. Ferro, Jr.
-------------------------------- -------------------------------
(Signature of Secretary (Signature of President
or Assistant Secretary) or Vice President)
Charles P. Hammersmith, Jr. Peter A. Ferro, Jr.
-------------------------------- ---------------------------------
(Type or Print Name and Title) (Type or Print Name and Title)
Dated ________________________ , 19________ _________________________________
(Exact Name of Corporation)
attested by _______________________________ by ______________________________
(Signature of Secretary or (Signature of President or
Assistant Secretary) Vice President)
_______________________________ ______________________________
(Type or Print Name and Title) (Type or Print Name and Title)
<PAGE>
EXHIBIT A
---------
AGREEMENT AND PLAN OF MERGER
The Agreement and Plan of Merger (the "Merger Agreement") is dated as of
________, 1994 and is entered into by and between River Casino Corporation, A
Delaware corporation ("RCC"), and Empress River Casino Corporation, an Illinois
corporation (the "Corporation" or, in its capacity as the surviving corporation
of the Merger, the "Surviving Corporation").
R E C I T A L S
---------------
A. RCC and the Corporation currently have identical equity ownership. The
outstanding capital stock of RCC consists only of one class of common stock,
$.01 par value per share ("RCC Common"), of which 1,150 shares of RCC Common are
issued and outstanding as of the date hereof. The outstanding capital stock of
the Corporation consists only of one class of common stock, no par value per
share ("Company Common"), of which 1,150 shares of Company Common are issued and
outstanding as of the date hereof.
B. RCC desires to merge with and into the Corporation with the
Corporation as the surviving entity of the merger (the "Merger"), all on the
terms and subject to the conditions contained in this Merger Agreement.
A G R E E M E N T S
-------------------
Therefore, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
---------
THE MERGER TRANSACTION
----------------------
1.1 The Merger. RCC shall be merged into the Corporation pursuant to
Section 11.25 of the Business Corporation act of 1983 of the State of Illinois
(the "BCA") and Section 252(c) of the General Corporation Law of the state of
Delaware, and the separate corporate existence of RCC will cease.
1.2 Effectiveness of the Merger. The Merger shall be effective at 10:00
a.m., Central Daylight Savings Time, on the date the Articles of Merger
providing for the Merger are filed with the Secretary of State of the state of
Illinois in accordance with the BCA ("Effective Time").
1
<PAGE>
ARTICLE II
----------
SURVIVAL OF ORGANIZATIONAL DOCUMENTS, DIRECTORS AND OFFICERS
------------------------------------------------------------
2.1 Articles of Incorporation. At the Effective Time, the Articles of
Incorporation of the Corporation as in effect immediately prior to the Effective
Time will be the Articles of Incorporation of the Surviving Corporation, and
thereafter may be amended in accordance with their terms and as provided by law.
2.2 By-laws. At the effective Time, the By-laws of the Corporation as in
effect immediately prior to the Effective Time will be the By-laws of the
Surviving Corporation, and thereafter may be amended or repealed in accordance
with their terms.
2.3 Officers. At the Effective Time, the officers of the Corporation
immediately prior to the Effective Time will be the officers of the Surviving
Corporation and will hold office from the Effective Time until their successors
shall have been duly elected or appointed and qualified in the manner provided
in the Articles of Incorporation and By-laws of the Surviving Corporation, or as
otherwise provided by law, or until their earlier death, resignation or removal.
2.4 Directors. At the Effective Time, the directors of the Corporation
immediately prior to the Effective Time will be the directors of the Surviving
Corporation and will hold office from the Effective Time for the balance of the
respective terms for which they were previously elected as directors of the
Corporation and until their respective successors are duly elected or appointed
and qualified in the manner provided in the Articles of Incorporation and By-
laws of the Surviving Corporation, or as otherwise provided by law, or until
their earlier death, resignation or removal.
ARTICLE III
-----------
CONVERSION OF SHARES
--------------------
3.1 Conversion of RCC Common. Both the shareholder of RCC and the number
of shares of RCC Common owned by such shareholders are identical to the
shareholders of the Corporation and the number of shares of Company Common owned
by such shareholders. Since the ownership structure of RCC and the Corporation
is identical, upon consummation of the Merger, shareholders of RCC will not
receive any consideration for the Merger and each share of RCC Common will be
canceled and retired and will cease to exist, and such holder of RCC Common will
thereafter cease to have any rights with respect to his or her shares of RCC
Common.
2
<PAGE>
3.2 Conversion of Company Common. Upon the consummation of the Merger, all
of the issued and outstanding shares of Company Common will remain issued and
outstanding and will represent one fully-paid and non-assessable share of common
stock, no par value per share, of the Surviving Corporation.
ARTICLE IV
----------
MISCELLANEOUS
-------------
4.1 Entire Agreement. This Merger Agreement constitutes the entire
agreement between the parties with respect to the subject matter contained
herein.
4.2 Binding Effect; Benefit. This Merger Agreement shall inure to the
benefit of and be binding upon the parties hereto, and their successors and
permitted assigns. Nothing in this Merger Agreement, express or implied, is
intended to confer on any person other than the parties hereto, and their
respective successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Merger Agreement.
4.3 Assignability. This Merger Agreement shall not be assignable by either
party without the prior written consent of the other party.
4.4 Amendments. This Merger Agreement shall not be modified or amended
prior to the filing date except pursuant to an instrument in writing executed
and delivered on behalf of each of the parties hereto.
4.5 Headings. The headings contained in this Merger Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this agreement.
IN WITNESS WHEREOF, the parties have executed this Merger Agreement on the
date first above written.
EMPRESS RIVER CASINO CORPORATION
By:
----------------------------------
Its:
------------------------------
RIVER CASINO CORPORATION
By:
----------------------------------
Its:
------------------------------
3
<PAGE>
File Number 5622-192-1
State of Illinois
Office of
The Secretary of State
Whereas,
ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF
EMPRESS RIVER CASINO CORPORATION INCORPORATED UNDER THE LAWS OF THE STATE OF
ILLINOIS HAVE BEEN FILED IN THE OFFICE OF THE SECRETARY OF STATE AS PROVIDED BY
THE BUSINESS CORPORATION ACT OF ILLINOIS, IN FORCE JULY 1, A.D. 1984.
Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois,
by virtue of the powers invested in me by law, do hereby issue this certificate
and attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the city of Springfield, this
26th day of March A.D. 1996 and of the Independence of the United
States the two hundred and 20th.
[INSERT SEAL OF
THE STATE OF
ILLINOIS]
/s/ George H. Ryan
Secretary of State
<PAGE>
<TABLE>
<CAPTION>
Form BCA - 10.30
(Rev. Jan. 1995) ARTICLES OF AMENDMENT File # 5622 - 192 - 1
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
George H. Ryan FILED SUBMIT IN DUPLICATE
Secretary of State
Department of Business Services PAID MAR 27 1996 This space for use by
Springfield, IL 62756 Secretary of State
Telephone (217) 782-1832
- --------------------------------------- Date 3-26-96
Remit payment in check or money MAR 26 1996
order, payable to "Secretary of State." Franchise Tax $ 25
GEORGE H. RYAN Filing Fee* $
The filing fee for articles of SECRETARY OF STATE Penalty $
amendment - $25.00 Approved: /s/ ???
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. CORPORATE NAME: EMPRESS RIVER CASINO CORPORATION
(Note 1)
2. MANNER OF ADOPTION OF AMENDMENT:
The following amendment of the Articles of Incorporation was adopted
on March 19, 1996 in the manner indicated below. ("X" one box only)
[ ] By a majority of the incorporators, provided no directors were named
in the articles of incorporation and no directors have been elected;
(Note 2)
[ ] By a majority of the board of directors, in accordance with Section
10.10, the corporation having issued no shares as of the time of
adoption of this amendment;
(Note 2)
[ ] By a majority of the board of directors, in accordance with Section
10.15, shares having been issued but shareholder action not being
required for the adoption of the amendment;
(Note 3)
[ ] By the shareholders, in accordance with Section 10.20, a resolution of
the board of directors having been duly adopted and submitted to the
shareholders. At a meeting of shareholders, not less than the minimum
number of votes required by statute and by the articles of
incorporation were voted in favor of the amendment;
(Notes 4)
[ ] By the shareholders, in accordance with Sections 10.20 and 7.10, a
resolution by the board of directors having been duly adopted and
submitted to the shareholders. A consent in writing has been signed by
shareholders having not less than the minimum number of votes required
by statute and by the articles of incorporation. Shareholders who have
not consented in writing have been given notice in accordance with
Section 7.10;
(Notes 4 & 5)
[X] By the shareholders, in accordance with Sections 10.20 and 7.10, a
resolution of the board of directors having been duly adopted and
submitted to the shareholders. A consent in writing has been signed by
all the shareholders entitled to vote on this amendment.
(Note 5)
3. TEXT OF AMENDMENT:
a. When amendment effects a name change, insert the new corporate name
below. Use Page 2 for all other amendments.
Article 1: The name of the corporation is: EMPRESS CASINO JOLIET
CORPORATION
- --------------------------------------------------------------------------------
(NEW NAME)
All changes other than name, include on page 2
(over)
<PAGE>
Text of Amendment
b. (If amendment affects the corporate purpose, the amended purpose is
required to be set forth in is entirety. If there is not sufficient
space to do so, add one or more sheets of this size.)
Page 2
<PAGE>
Text of Amendment
b. (If amendment affects the corporate purpose, the amended purpose is
required to be set forth in its entirety. If there is not sufficient space
to do so, add one or more sheets of this size.)
RESOLVED that the Articles of Incorporation of the Corporation are
amended by adding thereto a new Article 8 to be and read as follows:
8. Director Liability. No director of the corporation shall be
personally liable to the corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director, provided, however, that
this Article 8 shall not eliminate or limit the liability of a director (i)
for any breach of the director's duty of loyalty to the corporation or its
shareholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) under Section
8.65 of the Illinois Business Corporation Act of 1983, or (iv) for any
transaction from which the director derived an improper personal benefit.
No amendment to or repeal of this Article 8 shall apply to or have any
effect on the liability or alleged liability of any director of the
corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
Page 2
<PAGE>
4. The manner, if not set forth in Article 3b, in which any exchange,
reclassification or cancellation of issued shares or a reduction of the
number of authorized shares of any class below the number of issued shares
of that class provided for or effected by this amendment, is as follows:
(If not applicable, answer "No change")
NO CHANGE
5. (a) The manner, if not set forth in Article 3b in which said amendment
effects a change in the amount of paid-in capital (Paid-in capital replaces
the terms Stated Capital and Paid-in Surplus and is equal to the total of
these accounts) is as follows: (if not applicable , insert "No change")
NO CHANGE
(b) The amount of paid-in capital (Paid-in Capital replaces the terms
Stated Capital and Paid-in Surplus and is equal to the total of these
accounts) as changed by this amendment is as follows: (If not applicable,
insert "No change")
NO CHANGE
Before Amendment After Amendment
Paid-in Capital $_______________ $______________
(Complete either Item 6 or 7 below. All signatures must be in BLACK INK.)
6. The undersigned corporation has caused this statement to be signed by its
duly authorized officers, each of whom affirms, under penalties of perjury,
that the facts stated herein are true.
<TABLE>
<CAPTION>
<S> <C>
Dated: March 19, , 1996 EMPRESS RIVER CASINO CORPORATION
------------------------------------ ---- ------------------------------------------------
(Exact Name of Corporation at date of execution)
attested by /s/ John Costello By /s/ Kevin D. Larson
----------------------------------------------- ----------------------------------------------
(Signature of Secretary Or Assistant Secretary) (Signature of President or Vice President)
JOHN COSTELLO, SECRETARY KEVIN D. LARSON, President
----------------------------------------------- ----------------------------------------------
(Type or Print Name and Title) (Type or Print Name and Title)
</TABLE>
7. If amendment is authorized pursuant to Section 10.10 by the incorporators,
the incorporators must sign below, and type or print name and title.
OR
If amendment is authorized by the directors pursuant to Section 10.10 and
there are no officers, then a majority of the directors or such directors
as may be designated by the board, must sign below, and type or print name
and title.
The undersigned affirms, under the penalties of perjury, that the facts
stated herein are true.
Dated , 19
--------------------------- ----
---------------------------------------- ---------------------------------
---------------------------------------- ---------------------------------
---------------------------------------- ---------------------------------
---------------------------------------- ---------------------------------
Page 3
<PAGE>
NOTES and INSTRUCTIONS
NOTE 1. State the true exact corporate name as it appears on the records of
the office of the Secretary of State BEFORE any amendments herein
reported.
NOTE 2. Incorporators are permitted to adopt amendments ONLY before any shares
have been issued and before any directors have been named or elected.
((S) 10.10)
NOTE 3. Directors may adopt amendments without shareholder approval in only
seven instances, as follows:
(a) to remove the names and addresses of directors named in the
articles of incorporation;
(b) to remove the name and address of the initial registered agent
and registered office, provided a statement pursuant to Section
5.10 is also filed;
(c) to increase, decrease, create or eliminate the par value of the
shares of any class, so long as no class or series of shares is
adversely affected.
(d) to split the issued whole shares and unissued authorized shares
by multiplying them by a whole number, so long as no class or
series is adversely affected thereby;
(e) to change the corporate name by substituting the word
"corporation" "incorporated" "company", "limited", or the
abbreviation "corp", "inc.", "co.", or "ltd." for a similar word
or abbreviation in the name, or by adding a geographical
attribution to the name;
(f) to reduce the authorized shares of any class pursuant to a
cancellation statement filed in accordance with (S) 9.05.
(g) to restate the articles of incorporation as currently amended.
((S) 10.15)
NOTE 4. All amendments not adopted under (S) 10.10 or (S) 10.15 require (1)
that the board of directors adopt a resolution setting forth the
proposed amendment and (2) that the shareholders approve the
amendment.
Shareholder approval may be (1) by vote at a shareholders' meeting
(either annual or special) or (2) by consent in writing, without a
meeting.
To be adopted, the amendment must receive the affirmative vote or
consent of the holders of at least 2/3 of the outstanding shares
entitled to vote on the amendment (but if class voting applies, then
also at least a 2/3 vote within each class is required).
The articles of incorporation may supersede the 2/3 vote requirement
by specifying any smaller or larger vote requirement not less than a
majority of the outstanding shares entitled to vote and not less than
a majority within each class when class voting applies. ((S) 10.20)
NOTE 5. When shareholder approval is by consent, all shareholders must be
given notice of the proposed amendment at least 5 days before the
consent is signed. If the amendment is adopted, shareholders who have
not signed the consent must be promptly notified of the passage of the
amendment. ((SS) 7.10 & 10.20)
C-173.9
Page 4
<PAGE>
File Number 5622-192-1
State of Illinois
Office of
The Secretary of State
Whereas, ARTICLES OF MERGER OF EMPRESS CASINO JOLIET CORPORATION INCORPORATED
UNDER THE LAWS OF THE STATE OF ILLINOIS HAVE BEEN FILED IN THE OFFICE OF THE
SECRETARY OF STATE AS PROVIDED BY THE BUSINESS CORPORATION ACT OF ILLINOIS, IN
FORCE JULY 1, A.D. 1984.
Now Therefore, I, George H. Ryan, Secretary of State of the State of Illinois,
by virtue of the powers vested in me by law, do hereby issue this certificate
and attach hereto a copy of the Application of the aforesaid corporation.
In Testimony Whereof, I hereto set my hand and cause to be affixed the
Great Seal of the State of Illinois, at the City of Springfield, this
5th day of June A.D. 1998 and of the Independence of the United
States the two hundred and 22nd.
[INSERT LOGO]
C-212.2
/s/ George H. Ryan
------------------
Secretary of State
<PAGE>
Form BCA-11.25 ARTICLES OF MERGER
(Rev. Jan. 1995) CONSOLIDATION OR EXCHANGE File # 5622-192-1
- --------------------------------------------------------------------------------
George H. Ryan
Secretary of State FILED SUBMIT IN DUPLICATE
Department of Business Services JUN 5, 1998
Springfield, IL 62756 ---------------------
Telephone 217) 782-6961 PAID This space for use by
- ------------------------------------- JUN 05 1998 Secretary of State
DO NOT SEND CASH!
Remit payment in check or money GEORGE H. RYAN Date 6-5-98
order, payable Secretary of State SECRETARY OF STATE
Filing Fee is $100, but if merger or Filing Fee $100.00
consolidation of more than 2 corpo-
rations, $50 for each additional cor- Approved:
poration.
================================================================================
1. Names of the corporations proposing to merge, and the state or country of
their incorporation:
<TABLE>
<CAPTION>
Name of Corporation State or Country Corporation File No.
Of Incorporation
<S> <C> <C>
Empress Casino Joliet Corporation Illinois 5622-192-1
------------------------------------ ---------------- ----------------------
New Empress Joliet, Inc. Illinois 5992-755-8
------------------------------------ ---------------- ----------------------
------------------------------------ ---------------- ----------------------
------------------------------------ ---------------- ----------------------
</TABLE>
================================================================================
2. The laws of the state or country under which each corporation is
incorporated permit such merger, consolidation or exchange.
================================================================================
3. (a) Name of the surviving corporation: Empress Casino Joliet Corporation
----------------------------------
(b) it shall be governed by the laws of: Illinois
--------------------------------
================================================================================
4. Plan of merger is as follows: See Exhibit A
If not sufficient space to cover this point, add one or more sheets of this
size.
EXPEDITED
JUN 5 1998
SECRETARY OF STATE
<PAGE>
5. Plan of merger was approved, as to each corporation not organized in
Illinois, in compliance with the laws of the state under which it is
organized, and (b) as to each Illinois corporation as follows:
(The following items are not applicable to mergers under Section 11.30 -
90% owned subsidiary provisions. See Article 7.)
(Only "X" one box for each corporation)
By the shareholders, a resolution of the
board of directors having been duly adopted
and submitted to a vote at a meeting of
shareholders. Not less than the minimum
number of votes required by statute and by
the articles of incorporation voted in
favor of the action taken.
((S) 11.20)
-----------------------------
Name of Corporation
- -------------------
Empress Casino Joliet Corporation [_]
- ---------------------------------
New Empress Joliet, Inc. [_]
- ---------------------------------
[_]
- ---------------------------------
[_]
- ---------------------------------
[_]
- ---------------------------------
By written consent of the shareholders
having not less than the minimum number of
votes required by statute and by the
articles of incorporation. Shareholders who
have not consented in writing have been
given notice in accordance with Section
7.10 ((S) 11.220)
-----------------------------
Name of Corporation
- -------------------
Empress Casino Joliet Corporation [x]
- ---------------------------------
New Empress Joliet, Inc. [_]
- ---------------------------------
[_]
- ---------------------------------
[_]
- ---------------------------------
[_]
- ---------------------------------
By written consent of ALL the shareholders
entitled to vote on the action, in
accordance with (S) 7.10 & (S) 11.20
-----------------------------
Name of Corporation
- -------------------
Empress Casino Joliet Corporation [_]
- ---------------------------------
New Empress Joliet, Inc. [x]
- ---------------------------------
[_]
- ---------------------------------
[_]
- ---------------------------------
[_]
- ---------------------------------
================================================================================
6. (Not applicable if surviving, new or acquiring corporation is an Illinois
corporation)
It is agreed that, upon and after the issuance of a certificate of merger,
consolidation or exchange by the Secretary of State of the State of
Illinois:
a. The surviving, new or acquiring corporation may be served with process
in the State of Illinois in any proceeding for the enforcement of any
obligation of any corporation organized under the laws of the State of
Illinois which is a party to the merger, consolidation or exchange and
in any proceeding for the enforcement of the rights of a dissenting
shareholder of any such corporation organized under the laws of the
State of Illinois against the surviving new or acquiring corporation.
b. The Secretary of State of the State of Illinois shall be and hereby is
irrevocably appointed as the agent of the surviving, new or acquiring
corporation to accept service of process in any such proceedings, and
c. The surviving, new, or acquiring corporation will promptly pay to the
dissenting shareholders of any corporation organized under the laws of
the State of Illinois which is a party to the merger, consolidation or
exchange the amount, if any, to which they shall be entitled under the
provisions of "The Business Corporation Act of 1983" of the State of
Illinois with respect to the rights of dissenting shareholders.
================================================================================
<PAGE>
7. (Complete this item if reporting a merger under Section 11.30-90% owned
subsidiary provisions.)
a. The number of outstanding shares of each class of each merging
subsidiary corporation and the number of such shares of each class owned
immediately prior to the adoption of the plan of merger by the parent
corporation, are:
<TABLE>
<CAPTION>
Total Number of Shares Number of Shares of Each Class
Outstanding Owned Immediately Prior to
Name of Corporation of Each Class Merger by the Parent Corporation
<S> <C> <C>
- ---------------------- ------------------------ --------------------------------
- ---------------------- ------------------------ --------------------------------
- ---------------------- ------------------------ --------------------------------
- ---------------------- ------------------------ --------------------------------
- ---------------------- ------------------------ --------------------------------
</TABLE>
b. (Not applicable to 100% owned subsidiaries)
The date of mailing a copy of the plan of merger and notice of the
right to dissent to the shareholders of each merging subsidiary
corporation was _______________, 19 _______.
Was written consent for the merger or written waiver of the 30-day
period by the holders of all the outstanding shares of all subsidiary
corporations received? [_] Yes [_] No
(If the answer is "No" the duplicate copies of the Articles of Merger
may not be delivered to the Secretary of State until after 30 days
following the mailing of a copy of the plan of merger and of the
notice of the right to dissent to the shareholders of each merging
subsidiary corporation.)
8. The undersigned corporations have caused these articles to be signed by
their duly authorized officers, each of whom affirms, under penalties of
perjury, that the facts stated herein are true. (All signatures must be in BLACK
INK.)
<TABLE>
<CAPTION>
<S> <C>
Dated: June 1, 1998 Empress Casino Joliet Corporation
--------------------------------------------------- ---------------------------------------------
(Exact Name of Corporation)
attested by /s/ Michael W. Hansen by /s/ John Costello
----------------------------------------------- ------------------------------------------
(Signature of Secretary or Assistant Secretary) (Signature of President or Vice President)
Michael W. Hansen, Secretary John Costello, Vice President
----------------------------------------------- ------------------------------------------
(Type or Print Name and Title) (Type or Print Name and Title)
Dated: June 1, 1998 , 1998 New Empress Joliet, Inc.
--------------------------------------------- ---- -----------------------------------------
(Exact Name of Corporation)
attested by Michael W. Hansen By /s/ John Costello
----------------------------------------------- -----------------------------------------
(Signature of Secretary or Assistant Secretary) (Signature of President or Vice President)
Michael W. Hansen, Secretary John Costello, Vice President
----------------------------------------------- -----------------------------------------
(Type or Print Name and Title) (Type or Print Name and Title)
Dated: , 19
-------------------------------------------- --- -----------------------------------------
(Exact Name of Corporation)
attested by By
----------------------------------------------- -----------------------------------------
(Signature of Secretary or Assistant Secretary) (Signature of President or Vice President)
----------------------------------------------- -----------------------------------------
(Type or Print Name and Title) (Type or Print Name and Title)
</TABLE>
195.4
<PAGE>
AGREEMENT AND PLAN OF MERGER
OF
NEW EMPRESS JOLIET, INC.,
an Illinois corporation
INTO
EMPRESS CASINO JOLIET CORPORATION
an Illinois corporation
This AGREEMENT AND PLAN OF MERGER, dated as of the 1st day of June, 1998,
by and among New Empress Joliet, Inc., an Illinois corporation ( the "Merging
Corporation"), Empress Casino Joliet Corporation, an Illinois corporation
(referred to herein as ("Empress Joliet" or the "Surviving Corporation"), and
Empress Entertainment, Inc., a Delaware corporation ("Entertainment"). The
Merging Corporation and the Surviving Corporation are sometimes referred to as
the "Constituent Corporations."
WHEREAS, the Merging Corporation and the Surviving Corporation are
corporations duly organized and existing under the laws of the State of
Illinois, and Entertainment is a corporation duly organized and existing under
the laws of the State of Delaware and the parent of the Merging Corporation; and
WHEREAS, the Boards of Directors of the Constituent Corporations and
Entertainment deem it advisable for the general welfare and advantage of the
Constituent Corporations and their stockholders that the Constituent
Corporations merge into a single corporation pursuant to this Agreement and the
Illinois Business Corporation Act.
NOW, THEREFORE, the parties agree that the Constituent Corporations shall
be merged on the following terms and conditions:
1. The Merger. At the Effective Time (as defined below) of the merger,
the Merging Corporation shall be merged with and into Empress Joliet and the
separate existence of the Merging Corporation shall cease (the "Merger").
Following the consummation of the Merger, Empress Joliet shall continue its
corporate existence as the wholly-owned subsidiary of Entertainment. The name
of the Surviving Corporation following the Effective Time shall be "Empress
Casino Joliet Corporation."
2. Effective Time. The parties hereto shall cause the Merger to be
consummated by filing a certificate of merger (the "Certificate of Merger") with
the Secretary of State of Illinois, in such form as required by, and executed in
accordance with the relevant provisions of, the Illinois Business Corporation
Act. The effective time of the Merger shall be upon filing with the Secretary
of State of Illinois (the "Effective Time").
1
<PAGE>
3. Articles of Incorporation and By-Laws.
(a) The Articles of Incorporation of Empress Joliet at the effective
time of the Merger shall be the Articles of Incorporation for the Surviving
Corporation until amended as provided by law.
(b) The By-Laws of Empress Joliet at the effective time of the Merger
shall be the By-Laws of the Surviving Corporation until altered or amended in
accordance with the provisions thereof and Delaware law.
4. Directors and Officers. Subject to applicable law, the initial
directors and officers of the Surviving Corporation immediately after the
Effective Time shall be those persons who are the directors and officers of
Empress Joliet immediately prior to the Effect Time, to hold office until their
respective successors are duly elected or appointed and qualified, or their
earlier death, resignation or removal.
5. Condition to Merger. Each of the following shall be a condition
precedent to the filing of the Certificate of Merger:
(a) Entertainment and its stockholders shall have executed and
delivered an Amended and Restated Stockholders Agreement (the "Stockholders
Agreement") substantially similar to the existing stockholders agreement between
Empress Joliet and the shareholders of Empress Joliet, or in such other form
approved by Entertainment and at least 75% of its stockholders.
(b) The stockholders of Entertainment and the shareholders of Empress
Joliet shall have approved the Merger in accordance with applicable law and,
with respect to the shareholders of Empress Joliet, the provisions of the
Empress Joliet Shareholders Agreement.
6. Terms of Merger.
(a) From and after the Effective Time of the Merger, the Surviving
Corporation shall possess all the rights, privileges, immunities, and franchises
of a public, as well as of a private nature, of each of the Constituent
Corporations; and all property, real, personal and mixed, and all debts due on
whatever account, including subscriptions to shares and all other choses in
action, and all and every other interest, of or belonging to or due to each of
the Constituent Corporations, shall be taken and deemed to be transferred to and
vested in the surviving Corporation without further act or deed; and the title
to any real estate, or any interest therein, vested in any of the Constituent
Corporations shall not revert or be in any way impaired by reason of the Merger,
provided, however, that the Surviving Corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of each of the
Constituent Corporations, and any claim existing or action or preceding pending
by or against either of the Constituent Corporations may be prosecuted to
judgment as if the Merger had not taken place, or
2
<PAGE>
the Surviving Corporation may be substituted in its place, and neither the
rights of creditors nor any liens upon the property of either of the Constituent
Corporations shall be impaired by the Merger.
(b) As of the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, (i) each share of Common Stock of
Empress Joliet issued and outstanding immediately prior to the Effective Time
shall be canceled and converted into the right to receive 0.53 shares of the
Common Stock of Entertainment and 0.12 shares of the Non-Voting Common Stock of
Entertainment, (ii) each share of capital stock of the Merging Corporation
issued and outstanding immediately prior to the Effective Time shall be canceled
and extinguished and be converted into and become one fully paid and
nonassessable share of Common Stock of the Surviving Corporation; and (iii) each
share of Common Stock of Entertainment and each share of Non-Voting Common Stock
of Entertainment issued and outstanding immediately prior to the Effective Time
shall be canceled and converted into the right to receive one share of the
Common Stock of Entertainment and one share of the Non-Voting Common Stock of
Entertainment, respectively; provided, however, that the shares of the Common
Stock and Non-Voting Common Stock of Entertainment to be issued upon conversion
shall not be issued to a shareholder unless and until such shareholder has
executed and delivered to Entertainment the Amended and Restated Stockholders
Agreement or an agreement to be bound by the provisions thereof.
(c) The Surviving Corporation shall pay all expenses of carrying the Plan
into effect and accomplishing the Merger provided for herein.
(d) The proper officers and directors of the Constituent Corporations and
Entertainment shall execute and deliver all such documents and take all such
actions as may be necessary or advisable, or as may be requested by the
Surviving Corporation or Entertainment from time to time, in order to vest fully
all the property rights of the Constituent Corporations in the Surviving
Corporation and otherwise carry out this Plan.
(e) Anything herein or elsewhere to the contrary notwithstanding, this
Plan may be abandoned by the mutual consent of the Constituent Corporations and
Entertainment, evidenced by appropriate resolutions of their respective Board of
Directors, at any time prior to the Effective Time of the Merger.
(f) Promptly after the Effective Time, the Surviving Corporation shall
duly and properly file an election to be a Qualified Subchapter S. Subsidiary.
*****
3
<PAGE>
IN WITNESS WHEREOF, Entertainment and each of the Constituent Corporations
has caused this Agreement to be signed by its duly authorized officer on the day
and year first above written.
EMPRESS CASINO JOLIET EMPRESS ENTERTAINMENT, INC.
CORPORATION
By: /s/ Peter A. Ferro, Jr. By: /s/ Peter A. Ferro, Jr.
---------------------------------- ----------------------------------
Name: Peter A. Ferro, Jr. Name: Peter A. Ferro, Jr.
-------------------------------- --------------------------------
Its: Chief Executive Officer Its: Chief Executive Officer
--------------------------------- ---------------------------------
NEW EMPRESS JOLIET, INC.
By: /s/ Peter A. Ferro, Jr.
----------------------------------
Name: Peter A. Ferro, Jr.
--------------------------------
Its: Chief Executive Officer
--------------------------------
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
File # 5622-192-
BCA 5.10/5.20 (Rev. Jul 1984) JIM EDGAR -----------------------
Secretary of State This Space for Use By
Submit in Duplicate State of Illinois Secretary of State
Remit payment in Check or Money
Order, payable to "Secretary of STATEMENT OF CHANGE OF REGISTERED AGENT Date 12/29/94
State". AND/OR
DO NOT SEND CASH! REGISTERED OFFICE Filing Fee $5.00
Clerk
/s/ signature illegible
-----------------------
</TABLE>
Pursuant to the provisions of the "The Business Corporation Act of 1983", the
undersigned corporation hereby submits the following statement.
1. The name of the corporation is Empress River Casino Corporation
-----------------------------------------------
---------------------------------------------------------------------------
2. The State of Country of incorporation is Illinois
----------------------------------
3. The name and address of its registered agent and its registered office as
they appear on the records of the office of the Secretary of State (Before
Change) are:
<TABLE>
<CAPTION>
<S> <C>
Registered Agent Suzanne L. Saxman
-----------------------------------------------------------------------------
First Name Middle Name Last Name
Registered Office 30 North LaSalle Street Suite 2900
-----------------------------------------------------------------------------
DEC 29 1994 Number Street Suite No. (A.P.O. box above is not acceptable)
-----------------------------------------------------------------------------
GEORGE H. RYAN Chicago, 60602 Cook
SECRETARY OF STATE -----------------------------------------------------------------------------
City Zip Code County
4. The name and address of its registered agent and its registered office shall be (After all Changes herein Reported):
Registered Agent Michael W. Hansen
-----------------------------------------------------------------------------
First Name Middle Name Last Name
Registered Office 2300 Empress Drive
-----------------------------------------------------------------------------
Number Street Suite No. (A.P.O. box above is not acceptable)
Joliet 60436 Will
-----------------------------------------------------------------------------
City Zip Code County
5. The address of the registered office and the address of the business office of the registered agent, as changed, will be
identical.
6. The above change was authorized by: ("X" one box only)
a. [_] By Resolution duly adopted by the board of directors. (Note 5)
b. [X] By action of the registered agent. (Note 6)
(If authorized by the board of directors, sign here, See Note 5)
The undersigned corporation has caused this statement to be signed by its duly authorized officers, each of whom affirm, under
penalties of perjury, that the facts stated herein are true.
Dated
--------------------------------------------, 19 ---- -------------------------------------------
(Exact Name of Corporation)
attested by /s/ Peter Ferro, Jr. by /s/ Kevin Larson
----------------------------------------------- -----------------------------------------
(Signature of Secretary or Assistant Secretary) (Signature of President or vice president
Peter Ferro, Jr. Kevin Larson
----------------------------------------------- --------------------------------------------
Type or Print Name and Title) Title or Print Name and Title)
(If change of registered office by registered agent, sign here. See Note 6)
The undersigned, under penalties of perjury, affirms that the facts
stated herein are true.
Dated October 4 , 1994 /s/ Suzanne L. Saxman
-------------------------------------------- ---- -------------------------------------------
(Signature of Registered Agent of Record)
</TABLE>
<PAGE>
NOTES
1. The registered office may, but need not be the same as the principal office
of the corporation. However the registered office and the office address of
the registered agent must be the same.
2. The registered office must include a street or road address, a post office
box number alone is not acceptable.
3. A corporation cannot act as its own registered agent.
4. If the registered office is changed from one county to another, then the
corporation must file with the recorder of deeds of the new county a
certified copy of the articles of incorporation and a certified copy of the
statement of change of registered office. Such certified copies may be
obtained ONLY from the Secretary of State.
5. Any change of registered agent must be by resolution adopted by the board
of directors. This statement must then be signed by the President (or vice-
president) and by the Secretary (or and assistant secretary).
6. The registered may agent report a change of the registered office of the
corporation for which he or she is registered agent. When the agent reports
such a change, this statement must be signed by the registered agent.
Form BCA-5.10/5.20
File No.
---------------------------
====================================
STATEMENT OF CHANGE OF REGISTERED
AGENT AND/OR REGISTERED OFFICE
Filing Fee $5.00
RETURN TO:
Corporation Department
Secretary of State
Springfield, Illinois 62756
Telephone 217-782-7808
====================================
C-136.4
<PAGE>
STATE OF ILLINOIS
Office of the Secretary of State
I hereby certify that this is a true and
correct copy, consisting of forty
pages, as taken from the original on file in
this office.
/s/ George H. Ryan
GEORGE H. RYAN
SECRETARY OF STATE
DATED: June 15, 1998
BY: /s/ Michelle (illegible)
[LOGO]
EXPEDITED
SECRETARY OF STATE
JUN 15 1998
EXP. FEES 25.00
-----
COPY-CERT. 25.OO
-----
<PAGE>
EXHIBIT 3.6
BY-LAWS
OF
EMPRESS RIVER CASINO CORPORATION
(F/K/A DES PLAINES RIVER ENTERTAINMENT CORPORATION)
Article I
---------
OFFICES
Section 1. Principal Office. The principal office of the corporation
in the State of Illinois shall be located in the City of Rockdale and County of
Will. The corporation may have such other offices, either within or without the
State of Illinois, as the business of the corporation may require from time to
time.
Section 2. Registered Office. The registered office of the
Corporation required by the Illinois Business Corporation Act of 1983, as
amended, to be maintained in the State of Illinois may be, but need not be,
identical with the principal office in the State of Illinois, and the address of
the registered office may be changed from time to time by the board of
directors.
Article II
----------
SHAREHOLDERS
Section 1. Annual Meetings. The annual meeting of the shareholders
shall be held on the fourth Wednesday in December in each year, beginning with
the year 1992 at the hour of 10:00 A.M. for the purpose of electing directors
and for the transaction of such other business as may come before the meeting.
If the day fixed for the annual meeting shall be a legal holiday, such meeting
shall be held on the next succeeding business day. If the election of directors
shall not be held on the day designated herein for any annual meeting, or at any
adjournment thereof, the board of directors shall cause the election to be held
at a meeting of the shareholders as soon thereafter as conveniently may be.
Section 2. Special Meetings. Special meetings of the shareholders
may be called by the chairman of the board of directors, the president, the
board of directors or the holders of not less than one-fifth of all the
outstanding shares of the corporation entitled to vote on the matter for which
the meeting is called, upon notice by such holders to the secretary of the
corporation.
Section 3. Inspectors. At any meeting of the shareholders, the
chairman of the meeting may, or upon the request of any shareholder shall,
appoint one or more persons as inspectors for such meeting. Such inspectors
shall ascertain and report the
<PAGE>
number of shares represented at the meeting, based upon their determination of
the validity and effect of proxies; count all votes and report the results; and
do all such other acts as are proper to conduct the election and voting with
impartiality and fairness. Each report of an inspector shall be in writing and
signed by him or her or by a majority of them if there be more than one
inspector acting at such meeting. If there is more than one inspector, the
report of a majority shall be the report of the inspectors. The report of the
inspector or inspectors on the number of shares represented at the meeting and
the results of the voting shall be prima facie evidence thereof.
Section 4. Place of Meeting. The board of directors may designate
any place, either within or without the State of Illinois, as the place of
meeting for any annual meeting or for any special meeting called by the board of
directors. A waiver of notice signed by all shareholders may designate any
place, either within or without the State of Illinois, as the place for the
holding of such meeting. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the registered office of the
corporation in the State of Illinois, except as otherwise provided in Section 6
of this Article II.
Section 5. Notice of Meeting. Written or printed notice stating the
place, day and hour of the meeting, and in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten nor more than sixty days before the date of the meeting, or in the case
of merger, consolidation, share exchange, dissolution or sale, lease or exchange
of assets not less than twenty nor more than sixty days before the meeting,
either personally or by mail, by or at the direction of the president, the
secretary or the officer or persons calling the meeting, to each shareholder of
record entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail, addressed to the
shareholder at his or her address as it appears on the records of the
corporation, with postage thereon prepaid.
Section 6. Meeting of All Shareholders. If all of the shareholders
shall meet at any time and place, either within or without the State of
Illinois, and consent to the holding of a meeting at such time and place, such
meeting shall be valid without call or notice, and at such meeting any corporate
action may be taken.
Section 7. Closing of Transfer Books or Fixing of Record Date. For
the purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the board of directors of the corporation may fix in advance a
date as the record date for any such determination of shareholders, such date in
any case to be not more than sixty days and, for a meeting of shareholders, not
less than ten days, or in the case of a merger, consolidation, share exchange,
dissolution or sale, lease or exchange of assets, not less than twenty days,
immediately preceding such meeting. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
-2-
<PAGE>
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
Section 8. Voting Lists. The officer or agent having charge of the
transfer books for shares of the corporation shall make, within twenty days
after the record date for a meeting of shareholders or ten days before such
meeting, whichever is earlier, a complete list of the shareholders entitled to
vote at such meeting, arranged in alphabetical order, with the address of and
the number of shares held by each, which list, for a period of ten days prior to
such meeting. shall be kept on file at the registered office of the corporation
and shall be subject to inspection by any shareholder, and to copying at the
shareholder's expense, at any time during usual business hours. Such list shall
also be produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole time of the
meeting. The original share ledger or transfer book, or a duplicate thereof kept
in the State of Illinois, shall be prima facie evidence as to who are the
shareholders entitled to examine such list or share ledger or transfer book or
to vote at any meeting of shareholders.
Section 9. Quorum and Manner of Acting. Unless otherwise provided in
the articles of incorporation, a majority of the outstanding shares of the
corporation, entitled to vote on the matter, represented in person or by proxy,
shall constitute a quorum for consideration of such matter at any meeting of
shareholders; provided, however, that a quorum shall not consist of less than
one-third of the outstanding shares entitled to vote. If less than a quorum are
represented at said meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. If a quorum is present,
the affirmative vote of the majority of the shares represented at the meeting
and entitled to vote on a matter shall be the act of the shareholders, unless
the vote of a greater number or voting by classes is required by the Illinois
Business Corporation Act of 1983, as amended, the articles of incorporation or
these by-laws.
Section 10. Proxies. At all meetings of shareholders. a shareholder
may appoint a proxy to vote or otherwise act for him or her by signing an
appointment form and delivering it to the person so appointed. Such proxy shall
be filed with the secretary of the corporation before or at the time of the
meeting. No proxy shall be valid after the expiration of eleven months from the
date thereof, unless otherwise provided in the proxy.
Section 11. Voting of Shares. Except as otherwise provided by the
articles of incorporation, and subject to the provisions of Section 7 of this
Article 11, each outstanding share, regardless of class, shall be entitled to
one vote upon each matter submitted to vote at a meeting of shareholders.
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Section 12. Voting of Shares by Certain Holders.
(a) Shares of a corporation held by the corporation in a fiduciary
capacity may be voted and shall be counted in determining the total number of
outstanding shares entitled to vote at any given time.
(b) Shares registered in the name of another corporation, domestic or
foreign, may be voted by any officer, agent, proxy or other legal representative
authorized to vote such shares under the law of incorporation of such
corporation. The corporation may treat the president or other person holding the
position of chief executive officer of such other corporation as authorized to
vote such shares, together with any other person indicated and any other holder
of an office indicated by the corporate shareholder to the corporation as a
person or an office authorized to vote such shares. Such persons and offices
indicated shall be registered by the corporation on the transfer books for
shares and included in any voting list prepared in accordance with Section 8 of
these by-laws.
(c) Shares registered in the name of a deceased person. a minor ward
or a person under legal disability may be voted by his or her administrator,
executor or court appointed guardian, either in person or by proxy without a
transfer of such shares into the name of such administrator, executor or court
appointed guardian. Shares registered in the name of a trustee may be voted by
him or her, either in person or by proxy.
(d) Shares registered in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his or her name if authority so
to do is contained in an appropriate order of the court by which such receiver
was appointed.
(e) A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee,
and thereafter the pledgee shall be entitled to vote the shares so transferred.
Section 13. Informal Action by Shareholders. Unless otherwise
provided in the articles of incorporation, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a meeting
of the shareholders, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed (a) if five day's prior
notice of the proposed action is given in writing to all of the shareholders
entitled to vote with respect to the subject matter thereof, by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voting or (b) by all of the
shareholders entitled to vote with respect to the subject matter thereof. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given in writing to those shareholders who
have not consented in writing.
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Section 14. Voting by Ballot. Voting on any question or in any
election may be viva voce unless the presiding officer shall order or any
shareholder shall demand that voting be by ballot.
Article III
-----------
DIRECTORS
Section 1. General Powers. The business and affairs of the
corporation shall be managed by or under the direction of its board of
directors.
Section 2. Number, Tenure and Qualifications. The number of
directors of the corporation shall be eight (8). Each director shall hold office
until the next annual meeting of shareholders or until his or her successor
shall have been elected and qualified. Directors need not be residents of
Illinois or shareholders of the corporation.
Section 3. Annual and Related Meetings. The annual meeting of the
board of directors shall be held without other notice than this by-law,
immediately after, and at the same place as, the annual meeting of shareholders.
The board of directors may provide, by resolution, the time and place, either
within or without the State of Illinois, for the holding of regular meetings
without other notice than such resolution.
Section 4. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the chairman of the board of
directors, the president or any two directors. The person or persons authorized
to call special meetings of the board of directors may fix any place, either
within or without the State of Illinois, as the place for holding any special
meeting of the board of directors called by them.
Section 5. Notice. Notice of any special meeting of the board of
directors shall be given at least five (5) days prior thereto by written notice
delivered personally or mailed to each director at his or her business address
or by telegram. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed with postage thereon prepaid.
If notice be given by telegram, such notice shall be deemed to be delivered when
the telegram is delivered to the telegraph company. Any director may waive
notice of any meeting. The attendance of a director at any meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
presented because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any annual, regular or special
meeting of the board of directors need be specified in the notice or waiver of
notice of such meeting.
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Section 6. Quorum and Manner of Acting. Unless a greater number
stated in the articles of incorporation, a majority of the number of directors
fixed by these by these by-laws, or in the absence of a by-law fixing the number
of directors, the number stated in the articles of incorporation or named by the
incorporators or, if the corporation has a variable range board of directors, a
majority of the directors then in office, but not less than a majority of the
minimum specified for the range, shall constitute a quorum for transaction of
business at any meeting of the board of directors. If less than a quorum of
directors are present at said meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice. The act of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the board of directors unless the act of a greater number is
required by the articles of incorporation.
Section 7. Attendance by Communications Equipment. Unless
specifically prohibited by the articles of incorporation, members of the board
of directors, or of any committee of the board of directors, may participate in
and act at any meeting of such board or committee through the use of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in such
a meeting shall constitute attendance and presence in person at the meeting of
the person or persons so participating.
Section 8. Vacancies. Any vacancy occurring in the board of
directors, and any directorship to be filled by reason of an increase in the
number of directors, may be filled by election by the shareholders at an annual
meeting or at a special meeting called for that purpose.
Section 9. Presumption of Assent. A director of the corporation who
is present at a meeting of the board of directors at which action on any
corporate matter is taken shall be conclusively presumed to have assented to the
action taken unless his or her dissent shall be entered in the minutes of the
meeting or unless he or she shall file his or her written dissent to such action
with the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 10. Committees. A majority of the board of directors may
create one or more committees and appoint members of the board to serve on the
committee or committees Each committee shall have two or more members who serve
at the pleasure of the board. Unless the appointment of the board requires a
greater number, a majority of any committee shall constitute a quorum and a
majority of a quorum is necessary for committee action. A committee may act by
unanimous consent in writing without a meeting and, subject to the provisions of
these by-laws or action by the board, the committee by majority vote of its
members shall determine the time and place of meetings and the notice required
therefor. To the extent
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provided by the articles of incorporation, these by-laws or resolution of the
board of directors. each committee shall have and may exercise all of the
authority of the board of directors in the management of the corporation,
provided committees shall not have the authority of the board of directors to
(a) authorize distributions; (b) approve or recommend to shareholders any act
the Illinois Business Corporation Act of 1983, as amended, requires to be
approved by shareholders; (c) fill vacancies on the board or on any of its
Committees; (d) elect or remove officers or fix the compensation of any member
of the committee; (e) adopt. amend or repeal the by-laws; (f) approve a plan of
merger not requiring shareholder approval; (g) authorize or approve
reacquisition of shares, except according to a general formula or method
prescribed by the board; (h) authorize or approve the issuance or sale, or
contract for sale, of shares or determine the designation and relative rights,
preferences, and limitations of a series of shares, except that the board may
direct a committee to fix the specific terms of the issuance or sale or contract
for sale or the number of shares to be allocated to particular employees under
an employee benefit plan; or (i) amend, alter, repeal, or take action
inconsistent with any resolution or action of the board of directors when the
resolution or action of the board of directors provides by its terms that it
shall not be amended, altered or repealed by action of a committee.
Section 11. Informal Action. Unless specifically prohibited by the
articles of incorporation, any action required to be taken at a meeting of the
board of directors of the corporation, or any other action which may be taken at
a meeting of the board of directors or a committee thereof may be taken without
a meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors entitled to vote with respect to the subject
matter thereof or by all members of such committee, as the case may be.
Section 12. Removal. One or more of the directors may be removed,
with or without cause, at a meeting of shareholders by the affirmative vote of
the holders of a majority of the outstanding shares then entitled to vote at an
election of directors, except: (a) no director shall be removed at a meeting of
shareholders unless the notice of such meeting shall state that a purpose of the
meeting is to vote upon the removal of one or more directors named in the notice
and only the named director or directors may be removed at such meeting. and (b)
if the corporation has cumulative voting and if less than the entire board is to
be removed, no director may be removed, with or without cause, if the votes cast
against his or her removal would be sufficient to elect him or her if then
cumulatively voted at an election of the entire board of directors, and (c) if a
director is elected by a class or series of shares, he or she may be removed
only by the shareholders of that class or series.
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Article IV
----------
OFFICERS
Section 1. Number. At its annual meeting the board of directors
shall elect a chairman of the board of directors, a president. two vice
presidents, a secretary and a treasurer and, from time to time, may elect one or
more vice presidents and such assistant secretaries, assistant treasurers and
other officers, agents and employees as it may deem proper. Any two or more
offices may be held by the same person.
Section 2. Election and Term of Office. The elective officers of the
corporation shall be elected annually by the board of directors at its annual
meeting. If the election of officers shall not be held at such meeting, such
election shall be held as soon thereafter as conveniently may be. Vacancies may
be filled or new offices filled at any meeting of the board of directors. Each
officer shall hold office until his successor shall have been duly elected and
shall have qualified or until his or her death or until he or she shall resign
or shall have been removed in the manner hereinafter provided. Election or
appointment of an officer or agent shall not of itself create contract rights.
Section 3. Removal. Any officer or agent elected or appointed by the
board of directors may be removed by the board of directors whenever in its
judgment the best interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
Section 4. Chairman of the Board of Directors. The chairman of the
board of directors, if a chairman of the board of directors has been elected and
is serving, shall be the chief executive officer of the corporation and shall in
general supervise and control all of the business and affairs of the
corporation. The chairman shall preside at all meetings of the shareholders and
board of directors. He or she may sign, with the secretary or any other proper
officer of the corporation thereunto authorized, certificates for shares of the
corporation, and, when authorized by the board of directors, any deeds,
mortgages, bonds, contracts or other instruments. The chairman shall perform
such other duties as may be prescribed by the board of directors from time to
time.
Section 5. President. In the event that a chairman has not been
elected, then all of the duties of the chairman, subject to the restrictions set
forth in Section 4 of this Article IV with respect to the chairman, shall be
performed by the president. In the event that a chairman has been elected, the
president shall be the chief administrative officer of the corporation and
shall, subject to direction by the chairman, in general supervise and control
all of the operations of the corporation. In the absence of the chairman, the
president shall preside at all meetings of the shareholders and of the board of
directors. In the absence of the chairman or in the event of his or her
inability or refusal to act, the president shall perform the duties of the
chairman and, when so acting, shall have all the powers of and be subject to all
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the restrictions upon the chairman. The president may sign, with the secretary,
an assistant secretary or any other proper officer of the corporation thereunto
duly authorized by the board of directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts or other instruments which
the board of directors has authorized to be executed except in cases where the
execution thereof shall be expressly delegated by the board of directors or by
these by-laws to some other officer or agent of the corporation or shall be
required by law to be otherwise executed. In general, the president shall
perform all duties incident to the office of president and chief administrative
officer of the corporation and such other duties as may be prescribed from time
to time by the board of directors or the chairman.
Section 6. Vice Presidents. In the absence of the president or in
the event of his or her inability or refusal to act, the vice president (or in
the event there be more than one vice president, the vice presidents in the
order designated, or in the absence of any designation, then in the order of
their election) shall perform the duties of the president, including, without
limitation, the duties of the chairman if and as assumed by the president as a
result of the absence of the chairman or his or her inability or refusal to act,
and the vice president, when so acting, shall have all of the powers and be
subject to all the restrictions upon the president. Any vice president may sign,
with the secretary or an assistant secretary, certificates for shares of the
corporation. Each vice president shall perform such other duties as from time to
time may be assigned to him or her by the chairman, the president or the board
of directors.
Section 7. Treasurer. If required by the board of directors. the
treasurer shall give a bond for the faithful discharge of his or her duties in
such sum and with such surety or sureties as the board of directors shall
determine. He or she shall have charge and custody of and be responsible for all
funds and securities of the corporation, receive and give receipts for moneys
due and payable to the corporation from any source whatsoever, and deposit all
such moneys in the name of the corporation in such banks, trust companies or
other depositories as shall be selected in accordance with the provisions of
these by-laws. The treasurer shall in general perform all the duties incident to
the office of treasurer and such other duties as from time to time may be
assigned to him or her by the chairman, the president or the board of directors.
Section 8. Secretary. The secretary shall: (a) keep records of
corporate action, including the minutes of meetings of the shareholders and the
board of directors in one or more books provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these by-laws or
as required by law; (c) be custodian of the corporate records and of the seal of
the corporation and see that the seal of the corporation is affixed to all
certificates for shares prior to the issuance thereof and to all documents, the
execution of which on behalf of the corporation under its seal is duly
authorized in accordance with the provisions of these by-laws; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the secretary by such shareholder; (e) sign, with the chairman, the
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president or a vice president, certificates for shares of the corporation, the
issuance of which shall have been authorized by resolution of the board of
directors; (f) have general charge of the stock transfer books of the
corporation, and (g) in general, perform all duties incident to the office of
secretary and such other duties as from time to time may be assigned to him or
her by the chairman, the president or the board of directors.
Section 9. Assistant Treasurers and Assistant Secretaries. The
assistant treasurers shall if required by the board of directors, give bonds for
the faithful discharge of their duties in such sums and with sureties as the
board of directors shall determine. The assistant secretaries as thereunto
authorized by the board of directors may sign, with the chairman, the president
or a vice president, certificates for shares of the corporation, the issuance of
which shall have been authorized by a resolution of the board of directors. The
assistant treasurers and assistant secretaries in general shall perform such
duties as shall be assigned to them by the treasurer or the secretary,
respectively, or by the president, the chairman of the board or the board of
directors.
Section 10. Salaries. The salaries of the officers of the
corporation shall be fixed from time to time by the board of directors and no
officer shall be prevented from receiving such salary by reason of the fact that
he or she is also a director of the corporation.
Article V
---------
CONTRACTS, LOANS, CHECKS,
DEPOSITS AND VOTING SECURITIES
Section 1. Contracts. The board of directors may authorize any
officer or officers, agent or agents. to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the board of directors. Such authority may be
general or confined to specific instances.
Section 3. Checks, Drafts, Etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as shall from time to time be
determined by resolution of the board of directors.
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Section 4. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositories as the board of directors
may select.
Section 5. Voting Securities Held by the Corporation. Unless
otherwise ordered by the board of directors. either the chairman or the
president or, in the event of his or her of their inability to act, the vice
president having authority under these by-laws to act in the absence of the
president, shall have full power and authority on behalf of the corporation to
attend, act and vote at any meetings of security holders of corporations in
which the corporation may hold securities, and at such meetings or otherwise
shall possess and may exercise any and all rights and powers incident to the
ownership of such securities. The power and authority to attend, act and vote at
meetings shall include the power and authority to consent on behalf of the
corporation, with respect to securities of other-corporations held by the
corporation. The board of directors by resolution from time to time may confer
like powers upon any other person or persons.
Article VI
----------
CERTIFICATES FOR SHARES, UNCERTIFICATED
SHARES AND TRANSFER OF SHARES
Section 1. Certificates for Shares. Certificates representing shares
of the corporation shall be in such form as may be determined by the board of
directors. Unless otherwise provided in the articles of incorporation, the board
of directors may provide that some or all of any or all classes and series of
its shares shall be by uncertificated shares, provided that the foregoing shall
not apply to shares represented by certificates until such certificate is
surrendered to the corporation. Certificates shall be signed by the chairman of
the board of directors, or the president or a vice president and by the
secretary or an assistant secretary and may be sealed with the seal of the
corporation, or a facsimile of the seal if the corporation uses a seal. If a
certificate is countersigned by a transfer agent or registrar, other than the
corporation or its employee, any other signatures or countersignatures on the
certificate may be by facsimile. All certificates for shares shall be
consecutively numbered or otherwise identified. The name of the person to whom
the shares are issued, with the number of shares and the date of issue, shall be
entered on the books of the corporation. In the case of certificated shares, all
certificates surrendered to the corporation for transfer shall be canceled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that in case
of a lost, destroyed or mutilated certificate a new one may be issued therefor
upon such terms and indemnity to the corporation as the board of directors may
prescribe. Within a reasonable time after the issuance or transfer of
uncertificated shares, the secretary of the corporation shall send to the
registered owner thereof a written notice containing the information that would
otherwise be required to be set forth or stated on certificates representing
such shares. Except as otherwise provided by law, the
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rights and obligations of the holders of uncertificated shares and the holders
of certificates representing shares of the same class and series shall be
identical.
Section 2. Transfers of Shares. Transfers of shares of the
corporation shall be made only on the books of the corporation by the holder of
record thereof or by his legal representative, who shall furnish proper evidence
of authority to transfer, or by his or her attorney thereunto authorized by
power of attorney duly executed and filed with the secretary of the corporation,
and, in the case of certificated shares, on surrender for cancellation of the
certificate for such shares. The person in whose name shares stand on the books
of the corporation shall be deemed the owner thereof for all purposes as regards
the corporation.
Article VII
-----------
FISCAL YEAR
The fiscal year of the corporation shall be determined by the board of
directors.
Article VIII
------------
DIVIDENDS
The board of directors may from time to time, declare, and the
corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law and its articles of incorporation.
Article IX
----------
SEAL
The board of directors may provide a corporate seal which shall be in
the form of a circle and shall have inscribed thereon the name of the
corporation and the words, "Corporate Seal, Illinois".
Article X
---------
WAIVER OF NOTICE
Whenever any notice whatever is required to be given under the
provisions of these by-laws or under the provisions of the articles of
incorporation or under the provisions of the Illinois Business Corporation Act
of 1983, as amended,
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a waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
Article XI
----------
INTEREST OF DIRECTORS IN CERTAIN
TRANSACTIONS
If a transaction is fair to a corporation at the time it is
authorized, approved or ratified, the fact that a director of the corporation is
directly or indirectly a party to the transaction is not grounds for
invalidating the transaction. The presence of the director, who is directly or
indirectly a party to the transaction described above, or a director who is
otherwise not disinterested, may be counted in determining whether a quorum is
present but shall not be counted when the board of directors or a committee of
the board takes action on the transaction. For purposes of this Article, a
director is "indirectly" a party to a transaction if the other party to the
transaction is an entity in which the director has a material financial interest
or in which the director is an officer, director or general partner.
Article XII
-----------
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. Indemnification. (a) The corporation shall have the power
to and shall indemnify any person who is or was a director, officer, General
Manager or General Counsel of the corporation, or who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, to the full extent
permitted by law.
(b) The corporation may, by resolution of the board of directors or
as required by law, indemnify any other person who is or was an employee or
agent of the corporation, or who is or was serving at the request of the
corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, to the full extent permitted by law.
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Article XIII
------------
AMENDMENTS
Unless specifically reserved to the shareholders by the articles of
incorporation, these by-laws may be altered, amended or repealed and new by-laws
may be adopted at any meeting of the board of directors of the corporation by a
majority vote of the directors present at the meeting or at any annual or
special meeting of the shareholders of the corporation by the affirmative vote
of the holders of a majority of the shares of the corporation represented at
such meeting in person or by proxy entitled to vote thereon.
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EMPRESS CASINO JOLIET CORPORATION
ADDENDUM TO BY-LAWS
By-Law amendments adopted: June 17, 1996
CHIEF EXECUTIVE OFFICER
SECTION 11. Subject to the direction and control of the board of
directors, the chief executive officer shall have charge of the overall
business, affairs and policies of the corporation; he shall see that the
resolutions and directions of the board of directors are carried into effect
except in those instances in which that responsibility is specifically assigned
to some other person by the board of directors from time to time. The Chief
Executive Officer may sign, with the secretary, an assistant secretary or any
other officer of the corporation thereunto duly authorized by the board of
directors, certificates for shares of the corporation, any deeds, mortgages,
bonds, contracts or other instruments which the board of directors has
authorized to be executed except in cases where the execution thereof shall be
expressly delegated by the board of directors or by these by-laws to some other
officer or agent of the corporation or shall be required by law to be otherwise
executed. In general, the chief executive officer shall perform all duties
incident to the office of chief executive officer of the corporation and such
other duties as may be prescribed from time to time by the board of directors.
In the absence of the chairman, or in the event of the chairman's inability to
act, the chief executive officer shall preside at all meetings of the
shareholders and of the board of directors.
CHIEF OPERATING OFFICER
SECTION 12. The chief operating officer of the corporation shall be the
principal operating officer of the corporation and, subject to the control of
the board of directors and the president of the corporation, shall have general
and active management of the day-to-day business of the corporation. He shall
ensure that the businesses of the corporation are managed in a cohesive,
consistent and complementary manner and shall assist in the identification,
building and integration into the corporation of new business opportunities to
ensure the continued growth and development of the corporation. In the absence
of the chief executive officer and the president, the chief operating officer
shall perform the duties of and shall be vested with all the powers of the chief
executive officer and the president. The chief operating officer may sign, with
the secretary, an assistant secretary or any other officer of the corporation
thereunto duly authorized by the board of directors, any deeds, mortgages,
bonds, contracts or other instruments which the board of directors has
authorized to be executed except in cases where the execution thereof shall be
expressly delegated by the board of directors or by these by laws to some other
officer or agent of the corporation or shall be required by law to be otherwise
executed.
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CHIEF FINANCIAL OFFICER
SECTION 13. The chief financial officer of the corporation shall be the
treasurer of the corporation and shall have overall responsibility for the
management and protection of the assets of the corporation. He shall direct the
timely preparation, interpretation and dissemination of financial information
for the corporation, shall establish and maintain internal controls required to
safeguard the assets and integrity of the corporation, and shall see to timely
responses to internal and external audit recommendations. The chief financial
officer shall have overall charge and custody of and be responsible for all
funds and securities of the corporation and for the receipt and disbursement
thereof. He shall supervise the chief accounting officer of the corporation. If
required by the board of directors, the chief financial officer shall give a
bond for the faithful discharge of his duties in such sum and with such surety
or sureties as the board of directors shall determine.
CHIEF LEGAL OFFICER
SECTION 14. The chief legal officer, subject to the control of the chief
executive officer and the president of the corporation, shall supervise and
control the legal matters of the corporation. He shall be a licensed attorney in
good standing and shall be responsible for providing and coordinating expert
legal advise in connection with the laws and regulations governing the business
of the corporation. He shall be the general supervisor of all employees of the
corporation who.deal with legal matters.
<PAGE>
EXHIBIT 3.7
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE PAGE 1
______________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "EMPRESS RIVER CASINO FINANCE CORPORATION" FILE IN THIS OFFICE
ON THE SEVENTH DAY OF JANUARY, ^^. D. 1994, AT 12 O'CLOCK P.M.
[SEAL]
[SEAL] /s/ Edward J. Freel
----------------------------------------
Edward J. Freel, Secretary of State
2367284 8100 AUNTHENTICATION: 9134499
981226951 DATE: 06-12-98
<PAGE>
CERTIFICATE OF INCORPORATION
OF
EMPRESS RIVER CASINO FINANCE CORPORATION
**************
THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, does hereby certify as follows:
FIRST: The name of the Corporation is EMPRESS RIVER CASINO FINANCE
CORPORATION.
SECOND: The registered office of the Corporation is to be located at 1209
Orange Street in the City of Wilmington in the County of New Castle, in the
State of Delaware. The name of its registered agent at that address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock which the Corporation is
authorized to issue is Three Thousand (3,000) shares of common stock, $0.01 par
value per share.
FIFTH: The name and address of the Incorporator is as follows:
NAME ADDRESS
---- -------
Mark S. Albert c/o D'Ancona & Pflaum
30 N. LaSalle Street
Suite 2900
Chicago, IL 60602
<PAGE>
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders.
(1) The number of directors of the Corporation shall from time to time be
fixed by, or in the manner provided in, the by-laws. Election of directors need
not be by ballot unless the by-laws so provide.
(2) The Board of Directors shall have power without the assent or vote of
the stockholders to make, alter, amend, change, add to or repeal the by-laws of
the Corporation; to authorize and cause to be executed mortgages and liens on
all or any part of the property of the Corporation; to determine the use and
disposition of any surplus or net profits; and to fix the times for the
declaration and payment of dividends.
(3) The directors in their discretion may submit any contract or act for
approval or ratification at any annual meeting of the stockholders or at any
meeting of the stockholders called for the purpose of considering any such act
or contract, and any contract or act that shall be approved or be ratified by
the vote of the holders of a majority of the stock of the Corporation which is
represented in person or by proxy at such meeting and entitled to vote thereat
(provided that a lawful quorum of stockholders are present in person or by
proxy) shall be as valid and as binding upon the Corporation and upon all the
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stockholders as though it had been approved or ratified by every stockholder of
the Corporation, whether or not the contract or act would otherwise be open to
legal attack because of directors' interest, or for any other reason.
(4) In addition to the powers and authorities expressly conferred upon the
directors of the corporation, either by this Certificate or by Statute, the
directors are hereby empowered to exercise all such powers and do all such acts
as may be exercised or done by the Corporation, so long as such actions do not
violate applicable law, this Certificate, and any by-laws of the Corporation
from time to time enacted by the stockholders of the Corporation; provided,
however, that no by-laws shall invalidate any prior act of the directors which
would have been valid if such by-laws had not been enacted.
SEVENTH: The Corporation shall, to the fullest extent permitted by law,
indemnify all persons whom it may indemnify pursuant thereto.
EIGHTH: The liability of the Corporation's directors to the Corporation or
its stockholders shall be eliminated to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as the same may be amended and
supplemented. No amendment to or repeal of this ARTICLE EIGHTH shall apply to or
have any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
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TENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of January,
1994.
/s/ Mark S. Albert
___________________________________
Mark S. Albert
4
<PAGE>
EXHIBIT 3.8
B Y - L A W S
OF
EMPRESS RIVER CASINO FINANCE CORPORATION
----------------------------------------
ARTICLE I
---------
OFFICES
-------
SECTION 1. The registered office of the corporation shall be established
and maintained at the office of The Corporation Trust Company, in the city of
Wilmington, in the County of New Castle, in the State of Delaware. The
Corporation Trust Company shall be the registered agent of the corporation. The
corporation may have other offices, either within or without the State of
Delaware, at such place or places as the board of directors may from time to
time appoint or the business of the corporation may require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
SECTION 1. All annual meetings of the stockholders shall be held at such
place, within or without the State of Delaware, and at such time as may be fixed
or designated from time to time by the board of directors and shall be stated in
the notice of the meeting. At each annual meeting of stockholders, the
stockholders entitled to vote at such meeting shall elect a board of directors
and may transact such other corporate business as shall be stated in the notice
of the meeting or as may be otherwise properly brought before the meeting.
Special meetings of stockholders for any purpose may be held at such place,
within or without the State of Delaware, and at such time as stated in the
notice of the meeting or in a duly executed waiver of notice thereof. The
stockholders entitled to vote at any such special meeting may transact any
corporate business that is stated in the notice of the meeting or as may be
otherwise properly brought before the special meeting.
SECTION 2. Annual meetings of stockholders, commencing with the year 1995,
shall be held on the fourth Wednesday of December, at 10:00 a.m., or such other
day and at such other time as shall be designated from time to time by the board
of directors and shall be stated in the notice of the meeting. If the date of
the annual meeting shall fall upon a legal holiday, the meeting shall be held on
the next succeeding business day.
SECTION 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than sixty days before the date of the
meeting.
<PAGE>
SECTION 4. At least ten days before every meeting of stockholders, the
officer in charge of the stock ledger of the corporation shall prepare a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, showing the address of each stockholder and the number of
shares owned by each stockholder as set forth in the stock ledger of the
corporation. Such list shall be open to examination by any stockholder for any
purpose germane to the meeting during ordinary business hours for a period of at
least ten days prior to the meeting at a place where the meeting is to be held.
The list shall also be made available during the entire meeting and may be
inspected by any stockholder who is present.
SECTION 5. Unless otherwise prescribed by statute or by the certificate of
incorporation, special meetings of the stockholders for any purpose or purposes
may be called by the chairman of the board, if elected, or the president, and
shall be called by the chairman of the board, if elected, the president or the
secretary at the request in writing of a majority of the members of the board of
directors, or at the request in writing of stockholders owning a majority of the
shares of any class of the capital stock of the corporation issued and out
standing and entitled to vote. Such request shall state the purpose or purposes
of the proposed meeting.
SECTION 6. Written notice of a special meeting shall state the place, date
and hour of the meeting, and the purpose or purposes for which the meeting is
called, and shall be given to each stockholder entitled to vote at such meeting
not less than ten nor more than sixty days before the date of the meeting.
SECTION 7. Business transacted at any special meeting of stockholders
shall be limited to the purpose or purposes stated in the notice of the meeting
or any other purpose properly brought before such special meeting.
SECTION 8. Except as otherwise provided by statute or by the certificate
of incorporation, the holders of the issued and outstanding shares of stock of
the corporation which are entitled to cast a majority of the votes at any
meeting of stockholders, present in person or represented by proxy, shall
constitute a quorum at all meetings of stockholders for the transaction of
business. No business may be conducted at any meeting of stockholders unless a
quorum is present. If such a quorum shall not be present or represented at any
meeting of the stockholders, the stockholders entitled to vote at any such
meeting, present in person or represented by proxy, shall have power to adjourn
the meeting, without notice other than an announcement at the meeting, until a
quorum shall be present or represented. At such time at which a quorum shall be
present or represented, any business may be transacted at such meeting which
might have been transacted at the originally scheduled meeting as if the
stockholders had been properly notified of such meeting. If the adjournment of
the originally scheduled meeting is for more than thirty days, or if after the
adjournment of the originally scheduled meeting a new record date is fixed for
the subsequent meeting, a notice of the
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subsequent meeting shall be given to each stockholder of record entitled to vote
at the subsequent meeting.
SECTION 9. When a quorum is present at any meeting of stockholders, a
majority of the votes cast by holders of stock having voting power at such
meeting, present in person or represented by proxy, shall decide any question
properly brought before such meeting, unless the question is one upon which
applicable law or the certificate of incorporation requires a different vote, in
which case the vote required by such law or provision shall govern.
SECTION 10. At every meeting of stockholders, each stockholder shall be
entitled to vote in person or by proxy, but no proxy shall be valid longer than
three years from its date, unless such proxy specifically provides for a longer
survival period.
SECTION 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any meeting of stockholders, or any action
which may be taken at any meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing
setting forth the action so taken is signed by the holders of outstanding stock
having not less than the minimum number of votes necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing to such action.
SECTION 12. The board of directors, in advance of any meeting of
stockholders, may appoint one or more persons to act as inspectors at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at the meeting of stockholders may, and on the request of any
stockholder entitled to vote at such meeting, shall, appoint one or more
inspectors. In case any person appointed as an inspector fails to appear or act
as an inspector of such meeting, such vacancy may be filled by the board of
directors in advance of the meeting of stockholders or at the meeting of
stockholders by the person presiding at such meeting. Each inspector, before
performing his duties, shall take and sign an oath to faithfully execute the
duties of inspector at such meeting of stockholders with strict impartiality and
according to the best of his ability.
The inspectors shall determine: the aggregate number of shares outstanding,
the voting power of each share, the number of shares represented at the meeting
of stockholders, the existence or nonexistence of a quorum, and the validity and
effect of proxies. In addition, the inspectors shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the results of any vote, and perform any other acts as are proper to
conduct an election or vote with fairness to all stockholders. Upon the request
of the person presiding at the meeting of stockholders or any stockholder
entitled to vote at such meeting, the inspectors shall make a report in writing
of any
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<PAGE>
challenge or any question or matter determined by them and execute a certificate
of any fact found by them. Any report or certificate made by the inspectors
shall be prima facie evidence of the facts stated therein and of the vote
certified by them.
ARTICLE III
-----------
DIRECTORS
---------
SECTION 1. The number of directors which shall constitute the entire board
of directors shall be not less than five nor more than eleven. The initial board
of directors shall consist of eight directors. Thereafter, within the limits
specified above, the number of directors may be increased or decreased from time
to time pursuant to a resolution of the board of directors or by the
stockholders at the annual meeting. Directors shall be elected at the annual
meeting of stockholders and each director shall be elected to serve until the
next annual meeting of stockholders and until his successor is elected and
qualified, or until his earlier resignation or removal. Directors need not be
stockholders.
SECTION 2. Vacancies of the board of directors and newly created
directorships shall be filled by a majority vote of the members of the board of
directors then in office, or by the sole remaining director, as the case may be.
If there are no directors remaining in office, then an election of directors may
be held in the manner provided by statute or by these by-laws.
SECTION 3. The corporation shall be managed by and under the direction of
its board of directors, which may exercise all such powers of the corporation
and do all such lawful acts as are not otherwise required by statute, the
certificate of incorporation or these by-laws, to be exercised or done by the
stockholders. Without limiting the generality of the foregoing, the board of
directors is specifically granted the authority to approve the hiring of all
employees of the corporation.
MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------
SECTION 4. The board of directors may hold both regular or special
meetings within or without the State of Delaware.
SECTION 5. The first meeting of each newly elected board of directors
shall be held at the same place as the annual meeting of stockholders,
immediately following the adjournment of such meeting. No notice of such meeting
of directors shall be required to be delivered to the newly elected directors in
order to legally constitute a meeting, provided a quorum shall be present.
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<PAGE>
SECTION 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board of directors.
SECTION 7. Special meetings of the board of directors may be called by
the chairman of the board, if elected, or the president, either personally or
upon the written request of at least two directors, in each case upon three (3)
days prior written notice delivered to each director.
SECTION 8. At all meetings of the board of directors, a majority of the
entire board of directors then in office shall constitute a quorum for the
transaction of business. No action may be taken at a meeting of the board of
directors unless a quorum is present. Except as may be otherwise specifically
provided by statute or by the certificate of incorporation, the act of a
majority of the directors present at any meeting of directors at which a quorum
is present shall constitute the act of the board of directors. If a quorum shall
not be present at any meeting of the board of directors, the directors present
may adjourn the meeting without notice other than an announcement at the
meeting, until a quorum shall be present.
SECTION 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or at any committee thereof, may be taken
without a meeting if all members of the board of directors or any committee
thereof, as the case may be, consent to such action in writing.
SECTION 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors or any committee thereof,
may participate in a meeting of the board of directors or any committee thereof,
as the case may be, by means of a telephone conference or similar communication
equipment, whereby all persons participating in the meeting can hear each other.
Such participation in a meeting shall constitute presence in person at the
meeting.
COMMITTEES OF DIRECTORS
-----------------------
SECTION 11. The board of directors may designate one or more committees.
Each committee shall consist of one or more of the directors. The board of
directors may designate one or more directors as alternate members of any
committee who may replace any absent or disqualified member at any meeting of
the committee. All committees of the board of directors may only be established
by an affirmative vote of the number of directors of the corporation equal to a
majority of the entire board of directors.
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Any committee established by the board of directors may exercise all the
powers which are set forth in the resolution of the board of directors
establishing such committee. Notwithstanding the foregoing, no committee shall
have the power or authority to amend the certificate of incorporation; adopt an
agreement of merger or consolidation; recommend to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property or
assets; recommend to the stockholders a dissolution of the corporation or a
revocation of a dissolution; amend the by-laws of the corporation; or declare a
dividend or authorize the issuance of stock.
SECTION 12. Each committee may keep regular minutes of its meetings and
report such minutes to the board of directors, if required.
COMPENSATION OF DIRECTORS
-------------------------
SECTION 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The corporation may reimburse the
directors for their expenses, if any, incurred by them in connection with
attending meetings of the board of directors. No such payment shall prohibit a
director from serving in any other capacity with the corporation and receiving
compensation therefor from the corporation. Members of committees may be
entitled to receive similar compensation and reimbursement of expenses for
attending committee meetings.
REMOVAL OF DIRECTORS
--------------------
SECTION 14. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any director or directors may be removed, with
or without cause, by the holders of shares entitled to cast a majority of the
votes for the election of directors. A director elected or appointed by the
holders of a particular class of stock may be removed only by the vote of the
holders of a majority of the shares of such class.
ARTICLE IV
----------
NOTICES
-------
SECTION 1. Whenever applicable statutes, the certificate of incorporation
or these by-laws requires that notice be given to any director or stockholder,
such notice may be given in writing or by mail (addressed to such director or
stockholder, at his address as it appears on the records of the corporation,
with postage thereon prepaid), and such notice shall be deemed to be given at
the time when it is deposited in the United States mail. Notice to directors may
also be given personally in writing or by telegram or facsimile.
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SECTION 2. Whenever any notice is required to be given under applicable
statutes, the certificate of incorporation or these by-laws, a written waiver of
such notice, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed sufficient notice
pursuant to such applicable statute, the certificate of incorporation or these
by-laws.
ARTICLE V
---------
OFFICERS
--------
SECTION 1. The officers of the corporation shall be appointed by the
board of directors and may consist of a chairman of the board, a president, a
vice president, a secretary and a treasurer. The board of directors may also
appoint additional vice presidents, and one or more assistant secretaries and
assistant treasurers. Any number of offices may be held by the same person,
unless the certificate of incorporation or these by-laws provide otherwise.
SECTION 2. At the first meeting of each newly elected board of directors
held after each annual meeting of stockholders, the board of directors shall
choose a president, a treasurer and a secretary, and may choose a chairman of
the board, one or more vice presidents one or more assistant secretaries and one
or more assistant treasurers. The board of directors may appoint such other
officers and agents as it deems necessary or desirable from time to time.
SECTION 3. The officers of the corporation shall hold office until their
successors are chosen and qualified and shall exercise such powers and perform
such duties as are granted to them in these by-laws or as is determined from
time to time by the board of directors. Any officer elected or appointed by the
board of directors may be removed at any time by the affirmative vote of the
number of directors equal to a majority of the entire board of directors. Any
vacancy occurring in any office of the corporation may be filled by the board of
directors.
CHAIRMAN OF THE BOARD
---------------------
SECTION 4. The chairman of the board, if elected and serving, shall be
the chief executive officer of the corporation and shall supervise and control
the business and affairs of the corporation. The chairman shall preside at all
meetings of the stockholders and the board of directors. The chairman may sign,
with the secretary or any other authorized officer of the corporation,
certificates for shares of the corporation, and, when authorized by the board of
directors, any deeds, mortgages, bonds, contracts or other instruments to be
entered into by the corporation. The chairman shall also perform such other
duties as may be prescribed to him or her from time to time by the board of
directors.
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PRESIDENT
---------
SECTION 5. In the event that a chairman has not been elected, the
president shall perform all of the duties of the chairman which are set forth in
Section 4 of this Article V. In the event that a chairman has been elected, the
president shall be the chief operating officer of the corporation and, subject
to the direction of the chairman, shall supervise and control the operations of
the corporation. In the absence of the chairman, the president shall preside at
all meetings of the stockholders and the board of directors. In the absence of
the chairman or in the event the chairman is unable or unwilling to act, the
president shall perform the duties of the chairman set forth in Section 4 of
this Article V. The president may sign, with the secretary or any other
authorized officer of the corporation, certificates for shares of the
corporation, and, when authorized by the board of directors, any deeds,
mortgages, bonds, contracts or other instruments to be entered into by the
corporation. The president shall also perform all other duties incident to the
office of president and chief operating officer and such other duties as may be
prescribed to him or her from time to time by the chairman or the board of
directors.
VICE PRESIDENTS
---------------
SECTION 6. In the absence of the president or in the event the president
is unable or unwilling to act, the vice president (or if there is more than one
vice president, any vice president) shall perform the duties of the president
set forth in Section 5 of this Article V, including, without limitation, the
duties of the chairman if and as assumed by the president as a result of the
chairman's absence or inability or refusal to act. Any vice president may sign,
with the secretary or any other authorized officer of the corporation,
certificates for shares of the corporation and, when authorized by the board of
directors, any deeds, mortgages, bonds, contracts or other instruments to be
entered into by the corporation. Each vice president shall perform such other
duties as may be assigned to him or her from time to time by the chairman, the
president or the board of directors.
TREASURER
---------
SECTION 7. The board of directors may require the treasurer to give a
bond to the corporation as security for the faithful discharge of such
treasurer's duties in such sum and with such surety or sureties as the board of
directors shall determine. The Treasurer shall (a) have charge and custody of,
and shall be responsible for, all funds and securities of the corporation; (b)
receive and give receipts for moneys due and payable to the corporation from any
source whatsoever; (c) deposit all such moneys in the name of the corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with the provisions of these by-laws; and (d) perform all other
duties incident to the office of treasurer and such other duties as may be
assigned to him
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or her from time to time by the chairman, the president, any vice president or
the board of directors.
SECRETARY
---------
SECTION 8. The secretary shall: (a) keep records of corporate action,
including the minutes of meetings of the stockholders and the board of
directors, in one or more books maintained for such purpose; (b) see that all
notices required to be given pursuant to applicable laws, the certificate of
incorporation or these by-laws are properly given; (c) be custodian of the
corporate records and of the seal of the corporation and see that, as required
by any applicable law, the seal of the corporation is affixed to all
certificates of shares of the corporation and to all documents, the execution
and delivery of which is properly authorized by the board of directors; (d) keep
a register of the post office address of each stockholder; (e) sign, with the
chairman, the president or any vice president, certificates for shares of the
corporation and, when authorized by the board of directors, any deeds,
mortgages, bonds contracts, or other instruments to be entered into by the
corporation; (f) maintain and update the stock transfer books of the
corporation; and (g) perform all other duties incident to the office of
secretary and such other duties as may be assigned to him or her from time to
time by the chairman, the president, any vice president or the board of
directors.
ASSISTANT TREASURERS AND
ASSISTANT SECRETARIES
---------------------
SECTION 9. The board of directors may require an assistant treasurer, if
elected, to give a bond to the corporation as security for the faithful
discharge of such assistant treasurer's duties in such sums and with such
sureties as the board of directors shall determine. The assistant secretaries,
if any, may sign, with the chairman, the president or any vice president,
certificates for shares of the corporation and, when authorized by the board of
directors, any deeds, mortgages, bonds, contracts or other instruments to be
entered into by the corporation. The assistant treasurers and assistant
secretaries shall perform such duties as shall be assigned to them by the
treasurer or the secretary, respectively, or by the chairman, the president, any
vice president or the board of directors.
SALARIES
--------
SECTION 10. The salaries of the officers of the corporation shall be fixed
from time to time by the board of directors. No officer of the corporation shall
be prevented from receiving a salary from the corporation if such officer is
also a director of the corporation.
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ARTICLE VI
----------
CERTIFICATE OF STOCK
--------------------
SECTION 1. Every holder of shares of stock of the corporation shall be
issued a certificate, signed by the chairman, if elected, the president or any
vice president, and the secretary or any assistant secretary, certifying the
number of shares owned by such holder of stock in the corporation.
Certificates may be issued for partly paid shares and, if so issued, the
face or back of the certificates issued shall state the total amount of the
consideration to be paid for such shares and the amount paid thereon as of the
date of the issuance of such certificate.
If the corporation is authorized to issue more than one class of stock or
more than one series of any class of stock, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate issued by the corporation to
represent such class or series of stock; provided that, except as otherwise
required by applicable laws, in lieu of the foregoing requirements, the
corporation may set forth on the face or back of the certificate issued by the
corporation to represent such class or series of stock, a statement that the
corporation will furnish without charge to each stockholder who so requests, a
statement setting forth the powers, designations, preferences and relative,
participating, optional or other special rights of each class or series of stock
and the qualifications, limitations or restrictions of such preferences and/or
rights.
SECTION 2. Any of the signatures on a certificate representing shares of
the corporation may be a facsimile signature. If any officer, transfer agent or
registrar who has signed a certificate representing shares of the corporation
shall have ceased to be an officer, transfer agent or registrar of the
corporation before such certificate was issued, such certificate may be issued
by the corporation with the same effect as if such person was an officer,
transfer agent or registrar of the corporation as of the date such certificate
was issued.
LOST CERTIFICATES
-----------------
SECTION 3. Upon receipt of an affidavit of a holder of shares of the
corporation certifying that such holder's certificate or certificates
representing such shares of the corporation have been lost, stolen, or
destroyed, the board of directors may direct a new certificate or certificates
to be issued to such holder of shares as a replacement certificate for any
certificate or certificates alleged to have been lost, stolen or destroyed. In
connection with the issuance of any replacement certificate or certificates, the
board of directors may, in its discretion and as condition precedent to the
issuance thereof,
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require the owner of such lost, stolen or destroyed certificate or certificates,
or his legal representatives, as the case may be, to either (a) advertise that
such certificate or certificates have been lost, stolen or destroyed, as the
case may be, in such a manner as the board of directors may determine, in its
sole discretion; and/or (b) give the corporation a bond, in such sum as the
board of directors may determined which shall serve as security against any
claim that may be made against the corporation with respect to the certificate
or certificates alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
-----------------
SECTION 4. Upon the surrender to the corporation or the transfer agent of
the corporation of a certificate of shares of the corporation duly endorsed for
transfer or accompanied by proper evidence of succession, assignation or
authority to transfer, the corporation shall issue a new certificate to the
person entitled to such new certificate, cancel the old certificate and record
the transfer of shares upon its books; provided, however, that the corporation's
obligations under this paragraph shall be subject to applicable Federal and
state securities laws, other applicable laws, the certificate of incorporation,
and any legends and stop transfer instructions set forth on such old
certificate.
FIXING RECORD DATE
------------------
SECTION 5. In order for the corporation to determine the stockholders
entitled to (a) notice of, or to vote at, any meeting of stockholders or any
adjournment thereof; (b) consent to corporate action in writing without a
meeting; (c) receive payment of any dividend or other distribution or allotment
of any rights; (d) exercise any rights in respect to any change, conversion or
exchange of stock; or (e) take any other lawful action, the board of directors
may fix a record date in advance of any such action, which shall not be more
than sixty nor less than ten days before the date of any meeting of
stockholders, nor more than sixty days prior to any other action taken or to be
taken. A determination of stockholders of record entitled to notice of, or to
vote at, a meeting of stockholders, shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
REGISTERED STOCKHOLDERS
-----------------------
SECTION 6. The corporation shall recognize the person or persons
registered on its books as the owner or owners of shares of stock of the
corporation to receive dividends, to vote as such owner, and to be held liable
for calls and assessments with respect to such shares. The corporation shall not
be bound to recognize any claim to, or interest in, the shares of the
corporation on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by applicable
laws.
11
<PAGE>
ARTICLE VII
-----------
GENERAL PROVISIONS
------------------
DIVIDENDS
---------
SECTION 1. Subject to applicable law and the certificate of
incorporation, (a) the board of directors, at any regular or special meeting,
may declare dividends upon the capital stock of the corporation; and (b)
dividends may be paid in cash, property, or shares of the capital stock of the
corporation.
SECTION 2. Prior to the payment of any dividend, the board of directors
may set aside out of any funds of the corporation available for dividends, as a
reserve or reserves to meet contingencies, for equalizing dividends, for
repairing or maintaining any property of the corporation, or for such other
purpose or purposes as the board of directors determines is in the best
interests of the corporation, such sum or sums as the board of directors
determines, from time to time, in its sole discretion. The board of directors
may modify or abolish any such reserve in the same manner in which it was
created.
ANNUAL STATEMENT
----------------
SECTION 3. The board of directors shall present to the stockholders a
full and clear statement of the business and condition of the corporation at
each annual meeting of stockholders and at any special meeting of the
stockholders when called for by vote of the stockholders.
CHECKS
------
SECTION 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers, person or persons as the board of
directors may designate from time to time.
FISCAL YEAR
-----------
SECTION 5. The fiscal year of the corporation shall be fixed by a
resolution of the board of directors.
SEAL
----
SECTION 6. The corporate seal of the corporation shall have inscribed
thereon the name of the corporation and the words "CORPORATE SEAL DELAWARE". The
seal of the corporation may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
12
<PAGE>
INDEMNIFICATION
---------------
SECTION 7. (a) Indemnification of Officers, Directors, Employees and
-----------------------------------------------------
Agents; insurance. Any person who was or is a party or is threatened to made a
- -----------------
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprises,
shall be indemnified by the corporation against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not, of
---- ----------
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery of Delaware or the Court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery of Delaware,
or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) hereof, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
13
<PAGE>
(d) Any indemnification pursuant to paragraphs (a) and (b) of this Section
7 of this Article VII (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
the first two paragraphs of this Section 7. Such determination shall be made by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or if such a quorum is
not obtainable (or, even if obtainable a quorum of disinterested directors so
directs) by independent legal counsel in written opinion, or by the
stockholders.
(e) Expenses (including attorney's fees) incurred by a director, officer,
employee or agent of the corporation in defending a civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Section 7.
(f) The indemnification and advancement of expenses provided by this
Section 7 shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any by-
law, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall, unless otherwise provided when authorized
or ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(g) The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provision of this Section 7.
(h) For the purpose of this Section 7, all words and phrases used herein
shall have the meanings ascribed to them under Section 145 of the General
Corporation Law of the State of Delaware.
14
<PAGE>
ARTICLE VIII
------------
AMENDMENTS
----------
SECTION 1. These by-laws may be altered, amended or repealed or new by-
laws may be adopted by (a) the stockholders at any regular meeting of the
stockholders or, at any special meeting of the stockholders if notice of such
alteration, amendment, repeal or adoption of new by-laws is contained in the
notice of such special meeting; or (b) if such power is granted to the board of
directors by the certificate of incorporation, the board of directors, at any
meeting of the board of directors. If the power to adopt, amend or repeal by-
laws is granted to the board of directors by the certificate of incorporation,
such grant shall not divest or limit the power of the stockholders to adopt,
amend or repeal the by-laws.
ARTICLE IX
----------
RESTRICTIONS ON TRANSFER OF STOCK
---------------------------------
SECTION 1. No stockholder shall be permitted to sell, assign transfer,
pledge, hypothecate, encumber of otherwise dispose of any of the shares of the
corporation, directly or indirectly, or any interest therein, without first
notifying the corporation in writing of a bona fide third party offer and the
corporation's right of first refusal to purchase such shares. In the event the
corporation does not exercise such right of first refusal within 30 days from
the date the corporation receives notice, a right of second refusal to purchase
such shares shall be offered in writing to all of the other stockholders of the
corporation. Any notice of first or second refusal sent to the corporation or
the other stockholders shall contain the price and terms of the purchase of the
shares. Any exercise of a right of first or second refusal by the corporation or
the other stockholders shall be made in accordance with the price and terms
offered by the third party offeror contained in the notice. To the extent more
than one stockholder desires to purchase shares of the selling stockholder, such
stockholders shall divide the purchase of shares as mutually agreed or, if
unable to agree, in accordance with their relative shareholdings of the
corporation. Any such shares not purchased by the corporation or the other
stockholders, may be acquired by the third party offeror on the terms contained
in the original notice.
SECTION 2. So long as Section 1 of this Article IX of the by-laws of the
corporation is in effect, each and every certificate evidencing ownership of
shares in the corporation by the stockholders shall contain upon its face, or
upon the reverse side thereof, notice that the shares of the corporation are
subject to the restriction on transfer provided in Section 1 of this Article IX
of these by-laws.
15
<PAGE>
EXHIBIT 3.9
STATE OF INDIANA
OFFICE OF THE SECRETARY OF STATE
CERTIFICATE OF ORGANIZATION
OF
HAMMOND RESIDENTIAL LLC
I, SUE ANNE GILROY, Secretary of State of Indiana, hereby certify that Articles
of Organization of the above limited liability company have been presented to
me at my office accompanied by the fees prescribed by law and that I have found
such Articles conform to the provisions of the Indiana Business Flexibility Act,
as amended.
NOW, THEREFORE, I hereby issue to such limited liability company this
Certificate of Organization, and further certify that its existence will begin
February 23, 1998.
In Witness Whereof, I have hereunto set my
hand and affixed the seal of the State of
Indiana, at the City of Indianapolis, this
Twenty-third day of February, 1998.
<PAGE>
STATE OF INDIANA
ARTICLES OF ORGANIZATION
OF A
DOMESTIC LIMITED LIABILITY COMPANY
1. The name of the limited liability company is Hammond Residential LLC.
2. The limited liability company's registered agent and office in Indiana is
Rick S. Mazer, 825 Empress Drive, Hammond, IN 46320
3. If not of perpetual duration, the latest date on which the limited liability
company will dissolve is 12/31/2048.
4. The limited liability company does not have a manager.
Dated: February 20, 1998
/s/ Suzanne L. Saxman Suzanne L. Saxman, Organizer
- --------------------------- ------------------------------
signature name, title
<PAGE>
[SEAL]
STATE OF INDIANA
Office of the Secretary of State
I hereby certify that this is a true and complete copy of the two (2) page
document(s) as filed in this office.
DATED 6/12/, 1998
/s/ Sue Anne Gilroy
- --------------------------------------
Secretary of State
By: /s/ [Signature Illegible]^^
------------------------------------
This Certification Stamp replaces our previous Certification System.
<PAGE>
EXHIBIT 3.10
OPERATING AGREEMENT
OF
HAMMOND RESIDENTIAL, L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and
---------
entered into as of December 18, 1997, by and between Hammond Residential,
L.L.C., an Indiana limited liability company (the "Company"), and Empress Casino
-------
Hammond Corporation, an Indiana corporation together with any other Persons who,
after the date of this Agreement, become members in the Company (collectively,
the "Members").
-------
WHEREAS, the Company was formed as a limited liability company by the
filing of its Articles of Organization with the Secretary of the State of the
State of Indiana on December 18, 1997; and
WHEREAS, the Member and the Company desire to set forth their respective
rights and obligations in this Limited Liability Company Agreement for the
Company.
R E C I T A L S
---------------
In consideration of the mutual covenants of the parties hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
---------
FORMATION OF LIMITED LIABILITY COMPANY
--------------------------------------
1.1 The parties hereby enter into a limited liability company (the
"Company") under the provisions of the Indiana Business Flexibility Act (the
"Act") and, except as herein otherwise expressly provided, the rights and
liabilities of the Member shall be as provided in that Act, as amended from time
to time.
1.2 On December 18, 1997, the Company filed Articles of Organization with
the Indiana Secretary of State in accordance with and pursuant to the Act.
ARTICLE II
----------
NAME
----
The business of the Company shall be conducted under the name HAMMOND
RESIDENTIAL, L.L.C., or such other name as the Member shall hereafter designate.
1
<PAGE>
ARTICLE III
-----------
DEFINITIONS
-----------
As used in this Agreement, the following terms shall have the following
meanings:
3.1 "Agreement" means this Operating Agreement, as amended, modified or
supplemented from time to time.
3.2 "Company" means the limited liability company formed pursuant to this
Agreement by the parties hereto, as said company may from time to time be
constituted.
3.3 "Interest" means the Member's share of the profits and losses of the
Company and the Member's right to receive distributions of the Company's assets.
3.4 "Member" means Hammond Residential, L.L.C.
ARTICLE IV
----------
NATURE OF BUSINESS
------------------
The business of the Company is to acquire land, develop and construct
residential housing in Hammond, Indiana, engage in all activities which the
Member determines are related or incidental thereto, and to engage in any other
lawful activities.
ARTICLE V
---------
NAMES OF MEMBER
---------------
The name of the Member and its percentage interest in the Company are as
set forth on Schedule A.
ARTICLE VI
----------
TERM
----
The Company shall continue until February 1, 2044 unless sooner terminated
as hereinafter provided.
2
<PAGE>
ARTICLE VII
-----------
PRINCIPAL PLACE OF BUSINESS
---------------------------
The principal place of business of the Company shall be 825 Empress Drive,
Hammond, Indiana, or such other place or places as the Member may designate.
ARTICLE VIII
------------
CAPITAL AND CONTRIBUTIONS
-------------------------
The initial capital of the Company shall be an amount determined by the
Member, in its sole discretion. The Member has contributed or shall be
obligated to contribute to the initial capital of the Company an amount no
greater than the amount indicated in Schedule A. Upon a determination of the
Member that additional capital is necessary to carry out the business of the
Company, the Member may make additional capital contributions to the Company.
ARTICLE IX
----------
DISTRIBUTIONS
-------------
The Member shall have the sole discretion to cause the Company to make
distributions.
ARTICLE X
---------
ALLOCATIONS OF PROFITS AND LOSSES
---------------------------------
Each item of the Company's income, gain, loss, deduction or credit shall be
allocated to the Member.
ARTICLE XI
----------
BOOKS OF ACCOUNT AND RECORDS
----------------------------
11.1 Proper and complete records and books of account shall be kept by the
Member in which shall be entered fully and accurately all transactions and other
matters relating to the Company's business as are usually entered into records
and books of account maintained by persons engaged in businesses of a like
character. The Company books and records shall be kept on the accrual basis,
unless a different accounting method is permitted under applicable law and the
Member elects to employ such method. The books and records shall at all times
be maintained at the principal offices of the Company and shall be open to the
reasonable inspection and examination by the
3
<PAGE>
Member or its duly authorized representatives during reasonable business hours.
11.2 The Company shall be required to keep only those records and
information that are specifically required by Chapter 4, Section 8(a) of the
Act.
ARTICLE XII
-----------
FISCAL YEAR
-----------
The fiscal year of the Company shall end on December 31 of each year.
ARTICLE XIII
------------
COMPANY FUNDS
-------------
The funds of the Company shall be deposited in such bank account or
accounts, or invested in such interest-bearing or non-interest bearing
investments, as shall be designated by the Member. All withdrawals from any such
bank accounts shall be made by the authorized agent or agents of the Member.
Company funds shall be separately identifiable from and not commingled with
those of any other person.
ARTICLE XIV
-----------
POWERS, RIGHTS AND DUTIES OF MEMBER
-----------------------------------
14.1 The Member shall have exclusive authority to manage the operations and
affairs of the Company and to make all decisions regarding the business of the
Company, including without limitation making loans of Company funds on such
terms as the Member, in its sole discretion, deems appropriate. Without
limiting the generality of the foregoing, the Member shall have exclusive
authority to establish such business strategies, accounting procedures and other
practices and to make such business decisions as the Member, in its sole
discretion, deems advisable for the operation of the Company. In addition, it
is understood and agreed that the Member shall have all of the rights and powers
of a member as provided in the Act and as otherwise provided by law, and any
action taken by the Member shall constitute the act of and serve to bind the
Company. In dealing with the Member acting on behalf of the Company, no person
shall be required to inquire into the authority of the Member to bind the
Company. Persons dealing with the Company are entitled to rely conclusively on
the power and authority of the Member as set forth in this Agreement.
14.2 Subject to the foregoing, the Member shall have the right, power and
authority to do on behalf of the Company all things which in its sole judgment,
are necessary, proper or desirable to effectuate the purposes of the Company and
to carry out its duties and responsibilities, including,
4
<PAGE>
without limitation to fully satisfy all of Empress Casino Hammond Corporation's
obligations under Section 5.07 of the Hammond Riverboat Gaming Project
Development Agreement dated June 21, 1996, among Empress Casino Hammond
Corporation, the City of Hammond, Indiana and the City of Hammond Department of
Redevelopment.
14.3 The Member and its shareholders, officers, directors, employees and
agents shall have no liability whatever, whether to the Company or to the
creditors of the Company, for the debts of the Company or any of its losses,
except to the extent set forth in the Act.
14.4 Neither the Member nor any shareholder, officer, director, employee or
agent of the Member shall be liable, responsible or accountable in damages or
otherwise to the Company for any action taken or failure to act on behalf of the
Company within the scope of the authority conferred on the Member by this
Agreement or by law unless such action or omission was performed or omitted
fraudulently or in bad faith or constituted gross negligence. The Member is
hereby designated the "tax matters member" of the Company.
14.5 The Company shall indemnify and hold harmless the Member (and its
shareholders, officers, directors, employees and agents, if any) from and
against any loss, expense, damage or injury suffered or sustained by them by
reason of any acts, omissions or alleged acts or omissions arising out of the
Member's activities on behalf of the Company, including but not limited to any
judgment, award, settlement, reasonable attorneys' fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action, proceeding or claim if the acts, omissions or alleged acts or omissions
upon which such actual or threatened action, proceeding or claim is based were
for a purpose reasonably believed to be in the best interests of the Company and
were not performed or omitted fraudulently or in bad faith or as a result of
gross negligence by such party and were not in violation of such Member's
fiduciary obligation to the Company. Any such indemnification shall only be
from the assets of the Company.
ARTICLE XV
----------
DISSOLUTION OF THE COMPANY
--------------------------
The happening of any of the following events shall work an immediate
dissolution of the Company:
(a) The bankruptcy or dissolution of the Member or the occurrence of
any other event that terminates the continued membership of the Member
in the Company;
(b) The written agreement of the Member;
(c) The expiration of the term of the Company as provided in Article
VI of this Agreement;
(c) Entry of a decree of judicial dissolution under Section 9-2 of
the Act; or
5
<PAGE>
(e) Administrative dissolution under Chapter 10 of the Act.
ARTICLE XVI
-----------
ADDITIONAL PROVISIONS CONCERNING
DISSOLUTION OF THE COMPANY
--------------------------
16.1 In the event of the dissolution of the Company for any reasons, the
Member, or, if there is no Member, a liquidator or a liquidating committee
selected by the Member shall wind up the affairs of the Company. The Member
shall continue to be allocated profits and losses during the period of
liquidation in the same proportion as before the dissolution. The Member (or
such liquidator or liquidating committee) shall have full right and unlimited
discretion to determine the time, manner and terms of any sale or sales of
Company property pursuant to such liquidation.
16.2 Following the payment of all debts and liabilities of the Company and
all expenses of liquidation and subject to the right of the Member (or such
liquidator or liquidating committee) to set up such cash reserves as it may deem
reasonably necessary for any contingent or unforeseen liabilities or obligations
of the Company, the proceeds of the liquidation and any other funds of the
Company shall be distributed in accordance with Article IX hereof.
16.3 The Member shall look solely to the assets of the Company for all
distributions with respect to the Company and for the return of its capital
contribution. The Member shall not have any right to demand or receive property
other than cash upon dissolution and termination of the Company or to demand the
return of its capital contributions to the Company prior to dissolution and
termination of the Company.
16.4 Upon the dissolution and the commencement of winding up of the
Company, the Member shall have the authority to execute and record Articles of
Dissolution of the Company as well as any and all other documents required to
effectuate the dissolution and termination of the Company.
ARTICLE XVII
------------
NOTICE
------
All notices and demands required or permitted under this Agreement shall be
in writing and may be sent by U.S. mail, first class, postage prepaid, overnight
air courier or personal delivery to the Member at its address as shown from time
to time on the records of the Company. The Member may specify a different
address by notifying the Company in writing of such different address. Notices
shall be deemed given three days after mailing, the day after deposit with an
overnight air courier or when delivered in person, as the case may be.
6
<PAGE>
ARTICLE XVIII
-------------
ADMISSION OF NEW MEMBERS
18.1 New members may be admitted to the Company only upon the written
approval of the Member, and shall be admitted upon such terms and conditions as
the Member may determine, consistent with this Agreement, the Company's Articles
of Organization and any applicable provision of law.
18.2 In the event that the Company acquires an additional member for any
reason, the Member will amend and restate this Agreement to provide for the
relationship between the members.
ARTICLE XIX
-----------
AMENDMENT OF OPERATING AGREEMENT AND
------------------------------------
ARTICLES OF ORGANIZATION; MEETINGS.
19.1 This Agreement and the Articles of Organization may be amended with
the written approval of the Member.
19.2 Any action which may be taken at a meeting of the Member may be taken
by execution of a written consent providing for such action executed by the
Member.
19.3 The Member may appoint a proxy to vote or otherwise act for it at any
meeting of Members by signing an appointment form and delivering it to the
person so appointed. Such proxy shall be filed with the Company before or at
the time of the meeting. Unless otherwise provided in the proxy, any proxy may
be revoked at any time prior to the vote pursuant to such proxy by written
notice delivered to the Company. A proxy shall be valid for the time period
specified in the appointment form.
ARTICLE XX
----------
MISCELLANEOUS
-------------
20.1 This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof. It supersedes any prior agreement or
understandings between them relating to the subject matter hereof, and it may
not be modified or amended in any manner other than as set forth herein.
20.2 This Agreement and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Indiana.
7
<PAGE>
20.3 Except as herein otherwise specifically provided, this Agreement
shall be binding upon and inure to the benefit of the parties and their legal
representatives, heirs, administrators, executors, successors and assigns.
20.4 Captions contained in this Agreement are inserted only as a matter of
convenience and in no way define, limit or extend the scope or intent of this
Agreement or any provision thereof.
20.5 If any provision of this Agreement, or the application of such
provision to any person or circumstances shall be held invalid, the remainder of
this Agreement, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected hereby.
20.6 This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument.
8
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first hereinabove set forth.
HAMMOND RESIDENTIAL, L.L.C., EMPRESS CASINO HAMMOND CORPORATION
by Empress Casino Hammond Corporation,
its Managing Member:
By:/s/ Michael W. Hansen By:/s/ Michael W. Hansen
------------------------------- -------------------------------
Michael W. Hansen, Vice President Michael W. Hansen, Vice President
9
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
- ----------
INITIAL
CAPITAL PERCENTAGE
MEMBER CONTRIBUTION INTEREST
- ------ ------------ --------
<S> <C> <C>
EMPRESS CASINO HAMMOND $1,000.00 100%
CORPORATION
</TABLE>
10
<PAGE>
EXHIBIT 4.1
================================================================================
EMPRESS ENTERTAINMENT, INC., as Issuer,
THE GUARANTORS NAMED HEREIN
and
U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee
----------------------------
INDENTURE
Dated as of June 18, 1998
----------------------------
$150,000,000
8 1/8% Senior Subordinated Notes due 2006
================================================================================
<PAGE>
Reconciliation and tie between Trust Indenture Act of 1939
and Indenture, dated as of June 18, 1998
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- --------------- ----------
<S> <C>
(S)(S) 310 (a)(1)............................................... 6.09
(a)(2)............................................... 6.09
(a)(3)............................................... N/A
(a)(4)............................................... N/A
(a)(5)............................................... 6.09
(b).................................................. 6.08
(S)(S) 311 (a).................................................. 6.13
(b).................................................. 6.13
(S)(S) 312 (a).................................................. 7.01
(b).................................................. 7.02
(c).................................................. 7.02
(S)(S) 313 (a).................................................. 7.03
(b).................................................. 7.03
(c).................................................. 7.03
(d).................................................. 7.03
(S)(S) 314 (a)(1)............................................... 7.04
(a)(2)............................................... 7.04
(a)(3)............................................... 7.04
(a)(4)...............................................10.08
(b).................................................. N/A
(c)(1)......................................... 1.04, 4.03
(c)(2)......................................... 1.04, 4.03
(c)(3)............................................... N/A
(d).................................................. N/A
(e).................................................. 1.04
(S)(S) 315 (a)............................................... 6.01(a)
(b).................................................. 6.02
(c)............................................... 6.01(b)
(d)............................................... 6.01(c)
(e).................................................. 5.14
(S)(S) 316 (a) (last sentence)................... 1.1 ("Outstanding")
-----------
(a)(1)(A)............................................ 5.12
(a)(1)(B)............................................ 5.13
(a)(2)............................................... N/A
(b).................................................. 5.08
(S)(S) 317 (a)(1)............................................... 5.03
(a)(2)............................................... 5.04
(b)..................................................10.03
(S)(S) 318 (a).................................................. 1.08
</TABLE>
<PAGE>
________________________
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of this Indenture. "N/A" means Not Applicable.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
PARTIES....................................................................................................... 1
RECITALS OF THE COMPANY....................................................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.................................................. 2
Section 1.01. Definitions....................................................................... 2
Section 1.03. Rules of Construction............................................................. 23
Section 1.04. Form of Documents Delivered to Trustee............................................ 24
Section 1.05. Acts of Holders................................................................... 25
Section 1.06. Notices, etc., to the Trustee and the Company..................................... 26
Section 1.07. Notice to Holders; Waiver......................................................... 26
Section 1.08. Conflict with Trust Indenture Act................................................. 27
Section 1.09. Effect of Headings and Table of Contents.......................................... 27
Section 1.10. Successors and Assigns............................................................ 27
Section 1.11. Separability Clause............................................................... 27
Section 1.12. Benefits of Indenture............................................................. 27
Section 1.13. GOVERNING LAW..................................................................... 27
Section 1.14. No Recourse Against Others........................................................ 28
Section 1.15. Independence of Covenants......................................................... 28
Section 1.16. Exhibits and Schedules............................................................ 28
Section 1.17. Counterparts...................................................................... 28
Section 1.18. Duplicate Originals............................................................... 28
Section 1.19. Incorporation by Reference of TIA................................................. 28
ARTICLE TWO
SECURITY FORMS........................................................................................... 29
Section 2.01. Form and Dating................................................................... 29
Section 2.02. Execution and Authentication; Aggregate Principal Amount.......................... 30
Section 2.03. Restrictive Legends............................................................... 30
Section 2.04. Book-Entry Provisions for Global Notes............................................ 33
Section 2.05. Special Transfer Provisions....................................................... 34
ARTICLE THREE
THE NOTES................................................................................................ 36
Section 3.01. Title and Terms................................................................... 36
Section 3.02. Denominations..................................................................... 36
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Section 3.03. Temporary Notes................................................................... 37
Section 3.04. Registration; Registration of Transfer and Exchange............................... 37
Section 3.05. Mutilated, Destroyed, Lost and Stolen Notes....................................... 38
Section 3.06. Payment of Interest; Interest Rights Preserved.................................... 39
Section 3.07. Persons Deemed Owners............................................................. 40
Section 3.08. Cancellation...................................................................... 40
Section 3.09. Computation of Interest........................................................... 40
Section 3.10. Legal Holidays.................................................................... 41
Section 3.11. CUSIP Number...................................................................... 41
Section 3.12. Payment of Additional Interest Under Registration Rights Agreement................ 41
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE........................................................................ 41
Section 4.01. Defeasance........................................................................ 41
Section 4.02. Covenant Defeasance............................................................... 42
Section 4.03. Conditions to Defeasance or Covenant Defeasance................................... 42
Section 4.04. Deposited Money and U.S. Government Obligations To
Be Held in Trust, Etc............................................................. 43
Section 4.05. Reinstatement..................................................................... 44
Section 4.06. Repayment to Company.............................................................. 44
ARTICLE FIVE
REMEDIES................................................................................................. 45
Section 5.01. Events of Default................................................................. 45
Section 5.02. Acceleration of Maturity; Rescission and Annulment................................ 46
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee; Other Remedies........................................................... 47
Section 5.04. Trustee May File Proofs of Claims................................................. 47
Section 5.05. Trustee May Enforce Claims Without Possession of Notes............................ 48
Section 5.06. Application of Money Collected.................................................... 48
Section 5.07. Limitation on Suits............................................................... 49
Section 5.08. Unconditional Right of Holders To Receive Principal,
Premium and Interest.............................................................. 49
Section 5.09. Restoration of Rights and Remedies................................................ 50
Section 5.10. Rights and Remedies Cumulative.................................................... 50
Section 5.11. Delay or Omission Not Waiver...................................................... 50
Section 5.12. Control by Majority............................................................... 50
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Section 5.13. Waiver of Past Defaults........................................................... 50
Section 5.14. Undertaking for Costs............................................................. 51
Section 5.15. Waiver of Stay, Extension or Usury Laws........................................... 51
ARTICLE SIX
THE TRUSTEE.............................................................................................. 52
Section 6.01. Certain Duties and Responsibilities............................................... 52
Section 6.02. Notice of Defaults................................................................ 53
Section 6.03. Certain Rights of Trustee......................................................... 53
Section 6.04. Trustee Not Responsible for Recitals, Dispositions of
Notes or Application of Proceeds Thereof.......................................... 54
Section 6.05. Trustee and Agents May Hold Notes; Collections; etc............................... 55
Section 6.06. Money Held in Trust............................................................... 55
Section 6.07. Compensation and Indemnification of Trustee and Its Prior Claim................... 55
Section 6.08. Conflicting Interests............................................................. 55
Section 6.09. Corporate Trustee Required; Eligibility........................................... 56
Section 6.10. Resignation and Removal; Appointment of Successor Trustee......................... 56
Section 6.11. Acceptance of Appointment by Successor............................................ 57
Section 6.12. Successor Trustee by Merger, etc.................................................. 58
Section 6.13. Preferential Collection of Claims Against Issuers................................. 58
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY........................................................ 59
Section 7.01. Preservation of Information; Company To Furnish
Trustee Names and Addresses of Holders............................................ 59
Section 7.02. Communications of Holders......................................................... 59
Section 7.03. Reports by Trustee................................................................ 59
Section 7.04. Reports by Company and Each Guarantor............................................. 60
ARTICLE EIGHT
SUCCESSOR CORPORATION.................................................................................... 60
Section 8.01. When Company May Merge, etc....................................................... 60
Section 8.02. Successor Substituted............................................................. 61
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS...................................................................... 62
Section 9.01. Without Consent of Holders........................................................ 62
Section 9.02. With Consent of Holders........................................................... 62
Section 9.03. Compliance with Trust Indenture Act............................................... 63
Section 9.04. Effect of Supplemental Indentures................................................. 64
Section 9.05. Revocation and Effect of Consents................................................. 64
Section 9.06. Notation on or Exchange of Notes.................................................. 64
Section 9.07. Trustee May Sign Amendments, etc.................................................. 65
ARTICLE TEN
COVENANTS................................................................................................ 65
Section 10.01. Payment of Principal, Premium and Interest........................................ 65
Section 10.02. Maintenance of Office or Agency................................................... 65
Section 10.03. Money for Note Payments To Be Held in Trust....................................... 66
Section 10.04. Existence......................................................................... 67
Section 10.05. Payment of Taxes and Other Claims................................................. 67
Section 10.06. Insurance......................................................................... 67
Section 10.07. Compliance Certificate............................................................ 68
Section 10.08. Reporting Requirements............................................................ 68
Section 10.09. Limitation on Guarantees by Restricted Subsidiaries............................... 68
Section 10.10. Limitation on Incurrence of Indebtedness and Preferred Stock...................... 69
Section 10.11. Limitation on Restricted Payments................................................. 71
Section 10.12. Limitation on Transactions with Affiliates........................................ 72
Section 10.13. Limitation on Sale of Assets and Subsidiary Stock; Event of Loss.................. 73
Section 10.14. Change of Control................................................................. 75
Section 10.15. Limitation on Liens............................................................... 78
Section 10.16. Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries................................................. 78
Section 10.17. Restrictions on Sale of Capital Stock of Restricted Subsidiaries.................. 78
Section 10.18. Limitation on Designations of Unrestricted Subsidiaries........................... 79
Section 10.19. Limitation on Other Senior Subordinated Indebtedness.............................. 80
Section 10.20. Limitation on Lines of Business................................................... 80
Section 10.21. Limitation on Status as Investment Company........................................ 80
ARTICLE ELEVEN
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REDEMPTION OF NOTES...................................................................................... 80
Section 11.01. Optional and Special Redemption................................................... 80
Section 11.02. Required Regulatory Redemption.................................................... 81
Section 11.03. Applicability of Article.......................................................... 81
Section 11.04. Election To Redeem; Notice to Trustee............................................. 82
Section 11.05. Selection of Notes To Be Redeemed................................................. 82
Section 11.06. Notice of Redemption.............................................................. 82
Section 11.07. Deposit of Redemption Price....................................................... 83
Section 11.08. Notes Payable on Redemption Date.................................................. 83
Section 11.09. Notes Redeemed or Purchased in Part............................................... 84
ARTICLE TWELVE
SATISFACTION AND DISCHARGE............................................................................... 84
Section 12.01. Satisfaction and Discharge of Indenture........................................... 84
Section 12.02. Application of Trust Money........................................................ 85
ARTICLE THIRTEEN
GUARANTEE OF NOTES....................................................................................... 85
Section 13.01. Guarantee......................................................................... 85
Section 13.02. Execution and Delivery of Guarantee............................................... 87
Section 13.03. Additional Guarantors............................................................. 87
Section 13.04. Guarantee Obligations Subordinated to Guarantor
Senior Indebtedness............................................................... 88
Section 13.05. Release of a Guarantor............................................................ 88
Section 13.06. Waiver of Subrogation............................................................. 89
ARTICLE FOURTEEN
SUBORDINATION OF NOTES AND GUARANTEES.................................................................... 89
Section 14.01. Notes Subordinate to Senior Indebtedness; Guarantee
Obligations Subordinated to Guarantor Senior Indebtedness......................... 89
Section 14.02. Payment Over of Proceeds upon Dissolution, etc.................................... 90
Section 14.03. Suspension of Payment When Designated Senior
Indebtedness is in Default; Suspension of Guarantee Obligations
When Guarantor Senior Indebtedness in Default..................................... 91
Section 14.04. Trustee's Relation to Senior Indebtedness and Guarantor
Senior Indebtedness............................................................... 93
Section 14.05. Subrogation....................................................................... 93
Section 14.06. Provisions Solely To Define Relative Rights....................................... 94
Section 14.07. Trustee To Effectuate Subordination............................................... 94
Section 14.08. N o Waiver of Subordination Provisions............................................. 95
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Section 14.09. Notice to Trustee................................................................. 95
Section 14.10. Reliance on Judicial Order or Certificate of Liquidating Agent.................... 96
Section 14.11. Rights of Trustee as a Holder of Senior Indebtedness or
Guarantor Senior Indebtedness; Preservation of Trustee's Rights................... 97
Section 14.12. Article Applicable to Paying Agents............................................... 97
Section 14.13. No Suspension of Remedies......................................................... 97
TESTIMONIUM...................................................................................................
SIGNATURES....................................................................................................
Exhibit A Form of Initial Note................................................................................ A-1
Exhibit B Form of Exchange Note............................................................................... B-1
Exhibit C Form of Certificate To Be Delivered in Connection with
Subsequent Transfers to Non-QIB Accredited Investors................................................ C-1
Exhibit D Form of Certificate To be Delivered in Connection with Transfers
Pursuant to Regulation S............................................................................ D-1
Exhibit E Form of Guarantee................................................................................... E-1
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INDENTURE, dated as of June 18, 1998, among EMPRESS ENTERTAINMENT,
INC., a corporation incorporated under the laws of the State of Delaware (the
"Company"), as issuer; Empress Casino Joliet Corporation, a corporation
-------
incorporated under the laws of the State of Illinois, Empress River Casino
Finance Corporation, a corporation incorporated under the laws of the State of
Delaware, Empress Casino Hammond Corporation, a corporation incorporated under
the laws of the State of Indiana, and Hammond Residential, L.L.C., a limited
liability company organized under the laws of the State of Indiana, each as a
Guarantor; and U.S. BANK TRUST NATIONAL ASSOCIATION, a national banking
corporation, as trustee (the "Trustee").
-------
RECITALS OF THE COMPANY
The Company has duly authorized the issuance of $150,000,000 aggregate
principal amount of 8 1/8% Senior Subordinated Notes due 2006 (the "Initial
Notes"), and the issuance of 8 1/8% Senior Subordinated Notes due 2006, to be
exchanged for the Initial Notes, including the Exchange Securities and the
Private Exchange Securities contemplated by the Registration Rights Agreement
(as defined herein) (the "Exchange Notes" and, together with the Initial Notes,
the "Notes");
Each of the Guarantors has agreed to guarantee, jointly, severally and
unconditionally, the Notes.
Upon the effectiveness of the Exchange Offer Registration Statement or
the Shelf Registration Statement (each as defined herein), this Indenture will
be subject to, and shall be governed by, the provisions of the Trust Indenture
Act (as defined herein) that are required to be part of and to govern indentures
qualified under the Trust Indenture Act; and
All acts and things necessary have been done to make (i) the Notes,
when duly issued and executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company and (ii) this Indenture a valid
agreement of the Company in accordance with the terms of this Indenture.
NOW, THEREFOR, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
by the Holders (as defined herein) thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the Notes, as
follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.0. Definitions.
-----------
"Acquired Indebtedness" with respect to the Company means Indebtedness
---------------------
of another person existing at the time such person becomes a Restricted
Subsidiary or is merged or consolidated into or with the Company or one of its
Restricted Subsidiaries, and not incurred in connection with or in anticipation
of, such merger or consolidation or of such person becoming a Restricted
Subsidiary.
"Acquisition" means the purchase or other acquisition of any person or
-----------
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation or other transfer, and whether or not for
consideration.
"Adjusted Consolidated Net Income" means Consolidated Net Income,
--------------------------------
minus 100% of the amount of any writedowns, writeoffs, or negative extraordinary
charges not otherwise reflected in Consolidated Net Income during such period.
"Affiliate" means, (i) any person directly or indirectly controlling
---------
or controlled by or under direct or indirect common control with the Company or
any of the Restricted Subsidiaries; (ii) with respect to the Company and any
Restricted Subsidiary, so long as the Company is an S Corporation, any director
or stockholder of the Company or such Restricted Subsidiary; (iii) any spouse,
immediate family member, or other relative who has the same principal residence
of any person described in clauses (i) or (ii) above; and (iv) any trust in
which any person described in clauses (i) or (ii) above has a beneficial
interest. For purposes of this definition, the term "control" means (a) the
power to direct the management and policies of a person, directly or through one
or more intermediaries, whether through the ownership of voting securities, by
contract, or otherwise; or (b) the beneficial ownership of 10% or more of any
class of voting Capital Stock of a person (on a fully diluted basis) or of
warrants or other rights to acquire such class of Capital Stock (whether or not
presently exercisable).
"Affiliate Transaction" has the meaning set forth under Section 10.12.
---------------------
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
----------
transfer, lease or other disposition (including, without limitation, any merger,
consolidation or sale-leaseback transaction) to any person other than the
Company or a Restricted Subsidiary, in one or a series of related transactions,
of (i) any Capital Stock of any Restricted Subsidiary; (ii) all or substantially
all of the assets of any division or line of business of the Company or any
Restricted Subsidiary; or (iii) any other properties or assets of the Company or
any Restricted Subsidiary other than in the ordinary course of business. For
the purposes of this definition, the term "Asset Sale" will not include (a) any
sale of the Capital Stock of an Unrestricted Subsidiary or any other person
(other than a Restricted Subsidiary) in which the Company or any Restricted
Subsidiary has an ownership interest or any merger or consolidation involving
only an Unrestricted Subsidiary or any other person (other than a Restricted
Subsidiary) in which the
2
<PAGE>
Company or any Restricted Subsidiary has an ownership interest or any sale,
issuance, conveyance, transfer, lease or other disposition of properties or
assets governed by the provisions described in Article Eight; (b) sales of
property or equipment that have become worn out, obsolete or damaged or
otherwise unsuitable for use in connection with the business of the Company or
any Restricted Subsidiary, as the case may be; (c) any sale, conveyance,
transfer, lease or other disposition of any property or asset either (i) in the
ordinary course of business and consistent with past practice or (ii) whether in
one transaction or a series of related transactions, involving assets with a
fair market value not in excess of $2.0 million; (d) the sale of the Company's
airplane owned on the Issue Date; or (e) the sale, transfer, lease, conveyance
or other disposition of all or any portion of a parcel of real estate located in
Joliet, Illinois owned by the Company and its Restricted Subsidiaries, comprised
of approximately 350 acres, the legal description of which is set forth on
Exhibit F attached hereto (the "Joliet Real Estate").
------------------
"Average Life" means, as of the date of determination, with respect to
------------
any security or instrument, the quotient obtained by dividing (i) the sum of the
products of the number of years from the date of determination to the date of
each successive scheduled principal (or redemption) payment of such security or
instrument and multiplied by the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"Bank Indebtedness" means any and all amounts payable from time to
-----------------
time under or in respect of the Credit Facility, including principal, premium
(if any), interest, (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post-filing interest is allowed in such a proceeding), fees,
charges, expenses, reimbursement obligations, guarantees, indemnities and all
other amounts and other liabilities payable thereunder or in respect thereof.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of
--------------
1978, as amended, or any similar United States Federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors, or any amendment to, succession to or change in any such law.
"Beneficial Owner" for purposes of the definition of Change of Control
----------------
has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange
Act, whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time.
"Board of Directors" means, with respect to any person, the board of
------------------
directors, management committee or similar governing body or any authorized
committee thereof responsible for the management of the business and affairs of
such person.
"Board Resolution" means, with respect to any person, a copy of a
----------------
resolution certified by the Secretary or an Assistant Secretary of such person
to have been duly adopted by the Board of Directors of such person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
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"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
------------
Friday which is not a day on which banking institutions in New York, New York,
are authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any and all
-------------
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Capitalized Lease Obligation" means any obligation under a lease of
----------------------------
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) required to be classified and accounted for as a capital
lease obligation under GAAP, and, for the purpose of the Indenture, the amount
of such obligation at any date shall be the capitalized amount thereof at such
date, determined in accordance with GAAP consistently applied.
"Cash Equivalent" means (i) any evidence of Indebtedness with a
---------------
maturity of not more than one year issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) time deposits and certificates of deposit and
commercial paper or bankers' acceptances with a maturity of not more than one
year of any financial institution that is a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than
$500,000,000; (iii) commercial paper with a maturity of not more than one year
issued by a corporation that is not an Affiliate of the Company organized under
the laws of any state of the U.S. or the District of Columbia and rated at
least A-1 by Standard & Poor's Rating Services, a division of the McGraw Hill
Companies, Inc. or at least P-1 by Moody's Investors Service, Inc.; and (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (i) and (ii) above entered into
with any financial institution meeting the qualifications specified in clause
(ii) above.
"Casino" means a gaming establishment owned by the Company or a
------
Restricted Subsidiary, and containing at least 200 slot machines or at least 15
gaining tables, or containing at least 10,000 square feet dedicated to the
operation of games of chance, and any hotel, building, restaurant, theater,
parking facilities, retail shops, land, equipment and other property or asset
directly ancillary thereto or used in connection therewith.
"Change of Control" means (i) any merger or consolidation of, or any
-----------------
sale, transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of, the Company in each case on a consolidated
basis, in one transaction or a series of related transactions, if, immediately
after giving effect to such transaction, any "person" or "group" (as such terms
are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether
or not applicable), other than Excluded Persons or entities of which a majority
of voting power is owned by such Excluded Persons, is or becomes the "beneficial
owner," directly or indirectly, of more than 50% of the aggregate voting power
normally entitled to vote in the election of directors of the transferee; (ii)
the time that any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than
4
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Excluded Persons or entities of which a majority of voting power is owned by
such Excluded Persons, is or becomes the "beneficial owner," directly or
indirectly, of more than 50% of the aggregate voting power of all classes of
Capital Stock then outstanding of the Company normally entitled to vote in
elections of directors; or (iii) during any period of 12 consecutive months
after the Issue Date, individuals who at the beginning of any such 12-month
period constituted the Board of Directors of the Company (together with any new
directors whose election by such Board or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved), cease for any reason to constitute a majority of the Board of
Directors of the Company then in office.
The definition of Change of Control includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or substantially
all" of the assets of the Company and its Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes to require
the Company to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Company
and its Subsidiaries taken as a whole to another person or group may be
uncertain.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commission" or "SEC" means the Securities and Exchange Commission, as
---------- ---
from time to time constituted, or if at any time after the execution of this
Indenture such Commission is not existing and performing the applicable duties
now assigned to it, then the body or bodies performing such duties at such time.
"Company" means Empress Entertainment, Inc., a Delaware corporation,
-------
unless and until a successor replaces it in accordance with this Indenture, and
thereafter means such Surviving Person.
"Company Request" or "Company Order" means a written request or order
--------------- -------------
of the Company signed in the name of the Company by an Officer of the Company.
"Consolidated Depreciation and Amortization Expense" means, for any
--------------------------------------------------
period, the total amount of depreciation and amortization expense and other non-
cash expenses (excluding any non-cash expense that represents an accrual,
reserve or amortization of a cash expenditure for a past, present or future
period) for the Company and its Restricted Subsidiaries (but excluding its
Unrestricted Subsidiaries or other persons other than its Restricted
Subsidiaries, even though such amounts may be included in a consolidated
calculation in accordance with GAAP) for such period on a consolidated basis as
defined in accordance with GAAP.
"Consolidated EBITDA" means, for any period, Consolidated Net Income
-------------------
for such period adjusted to add thereto (to the extent deducted from net
revenues in determining
5
<PAGE>
Consolidated Net Income), without duplication, the sum of (i) Consolidated
Income Tax Expense; (ii) Consolidated Depreciation and Amortization Expense; and
(iii) Consolidated Fixed Charges.
"Consolidated Fixed Charge Coverage Ratio" on any date of
----------------------------------------
determination (the "Transaction Date") means the ratio, on a pro forma basis, of
----------------
(a) the aggregate amount of Consolidated EBITDA attributable to continuing
operations and businesses (exclusive of amounts attributable to operations and
businesses permanently discontinued or disposed of) for the Reference Period to
(b) the aggregate Consolidated Fixed Charges (exclusive of amounts attributable
to operations and businesses permanently discontinued or disposed of, but only
to the extent that the obligations giving rise to such Consolidated Fixed
Charges would no longer be obligations contributing to Consolidated Fixed
Charges subsequent to the Transaction Date) during the Reference Period;
provided, that for purposes of such calculation: (i) Acquisitions or Assets
Sales (or transactions which would constitute Asset Sales but for the exclusions
set forth in clause (a), and in the last sentence, of the definition of "Asset
Sales") which occurred during the Reference Period or subsequent to the
Reference Period and on or prior to the Transaction Date shall be assumed to
have occurred on the first day of the Reference Period; (ii) transactions giving
rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio shall
be assumed to have occurred on the first day of the Reference Period; (iii) the
incurrence of any Indebtedness or issuance of any Disqualified Capital Stock
during the Reference Period or subsequent to the Reference Period and on or
prior to the relevant Transaction Date (and the application of the proceeds
therefrom to the extent used to refinance or retire other Indebtedness) shall be
assumed to have occurred on the first day of such Reference Period; and (iv) the
Consolidated Fixed Charges attributable to interest on any Indebtedness or
dividends on any Disqualified Capital Stock bearing a floating interest (or
dividend) rate shall be computed on a pro forma basis as if the average rate in
effect from the beginning of the Reference Period to the relevant Transaction
Date had been the applicable rate for the entire period, unless such person or
any of its Subsidiaries is a party to an Interest Swap Obligation (which shall
remain in effect for the 12-month period immediately following the Transaction
Date) that has the effect of fixing the interest rate on the date of
computation, in which case such rate (whether higher or lower) shall be used.
"Consolidated Fixed Charges" means, for any period, the aggregate
--------------------------
amount (without duplication) of (a) interest expensed or capitalized, paid,
accrued, or scheduled to be paid or accrued in accordance with GAAP (including,
in accordance with the following sentence, interest attributable to Capitalized
Lease Obligations) during such period in respect of all of Indebtedness of the
Company and its Restricted Subsidiaries (but excluding its Unrestricted
Subsidiaries or other persons other than its Restricted Subsidiaries, even
though such amounts may be included in a consolidated calculation in accordance
with GAAP), including (i) original issue discount and non-cash interest payments
or accruals on any Indebtedness; (ii) the interest portion of all deferred
payment obligations, calculated in accordance with GAAP; and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptance financings and currency and Interest Swap Obligations, in each case
to the extent attributable to such period and determined on a consolidated basis
in accordance with GAAP; (b) one-third of the rental expense for such period
attributable to operating leases of the Company and its Restricted Subsidiaries;
and (c) the amount of dividends paid or payable by the Company or any
6
<PAGE>
of its Restricted Subsidiaries in respect of Disqualified Capital Stock (other
than by Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by such person to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP; (y) interest expense
attributable to any Indebtedness represented by the guaranty by such person or a
Restricted Subsidiary of such person of an obligation of another person shall be
deemed to be the interest expense attributable to the Indebtedness guaranteed;
and (z) any interest expense or premium for the period from and after the Issue
Date relating to the 10 3/4% Notes shall be excluded from Consolidated Fixed
Charges.
"Consolidated Income Tax Expense" means, for any period, the provision
-------------------------------
for Federal, state, local and foreign income taxes of the Company and its
Restricted Subsidiaries (but excluding its Unrestricted Subsidiaries or other
persons other than its Restricted Subsidiaries, even though such amounts may be
included in a consolidated calculation in accordance with GAAP), for such period
as determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any period, the net
-----------------------
income (or loss) of the Company and its Restricted Subsidiaries (but excluding
Unrestricted Subsidiaries or other persons other than its Restricted
Subsidiaries, even though such amounts may be included in a consolidated
calculation in accordance with GAAP), determined on a consolidated basis in
accordance with GAAP, for such period, adjusted to exclude (only to the extent
included in computing such net income (or loss) and without duplication): (a)
all gains which are extraordinary (as determined in accordance with GAAP) or are
either unusual or nonrecurring (including, without limitation, any gain from the
sale or other disposition of assets outside the ordinary course of business or
from the sale of any Capital Stock, but gains from the sale of Capital Stock of
Unrestricted Subsidiaries (or other persons other than Restricted Subsidiaries)
or a merger or consolidation involving Unrestricted Subsidiaries (or other
persons other than Restricted Subsidiaries) shall be included in the calculation
of net income); (b) the portion of net income, if positive, of any Restricted
Subsidiary allocable to minority interests therein, except to the extent of the
amount of any dividends or distributions actually paid in cash to the Company or
a Restricted Subsidiary; (c) the net income, if positive, of any person acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition; and (d) any interest expense or premium for the period from and
after the Issue Date relating to the 10 3/4% Notes, and any interest income
relating to securities deposited in connection with the covenant defeasance
thereof.
"Corporate Trust Office" means the office of the Trustee at which at
----------------------
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 180 E. Fifth Street, St. Paul, Minnesota 55101; attention: Corporate Trust
Administration.
"Credit Agreement" means the Credit Agreement to be dated as of June
----------------
17, 1998 among the Company, certain of the Company's Subsidiaries, the lenders
named therein, Wells Fargo Bank, National Association, and Wells Fargo Bank, as
in effect on the Issue Date, and as such agreement may be amended, renewed,
extended, substituted, refinanced, replaced,
7
<PAGE>
supplemented or otherwise modified from time to time, and includes (a) related
notes, guarantees and other agreements executed in connection therewith and (b)
any agreement (i) extending the maturity of all or any portion of the
Indebtedness thereunder, (ii) adding additional borrowers or guarantors
thereunder and (iii) increasing the amount to be borrowed thereunder; provided,
however, that in the case of clauses (i), (ii) and (iii), any such agreement is
not prohibited by this Indenture.
"Credit Facility" means the $100.0 million revolving line of credit,
---------------
including a subfacility for the issuance of standby and documentary letters of
credit, established pursuant to the Credit Agreement.
"Currency Agreement" means any foreign exchange contract, currency
------------------
swap agreement or other similar agreement or arrangement designed to protect the
Company against fluctuations in currency values.
"Currency Agreement Obligations" means the obligations of any person
------------------------------
under a foreign exchange contract, currency swap agreement or other similar
agreement or arrangement to protect such person against fluctuations in currency
values.
"Default" means any event which is, or after notice or passage of time
-------
or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, or such other
----------
depositary as the Company may appoint as a successor thereto.
"Designated Senior Indebtedness" means (a) all Senior Indebtedness
------------------------------
outstanding under the Credit Facility and (b) any other Senior Indebtedness in a
principal amount of at least $10 million outstanding which, at the time of
determination, is specifically designated in the instrument governing such
Senior Indebtedness as "Designated Senior Indebtedness" by the Company.
"Designation" has the meaning set forth in Section 10.18.
-----------
"Designation Amount" has the meaning set forth in Section 10.18.
------------------
"Disqualified Capital Stock" means (a) except as set forth in (b),
--------------------------
with respect to any person, Capital Stock of such person that, by its terms or
by the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Notes; and (b) with respect to any
Subsidiary of such person, any Capital Stock.
"Dollars" or "$" means lawful money of the United States of America.
------- -
"Equity Offering" has the meaning set forth in Section 11.01.
---------------
8
<PAGE>
"Event of Default" has the meaning set forth in Section 5.01.
----------------
"Event of Loss" means, with respect to any property or asset, any
-------------
loss, destruction or damage of such property or asset or any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
any property or asset, or confiscation or requisition of the use of such
property or asset.
"Event of Loss Amount" has the meaning setforth in Section 10.13.
--------------------
"Excess Proceeds" has the meaning set forth in Section 10.13.
---------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated by the Commission thereunder.
"Exchange Notes" has the meaning set forth in the preamble hereto.
--------------
"Exchange Offer" has the meaning set forth in the Registration Rights
--------------
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
-------------------------------------
the Registration Rights Agreement.
"Exchange Securities" has the meaning set forth in the Registration
-------------------
Rights Agreement.
"Excluded Persons" means, collectively, the existing stockholders of
----------------
the Company as of the Issue Date and any of their respective estates, spouses,
heirs, ancestors, lineal descendants, legatees, and legal representatives and
the trustee of any bona fide trust of which one or more of the foregoing are the
sole beneficiaries.
"Existing Indebtedness" means Indebtedness outstanding on the date of
---------------------
the Indenture.
"Facility" means one or more Casinos and related facilities operated
--------
by the Company or any of its Restricted Subsidiaries that are located within a
ten-mile radius of one another.
"Fair Market Value" means, with respect to any asset, the price which
-----------------
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of which is under pressure
or compulsion to complete the transaction. Fair Market Value shall be determined
by the Board of Directors of the Company acting in good faith evidenced by a
board resolution thereof delivered to the Trustee.
"FF&E Indebtedness" means Indebtedness which is secured by a Lien upon
-----------------
any tangible personal property acquired after the Issue Date, constituting
operating assets, which are financed, purchased or leased for the purpose of
engaging in or developing a Related Business.
9
<PAGE>
"GAAP" means U.S. generally accepted accounting principles as in
----
effect on the Issue Date.
"Gaming Authority" means any Governmental Authority with appropriate
----------------
jurisdiction and authority relating to a Gaming License.
"Gaming Jurisdiction" means any foreign, Federal, state or local
-------------------
jurisdiction in which the Company, any Restricted Subsidiary or any of their
respective Subsidiaries has a direct or indirect beneficial, legal or voting
interest in an entity that conducts casino gaming.
"Gaming Law" means any law, rule, regulation or ordinance governing
----------
gaming activities, including the Illinois Riverboat Act and the Indiana
Riverboat Act, any administrative rules or regulations promulgated thereunder,
and any of the corresponding statutes, rules, and regulations in each Gaming
Jurisdiction.
"Gaming Licenses" means every license, franchise or other
---------------
authorization on the Issue Date or thereafter required to own, lease, operate or
otherwise conduct riverboat, dockside or land-based gaming in any Gaming
Jurisdiction, and any applicable liquor licenses.
"Governmental Authority" means any agency, authority, board, bureau,
----------------------
commission, department, office or instrumentality of any nature whatsoever of
the U.S. or a foreign government, any state, province or any city or other
political subdivision or otherwise and whether now or hereafter in existence, or
any officer or official thereof, and any maritime authority.
"guarantee" means, as applied to any obligation, (i) a guarantee
---------
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn down by letters of credit.
"Guarantors" means all existing Restricted Subsidiaries of the Company
----------
and all future Restricted Subsidiaries of the Company.
"Guarantor Senior Indebtedness" means, with respect to the
-----------------------------
Indebtedness of any Guarantor, any such Indebtedness represented by a guarantee
by such Guarantor of any Senior Indebtedness or any Senior Indebtedness of any
such Guarantor.
"Holder" or "Noteholder" means a person in whose name a Note is
------ ----------
registered in the Note Register.
"incur" has the meaning set forth in Section 10.10 and "incurrence,"
-----
"incurred" and "incurring" shall have the meanings correlative to the foregoing.
10
<PAGE>
"Indebtedness" of any person means, without duplication, (a) all
------------
liabilities and obligations, contingent or otherwise, with respect to any
person, (i) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such person or only to a portion
thereof); (ii) evidenced by bonds (other than surety or performance bonds),
notes, debentures or similar instruments; (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, except
such as would constitute trade payables to trade creditors in the ordinary
course of business that are not more than 90 days past their original due date
or are being contested in good faith; (iv) evidenced by bankers' acceptances or
similar instruments issued or accepted by banks; (v) for the payment of money
relating to a Capitalized Lease Obligation; or (vi) evidenced by a letter of
credit or a reimbursement obligation of such person with respect to any letter
of credit; (b) all net obligations of such person under Interest Swap
Obligations and foreign currency hedges; (c) all liabilities of others of the
kind described in the preceding clauses (a) or (b) that such person has
guaranteed or that is otherwise its legal liability; (d) all obligations to
purchase, redeem or acquire any Capital Stock; (e) all obligations secured by a
Lien, to which the property or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights) of such person
are subject, whether or not the obligations secured thereby shall have been
assumed by or shall otherwise be such person's legal liability, provided, that
the amount of such obligations shall be limited to the lesser of the fair market
value of the assets or property to which such Lien attaches and the amount of
the obligation so secured; and (f) any and all deferrals, renewals, extensions,
refinancings and refundings (whether direct or indirect) of, or amendments,
modifications or supplements to, any liability of the kind described in any of
the preceding clauses (a), (b), (c), (d) or (e), or this clause (f), whether or
not between or among the same parties.
"Indenture" means this instrument as originally executed (including
---------
all exhibits and schedules hereto) and as it may from time to time be
supplemented or amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof.
"Initial Purchasers" means Merrill Lynch, Pierce, Fenner & Smith
------------------
Incorporated and Wasserstein Perella Securities, Inc.
"Institutional Accredited Investor" means an institution that is an
---------------------------------
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Interest Payment Date" means the stated due date of an installment of
---------------------
interest on the Notes.
"Interest Swap Obligations" means the obligations of any person
-------------------------
pursuant to any arrangement with any other person whereby, directly or
indirectly, such person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such person
to such other person calculated by applying a fixed or a floating rate of
interest on the same notional amount or any other arrangement involving payments
by or to such other person based upon fluctuations in interest rates.
11
<PAGE>
"Investment" by any person in any other person means (without
----------
duplication) (a) the acquisition by such person (whether for cash, property,
services, securities or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities, including any
options or warrants, of such other person or any agreement to make any such
acquisition; (b) the making by such person of any deposit with, or advance, loan
or other extension of credit to, such other person (including the purchase of
property from another person subject to an understanding or agreement,
contingent or otherwise, to resell such property to such other person) or any
commitment to make any such advance, loan or extension (but excluding accounts
receivable arising in the ordinary course of business that are not more than 30
days past their original due date); (c) other than the Subsidiary Guarantees,
the entering into by such person of any guarantee of, or other credit support or
contingent obligation with respect to, Indebtedness or other liability of such
other person; or (d) the making of any capital contribution by such person to
such other person.
"Issue Date" means the date of first issuance of the Notes under the
----------
Indenture.
"Joliet Real Estate" shall have the meaning given to such term in the
------------------
definition of "Asset Sale" set forth above.
"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).
"Net Cash Proceeds" means the aggregate amount of U.S. Legal Tender or
-----------------
Cash Equivalents received by the Company or a Restricted Subsidiary in the case
of a sale of Qualified Capital Stock and by the Company or a Restricted
Subsidiary in respect of an Asset Sale, less, in each case, the sum of all fees,
commissions and other (in the case of an Asset Sale, reasonable and customary)
expenses incurred in connection with such Asset Sale or sale of Qualified
Capital Stock, and, in the case of an Asset Sale only, less the amount
(estimated reasonably and in good faith by the Company or such Restricted
Subsidiary) of income, franchise, sales and other applicable taxes required to
be paid by the Company or such Restricted Subsidiary in connection with such
Asset Sale.
"Net Proceeds" means the aggregate Net Cash Proceeds and fair market
------------
value of property (valued at the fair market value thereof at the time of
receipt in good faith by the Board of Directors of the Company or the applicable
Restricted Subsidiary), other than securities of the Company or a Restricted
Subsidiary, received by the Company or a Restricted Subsidiary after payment of
expenses, commissions, discounts and the like incurred in connection therewith.
"Non-Recourse Indebtedness" means Indebtedness of a person to the
-------------------------
extent that under the terms thereof or any other document, instrument or filing
no personal recourse shall be had against such person for the payment of the
principal of, premium, if any, or interest on, such Indebtedness, and
enforcement of obligations on such Indebtedness is limited only to recourse
12
<PAGE>
against interests in property and assets purchased with the proceeds of the
incurrence of such Indebtedness and as to which none of the Company or any
Restricted Subsidiary provides any credit support or is directly or indirectly
liable. Indebtedness shall not lose is characterization as Non-Recourse
Indebtedness solely as a result of a person being personally liable for losses
caused by misappropriation, fraud or wilful breaches of representations and
warranties.
"Non-payment Default" means, for purposes of Article Fourteen hereof,
-------------------
any default (other than a Payment Default) with respect to any Designated Senior
Indebtedness of the Company or any Guarantor pursuant to which the maturity
thereof may be accelerated.
"Non-U.S. Person" means a person who is not a U.S. person, as defined
---------------
in Regulation S.
"Note Guarantee" means a guarantee by a Guarantor, if any, of the
--------------
Notes and the Company's obligations under this Indenture.
"Notes" has the meaning set forth in the preamble hereto.
-----
"Obligations" means any principal, interest, penalties, fees,
-----------
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offer to Purchase" means any Change of Control Offer or Asset Sale
-----------------
Offer.
"Offer to Purchase Price" means any Change of Control Purchase Price
-----------------------
or Asset Sale Offer Price.
"Offering" shall have the meaning set forth in the Offering
--------
Memorandum.
"Offering Memorandum" means the offering memorandum dated as of June
-------------------
11, 1998 relating to the Offering and sale of the Notes.
"Officer" means, with respect to any person, the Chairman, President,
-------
Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,
General Counsel, any Vice President, Treasurer or Secretary, or any other
officer designated by the Board of Directors serving in a similar capacity.
"Officer's Certificate" means, with respect to the Company or any
---------------------
Restricted Subsidiary, a certificate signed by two Officers of the Company or
such Restricted Subsidiary and otherwise complying with the requirements of the
Indenture.
"Opinion of Counsel" means a written opinion of counsel, who may be an
------------------
employee of or counsel to the Company or a Restricted Subsidiary, and who shall
be reasonably acceptable to the Trustee.
13
<PAGE>
"Outstanding" means, as of the date of determination, all Notes
-----------
theretofore authenticated and delivered under this Indenture, except:
(i) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company or any Affiliate
thereof) in trust for the Holders of such Notes; provided, however, that if
such Notes are to be redeemed, notice of such redemption has been duly and
irrevocably given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made;
(iii) Notes with respect to which the Company has effected defeasance
or covenant defeasance as provided in Article Four, to the extent provided
in Sections 4.02 and 4.03; and
(iv) Notes in exchange for or in lieu of which other Notes have been
authenticated and delivered pursuant to this Indenture, other than any such
Notes in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Notes are held by a bona fide purchaser
in whose hands the Notes are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company or any other obligor under the Notes or any Affiliate of the Company
or such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes which the Trustee knows to be so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Company or any other obligor under the Notes or any Affiliate
of the Company or such other obligor.
"Paying Agent" means any person authorized by the Company to pay the
------------
principal, premium, if any, or interest on any Notes on behalf of the Company.
"Payment Blockage Period" shall have the meaning set forth in Section
-----------------------
14.03.
"Payment Default" means any default in the payment when due (whether
---------------
Stated Maturity, by acceleration or otherwise) of principal or interest on, or
of unreimbursed amounts under drawn letters of credit or fees relating to
letters of credit constituting, any Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable, of the Company or any Guarantor.
"Permitted Indebtedness" has the meaning set forth in Section 10.10.
----------------------
14
<PAGE>
"Permitted Investments" means the aggregate of (a) any Investment in
---------------------
the Company or in any Restricted Subsidiary; (b) any Investment in Cash
Equivalents or purchases by the Company or any Restricted Subsidiary of any of
the Notes in open market purchase transactions; (c) any Investment by the
Company or any Restricted Subsidiary in a person, if as a result of such
Investment (i) such person becomes a Restricted Subsidiary of the Company that
is engaged in a Related Business, 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 into, the Company or a Restricted Subsidiary that is
engaged in a Related Business; (d) any Restricted Investment made as a result of
the receipt of non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with Section 10.13; (e) any acquisition of assets solely in
exchange for the issuance of Qualified Capital Stock of the Company or its
Restricted Subsidiaries; (f) any Investment of the Joliet Real Estate or
proceeds from the sale of the Joliet Real Estate; and (g) Investments, the
aggregate fair market value of which (measured on the date each such Investment
was made and without giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this clause (g) that are at
the time outstanding, do not exceed $50.0 million.
"Permitted Liens" means any of the following:
---------------
(a) Liens existing on the date of the Indenture;
(b) Liens securing Obligations of the Company or any of the
Restricted Subsidiaries under any Senior Indebtedness permitted to be
incurred under the Indenture, including, without limitation, Liens to
be incurred under the Credit Agreement;
(c) Liens to secure Obligations of the Company or any of its
Restricted Subsidiaries under any FF&E Indebtedness permitted to be
incurred pursuant to clause (b)(v) of Section 10.10 that do not exceed
$7.5 million at any one time outstanding per Facility;
(d) Liens to secure Obligations of the Company or any of its
Restricted Subsidiaries under any Purchase Money Indebtedness or Non-
Recourse Indebtedness permitted to be incurred pursuant to clause
(b)(iv) of Section 10.10 in an amount not to exceed $7.5 million in
the aggregate at any one time outstanding;
(e) Liens to secure Obligations of the Company or any of the
Restricted Subsidiaries under any Refinancing Indebtedness incurred to
refinance any Indebtedness referred to in the foregoing clauses (a)
through (d), provided that (i) the Indebtedness to be refinanced was
secured and (ii) the Lien does not extend beyond the amount of
Indebtedness to be refinanced;
(f) Liens for taxes, assessments or other governmental charges
not yet due or which are being contested in good faith and by
appropriate proceedings by the Company or the applicable Restricted
Subsidiary if adequate reserves with
15
<PAGE>
respect thereto are maintained on the books of the Company or such
Restricted Subsidiary, as applicable, in accordance with GAAP;
(g) statutory Liens of carriers, warehousemen, mechanics,
landlords, materialmen, repairmen or other like Liens arising by
operation of law in the ordinary course of business and consistent
with industry practices and Liens on deposits made to obtain the
release of such Liens if (i) the underlying obligations are not
overdue; or (ii) such Liens are being contested in good faith and by
appropriate proceedings by the Company or the applicable Restricted
Subsidiary and adequate reserves with respect thereto are maintained
on the books of the Company or such Restricted Subsidiary, as the case
may be, in accordance with GAAP;
(h) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects incurred in the ordinary
course of business and consistent with industry practices which, in
the aggregate, are not substantial in amount, and which do not in any
case materially detract from the value of the property subject thereto
(as such property is used by the Company or a Restricted Subsidiary)
or interfere with the ordinary conduct of the business of the Company
or a Restricted Subsidiary; provided, that any such Liens are not
incurred in connection with any borrowing of money or any commitment
to loan any money or to extend any credit; and
(i) Liens created by the Indenture.
"person" means any individual, limited liability company, corporation,
------
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"Preferred Stock" means, with respect to any person, Capital Stock of
---------------
any class or classes (however designated) which is preferred as to the payment
of dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such person, over Capital
Stock of any other class of such person.
"Private Exchange Securities" has the meaning set forth in the
---------------------------
Registration Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
------------------------
Initial Notes in the form set forth in Section 2.03.
"Purchase Money Indebtedness" means any Non-recourse Indebtedness of
---------------------------
such person owed to any seller or other person which is incurred to finance the
acquisition of any real or personal tangible property of a Related Business
within 90 days of such acquisition.
"Qualified Capital Stock" means any Capital Stock of the Company or a
-----------------------
Restricted Subsidiary that is not Disqualified Capital Stock.
16
<PAGE>
"Qualified Exchange" means any defeasance, redemption, repurchase or
------------------
other acquisition of Capital Stock or Indebtedness of a Guarantor with the Net
Proceeds received by such Guarantor from the substantially concurrent sale of
Qualified Capital Stock of such Guarantor or in exchange for Qualified Capital
Stock of such Guarantor.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
----------------------------- ---
specified in Rule 144A under the Securities Act.
"Redeemable Capital Stock" means any class or series of Capital Stock
------------------------
to the extent that, either by its terms, by the terms of any security into which
it is convertible or exchangeable, or by contract or otherwise, is or upon the
happening of an event or passage of time would be, required to be redeemed prior
to the final Stated Maturity of the Notes or is redeemable at the option of the
holder thereof at any time prior to such Stated Maturity, or is convertible into
or exchangeable for debt securities at any time prior to such Stated Maturity.
"Redemption Date," when used with respect to any Note to be redeemed,
---------------
means the date fixed for such redemption pursuant to the Indenture and the form
of Note included therein.
"Redemption Price" means, with respect to any Note to be redeemed, the
----------------
price at which it is to be redeemed pursuant to this Indenture and the terms of
the Notes.
"Reference Period" with regard to any person means the four full
----------------
fiscal quarters (or such lesser period during which such person has been in
existence) ended immediately preceding the relevant date upon which such
determination is to be made pursuant to the terms of the Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital
------------------------
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part; or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
-----------
Indebtedness or Disqualified Capital Stock of such person in a principal amount
or, in the case of Disqualified Capital Stock, liquidation preference, not to
exceed (after deduction of reasonable and customary fees and expenses incurred
in connection with the Refinancing) the lesser of (i) the principal amount or,
in the case of Disqualified Capital Stock, liquidation preference, of the
Indebtedness or Disqualified Capital Stock so Refinanced and (ii) if such
Indebtedness being Refinanced was issued with an original issue discount, the
accreted value thereof (as determined in accordance with GAAP) at the time of
such Refinancing; provided, that (A) Refinancing Indebtedness of any Restricted
Subsidiary shall only be used to Refinance outstanding Indebtedness or
Disqualified Capital Stock of such Restricted Subsidiary; (B) Refinancing
Indebtedness shall not have an Average Life less than that of the Indebtedness
or Disqualified Capital Stock to be so refinanced at the time of such
refinancing; (C) such Refinancing Indebtedness shall have no installment of
principal (or redemption payment) scheduled to come due earlier than the
scheduled maturity of any installment of principal of the Indebtedness (or
Disqualified Capital Stock) to be so refinanced which was scheduled to come
17
<PAGE>
due on or prior to the Stated Maturity; and (D) if the Indebtedness or
Disqualified Capital Stock to be so refinanced was subordinate or junior in
right of payment to the Guarantee, then the Refinancing Indebtedness shall be so
subordinate or junior in right of payment to such Guarantee to an extent no less
favorable in respect thereof to the Holders.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated on or about the Issue Date between the Company and the Initial
Purchasers for the benefit of themselves and the Holders as the same may be
amended from time to time in accordance with the terms thereof.
"Regular Record Date" means the Regular Record Date specified in the
-------------------
Notes.
"Regulation S" means Regulation S under the Securities Act.
------------
"Related Business" means the gaming business conducted (or proposed to
----------------
be conducted) by the Company, its Restricted Subsidiaries and their respective
Subsidiaries as of the Issue Date and any and all related businesses in support
of, ancillary to or attracting visitors to the gaming business of the Company,
its Restricted Subsidiaries and their respective Subsidiaries and additionally
expressly includes any riverboat, dockside or land-based gaming or horse racing
businesses or any business mandated by a Gaming Authority in order to obtain or
retain a Gaming License.
"Required Regulatory Redemption" shall have the meaning set for under
------------------------------
Section 11.02.
"Responsible Officer" means, with respect to the Trustee, the chairman
-------------------
or vice chairman of the board of directors, the chairman or vice chairman of the
executive committee of the board of directors, the president, any vice
president, the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or assistant
trust officer, the controller and any assistant controller or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom any
corporate trust matter is referred because of his or her knowledge of and
familiarity with the particular subject.
"Restricted Investment" means, in one or a series of related
---------------------
transactions, any Investment, other than Investments in Cash Equivalents;
provided, that a Restricted Investment shall not include (i) the extension of
credit to customers of Casinos consistent with industry practice in the ordinary
course of business; and (ii) a guaranty by a Guarantor of Indebtedness incurred
by another Guarantor or the Company in accordance with the covenant in Section
10.10.
"Restricted Payment" means, with respect to any person, (a) the
------------------
declaration or payment of any dividend or other distribution in respect of
Capital Stock of such person or any Restricted Subsidiary of such person; (b)
any payment on account of the purchase, redemption or other acquisition or
retirement for value of Capital Stock of such person or any Restricted
18
<PAGE>
Subsidiary of any such person; (c) any purchase, redemption, or other
acquisition or retirement for value of, any payment in respect of any amendment
of the terms or any defeasance of, any subordinated Indebtedness, directly or
indirectly, by such person or a Restricted Subsidiary of such person prior to
the scheduled maturity, and scheduled repayment of principal or scheduled
sinking fund payment, as the case may be, of such Indebtedness; and (d) any
Restricted Investment by such person; provided, however, that the term
"Restricted Payment" does not include (i) any dividend, distribution or other
payment on or with respect to Capital Stock of an issuer to the extent payable
solely in shares of Qualified Capital Stock of such issuer; and (ii) any
Investment in the Company or any of the Restricted Subsidiaries by any of their
respective Subsidiaries.
"Restricted Security" has the meaning assigned to such term in Rule
-------------------
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
entitled to receive, at its request, and conclusively rely on an Opinion of
Counsel with respect to whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company that has
---------------------
not been Designated by the Board of Directors of the Company, by a Board
Resolution delivered to the Trustee, as an Unrestricted Subsidiary pursuant to
and in compliance with the covenant described in Section 10.18. Except in the
case of the Guarantors that existed as of the Issue Date, any such Designation
may be Revoked by a Board Resolution of the Board of Directors of the Company
delivered to the Trustee, subject to the provisions of such covenant.
"Revocation" has the meaning set forth in Section 10.18.
----------
"Rule 144A" means Rule 144A under the Securities Act.
---------
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated by the Commission thereunder.
"Senior Indebtedness" means (i) the Bank Indebtedness, and (ii) the
-------------------
principal of, premium, if any, and interest on any Indebtedness of the Company,
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to any Indebtedness of the Company. Notwithstanding the foregoing,
"Senior Indebtedness" shall not include, to the extent constituting
Indebtedness, (i) Indebtedness evidenced by the Notes, (ii) Indebtedness that is
subordinate or junior in right of payment to any Indebtedness of the Company,
(iii) Indebtedness which, when incurred and without respect to any election
under Section 1111(b) of Title 11, U.S. Code, is without recourse to the
Company, (iv) Indebtedness which is represented by Redeemable Capital Stock, (v)
Indebtedness for goods, materials or services purchased in the ordinary course
of business or Indebtedness consisting of trade payables or other current
liabilities (other than any current liabilities owing under the Credit Facility
or the current portion of any long-term Indebtedness which would constitute
Senior Indebtedness but for the operation of this clause (v)), (vi) Indebtedness
of or amounts owed by the Company for compensation to employees or for services
rendered to the Company, (vii)
19
<PAGE>
Indebtedness of or amounts owed by the Company or a Restricted Subsidiary to the
Company or another Restricted Subsidiary, (viii) any liability for Federal,
state, local or other taxes owed or owing by the Company, (ix) Indebtedness of
the Company to any other Subsidiary of the Company and (x) that portion of any
Indebtedness which at the time of issuance is issued in violation of the
Indenture.
"Senior Representative" means the representative or representatives
---------------------
designated in writing to the Trustee of the holders of any class or issue of
Designated Senior Indebtedness; provided that, in the absence of a
representative of the type described above, any holder or holders of a majority
of the principal amount outstanding of any class or issue of Designated Senior
Indebtedness may collectively act as Senior Representative for such class or
issue.
"Shelf Registration Statement" has the meaning set forth in the
----------------------------
Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary (i) the
----------------------
assets of which (after intercompany eliminations) exceed 10% of the assets of
the Company and its Restricted Subsidiaries, considered as a whole, or (ii) the
Consolidated Net Income of which (before income taxes and extraordinary items)
exceeds 10% of the Consolidated Net Income of the Company and its Restricted
Subsidiaries, considered as a whole, or (iii) that holds a Gaming License with
respect to any Casino, if the Facility of which the Casino is a part (were such
facility operated by a single Restricted Subsidiary) would be a Significant
Subsidiary as set forth in (i) or (ii) above.
"Special Record Date" means the Special Record Date specified in the
-------------------
Notes.
"Stated Maturity," when used with respect to any Note, means July 1,
---------------
2006.
"Subordinated Indebtedness" means Indebtedness of a Restricted
-------------------------
Subsidiary that is subordinated in right of payment to the Subsidiary Guaranty
of such Restricted Subsidiary to any extent.
"Subsidiary," with respect to any person, means (i) a corporation at
----------
least a majority of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person, by such person and one or more Subsidiaries of such person or by
one or more Subsidiaries of such person or (ii) any other person (other than a
corporation) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof, has at least a majority ownership
interest.
"Surviving Person" means, with respect to any person involved in any
----------------
consolidation or merger, or any sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of its properties and assets as an
entirety, the person formed by or surviving such merger or consolidation or the
person to which such sale, assignment, conveyance, transfer or lease is made.
20
<PAGE>
"Tax Amounts" with respect to any year means an amount equal to (a)
-----------
the higher of (i) the product of (A) the taxable income of the Company for such
year as determined in good faith by its Board of Directors; and (B) the Tax
Percentage (as defined); and (ii) the product of (A) the alternative minimum
taxable income attributable to the Company for such year as determined in good
faith by its Board of Directors; and (B) the Tax Percentage, plus (b) any
deficiencies, penalties or interest payable by the Company's stockholders solely
as a result of the taxable income of the Company, less (c) to the extent not
previously taken into account, any income tax benefit attributable to the
Company which could be realized by the Company's stockholders in the current or
a prior taxable year (including, without limitation, tax losses, alternative
minimum tax credits, other tax credits and carryforwards and carrybacks
thereof); provided, however, that in no event shall such Tax Percentage exceed
the lesser of (1) the highest aggregate applicable effective marginal rate of
Federal, state and local income tax or, when applicable, alternative minimum
tax, to which a corporation doing business in Chicago, Illinois would be subject
in the relevant year of determination (as certified to the Trustee by a
nationally recognized tax accounting firm) plus 500 "Basis Points"; and (2) 60%.
Any part of the Tax Amount not distributed in respect of a tax period for which
it is calculated shall be available for distribution in subsequent tax periods
(whether or not the Company ceases to qualify as an S Corporation prior to such
distribution). The term "Tax Percentage" is the highest aggregate applicable
effective marginal rate of Federal, state and local income tax or, when
applicable, alternative minimum tax, to which an individual resident of Chicago,
Illinois would be subject in the relevant year of determination (as certified to
the Trustee by a nationally recognized tax accounting firm). Distributions of
Tax Amounts may be made from time to time with respect to a tax year based on
reasonable estimates, with a reconciliation within 40 days of the earlier of (i)
the Company's filing of the Internal Revenue Service Form 1120S for the
applicable taxable year; and (ii) the last date such form is required to be
filed (without regard to any extensions). The stockholders of the Company will
enter into a binding agreement with the Company to reimburse the Company for
certain positive differences between the distributed amount and the Tax Amount,
which difference must be paid at the time of such reconciliation; provided, that
in lieu thereof, the Company shall notify all stockholders that any such
positive differences will be set off against future distributions of Tax
Amounts.
"10 3/4% Notes" means the 10 3/4% Senior Notes due 2002 issued
-------------
pursuant to the terms of an indenture, dated April 7, 1994 among Empress River
Casino Finance Corporation, as issuer, the Guarantors named therein and First
Trust National Association, as Trustee.
"Transaction Date" has the meaning set forth under the definition of
----------------
"Consolidated Fixed Charge Coverage Ratio".
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
------------------- ---
as amended, and as in effect from time to time.
"Trustee" means the person named as the "Trustee" in the first
-------
paragraph of this Indenture, until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
21
<PAGE>
"Unrestricted Subsidiary" means a Subsidiary of the Company (other
-----------------------
than a Guarantor) designated as such pursuant to and in compliance with Section
10.18. Any such Designation may be Revoked by a Board Resolution of the Company
delivered to the Trustee, subject to the provisions of such covenant.
"U.S. Government Obligations" means securities that are (i) direct
---------------------------
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (ii) 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 Depositary receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
Holder of such Depositary receipt; provided, however, that (except as required
-------- -------
by law) such custodian is not authorized to make any deduction from the amount
payable to the Holder of such Depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
Depositary receipt.
"U.S. Legal Tender" means such coin or currency of the United States
-----------------
of America at the time of payment is legal tender for the payment of public and
private debts.
Section 1.02. Other Definitions.
-----------------
Defined in
Term Section
---- ----------
"Act" 1.05
"Agent Members" 2.04
"Asset Sale Offer" 10.13
"Asset Sale Offer Period" 10.13
"Asset Sale Offer Price" 10.13
"Asset Sale Offer Purchase Date" 10.13
"Asset Sale Offer Trigger Date" 10.13
"Authenticating Agent" 2.02
"Change of Control Date" 10.14
"Change of Control Offer" 10.14
"Change of Control Purchase Date" 10.14
"Change of Control Purchase Price" 10.14
"covenant defeasance" 4.03
"Defaulted Interest" 3.06
"Defeasance" 4.01
"Defeased Guarantees" 4.01
"Defeased Notes" 4.01
22
<PAGE>
"Global Notes" 2.01
"Initial Notes" Recitals
"Note Register" 3.04
"Note Registrar" 3.04
"Notice of Default" 5.01
"Offshore Global Note" 2.01
"Offshore Physical Note" 2.01
"Optional Redemption Price" 11.01
"Other Obligations" 1.20
"Payment Blockage Notice" 14.03
"Physical Notes" 2.01
"Refinancing Indebtedness" 10.10
"Repurchase Payments" 10.11
"Required Filing Dates" 10.08
"U.S. Global Note" 2.01
"U.S. Physical Notes" 2.01
Section 1.03. Rules of Construction.
---------------------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(d) the words "herein," "hereof" and "hereunder" and other words of
------ ------ ---------
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(e) all references to "$" or "dollars" shall refer to the lawful
- -------
currency of the United States of America;
(f) the words "include," "included" and "including" as used herein
------- -------- ---------
shall be deemed in each case to be followed by the phrase "without limitation";
------------------
(g) words in the singular include the plural, and words in the plural
include the singular; and
(h) any reference to a Section or Article refers to such Section or
Article of this Indenture unless otherwise indicated.
23
<PAGE>
Section 1.04. Form of Documents Delivered to Trustee.
--------------------------------------
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee
(a) an Officers' Certificate in form and substance reasonably satisfactory to
the Trustee stating that, in the opinion of the signers, all conditions
precedent (including any covenants compliance with which constitutes a condition
precedent), if any, provided for in this Indenture relating to the proposed
action have been complied with, (b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee stating that, in the opinion of counsel,
all such conditions (including any covenants compliance with which constitutes a
condition precedent), have been complied with and (c) where applicable, a
certificate or opinion by an accountant that complies with Section 314(c) of the
Trust Indenture Act.
Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(a) a statement that the person making such certificate or Opinion of
Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements contained in such Officers'
Certificate or Opinion of Counsel are based;
(c) a statement that, in the opinion of such person, he 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
complied with; and
(d) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
person, or that they be so certified or covered by only one document, but one
such person may certify or give an opinion with respect to some matters and one
or more other such persons as to other matters, and any such person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
24
<PAGE>
should know, that the certificate or opinion or representations with respect to
such matters are erroneous. Opinions of Counsel required to be delivered to the
Trustee may have qualifications customary for opinions of the type required and
counsel delivering such Opinions of Counsel may rely on certificates of the
Company or government of other officials customary for opinions of the type
required, including certificates certifying as to matters of fact, including
that various financial covenants have been complied with.
Any certificate of opinion of an Officer of the Company, and Guarantor
of other obligor on the Notes may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of, or representations by, an accountant
or firm of accountants in the employ of the Company, unless such Officer knows,
or in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to accounting matters upon which his
certificate or opinion may be based are erroneous. Any certificate or opinion
of any independent firm of public accountants filed with the Trustee shall
contain a statement that such firm is independent with respect to the Company.
Section 1.05. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
---
such instrument or instruments. Proof of execution (as provided below in
subsection (b) of this Section 1.05) of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 6.01 hereof) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any reasonable manner which the Trustee
deems sufficient including, without limitation, by verification from a notary
public or signature guarantee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Note shall bind every future Holder
of the same Note or the Holder of every Note issued upon the transfer thereof or
in exchange therefor or in lieu thereof to the same extent as the original
Holder, in respect of anything done, suffered or omitted to be done by the
Trustee, any Paying Agent or the Company in reliance thereon, whether or not
notation of such action is made upon such Note.
25
<PAGE>
Section 1.06. Notices, etc., to the Trustee and the Company.
---------------------------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with:
(a) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed, in writing, to or with the Trustee at its Corporate Trust
Office or at any other address previously furnished in writing to the
Holders and the Company by the Trustee or at the office of any drop
agent specified by or on behalf of the Trustee to the Holders and the
Company from time to time; and
(b) the Company by the Trustee or by any Holder shall be
sufficient for every purpose (except as otherwise expressly provided
herein) hereunder if in writing and mailed, first-class postage
prepaid, to the Company, addressed to it at 2300 Empress Drive,
Joliet, Illinois 60436, Attention: General Counsel, with a copy to
D'Ancona & Pflaum, 30 North LaSalle Street, Chicago, Illinois 60602,
Attention: Joel D. Rubin, or at any other address previously furnished
in writing to the Trustee by the Company.
Section 1.07. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise expressly provided herein)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Note Register,
not later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Any notice when mailed to a Holder in the
aforesaid manner shall be conclusively deemed to have been received by such
Holder whether or not actually received by such Holder. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by
Holders shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause, it shall be impracticable to mail notice of any event
as required by any provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
26
<PAGE>
Section 1.08. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such provision or requirement of the Trust Indenture Act shall
control.
If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, such provision
of the Trust Indenture Act shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be, if this Indenture shall then be
qualified under the TIA.
Section 1.09. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.10. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company and
Trustee shall bind their respective successors and assigns, whether so expressed
or not.
Section 1.11. Separability Clause.
-------------------
In case any provision in this Indenture or in the Notes 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 1.12. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Notes issued pursuant hereto,
express or implied, shall give to any person (other than the parties hereto and
their successors hereunder, any Paying Agent and the Holders) any benefit or any
legal or equitable right, remedy or claim under this Indenture, except as
provided in Article Thirteen and Article Fourteen.
SECTION 1.13. GOVERNING LAW.
-------------
THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE TRUSTEE, THE COMPANY,
EACH GUARANTOR AND ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE HOLDERS
AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE
NOTES.
27
<PAGE>
Section 1.14. No Recourse Against Others.
--------------------------
No director, officer, employee or stockholder of the Company or any
Guarantor, as such, shall have any liability for any obligations of the Company
or any Guarantor under the Notes, the Guarantees or this Indenture. Each Holder
of Notes by accepting a Note waives and releases all such liability, and such
waiver and release is part of the consideration for the issuance of the Notes.
Section 1.15. Independence of Covenants.
-------------------------
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or condition exists.
Section 1.16. Exhibits and Schedules.
----------------------
All exhibits and schedules attached hereto are by this reference made
a part hereof with the same effect as if herein set forth in full.
Section 1.17. Counterparts.
------------
This Indenture may be executed in any number of counterparts, each of
which shall be an original; but such counterparts shall together constitute but
one and the same instrument.
Section 1.18. Duplicate 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 1.19. Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in, and made a part of, this Indenture.
Any terms incorporated by reference in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them therein.
28
<PAGE>
ARTICLE TWO
SECURITY FORMS
Section 2.01. Form and Dating.
---------------
The Initial Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit A hereto. The
---------
Exchange Notes and the Trustee's certificate of authentication relating thereto
shall be substantially in the form of Exhibit B hereto. The Notes may have
---------
notations, legends or endorsements required by law, stock exchange rule or
Depositary rule or usage. The Company shall approve the form of the Notes and
any notation, legend or endorsement on them. Each Note shall be dated the date
of its authentication and shall show the date of its authentication.
The additional terms and provisions contained in the forms of Notes
and Guarantees, annexed hereto as Exhibits A and E, respectively, shall
----------------
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Notes will initially be issued in either of the following forms:
(a) Notes offered and sold in reliance on Rule 144A issued initially
in the form of one or more global Notes in registered form, substantially
in the form set forth in Exhibit A (the "U.S. Global Note"), deposited with
---------
the Trustee, as custodian for the Depositary, duly executed by the Company
and authenticated by the Trustee as hereinafter provided and shall bear the
legend set forth in Section 2.03 hereof. The aggregate principal amount of
the U.S. Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the
Depositary.
(b) Notes offered and sold in offshore transactions in reliance on
Regulation S represented upon issuance by a temporary global Note (the
"Offshore Global Note" and, together with the U.S. Global Note, the "Global
Notes"), which will be exchangeable for certificated Notes in registered
form in substantially the form set forth in Exhibit A (the "Offshore
---------
Physical Notes") only upon the expiration of the "40-day restricted period"
within the meaning of Rule 903(c)(3) of Regulation S.
Subsequent to the initial issuance of the Global Notes provided for in
paragraphs (a) and (b) above, physical certificates for notes transferred in
reliance on any exemption from registration under the Securities Act, other than
as described in the preceding two paragraphs, shall be issued in substantially
the form set forth in Exhibit A, subject to the Company's and the Trustee's
---------
right prior to any such transfer to require the delivery of an Opinion of
Counsel, certifications and/or other information satisfactory to each of them
(the "U.S. Physical Notes"). The Offshore Physical Notes and the U.S. Physical
Notes are sometimes collectively herein referred to as the "Physical Notes."
Physical Notes may initially be registered in the name of the
29
<PAGE>
Depositary or a nominee of such Depositary and be delivered to the Trustee as
custodian for such Depositary. Beneficial owners of Physical Notes, however, may
request registration of such Physical Notes in their names or the names of their
nominees.
Section 2.02. Execution and Authentication; Aggregate Principal
-------------------------------------------------
Amount.
- ------
The Notes shall be executed on behalf of the Company by two Officers
of the Company. The signature of any Officer on the Notes may be manual or
facsimile.
If an Officer or Assistant Secretary whose manual or facsimile
signature is on a Note was an Officer or Assistant Secretary at the time of such
execution but no longer holds that office or position at the time the Trustee
authenticates the Note, the Note shall nevertheless be valid.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
The Trustee shall authenticate (i) Initial Notes for original issue in
the aggregate principal amount not to exceed $150,000,000 and (ii) Exchange
Notes from time to time for issue only in exchange for a like principal amount
of Initial Notes, in each case upon a written order of the Company in the form
of an Officers' Certificate. The Officers' Certificate shall specify the amount
of Notes to be authenticated and the date on which the Notes are to be
authenticated, whether the Notes are to be Initial Notes or Exchange Notes and
whether the Notes are to be issued as Physical Notes or Global Notes or such
other information as the Trustee may reasonably request. The aggregate
principal amount of Notes outstanding at any time may not exceed $150,000,000,
except as provided in Section 3.05 hereof.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Company to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an agent to deal with the
Company or with any Affiliate of the Company.
Section 2.03. Restrictive Legends.
-------------------
Each Global Note and Physical Note that constitutes a Restricted
Security shall bear the following legend (the "Private Placement Legend") on the
------------------------
face thereof until the second anniversary of the Issue Date, unless otherwise
agreed by the Company and the Holder thereof:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE OR
30
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OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
SECURITY IN AN "OFFSHORE TRANSACTION" PURSUANT TO RULE 903 OR 904 OF
REGULATION S AND (2) AGREES THAT IT WILL NOT PRIOR TO (X) THE DATE
WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY
RULE 144(k) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION
THEREUNDER) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR OF
ANY PREDECESSOR OF THIS SECURITY) OR THE LAST DAY ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF THIS SECURITY) AND (Y) SUCH LATER DATE, IF ANY, AS MAY
BE REQUIRED BY APPLICABLE LAWS (THE "RESALE RESTRICTION TERMINATION
DATE"), OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO
THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, (D) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(a)(1),(2),(3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (E)
31
<PAGE>
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, PURSUANT TO RULE 904 OF REGULATION S OR (F) PURSUANT
TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO
WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND; PROVIDED THAT THE COMPANY, THE TRUSTEE AND THE
TRANSFER AGENT AND REGISTRAR RESERVE THE RIGHT PRIOR TO ANY OFFER,
SALE OR OTHER TRANSFER PURSUANT TO CLAUSES (D),(E) OR (F) ABOVE TO
REQUIRE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND OTHER
INFORMATION SATISFACTORY TO THE COMPANY, THE TRUSTEE AND THE TRANSFER
AGENT AND REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF
THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S.
PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT.
Each Global Note shall also bear a legend on the face thereof in
substantially the following form:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, OR BY ANY SUCH
NOMINEE OF THE DEPOSITARY, OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO
A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE COMPANY 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 IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
32
<PAGE>
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 2.05 OF THE INDENTURE.
Section 2.04. Book-Entry Provisions for Global Notes.
--------------------------------------
This Section 2.04 shall apply only to the Global Notes deposited with
the Depositary or its custodian.
(1) So long as the Notes are eligible for book-entry settlement with
the Depositary, or unless otherwise required by law, the Global Notes initially
shall (i) be registered in the name of the Depositary or the nominee of such
Depositary, (ii) be delivered to the Trustee as custodian for such Depositary
and (iii) bear legends as set forth in Section 2.03.
Members of, or participants in, the Depositary ("Agent Members") shall
-------------
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depositary, or the Trustee as its custodian, or under the
Global Notes, and the Depositary may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of the Global
Notes for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(2) Transfers of the Global Notes shall be limited to transfers in
whole, but, subject to the immediately succeeding sentence, not in part, to the
Depositary, its successors or their respective nominees. Interests of
beneficial owners in the Global Notes may be transferred or exchanged for
Physical Notes in accordance with the rules and procedures of the Depositary and
the provisions of Section 2.05 hereof. In addition, Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in the Global Notes if (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for the Global Notes and a
successor depositary is not appointed by the Company within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing and the Note
Registrar has received a written request from the Depositary to issue Physical
Notes.
(3) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(2), the Note Registrar shall
33
<PAGE>
(if one or more Physical Notes are to be issued) reflect on its books and
records the date and a decrease in the principal amount of the Global Note in an
amount equal to the principal amount of the beneficial interest in the Global
Note to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Physical Notes of like tenor and amount.
(4) In connection with the transfer of the beneficial interests in an
entire Global Note to beneficial owners pursuant to paragraph (2), the Global
Note shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver to each
beneficial owner identified by the Depositary in exchange for its beneficial
interest in the Global Note, an equal aggregate principal amount of Physical
Notes of authorized denominations.
(5) Any Physical Note constituting a Restricted Security delivered in
exchange for a beneficial interest in a Global Note pursuant to paragraph (2) or
(3) shall, except as otherwise provided by paragraphs (1)(a)(x) and (3) of
Section 2.05 hereof, bear the Private Placement Legend.
(6) The owner of a beneficial interest in a Global Note may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Notes.
Section 2.05. Special Transfer Provisions.
---------------------------
(1) Transfers to Non-QIB Institutional Accredited Investors and Non-
---------------------------------------------------------------
U.S. Persons. The following provisions shall apply with respect to the
- ------------
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(a) the Note Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the second
anniversary of the Issue Date or (y) (A) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB (excluding Non-U.S.
Persons), the proposed transferee has delivered to the Note Registrar a
certificate substantially in the form of Exhibit C hereto or (B) in the
---------
case of a transfer to a Non-U.S. Person, the proposed transferor has
delivered to the Note Registrar a certificate substantially in the form of
Exhibit D hereto; and
---------
(b) if the proposed transferor is an Agent Member holding a beneficial
interest in the Global Note, upon receipt by the Note Registrar of (x) the
certificate, if any, required by paragraph (a) above and (y) written
instructions given in accordance with the Depositary's and the Note
Registrar's procedures,
whereupon (i) the Note Registrar shall reflect on its books and records the date
and (if the transfer does not involve a transfer of outstanding Physical Notes)
a decrease in the principal
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<PAGE>
amount of the applicable Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and (ii) the
Company shall execute and the Trustee shall authenticate and deliver one or more
Physical Notes of like tenor and amount.
(2) Transfers to QIBs. The following provisions shall apply with
-----------------
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S. Persons):
(a) the Note Registrar shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Note stating, or has otherwise advised the Company and the Note
Registrar in writing, that the sale has been made in compliance with the
provisions of Rule 144A to a transferee who has signed the certification
provided for on the form of Note stating, or has otherwise advised the
Company and the Note Registrar in writing, that it is purchasing the Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule 144A
or has determined not to request such information and that it is aware that
the transferor is relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule 144A; and
(b) if the proposed transferee is an Agent Member, and the Notes to be
transferred consist of Physical Notes which after transfer are to be
evidenced by an interest in a Global Note, upon receipt by the Note
Registrar of written instructions given in accordance with the Depositary's
and the Note Registrar's procedures, the Note Registrar shall reflect on
its books and records the date and an increase in the principal amount of
the applicable Global Note in an amount equal to the principal amount of
the Physical Notes to be transferred, and the Trustee shall cancel the
Physical Notes so transferred.
(3) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Notes not bearing the Private Placement Legend, the Note
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Notes bearing the Private
Placement Legend, the Note Registrar shall deliver only Notes that bear the
Private Placement Legend unless (i) the requested transfer is after the second
anniversary of the Issue Date, or (ii) there is delivered to the Note Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act.
(4) General. By its acceptance of any Note bearing the Private
-------
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
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<PAGE>
The Note Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.04 hereof or this
Section 2.05. The Company shall have the right to inspect and make copies of
all such letters, notices or other written communications at any reasonable time
during the Note Registrar's normal business hours upon the giving of reasonable
written notice to the Note Registrar.
In connection with any transfer of the Notes, the Trustee, the Note
Registrar and the Company shall be entitled to receive, shall be under no duty
to inquire into, may conclusively presume the correctness of, and shall be fully
protected in relying upon the certificates, opinions and other information
referred to herein (or in the forms provided herein, attached hereto or to the
Notes, or otherwise) received from any Holder and any transferee of any Note
regarding the validity, legality and due authorization of any such transfer, the
eligibility of the transferee to receive such Note and any other facts and
circumstances related to such transfer.
ARTICLE THREE
THE NOTES
Section 3.01. Title and Terms.
---------------
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $150,000,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Section 3.03, 3.04, 3.05, 9.05,
10.11, 10.13, 10.14 or 11.08.
The Notes shall be known and designated as the "8 1/8% Senior
Subordinated Notes due 2006" of the Company. The final Stated Maturity of the
Notes shall be July 1, 2006. Interest on the Notes will accrue at the rate of 8
1/8% per annum and will be payable semi-annually in arrears on January 1 and
July 1 in each year, commencing on January 1, 1999, to Holders of record on the
immediately preceding December 15 and June 15, respectively. Interest on the
Notes will accrue from the most recent date to which interest has been paid or
duly provided for or, if no interest has been paid, from the Issue Date.
The additional terms and provisions contained in the forms of Notes
and the Guarantees, annexed hereto as Exhibits A and E, respectively, shall
----------------
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
Section 3.02. Denominations.
-------------
The Notes shall be issuable only in fully registered form without
coupons and in denominations of $1,000 and any integral multiple thereof.
36
<PAGE>
Section 3.03. Temporary Notes.
---------------
Pending the preparation and delivery of definitive Notes, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Notes. Temporary Notes may be printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the Officers executing such Notes may consider appropriate, as
conclusively evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 10.02, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
Section 3.04. Registration; Registration of Transfer and Exchange.
---------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office a
register (the register maintained in such office and in any other office or
agency designated pursuant to Section 10.02 being herein sometimes referred to
as the "Note Register") in which, subject to such reasonable regulations as the
person appointed as being responsible for the keeping of the Note Register (the
"Note Registrar") may prescribe, the Company shall provide for the registration
of Notes and of transfers of Notes. The Note Register shall be in written form
or in any form capable of being converted into written form within a reasonable
period of time. The Trustee is hereby initially appointed Note Registrar for
the purpose of registering Notes and transfers of Notes as herein provided. The
Company may appoint one or more co-registrars.
Upon surrender for registration of transfer of any Note at the office
or agency of the Company designated pursuant to Section 10.02, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denomination or denominations, of a like aggregate principal amount and bearing
such restrictive legends as may be required by Section 2.03.
At the option of the Holder, Notes in certificated form may be
exchanged for other Notes of any authorized denomination or denominations, of a
like aggregate principal amount, upon surrender of the Notes to be exchanged at
such office or agency. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the Notes
which the Holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same
indebtedness, and entitled to the same
37
<PAGE>
benefits under this Indenture, as the Notes surrendered upon such registration
of transfer or exchange and no such transfer or exchange shall constitute a
repayment of any obligation nor create any new obligations of the Company.
Every Note presented or surrendered for registration of transfer, or
for exchange or redemption, shall (if so required by the Company, the Trustee,
the Note Registrar or any co-registrar) be duly endorsed or be accompanied by a
written instrument of transfer in form satisfactory to the Company, the Trustee,
and the Note Registrar or any co-registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing.
No service charge shall be made to a Holder for any registration of
transfer or exchange or redemption of Notes, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 3.03, 9.05, 10.14, 10.15 or 11.08 not
involving any transfer.
None of the Company, the Trustee, the Note Registrar or any co-
registrar shall be required (a) to issue, register the transfer of or exchange
any Note during a period beginning at the opening of business 15 days before the
mailing of a notice of redemption of the Notes selected for redemption and
ending at the close of business on the day of such mailing, (b) to register the
transfer of or exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of Notes being redeemed in part or (c) to issue,
register, transfer or exchange any Note during a Change of Control Offer or an
Asset Sale Offer, if such note is tendered pursuant to such Change of Control
Offer or Asset Sale Offer.
When Notes are presented to the Note Registrar with a request to
register the transfer or to exchange them for an equal principal amount of Notes
of other authorized denominations, the Note Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Notes at the Note
Registrar's request.
Section 3.05. Mutilated, Destroyed, Lost and Stolen Notes.
-------------------------------------------
If (a) any mutilated Note is surrendered to the Trustee, or (b) the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, and there is delivered to the Company
and the Trustee, such security or indemnity, in each case, as may be required by
them to save each of them harmless from any loss which either of them may suffer
if a Note is replaced, then, in the absence of notice to the Company or the
Trustee that such Note has been acquired by a bona fide purchaser, the Company
shall execute and the Trustee shall authenticate and deliver, in exchange for
any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a
replacement Note of like tenor and principal amount, bearing a number not
contemporaneously outstanding.
Upon the issuance of any replacement Notes under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that
38
<PAGE>
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all benefits of this Indenture equally and proportionately with any and all
other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 3.06. Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid by check or wire
transfer to the person in whose name that Note (or one or more predecessor
Notes) is registered at the close of business on the Regular Record Date for
such interest.
Any interest on any Note which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date and interest on such
defaulted interest at the then applicable interest rate borne by the Notes, to
the extent lawful (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest"), shall forthwith cease to be payable
to the Holder on the Regular Record Date and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in subsection (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the persons in whose names the Notes (or their respective predecessor
Notes) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing at least
20 days before such payment date of the amount of Defaulted Interest
proposed to be paid on each Note and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the persons entitled to
such Defaulted Interest as in this subsection (a) provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company in writing of such Special Record
Date. In the name and at the expense of the Company, the Trustee shall
cause notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid, to
each Holder at its address as it appears in the Note Register, not less
than 10 days prior to such Special
39
<PAGE>
Record Date. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the persons in whose names the Notes (or their
respective predecessor Notes) are registered on such Special Record Date
and shall no longer be payable pursuant to the following subsection (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after written notice given by the
Company to the Trustee of the proposed payment pursuant to this subsection
(b), such payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
Section 3.07. Persons Deemed Owners.
---------------------
Prior to and at the time of due presentment for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the person in whose name any Note is registered in the Note Register
as the owner of such Note for the purpose of receiving payment of principal of,
premium, if any, and (subject to Section 3.06) interest on such Note and for all
other purposes whatsoever, whether or not such Note shall be overdue, and
neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
Section 3.08. Cancellation.
------------
All Notes surrendered for payment, redemption, registration of
transfer or exchange shall be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The Company may at any time
deliver to the Trustee for cancellation any Notes previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, as evidenced by a Company Order instructing the Trustee that all
Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall
be authenticated in lieu of or in exchange for any Notes cancelled as provided
in this Section 3.08, except as expressly permitted by this Indenture.
Cancelled Notes shall be destroyed by the Trustee who shall provide proof of
destruction to the Company. The Trustee shall provide the Company with a list
of all Notes that have been cancelled from time to time as requested by the
Company.
Section 3.09. Computation of Interest.
-----------------------
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months.
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Section 3.10. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date, date
established for the payment of Defaulted Interest or Stated Maturity of any Note
shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of principal, premium, if any, or interest
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the Interest Payment Date,
Redemption Date, date established for the payment of Defaulted Interest or at
the Stated Maturity, as the case may be, and no interest shall accrue with
respect to such payment for the period from and after such Interest Payment
Date, Redemption Date, date established for the payment of Defaulted Interest or
Stated Maturity, as the case may be, to the next succeeding Business Day.
Section 3.11. CUSIP Number.
------------
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and if so, the Trustee may use the CUSIP numbers in notices
of redemption or exchange as a convenience to Holders; provided, however, that
-------- -------
any such notice may state that no representation is made as to the correctness
or accuracy of the CUSIP number printed in the notice or on the Notes, and that
reliance may be placed only on the other identification numbers printed on the
Notes. All Initial Notes shall bear identical CUSIP numbers and all Exchange
Notes shall bear identical CUSIP numbers. The Company shall promptly notify the
Trustee in writing of any change in the CUSIP number of the Notes.
Section 3.12. Payment of Additional Interest Under Registration
-------------------------------------------------
Rights Agreement.
- ----------------
Under certain circumstances the Company will be obligated to pay
certain additional amounts of interest to the Holders, as more particularly set
forth in section 2(e) of the Registration Rights Agreement. The terms of
Section 2(e) of the Registration Rights Agreement are hereby incorporated herein
by reference and the Company shall be obligated to provide a copy of such
Registration Rights Agreement to the Trustee.
ARTICLE FOUR
DEFEASANCE OR COVENANT DEFEASANCE
Section 4.01. Defeasance.
----------
The Company may, at its option at any time within the final year of
the Stated Maturity of the Notes, elect to have its obligations discharged with
respect to Outstanding Notes ("defeasance"). Such defeasance means that the
Company shall be deemed to have paid and discharged the entire Indebtedness
represented, and the Indenture shall cease to be of further effect as to all
outstanding Notes and Guarantees, except as to (i) rights of Holders to receive
payments in respect of the principal of, premium, if any, and interest on such
Notes when such
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payments are due solely from the trust fund described below, (ii) the Company's
obligations with respect to such Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes, and the
maintenance of an office or agency for payments and money for security payments
held in trust and (iii) the rights, powers, trusts, duties and immunities of the
Trustee and the Company's obligations in connection therewith.
Section 4.02. Covenant Defeasance.
-------------------
In addition, the Company may, at its option and at any time, elect to
have the obligations of the Company and all Guarantors released with respect to
Sections 10.05 through 10.20 and the provisions of Article Eight, and any
failure to comply with such obligations shall not constitute a Default or an
Event of Default with respect to the Notes (''covenant defeasance''). For this
purpose, such covenant defeasance means that, with respect to the Outstanding
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
5.01(c), (d), (e), (f), (g) or (i); provided as specified above, the remainder
of this Indenture and such Outstanding Notes shall be unaffected thereby.
Section 4.03. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
In order to exercise either defeasance or covenant defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, U.S. Legal Tender, U.S. Government
Obligations, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest
on the outstanding Notes at Stated Maturity or upon redemption in
accordance with Article Eleven, and the Holders must have a valid,
perfected, exclusive security interest in such trust;
(2) (a) in the case of defeasance, the Company shall have delivered
to the Trustee an opinion of counsel in the U.S. reasonably acceptable to
the Trustee confirming that (A) the Company has received from, or there has
been published by the Internal Revenue Service a ruling, or (B) since the
date of the Indenture, there has been a change in the applicable Federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of such Notes will not
recognize income, gain or loss for Federal income tax purposes as a result
of such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such defeasance had not occurred; or (b) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee an Opinion of
Counsel in the U.S. reasonably acceptable to such Trustee confirming that
the Holders of such Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such Covenant Defeasance and
will be subject to
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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;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit, or insofar as Section 5.01 (d)
events are concerned, at any time in the period ending on the 91st day
after the date of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period);
(4) such defeasance or covenant defeasance shall not cause the Trustee
to have a conflicting interest with respect to any securities of the
Company or any Guarantor;
(5) such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument to which the Company or any Guarantor is a party or
by which it is bound;
(6) the Company shall have delivered to the Trustee an Officer's
Certificate to the effect that the deposit was not made by the Company with
the intent of preferring the Holders of such Notes over any other creditors
of the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others; and
(7) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent under this Indenture to either defeasance or covenant defeasance,
as the case may be, have been complied with.
Opinions and certificates required to be delivered under this Section
shall be in compliance with the requirements set forth in Section 1.04 and this
Section 4.03.
Section 4.04. Deposited Money and U.S. Government Obligations To Be
-----------------------------------------------------
Held in Trust, Etc.
- -------------------
Subject to the provisions of the last paragraph of Section 10.03, all
U.S. Legal Tender and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or such other person that would qualify to
act as successor trustee under Article Six, collectively for purposes of this
Section 4.04, the "Trustee") pursuant to Section 4.03 in respect of the
Company's election under either Section 4.01 or 4.02, shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Notes and this
Indenture, to the payment, either directly or through any Paying Agent (other
than the Company or any Affiliate of the Company) as the Trustee may determine,
to the Holders of such Notes of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, either at the Stated
Maturity or on the applicable Redemption Date, as the case may be, but such
money need not be segregated from other funds except to the extent required by
law; provided that the Trustee shall have been irrevocably instructed to apply
such U.S. Legal Tender or the proceeds of such U.S. Government Obligations to
said payments with respect to the Notes.
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The Company shall pay and indemnify the Trustee and its agents and
hold them harmless against any tax, fee or other charge imposed on or assessed
against the U.S. Government Obligations deposited pursuant to Section 4.03 or
the principal, premium, if any, and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the account of the
Holders of the Defeased Notes.
Anything in this Article Four to the contrary notwithstanding, the
Trustee shall deliver to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 4.03
hereof which, in the opinion of a nationally-recognized firm of independent
public accountants expressed in a written certification thereof to the Trustee,
are in excess of the amount thereof which would then be required to be deposited
to effect an equivalent defeasance or covenant defeasance.
Section 4.05. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 4.03, by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the obligations of the Company and
each of the Guarantors under this Indenture, the Notes and the Guarantees shall
be revived and reinstated as though no deposit had occurred pursuant to Section
4.03, until such time as the Trustee or Paying Agent is permitted to apply all
such money and U.S. Government Obligations in accordance with Section 4.03;
provided, however, that if the Company or the Guarantors make any payment of
principal, premium, if any, or interest on any Note following the reinstatement
of its obligations, the Company or the Guarantors, as the case may be, shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money and U.S. Government Obligations held by the Trustee or Paying
Agent.
Section 4.06. Repayment to Company.
--------------------
The Trustee shall pay to the Company (or, if appropriate, the
Guarantors) upon Company Request any money held by it for the payment of
principal, premium, if any, or interest that remains unclaimed for two years.
After payment to the Company or the Guarantors, Noteholders entitled to money
must look to the Company and the Guarantors for payment as general creditors
unless an applicable abandoned property law designates another person and all
liability of the Trustee or Paying Agent with respect to such money shall
thereupon cease.
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default.
-----------------
"Event of Default," wherever used herein, means any one of the
----------------
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary
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or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(a) the failure by the Company to pay any installment of interest on
the Notes as and when due and payable and the continuance of any such failure
for 30 days;
(b) the failure to pay all or any part of the principal of, or
premium, if any, on, the Notes when and as the same become due and payable at
maturity, redemption, by acceleration or otherwise, or the failure by the
Company or any Restricted Subsidiary to comply with any of its obligations
described under Article Eight, Section 10.13 or Section 10.14;
(c) the failure by the Company to observe or perform any other
covenant or agreement contained in the Notes or the Indenture and, subject to
certain exceptions, the continuance of such failure for a period of 30 days
after written notice is given to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount of
the Notes outstanding;
(d) (i) the Company or any Significant Subsidiary commences a
voluntary case or proceeding under any applicable Bankruptcy Law or any other
case or proceeding to be adjudicated bankrupt or insolvent, (ii) the Company or
any Significant Subsidiary consents to the entry of a decree or order for relief
in respect of the Company or such Significant Subsidiary in an involuntary case
or proceeding under any applicable Bankruptcy Law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, (iii) the Company or any
Significant Subsidiary files a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state bankruptcy law,
(iv) the Company or any Significant Subsidiary (x) consents to the filing of
such petition or the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or such Significant Subsidiary or of any substantial part of
their respective property, (y) makes an assignment for the benefit of creditors
or (z) admits in writing its inability to pay its debts generally as they become
due;
(e) default or defaults under one or more agreements, indentures or
instruments under which the Company or any Restricted Subsidiary then has
outstanding Indebtedness in excess of $10.0 million individually or in the
aggregate and either (i) such Indebtedness (or any payment of principal,
interest or premium thereon) is already due and payable or (ii) such default or
defaults results in the acceleration of the maturity of such Indebtedness;
(f) final unsatisfied judgments no longer subject to appeal not
covered by insurance aggregating in excess of $10.0 million at any one time
rendered against the Company or any of the Restricted Subsidiaries and not
stayed, bonded or discharged within 60 days; or
(g) the loss for 90 days of the legal right to conduct gaming
operations at any Casino which, if the Facility of which such Casino is a part
were operated by a single Subsidiary, would constitute a Significant Subsidiary.
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The Company shall provide an Officers' Certificate to the Trustee
promptly upon any officer of the Company obtaining knowledge of any Default or
Event of Default that has occurred and, if applicable, describe such Default or
Event of Default and the status thereof.
Section 5.02. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default occurs and is continuing (other than an Event
of Default specified in clause (d) above relating to the Company or any of the
Significant Subsidiaries) unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the Holders of 25% of the
aggregate principal amount of the Notes then outstanding, by notice in writing
to the Company (and to the Trustee if given by Holders) (an "Acceleration
Notice"), may declare all principal of, and accrued and unpaid interest on, the
Notes due and payable immediately. If an Event of Default specified in clause
(d) above relating to the Company or any of the Significant Subsidiaries occurs,
all principal of, and accrued and unpaid interest on, the Notes will be
immediately due and payable without any declaration or other act on the part of
Trustee or the Holders. The Holders of no less than a majority in aggregate
principal amount of Notes are generally authorized to rescind such acceleration
if all existing Events of Default, other than the non-payment of the principal
of, premium, if any, and interest on, the Notes which have become due solely by
such acceleration, have been cured or waived.
Prior to the declaration of acceleration of the maturity of the Notes,
the Holders of a majority of the aggregate principal amount of the Notes at the
time outstanding may waive on behalf of all the Holders any Default or Event of
Default, except a Default or Event of Default in the payment of principal of, or
interest on, any Note not yet cured, or a Default or Event of Default with
respect to any covenant or provision which cannot be modified or amended without
the consent of the Holder of each outstanding Note affected. Subject to the
provisions of this Indenture relating to the duties of the Trustee, the Trustee
will be under no obligation to exercise any of its rights or powers under this
Indenture at the request, order or direction of any of the Holders, unless such
Holders have offered to the Trustee reasonable security or indemnity. Subject to
all provisions of this Indenture and applicable law, the Holders of a majority
of the aggregate principal amount of the Notes at the time outstanding will have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred
on the Trustee.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee; Other Remedies.
- -----------------------
The Company covenants that if an Event of Default in payment of
principal, premium or interest specified in Section 5.01(a) or 5.01(b) hereof
occurs and is continuing, the Company will, upon demand of the Trustee, pay to
the Trustee, for the benefit of the Holders of such Notes, the whole amount then
due and payable on such Notes for principal, premium, if any, and interest, with
interest upon the overdue principal, premium, if any, and, to the extent that
payment of such interest shall be legally enforceable, upon overdue installments
of interest, at the rate then borne by the Notes; and, in addition thereto, 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.
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If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may, but is not
obligated under this paragraph to, institute a judicial proceeding for the
collection of the sums so due and unpaid and may, but is not obligated under
this paragraph to, prosecute such proceeding to judgment or final decree, and
may, but is not obligated under this paragraph to, enforce the same against the
Company, the Guarantors or any other obligor upon the Notes and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Notes, wherever
situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion, but is not obligated under this paragraph to, (i) proceed to
protect and enforce its rights and the rights of the Holders under this
Indenture and the Notes by such appropriate private or judicial proceedings as
the Trustee shall deem most effectual to protect and enforce such rights,
whether for the specific enforcement of any covenant or agreement contained in
this Indenture or the Notes or in aid of the exercise of any power granted
herein or therein, or (ii) proceed to protect and enforce any other proper
remedy. No recovery of any such judgment upon any property of the Company shall
affect or impair any rights, powers or remedies of the Trustee or the Holders.
Section 5.04. Trustee May File Proofs of Claims.
---------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, the Guarantors or any other obligor
upon the Notes, or the property of the Company, the Guarantors or of such other
obligor or their creditors, the Trustee (irrespective of whether the principal
of the Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise, but is not obligated under this paragraph
(a) to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Notes and
to file such 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 of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
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 the
Trustee any amount due 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 6.07 hereof.
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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 Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
Section 5.05. Trustee May Enforce Claims Without Possession of Notes.
------------------------------------------------------
All rights of action and claims under this Indenture or the Notes may
be prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name and as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Notes in respect of which such judgment has been recovered.
Section 5.06. Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, premium, if
any, or interest, upon presentation of the Notes and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
First: to the Trustee for amounts due under Section 6.07;
Second: to Holders for interest accrued on the Notes, ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Notes for interest;
Third: to Holders for principal amounts and premium, if any, owing
under the Notes, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
premium; and
Fourth: to the Company or, to the extent the Trustee collects any
amount from any Guarantor, to such Guarantor.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Noteholders pursuant to this
Section 5.06.
Section 5.07. Limitation on Suits.
-------------------
No Holder of any Notes shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
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(a) the Holder or Holders of not less than 25.0% in aggregate
principal amount of the Outstanding Notes shall have made written
request(s) to the Trustee to institute proceedings in respect of such Event
of Default in its own name as Trustee hereunder;
(b) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(c) the Trustee for 15 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(d) no direction inconsistent with such written request has been
given to the Trustee during such 15-day period by the Holders of a majority
in aggregate principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture or any Note to affect, disturb or prejudice the rights of any
other Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture or any Note except in
the manner provided in this Indenture and for the equal and ratable benefit of
all the Holders.
Section 5.09. Unconditional Right of Holders To Receive Principal,
---------------------------------------------------
Premium and Interest.
- --------------------
Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
cash payment, in U.S. Legal Tender, of the principal of, premium, if any, and
(subject to Section 3.06 hereof) interest on such Note on the respective Stated
Maturities expressed in such Note (or, in the case of redemption or repurchase,
on the respective Redemption Dates or date fixed for repurchase) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the express consent of such Holder.
Section 5.09. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture or any Note and such proceeding has
been discontinued or abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
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Section 5.10. Rights and Remedies Cumulative.
------------------------------
No right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article Five or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
Section 5.12. Control by Majority.
-------------------
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Notes shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided, however, that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture or any Note or expose the Trustee to liability; and
(b) subject to the provisions of Section 315 of the TIA, the Trustee
may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 5.13. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Notes may on behalf of the Holders of all the Notes waive any
past Default hereunder and its consequences, except a Default:
(a) in the payment of the principal of, premium, if any, or interest
on any Note (which may only be waived with the consent of each Holder of
Notes affected); or
(b) in respect of a covenant or provision under this Indenture which
cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
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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 Event of Default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture or the Notes, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Notes or to
any suit instituted by any Holder for the enforcement of the payment of the
principal of, premium, if any, or interest on any Note on or after the
respective Stated Maturities expressed in such Note (or, in the case of
redemption or repurchase, on or after the respective Redemption Dates or dates
fixed for repurchase).
Section 5.15. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which would
prohibit or forgive the Company from paying all or any portion of the principal
of, premium, if any, or interest on the Notes contemplated herein or in the
Notes or which may affect the covenants or the performance of this Indenture;
and the Company (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
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ARTICLE SIX
THE TRUSTEE
Section 6.01. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) 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 to the requirements of this Indenture; but in
the case of any such certificates or opinions which by any provision hereof
are specifically required to be furnished to the Trustee, the Trustee or
its counsel shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture.
(b) In case 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 use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that (i) this paragraph does not
limit the effect of paragraph (a) of this Section 6.01; (ii) the Trustee shall
not be liable for any error of judgment made in good faith by an officer of the
Trustee or upon advice of its counsel, 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 5.12.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or take any action at the request or direction of Holders
if it shall have reasonable grounds for believing that repayment of such funds
is not assured to it or it does not receive an indemnity satisfactory to it in
its sole discretion against such risk, liability, loss, fee or expense which
might be incurred by it in compliance with such request or direction.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 6.01.
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Section 6.02. Notice of Defaults.
------------------
Within 90 days after the occurrence of any Default, the Trustee shall
transmit by mail to all Holders, as their names and addresses appear in the Note
Register, notice of such Default hereunder known to the Trustee; provided,
however, that, except in the case of a Default in the payment of the principal
of, premium, if any, or interest on any Note, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of Responsible Officers or counsel of the Trustee
in good faith determines that the withholding of such notice is in the interest
of the Holders.
Section 6.03. Certain Rights of Trustee.
-------------------------
Subject to Section 6.01 hereof and the provisions of (S) 315 of the
TIA:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, approval, appraisal, bond, debenture, note, coupon, security,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution of the Company thereof;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior
to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate
of the Company;
(d) the Trustee and its agents may consult with counsel and any
written advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon in accordance with such advice or Opinion of Counsel;
(e) the Trustee and its agents shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, other evidence of indebtedness or other paper or
document but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may deem
fit, and, if the Trustee shall determine to make such further inquiry
or investigation, it shall be entitled to examine the books, records
and premises of
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the Company, personally or by agent or attorney during the reasonable
business hours of the Company;
(f) the Trustee and its agents may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
(other than an agent who is an employee of the Trustee) or attorney
appointed with due care by it hereunder; or
(g) the Trustee shall not be charged with knowledge of any
Default or Event of Default, as the case may be, with respect to the
Notes unless either (1) a Responsible Officer of the Trustee shall
have actual knowledge of the Default or Event of Default, as the case
may be, or (2) written notice of such Default or Event of Default, as
the case may be, shall have been given to the Trustee by the Company,
any other obligor on the Notes or by any Holder of the Notes.
(h) Except with respect to Section 10.01, the Trustee shall have
no duty to inquire as to the performance of the Company with respect
to the covenants contained in Article Ten. In addition, the Trustee
shall not be deemed to have knowledge of an Event of Default except
(i) any Default or Event of Default occurring pursuant to Sections
5.01(a), 5.01(b) or 10.01 or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or obtained
actual knowledge.
(i) Delivery of reports, information and documents to the
Trustee under Section 10.08 is for informational purposes only and the
Trustee's receipt of the foregoing shall not constitute constructive
notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with
any of their covenants hereunder (as to which the Trustee is entitled
to rely exclusively on Officers' Certificates).
Section 6.04. Trustee Not Responsible for Recitals, Dispositions of
-----------------------------------------------------
Notes or Application of Proceeds Thereof.
- ----------------------------------------
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company
and the Guarantors, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or the Notes, except that the Trustee represents
that it is duly authorized to execute and deliver this Indenture, authenticate
the Notes and perform its obligations hereunder and that the statements made by
it in a Statement of Eligibility and Qualification on Form T-1 supplied to the
Company and the Guarantors in connection with the registration of any Notes and
Guarantees issued hereunder are true and accurate subject to the qualifications
set forth therein. The Trustee shall not be accountable for the use or
application by the Company of Notes or the proceeds thereof.
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Section 6.05. Trustee and Agents May Hold Notes; Collections; etc.
---------------------------------------------------
The Trustee, any Paying Agent, Note Registrar or any other agent of
the Company or the Guarantors, in its individual or any other capacity, may
become the owner or pledgee of Notes, with the same rights it would have if it
were not the Trustee, Paying Agent, Note Registrar or such other agent and,
subject to Sections 6.08 and 6.13 hereof and (S)(S) 310 and 311 of the Trust
Indenture Act, may otherwise deal with the Company or the Guarantors and
receive, collect, hold and retain collections from the Company or the Guarantors
with the same rights it would have if it were not the Trustee, Paying Agent,
Note Registrar or such other agent.
Section 6.06. Money Held in Trust.
-------------------
All moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required herein
or by law. The Trustee shall not be under any liability for interest on any
moneys received by it hereunder.
Section 6.07. Compensation and Indemnification of Trustee and Its
---------------------------------------------------
Prior Claim.
- -----------
The Company and the Guarantors covenant and agree: (a) to pay to the
Trustee from time to time, and the Trustee shall be entitled to, reasonable
compensation for all services rendered by it hereunder (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust); (b) to reimburse the Trustee and each predecessor Trustee upon
its request for all reasonable expenses, disbursements and advances incurred or
made by or on behalf of it in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all agents and other persons not regularly
in its employ), except any such reasonable expense, disbursement or advance as
may arise from its negligence or bad faith; and (c) to indemnify the Trustee and
each predecessor Trustee for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder and the exercise or performance of any of its
powers or duties hereunder, including enforcement of this Section 6.07. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The obligations of the Company and the
Guarantors under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall constitute an additional
obligation hereunder and shall survive the satisfaction and discharge of this
Indenture.
Section 6.08. Conflicting Interests.
---------------------
The Trustee shall be subject to and comply with the provisions of (S)
310(b) of the TIA.
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Section 6.09. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be
eligible to act as Trustee under TIA (S)(S) 310(a)(1) and 310(a)(5) and which
shall have a combined capital and, surplus of at least $100,000,000 (or be a
member of a bank holding company with combined capital and surplus of at least
$100,000,000), and have an office or agency at which Notes may be presented for
transfer and redemption and at which demands may be made in The City of New
York. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of United States Federal, state,
territorial or District of Columbia supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 6.10. Resignation and Removal; Appointment of Successor
-------------------------------------------------
Trustee.
- -------
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee, or any trustee or trustees hereinafter appointed,
may at any time resign by giving written notice thereof to the Company and the
Guarantors at least 30 Business Days prior to the date of such proposed
resignation. Upon receiving such notice of resignation, the Company and the
Guarantors shall promptly appoint a successor trustee by written instrument, a
copy of which shall be delivered to the resigning Trustee and a copy to the
successor trustee. If an instrument of acceptance by a successor Trustee shall
not have been delivered to the Trustee within 30 Business Days after the giving
of such notice of resignation, the resigning Trustee may, or any Holder who has
been a bona fide Holder of a Note for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper, appoint a successor
trustee.
(c) The Trustee may be removed at any time with 60 days written
notice by an Act of the Holders of a majority in principal amount of the
Outstanding Notes, delivered to the Trustee, the Company and the Guarantors.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of (S)
310(b) of the TIA in accordance with Section 6.08 hereof after written
request therefor by the Company, the Guarantors or by any Holder who has
been a bona fide Holder of a Note for at least six months, or
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(2) the Trustee shall cease to be eligible under Section 6.09 hereof
and shall fail to resign after written request therefor by the Company, the
Guarantors or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent, or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose or
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company or the Guarantors may remove the
Trustee, or (ii) subject to Section 5.14, the Holder of any Note who has been a
bona fide Holder of a Note for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company or the Guarantors shall promptly appoint a successor Trustee. If,
within 60 days after such resignation, removal or incapability, or the
occurrence of such vacancy, and the Company or the Guarantors have not appointed
a successor Trustee, a successor Trustee shall be appointed by act of the
Holders of a majority in principal amount of the Outstanding Notes delivered to
the Company, the Guarantors and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company
and the Guarantors. If no successor Trustee shall have been so appointed by the
Company or the Holders of the Notes and accepted appointment in the manner
hereinafter provided, the Holder of any Note who has been a bona fide Holder for
at least six months may, subject to Section 5.14, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company and the Guarantors shall give notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Notes as their names and addresses appear in the Note
Register. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company, the Guarantors and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee as if originally named
as Trustee hereunder; but, nevertheless, on the written request of the Company,
the Guarantors or the successor Trustee, upon payment of amounts due it pursuant
to Section 6.07, such retiring Trustee shall duly assign, transfer and deliver
to the successor Trustee all moneys and property at
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the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor Trustee all the rights, powers, duties and
obligations of the retiring Trustee. Upon request of any such successor Trustee,
the Company and the Guarantors shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights and powers.
No successor Trustee with respect to the Notes shall accept
appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor Trustee shall be eligible to act as Trustee under this
Article.
Upon acceptance of appointment by any successor Trustee as provided in
this Section 6.11, the Company and the Guarantors shall give notice thereof to
the Holders of the Notes, by mailing such notice to such Holders at their
addresses as they shall appear on the Note Register. If the acceptance of
appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 6.10(f). If the Company or the Guarantors fail to give
such notice within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be given at the
expense of the Company.
Section 6.12. Successor Trustee by Merger, etc.
--------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder without
the execution or filing of any paper or any further act on the part of any of
the parties hereto, provided such corporation shall be eligible under this
Article to serve as Trustee hereunder.
In case at the time such successor to the Trustee under this Section
6.12 shall succeed to the trusts created by this Indenture any of the Notes
shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor Trustee
and deliver such Notes so authenticated; and, in case at that time any of the
Notes shall not have been authenticated, any successor to the Trustee under this
Section 6.12 may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificate shall have the full force which it is anywhere in the Notes or in
this Indenture provided that the certificate of the Trustee shall have been
authenticated.
Section 6.13. Preferential Collection of Claims Against Issuers.
-------------------------------------------------
The Trustee shall comply with Section 311(a) of the TIA, excluding any
creditor relationship listed in (S) 311(b) of the TIA. If the present or any
future Trustee shall resign or be removed, it shall be subject to (S) 311(a) of
the TIA to the extent provided therein.
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.01. Preservation of Information; Company To Furnish Trustee
-------------------------------------------------------
Names and Addresses of Holders.
- ------------------------------
(a) 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; provided, however, that if and for so long as the Trustee shall not
be the Note Registrar, the Note Register shall satisfy the requirements relating
to such list. None of the Company, the Guarantors or the Trustee shall be
under any responsibility with regard to the accuracy of such list.
(b) The Company will furnish or cause to be furnished to the Trustee
(i) semiannually, not more than 10 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of such Regular Record Date; and
(ii) at such other times as the Trustee may request in writing, within
30 days after receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such
list is furnished;
provided, however, that if and so long as the Trustee shall be the Note
- -------- -------
Registrar, no such list need be furnished pursuant to this Section 7.01(b)
Section 7.02. Communications of Holders.
-------------------------
Holders may communicate with other Holders with respect to their
rights under this Indenture or under the Notes pursuant to (S) 312(b) of the
TIA. The Trustee shall comply with (S) 312(b) of the TIA. The Company, the
Guarantors and the Trustee and any and all other persons benefited by this
Indenture shall have the protection afforded by (S) 312(c) of the TIA.
Section 7.03. Reports by Trustee.
------------------
Within 60 days after May 15 of each year commencing with the first May
15 following the date of this Indenture, the Trustee shall mail to all Holders,
as their names and addresses appear in the Note Register, a brief report dated
as of such May 15 that complies with (S) 313(a) of the TIA; provided, however,
that if no such event as described in (S) 313(a) of the TIA has occurred within
such period then no such report need be transmitted. The Trustee shall also
comply with (S)(S) 313(b), 313(c) and 313(d) of the TIA. At the time of its
mailing to Holders, a copy of each report shall be filed with the Company, the
Guarantors, the Commission and with each national securities exchange on which
the Notes are listed. The Company shall notify the Trustee when the Notes are
listed on any stock exchange or any delisting thereof.
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Section 7.04. Reports by Company and Each Guarantor.
-------------------------------------
The Company and each Guarantor shall:
(a) file with the Trustee copies of the reports and of the
information and documents which the Company and each Guarantor is required to
provide to any person under Section 10.08, hereof, and, if the Company or any
Guarantor is not required to file information, documents or reports pursuant to
Section 13 or Section 15(d) of the Exchange Act, to file with the Trustee and
the Commission, in accordance with, and so long as not prohibited by, the rules
and regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance with the
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Company and each Guarantor with the covenants of this Indenture as is required
from time to time by such rules and regulations (including such information,
documents and reports referred to in Trust Indenture Act Section 314(a)(2)); and
(c) transmit by mail to all Holders, in a manner and to the extent
provided in Trust Indenture Act Section 313(c), such summaries of any
information, documents and reports required to be filed by the Company and each
Guarantor pursuant to Section 10.08 hereof and subsections (a) and (b) of this
Section as is required and not prohibited by rules and regulations prescribed
from time to time by the Commission.
ARTICLE EIGHT
SUCCESSOR CORPORATION
Section 8.01. When Company May Merge, etc.
---------------------------
The Company shall not consolidate with or merge with or into another
person or, directly or indirectly, sell, lease or convey all or substantially
all of its assets (computed on a consolidated basis), to another person or group
of affiliated persons, unless (i)(A) the Surviving Person shall be a corporation
organized under the laws of the United States of America, any State thereof or
the District of Columbia and (B) the Surviving Person expressly assumes by
supplemental indenture executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company in connection
with the Notes and this Indenture and the Registration Rights Agreement, and in
each case, this Indenture and the Registration Rights Agreement shall remain in
full force and effect; (ii) immediately after giving effect to such transaction
or series of related transactions on a pro forma basis, no Default or Event of
Default shall have occurred and be continuing; and (iii) the Surviving Person
immediately after giving effect to such transaction or series of transactions on
a pro forma basis (including, without
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limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions),
could incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Fixed Charge Coverage Ratio provision contained in Section 10.10;
and (iv) such transaction will not result in the loss of any Gaming License held
by a Significant Subsidiary of the Company. For purposes of this Section 8.01,
the Consolidated Fixed Charge Coverage Ratio shall be determined on a pro forma
consolidated basis (after giving effect, and a pro forma basis, to the
transaction and any related incurrence of Indebtedness or Preferred Stock) for
the Reference Period which ended immediately preceding such transaction.
In connection with any consolidation, merger, transfer, lease or other
disposition contemplated hereby, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, transfer, lease or other disposition and the
supplemental indenture in respect thereof comply with the requirements under
this Indenture. In addition, each Guarantor, in the case of a transaction
described in the first paragraph under this Section 8.01, unless it is the other
party to the transaction or unless its Note Guarantee will be released and
discharged in accordance with its terms as a result of the transaction, will be
required to confirm, by supplemental indenture, that its Note Guarantee will
continue to apply to the obligations of the Company or the Surviving Person
under this Indenture.
Section 8.02. Successor Substituted.
---------------------
Upon any consolidation or merger of the Company or any transfer of all
or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the Surviving Person, the Surviving
Person shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture and the Notes and the
Registration Rights Agreement with the same effect as if such Surviving Person
had been named as the Company therein; and thereafter, except in the case of (a)
a lease or (b) any sale, assignment, conveyance, transfer, lease or other
disposition to a Restricted Subsidiary of the Company, the Company shall be
discharged from all obligations and covenants under this Indenture and the
Notes.
For all purposes of this Indenture and the Notes (including the
provisions of this Article Eight and Sections 10.10, 10.11 and 10.15),
Subsidiaries of any Surviving Person shall, upon such transaction or series of
related transactions, become Restricted Subsidiaries unless and until designated
as Unrestricted Subsidiaries pursuant to and in accordance with Section 10.18
and all Indebtedness, and all Liens on property or assets, of such Surviving
Person and its Restricted Subsidiaries in existence immediately prior to such
transaction or series of related transactions will be deemed to have been
incurred upon consummation of such transaction or series of related
transactions.
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ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.
--------------------------
The Company, the Guarantors, if any, when authorized by their board of
directors, and the Trustee may, without the consent of the Holders of any
Outstanding Notes, amend, waive or supplement this Indenture or the Notes:
(a) to cure any ambiguity, defect or inconsistency;
(b) to comply with Article Eight;
(c) to provide for uncertificated Notes in addition to certificated
Notes;
(d) to comply with any requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA;
(e) to provide for additional Guarantors of the Notes;
(f) to evidence the release of any Guarantor in accordance with
Article Thirteen hereof;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(h) to make any change that would provide any additional benefit or
rights to the Holders or that does not adversely affect the rights of any
Holder;
provided, however, that the Company has delivered to the Trustee an
Opinion of Counsel stating that such change does not adversely affect the
legal rights of any Holder.
Section 9.02. With Consent of Holders.
-----------------------
Except as provided in Section 9.01, other amendments and modifications
of this Indenture or the Notes may be made by the Company, the Guarantors, if
any, and the Trustee with the consent of the Holders of not less than a majority
of the aggregate principal amount of the outstanding Notes; provided, however,
that no such modification or amendment may, without the consent of the Holder of
each outstanding Note affected thereby,
(i) change the Stated Maturity of any Note; or
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<PAGE>
(ii) reduce the principal amount thereof or the rate (or extend
the time for payment) of interest thereon or any premium payable upon
the redemption thereof, or change the place of payment where, or the
coin or currency in which, any Note or any premium or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption
Date), or reduce any Offer to Purchase Price; or
(iii) alter the redemption provisions in a manner adverse to the
Holders; or
(iv) make the Notes subordinate to any Indebtedness or other
claims;
(v) change the provisions of Section 10.14.; or
(vi) reduce the percentage in principal amount of the
outstanding Notes, the consent of whose Holders is required for any
such amendment, supplemental indenture or waiver provided for in the
Indenture; or
(vii) modify any of the waiver provisions, except to increase
any required percentage or to provide that certain other provisions of
the Indenture cannot be modified or waived without the consent of the
Holder of each outstanding Note affected thereby.
The Holders of a majority in aggregate principal amount of the
outstanding Notes, on behalf of all Holders of Notes, may waive compliance by
the Company and the Guarantors with certain restrictive provisions of this
Indenture. Subject to certain rights of the Trustee, as provided in this
Indenture, the Holders of a majority in aggregate principal amount of the Notes,
on behalf of all Holders of the Notes, may waive any past default under this
Indenture (including any such waiver obtained in connection with a tender offer
or exchange offer for the Notes), except a default in the payment of principal,
premium or interest or a default arising from failure to purchase any Notes
tendered pursuant to an optional redemption or repurchase, or a default in
respect of a provision hereunder that cannot be modified or amended without the
consent of the Holder of each Note that is affected.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
Section 9.03. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment of or supplement to this Indenture or the Notes shall
comply with the TIA as then in effect if this Indenture shall then be qualified
under the TIA.
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Section 9.04. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article
Nine, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.05. Revocation and Effect of Consents.
---------------------------------
Until an amendment or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of that
Note or portion of that Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. Subject
to the following paragraph, any such Holder or subsequent Holder may revoke the
consent as to such Holder's Note or portion of such Note by notice to the
Trustee or the Company received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Notes have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then, notwithstanding the last
sentence of the immediately preceding paragraph, those persons who were Holders
at such record date (or their duly designated proxies), and only those persons,
shall be entitled to consent to such amendment, supplement or waiver or to
revoke any consent previously given, whether or not such persons continue to be
Holders after such record date. No such consent shall be valid or effective for
more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder of Notes, unless it makes a change described in any of clauses
(i) through (ix) of Section 9.02. In that case, the amendment, supplement or
waiver shall bind each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note.
Section 9.06. Notation on or Exchange of Notes.
--------------------------------
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee shall (in accordance with the specific direction of the Company) request
the Holder of the Note to deliver it to the Trustee. The Trustee shall (in
accordance with the specific direction of the Company) place an appropriate
notation on the Note about the changed terms and return it to the Holder.
Alternatively, if the Company or the Trustee so determines, the Company in
exchange for the Note shall issue and the Trustee shall authenticate a new Note
that reflects the changed terms. Failure to make the appropriate notation or
issue a new Note shall not affect the validity and effect of such amendment,
supplement or waiver.
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Section 9.07. Trustee May Sign Amendments, etc.
--------------------------------
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article Nine if the amendment, supplement or waiver does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If such amendment, supplement or waiver does affect the rights, duties,
liabilities or immunities of the Trustee, the Trustee may, but need not, sign
it. In signing or refusing to sign such amendment, supplement or waiver, the
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that the
execution of any amendment, supplement or waiver is authorized or permitted by
this Indenture, that it is not inconsistent herewith and that it will be valid
and binding upon the Company in accordance with its terms.
ARTICLE TEN
COVENANTS
Section 10.01. Payment of Principal, Premium and Interest.
------------------------------------------
The Company will duly and punctually pay the principal of, premium, if
any, and interest on the Notes in accordance with the terms of the Notes and
this Indenture.
Section 10.02. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in The City of New York, an office or agency
where Notes may be presented or surrendered for payment, where Notes and the
Guarantees may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company or any Guarantor in respect of the
Notes, the Guarantees and this Indenture may be served. The office of the
Trustee shall be such office or agency of the Company, unless the Company shall
designate and maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the Trustee of any
change in the location of any 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, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies (in or outside of The City of New York) where the Notes and
the Guarantees may be presented or surrendered for any or all such purposes, and
may from time to time rescind such designation; 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 in The
City of New York for such purposes. The Company will give prompt written notice
to the Trustee of any such designation or rescission and any change in the
location of any such other office or agency.
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Section 10.03. Money for Note Payments To Be Held in Trust.
-------------------------------------------
If the Company shall at any time act as its own Paying Agent, the
Company will, on or before each due date of the principal of, premium, if any,
or interest on any of the Notes, segregate and hold in trust for the benefit of
the Holders entitled thereto a sum sufficient to pay the principal, premium, if
any, or interest so becoming due until such sums shall be paid to such persons
or otherwise disposed of as herein provided, and will promptly notify the
Trustee of its action or failure so to act.
If the Company is not acting as Paying Agent, the Company will, on or
before each due date of the principal of, premium, if any, or interest on any
Notes, deposit with a Paying Agent a sum in same day funds sufficient to pay the
principal, premium, if any, or interest so becoming due, such sum to be held in
trust for the benefit of the Holders entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to act.
If the Company is not acting as Paying Agent, the Company will cause
each Paying Agent other than the Trustee to execute and deliver to the Trustee
an instrument in which such Paying Agent shall agree with the Trustee, subject
to the provisions of this Section 10.03, that such Paying Agent will:
(a) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Notes in trust for the benefit of the
Holders entitled thereto until such sums shall be paid to such Holders or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any Default by the Company (or any
other obligor upon the Notes) in the making of any payment of principal of,
premium, if any, or interest on the Notes;
(c) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
(d) acknowledge, accept and agree to comply in all respects with the
provisions of this Indenture relating to the duties, rights and liabilities
of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
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 Note
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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 upon receipt of
a Company Request therefor, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Note shall thereafter, as an unsecured
general 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, shall 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
will be repaid to the Company.
Section 10.04. Existence.
---------
Subject to Article Eight, each of the Company and each Guarantor will
do or cause to be done all things necessary to and will cause each of its
Restricted Subsidiaries to preserve and keep in full force and effect its
corporate existence and the corporate existence of each of the Restricted
Subsidiaries, and the rights (charter and statutory), licenses and franchises of
the Company and each of the Restricted Subsidiaries; provided, however, that the
Company, the Guarantors or their respective Restricted Subsidiaries shall not be
required to preserve any such right, license or franchise 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
respective Restricted Subsidiaries as a whole and that the loss thereof is not
disadvantageous in any material respect to the Holders; provided, further,
however, that the foregoing shall not prohibit a sale, transfer or conveyance of
a Subsidiary of the Company or any of its assets or Capital Stock in compliance
with the terms of this Indenture.
Section 10.05. Payment of Taxes and Other Claims.
---------------------------------
The Company and each Guarantor shall pay or discharge or cause to be
paid or discharged, before the same shall become delinquent, (a) all taxes,
assessments and governmental charges levied or imposed (i) upon the Company or
any of its Restricted Subsidiaries or (ii) upon the income, profits or property
of the Company or any of its Restricted Subsidiaries and (b) all material lawful
claims for labor, materials and supplies, which, if unpaid, might by law become
a Lien upon the property of the Company or any of its Restricted Subsidiaries;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings properly instituted and diligently conducted.
Section 10.06. Insurance.
---------
The Company will at all times keep all of its and the Restricted
Subsidiaries' properties which are of an insurable nature insured with insurers,
believed by the Company in good faith to be financially sound and responsible,
against loss or damage to the extent that
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property of similar character is usually so insured by corporations similarly
situated and owning like properties (which may include self-insurance, if
reasonable and in comparable form to that maintained by companies similarly
situated) except where the failure to do so could not reasonably be expected to
have a material adverse effect on the condition (financial or otherwise),
earnings, business affairs or prospects of the Company and the Restricted
Subsidiaries, taken as a whole.
Section 10.07. Compliance Certificate.
----------------------
(a) The Company will deliver to the Trustee within 120 days after the
end of each of the Company's fiscal years a certificate to the Trustee from the
chief financial officer (or if the Company does not have a chief financial
officer, the Company's principal executive, financial or accounting officer) of
the Company as to his or her knowledge of the compliance of the Company, the
Guarantors and the Restricted Subsidiaries with all conditions and covenants
under this Indenture and any related documents and whether any Default or Event
of Default has occurred, such compliance to be determined without regard to any
period of grace or requirement of notice provided herein.
(b) The Company will deliver to the Trustee as soon as possible, and
in any event within 10 Business Days after the Company becomes aware of the
occurrence of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company or the
applicable Guarantor, as the case may be, is taking or proposes to take with
respect thereto.
Section 10.08. Reporting Requirements.
----------------------
So long as any of the Notes are outstanding, the Company will file
with the Commission, to the extent then permitted by the Commission, the annual
reports, quarterly reports and other documents that the Company would have been
required to file with the Commission pursuant to Sections 13(a) and 15(d) of the
Exchange Act if the Company was subject to such Sections, and the Company will
promptly provide to the Trustee copies of such reports and documents; provided,
however, that if the Company is for any reason unable to make such filings it
will make available, upon request, to any Holder of Notes or prospective
purchaser of Notes the information specified in Rule 144A(d)(4) of the
Securities Act.
Section 10.09. Limitation on Guarantees by Restricted Subsidiaries.
---------------------------------------------------
The Company shall not cause or permit any of its Restricted
Subsidiaries, directly or indirectly, to guarantee the payment of any
Indebtedness of the Company or any Restricted Subsidiary unless such Restricted
Subsidiary (A) is a Guarantor or (B) simultaneously executes and delivers a
supplemental indenture to this Indenture pursuant to which it will become a
Guarantor on the basis provided for in Article Thirteen of this Indenture.
Notwithstanding the foregoing, any Note Guarantee by a Restricted Subsidiary
shall be automatically and unconditionally released and discharged upon any
sale, exchange or transfer, to any person not an Affiliate of the Company, of
all of the Capital Stock of such Restricted Subsidiary, or all or substantially
all the assets of such Restricted Subsidiary, pursuant to a transaction which is
in
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compliance with this Indenture. The Company shall cause each Restricted
Subsidiary hereafter formed or acquired, or any Unrestricted Subsidiary that is
designated as a Restricted Subsidiary to become a Guarantor by executing and
delivering a supplemental indenture providing for the guarantee of payment of
the Notes by such Restricted Subsidiary on the basis provided in this Indenture.
Section 10.10. Limitation on Incurrence of Indebtedness and
--------------------------------------------
Preferred Stock.
- ---------------
(a) The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, issue, assume, guaranty,
incur, suffer to exist, become directly or indirectly liable with respect to
(including as a result of an acquisition, merger or consolidation), extend the
maturity of, or otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur" or, as appropriate, an "incurrence"),
any Indebtedness or any Preferred Stock on or after the Issue Date; provided
that the Company and its Restricted Subsidiaries may incur Indebtedness or
Preferred Stock if: (i) no Default or Event of Default shall have occurred and
be continuing at the time of, or would occur after giving effect to, on a pro
forma basis, such incurrence of such Indebtedness or Preferred Stock; and (ii)
on the date of the incurrence of such Indebtedness or Preferred Stock (the
"Incurrence Date"), the Consolidated Fixed Charge Coverage Ratio for the
Reference Period immediately preceding the Incurrence Date, after giving effect,
on a pro forma basis, to the incurrence of such Indebtedness or Preferred Stock
as of the first day of the Reference Period, would be at least 2.00 to 1.
(b) Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries, as applicable, may incur each of the following (collectively,
"Permitted Indebtedness"):
(i) Indebtedness of the Company or any Guarantor under the
Credit Agreement in an aggregate principal amount at any time
outstanding not to exceed $100.0 million, less the amount of all
permanent repayments thereof with the Net Cash Proceeds from an Asset
Sale as provided in Section 10.13;
(ii) Indebtedness under this Indenture, the Notes and the Note
Guarantees;
(iii) Indebtedness of the Company or any Restricted Subsidiary
not otherwise referred to in this paragraph that is outstanding on the
Issue Date, except Indebtedness repaid with the proceeds of the
issuance of the Notes as described under "Use of Proceeds" in the
Offering Memorandum (which is permitted hereunder);
(iv) The Company and its Restricted Subsidiaries may incur
Purchase Money Indebtedness or Non-Recourse Indebtedness, provided
that the amount of such Indebtedness outstanding at any time pursuant
to this paragraph (iv) (including any Indebtedness, whether or not
Refinancing Indebtedness, issued to
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refinance, replace or refund such Indebtedness) shall not, in the
aggregate, exceed $7.5 million;
(v) The Company and its Restricted Subsidiaries may incur
FF&E Indebtedness, provided, that the amount of such Indebtedness
outstanding at any time pursuant to this paragraph (v) (including any
Indebtedness, whether or not Refinancing Indebtedness, issued to
refinance, replace or refund such Indebtedness) shall not, in the
aggregate, exceed at any time the product of (i) $7.5 million, times
(ii) the number of Facilities being operated by the Company and its
Restricted Subsidiaries;
(vi) The Company and its REstricted Subsidiaries may incur
Refinancing Indebtedness with respect to any Indebtedness or Preferred
Stock, as applicable, described in clause (i) and clauses (iii)
through (v) of this covenant (so long as, in the case of Indebtedness
used to refinance, replace or retire Indebtedness in clause (iv), such
Refinancing Indebtedness is non-recourse as to any assets other than
the assets that secured such Indebtedness being refinanced, replaced
or retired; and in the case of clause (iii) of this covenant, other
than Refinancing Indebtedness with respect to the 10 3/4% Notes);
(vii) The Company and its Restricted Subsidiaries may incur
Indebtedness under Interest Swap Obligations, provided that in each
case the notional principal amount of such Interest Swap Obligation
does not exceed the principal amount Indebtedness to which such
Interest Swap Obligation relates;
(viii) The Company and its Restricted Subsidiaries may incur
Indebtedness in the form of (i) letters of credit and (ii) performance
bonds and surety bonds, the aggregate principal amount of which shall
not at any time exceed $7.5 million in the aggregate outstanding;
(ix) The Company may incur Indebtedness to a Restricted
Subsidiary, a Restricted Subsidiary may incur Indebtedness to the
Company and a Restricted Subsidiary may incur Indebtedness to another
Restricted Subsidiary; provided that any such Indebtedness is made
pursuant to an intercompany note and is expressly subordinated in
right of payment to the payment and performance of the Company's
obligations under the Notes or such Restricted Subsidiary's
obligations under the Subsidiary Guarantees, as applicable, and, upon
an Event of Default, such Indebtedness shall not be due and payable
until such Event of Default is cured, waived or rescinded; provided,
further, that any disposition, pledge or transfer of any such
Indebtedness to a person (other than a disposition, pledge or transfer
to a Restricted Subsidiary) shall be deemed to be an incurrence of
such Indebtedness by the Company or such Restricted Subsidiary, as
applicable, not permitted by this clause (ix); and
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(x) The Company and its Restricted Subsidiaries may incur
Indebtedness in an aggregate principal amount outstanding at any time
of up to $25 million in the aggregate.
Section 10.11. Limitation on Restricted Payments.
---------------------------------
(a) The Company shall not, and shall not cause or permit any of the
Restricted Subsidiaries, to, directly or indirectly, make any Restricted Payment
if, immediately prior to such proposed Restricted Payment or after giving effect
to such proposed Restricted Payment on a pro forma basis, (1) a Default or an
Event of Default shall have occurred and be continuing; or (2) the Company would
not be permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Consolidated Fixed Charge Coverage Ratio test contained in Section 10.10; or
(3) the aggregate amount of all Restricted Payments made by the Company and its
Restricted Subsidiaries, including after giving pro forma effect to such
proposed Restricted Payment (including Restricted Payments described in clause
(a) of the following paragraph) from and after the Issue Date, would exceed the
sum of (a) 50% of the amount by which the aggregate Adjusted Consolidated Net
Income for the period (taken as one accounting period) commencing on the first
day of the fiscal quarter that includes the Issue Date, to and including the
last day of the full fiscal quarter ended immediately prior to the date of each
such calculation, exceeds permitted distributions of Tax Amounts made with
respect to such period (or, in the event Adjusted Consolidated Net Income less
permitted distributions of Tax Amounts made with respect to such period is a
deficit, then minus 100% of such deficit) plus (b) 50% of all cash dividends or
any other cash payments which represent distributions of net income (determined
in accordance with GAAP) paid by an Unrestricted Subsidiary or any other person
(other than a Restricted Subsidiary) in which the Company or any Restricted
Subsidiary has an ownership interest to the Company or a Restricted Subsidiary
to the extent the same are not otherwise included in Adjusted Consolidated Net
Income or represent a return of capital, plus (c) 100% of the aggregate Net Cash
Proceeds received by the Company or any Restricted Subsidiary as a capital
contribution (other than capital contributions directly or indirectly made from
the Company or any Restricted Subsidiary and other than capital contributions
made from the proceeds of loans or advances described in clause (g) of the
following paragraph) or from the sale of Qualified Capital Stock after the Issue
Date plus (d) in the case of the disposition or repayment of any Investment in
an Unrestricted Subsidiary or any other person (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary has an ownership
interest constituting a Restricted Payment made after the Issue Date, an amount
equal to the lesser of the return of capital with respect to such Investment and
the initial amount of such Investment which was treated as a Restricted Payment,
in either case, less the cost of the disposition or repayment of such
Investment.
(b) The restrictions set forth in paragraph (a), however, will not
prohibit
(a) the payment of any dividend or redemption payment within 60
days after the date of declaration thereof, if at the date of
declaration such payment would have complied with the provisions of
the Indenture;
(b) a Qualified Exchange;
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(c) a Required Regulatory Redemption;
(d) with respect to each tax year that the Company qualifies as
an S Corporation under the Code, or any similar provision of state or
local law, distributions of Tax Amounts, provided, however, that prior
to any distribution of Tax Amounts, a knowledgeable and duly
authorized officer of the Company certifies, and counsel reasonably
acceptable to the Trustee opines, to the Trustee that the Company
qualifies as an S Corporation for Federal income tax purposes and for
the states in respect of which such distributions are being made (or
so qualified for the period or periods for which such Tax Amounts are
computed);
(e) for so long as no Default or Event of Default shall have
occurred and be continuing, Restricted Payments in an amount not to
exceed $10 million in the aggregate to pay for the redemption of
Capital Stock of the Company held by its directors or officers, or by
its stockholders, as of the Issue Date;
(f) for so long as no Default or Event of Default shall have
occurred and be continuing, Restricted Payments in the aggregate
amount of up to $10 million, which amount shall increase by $10
million on each of the first four anniversaries of the Issue Date,
provided that the Consolidated Fixed Charge Coverage Ratio for the
Reference Period immediately preceding the date of making any such
Restricted Payment permitted solely by this clause (f) would be at
least 3.00 to 1 on a pro forma basis, as if such Restricted Payment
were made on the first day of the Reference Period;
(g) for so long as no Default or Event of Default shall have
occurred and be continuing, loans or advances to officers, directors,
employees or stockholders of the Company or any Restricted Subsidiary
in an aggregate amount not to exceed $7.5 million at any time
outstanding, provided that (A) such loan or advance is used by the
officer, director, employee or stockholder receiving such loan or
advance to purchase Capital Stock of the Company or any Restricted
Subsidiary, and (B) the repayment of such loan or advance is secured
by a first priority pledge of the Capital Stock so purchased; and
(h) for so long as no Default or Event of Default shall have
occurred and be continuing, Permitted Investments.
Section 10.12. Limitation on Transactions with Affiliates.
------------------------------------------
The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries, on or after the Issue Date, to enter into any
transaction, including any contract, arrangement, agreement, loan, advance,
guarantee or understanding and including any series of related transactions,
with or for the benefit of any Affiliate (an "Affiliate Transaction") unless
such Affiliate Transaction or series of related Affiliate Transactions are made
in good faith and (a) the terms of such Affiliate Transaction or series of
related Affiliate Transactions are fair and reasonable to the Company or such
Restricted Subsidiary, as applicable, and are at least as
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favorable to the Company or such Restricted Subsidiary, as applicable, as the
terms that could be obtained by the Company or such Restricted Subsidiary, as
applicable, in a comparable transaction made on an arms' length basis between
unaffiliated parties, (b) that with respect to any Affiliate Transaction
(including any series of related Affiliate Transactions) involving consideration
to either party in excess of $2.0 million, the Company shall have delivered to
the Trustee an Officer's Certificate certifying that such Affiliate Transaction
or series of related Affiliate Transactions complies with clause (a) above, and
(c) with respect to any Affiliate Transaction (including any series of related
Affiliate Transactions) involving consideration to either party in excess of
$5.0 million, either (A) such Affiliate Transaction or series of Affiliate
Transactions has been approved by a majority of the disinterested directors of
the Company or (B) the Company delivers to the Trustee a written favorable
opinion as to the fairness of such transaction to the Company from a financial
point of view, from an independent investment banking firm of national
reputation.
Notwithstanding the foregoing, any transactions solely between or
among the Company and its Restricted Subsidiaries, between or among the
Restricted Subsidiaries or between or among the Company and its Unrestricted
Subsidiaries shall not be deemed to be Affiliate Transactions for purposes of
this Section 10.12 (as long as in the case of Unrestricted Subsidiaries, the
Capital Stock which is not owned by any of the Company, a Restricted Subsidiary
or an Unrestricted Subsidiary, is not owned by an Affiliate of the Company or
any of its Restricted Subsidiaries).
Section 10.13. Limitation on Sale of Assets and Subsidiary Stock;
--------------------------------------------------
Event of Loss.
- -------------
The Company shall not, and shall not cause or permit any of its
Restricted Subsidiaries, directly or indirectly, to, make any Asset Sale unless
(a) no Default or Event of Default shall have occurred and be continuing at the
time of, or would occur after giving effect, on a pro forma basis, to, such
Asset Sale; (b) the Board of Directors of the Company determines in good faith
that the Company or such Restricted Subsidiary, as applicable, receives fair
market value as consideration for such Asset Sale, as evidenced by an Officers'
Certificate delivered to the Trustee; and (c) at least 75% of the consideration
for such conveyance, sale, lease, transfer or other disposition consists of U.S.
Legal Tender, Cash Equivalents or securities of a company with a market
capitalization of at least $500 million, which securities are traded on a
national securities exchange and are of a class and series of securities with a
minimum public float of $100 million.
Within 360 days following an Asset Sale, the Company and its
Restricted Subsidiaries must apply (or enter into a binding contractual
commitment to apply) the Net Cash Proceeds therefrom (a) first, to the extent
the Company or a Restricted Subsidiary elects (or is required by the terms of
any Senior Indebtedness), to permanently repay Senior Indebtedness (for purposes
of this clause, a repayment of any amount owing under a revolving credit
facility shall be deemed a permanent repayment to the extent the amount
represented by such repayment is not drawn upon by the Company for a period of
six months after such repayment); (b) second, to the extent the Company or a
Restricted Subsidiary elects, to reinvest in additional assets that are part of
a Related Business of the Company or a Restricted Subsidiary; and (c) third, to
the
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extent the Net Cash Proceeds, after application of (a) and (b), exceed $10
million (the "Excess Proceeds"), the Company shall make an offer (the "Asset
Sale Offer") to all Holders to purchase the Notes in the amount of the Excess
Proceeds at 100% of the principal amount thereof, plus accrued and unpaid
interest to the date of payment (the "Asset Sale Offer Price").
Each Asset Sale Offer shall remain open for twenty (20) Business Days
following its commencement and no longer, except to the extent that a longer
period is expressly required by applicable law (the "Asset Sale Offer Period").
Upon expiration of the Asset Sale Offer Period, the Company shall apply an
amount equal to the Excess Proceeds received from an Asset Sale included in such
Asset Sale Offer to the purchase of all Notes tendered (on a pro rata basis if
the Excess Proceeds are insufficient to purchase all Notes so tendered) at the
Asset Sale Offer Price.
Notice of an Asset Sale Offer shall be prepared and mailed by the
Company with a copy to the Trustee (or, at the Company's written request, by the
Trustee in the name and at the expense of the Company) not later than the 20th
business day after the Company is obligated to make an Asset Sale Offer (in
accordance with the immediately preceding paragraph) to each Holder at such
Holder's registered address, stating:
(i) that the Company is offering to purchase the maximum principal
amount of Notes that may be purchased with the Excess Proceeds (as provided
in the immediately preceding paragraph), at an offer price in U. S. Legal
Tender in an amount equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of the purchase (the
"Asset Sale Offer Purchase Date"), which shall be a Business Day, specified
in such notice, that is not earlier than 20 days or later than 60 days from
the date such notice is mailed;
(ii) the amount of accrued and unpaid interest, if any, as of the
Asset Sale Offer Purchase Date;
(iii) that any Note not tendered will continue to accrue interest in
accordance with the terms thereof;
(iv) that, unless the Company defaults in the payment of the Asset
Sale Offer Price, any Notes accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest after the Asset Sale Offer Purchase
Date;
(v) that Holders electing to have Notes purchased pursuant to an
Asset Sale Offer will be required to surrender their Notes to the Paying
Agent at the address specified in the notice prior to 5:00 p.m., New York
City time, on the third Business Day prior to the Asset Sale Offer Purchase
Date with the "Option of Holder to Elect Purchase" included with the Asset
Sale Offer completed and must complete any form letter of transmittal
proposed by the Company (which letter must be completed correctly by such
Holder) and which is acceptable to the Trustee and the Paying Agent;
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(vi) that Holders of Notes will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New York
City time, on the third Business Day prior to the Asset Sale Offer Purchase
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes the Holder delivered for
purchase, the Note certificate number (if any) and a statement that such
Holder is withdrawing its election to have such Notes purchased;
(vii) that Holders whose Notes are purchased only in part will be
issued Notes equal in principal amount to the unpurchased portion of the
Notes surrendered; and
(viii) the instructions that Holders must follow in order to tender
their Notes.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note shall not affect the validity of the
proceedings for the Asset Sale Offer.
With respect to any Asset Sale Offer effected pursuant to this Section
10.13, to the extent the aggregate principal amount of Notes tendered pursuant
to such Asset Sale Offer exceeds the Excess Proceeds, such Notes shall be
purchased pro rata based on the aggregate principal amount of such Notes
tendered by each Holder. To the extent the Excess Proceeds exceed the aggregate
amount of Notes tendered by the Holders pursuant to such Asset Sale Offer, the
Company may retain and utilize any portion of the Excess Proceeds not applied to
repurchase the Notes for any purpose consistent with the other terms of this
Indenture.
Upon an Event of Loss relating to property with a fair market value in
excess of $5 million, the Company or any Guarantor shall make an Asset Sale
Offer to repurchase at the Asset Sale Offer Price, plus accrued and unpaid
interest, that principal amount of Notes equal to the Excess Proceeds of such
Event of Loss (the "Event of Loss Amount"), unless the Company or the applicable
Guarantor applies (or enters into a binding contractual commitment to apply) the
Event of Loss Amount within 365 days after such Event of Loss, in accordance
with this Section 10.13.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act, and any other applicable
securities laws or regulations and any applicable requirements of any securities
exchange on which the Notes are listed, and any violation of the provisions of
this Indenture relating to such Asset Sale Offer occurring as a result of such
compliance shall not be deemed a Default.
Section 10.14. Change of Control.
-----------------
Upon the occurrence of a Change of Control, each Holder of Notes will
have the right, at such Holder's option, pursuant to an irrevocable,
unconditional offer by the Company (a "Change of Control Offer") to require the
Company to repurchase all or any portion of such Holder's Notes (provided that
the principal amount of such Notes at maturity must be $1,000 or an integral
multiple thereof) on a date (the "Change of Control Purchase Date") that is no
later
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than 30 Business Days after the occurrence of such Change of Control, at a cash
price (the "Change of Control Purchase Price") equal to 101% of the principal
amount thereof, plus accrued and unpaid interest thereon, if any, to and
including the Change of Control Purchase Date.
The Change of Control Offer must commence within 10 Business Days
following a Change of Control and must remain open for a period of at least 20
Business Days following its commencement, except to the extent that a longer
period is expressly required by applicable law (the "Change of Control Offer
Period"). Upon expiration of the Change of Control Offer Period, the Company
will purchase all Notes tendered in accordance with the terms of the Indenture
in response to the Change of Control Offer. Notice of a Change in Control Offer
shall be given by the Company or, at the Company's written request, by the
Trustee in the name and at the expense of the Company.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note shall not affect the validity of the
proceedings for the Change in Control Offer.
The notice of the Change of Control Offer shall state:
(a) that the Change of Control has occurred and that such Holder has
the right to require the Company to purchase all or a portion (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes at a
purchase price in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase,
which shall be a Business Day, specified in such notice, that is not more
than 30 Business Days after the Change of Control Date (the "Change of
Control Purchase Date");
(b) the amount of accrued and unpaid interest, if any, as of the
Change of Control Purchase Date;
(c) that any Note not tendered for payment will continue to accrue
interest in accordance with the terms thereof;
(d) that, unless the Company defaults in the payment of the Change of
Control Purchase Price for the Notes payable pursuant to the Change of
Control Offer, any Notes accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Purchase Date;
(e) that Holders electing to have Notes purchased pursuant to a Change
of Control Offer will be required to surrender their Notes to the Paying
Agent at the address specified in the notice prior to 5:00 p.m., New York
City time, on the third Business Day prior to the Change of Control
Purchase Date with the "Option of Holder to Elect Purchase" included in the
change of Control Offer completed and must complete any
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form letter of transmittal proposed by the Company and be completed
correctly by such Holder and be acceptable to the Trustee and the Paying
Agent;
(f) that Holders of Notes will be entitled to withdraw their election
if the Paying Agent receives, not later than 5:00 p.m., New York City time,
on the third Business Day prior to the Change of Control Purchase Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of Notes the Holder delivered for
purchase, the Note certificate number (if any) and a statement that such
Holder is withdrawing its election to have such Notes purchased;
(g) that Holders whose Notes are purchased only in part will be issued
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered; and
(h) the instructions that Holders must follow in order to tender their
Notes.
On or before the Change of Control Purchase Date, (i) the Company will
accept for payment Notes or portions thereof properly tendered to the Company
pursuant to the Change of Control Offer; (ii) the Company will deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the Change of Control Purchase
Price (including accrued and unpaid interest) of all Notes so tendered; and
(iii) the Company will deliver to the Trustee Notes so accepted together with an
Officers' Certificate listing the Notes or portions thereof being purchased by
the Company. The joint and several obligations of each of the Guarantors upon a
Change of Control extend both to the payment of principal and interest on the
Notes and to the joint and several obligations of each of the Guarantors to
honor the Change of Control repurchase obligations of the Company in the event
that a Change of Control occurs and the Company is unable to pay in full the
Change of Control Purchase Price. The Paying Agent will promptly mail to the
Holders of Notes so accepted, payment in an amount equal to the Change of
Control Purchase Price (including accrued and unpaid interest), and the Trustee
will promptly authenticate and mail or deliver to such Holders a new Note equal
to the principal amount of any unpurchased portion of the Note surrendered. Any
Notes not so accepted will be promptly mailed or delivered by the Company to the
Holder thereof.
On and after a Change of Control Purchase Date, interest will cease to
accrue on the Notes or portions thereof accepted for payment unless the Company
defaults in the payment of the purchase price therefor. The Company will
publicly announce the results of the Change of Control Offer as soon as
practicable after the Change of Control Purchase Date.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act, and any other applicable
securities laws or regulations and any applicable requirements of any securities
exchange on which the Notes are listed, in connection with the repurchase of
Notes pursuant to a Change of Control Offer, and any violation of the provisions
of this Indenture relating to such Change of Control Offer occurring as a result
of such compliance shall not be deemed a Default.
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Section 10.15. Limitation on Liens.
-------------------
The Company shall not, and shall not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien in or on any right, title or interest to any of their
respective properties or assets, now owned or hereafter acquired, securing any
obligation unless the Notes are secured on an equal and ratable basis with such
Lien, other than Permitted Liens.
Section 10.16. Limitation on Dividends and Other Payment Restrictions
------------------------------------------------------
Affecting Restricted Subsidiaries.
- ---------------------------------
The Company shall not, and shall not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create, assume or suffer to
exist any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (i) pay dividends, in cash or otherwise, or make other
distributions on its Capital Stock or pay Indebtedness owed to the Company or
any other Restricted Subsidiary, (ii) make any loans or advances to the Company
or any other Restricted Subsidiary or (iii) transfer any of its assets to the
Company or any other Restricted Subsidiary, except (a) restrictions imposed by
the Notes or the Indenture, or restrictions imposed by other Senior Indebtedness
which are substantially the same as (and apply only to the same persons and
property as) such restrictions; (b) restrictions imposed by applicable Gaming
Law; and (c) restrictions under any Acquired Indebtedness not incurred in
violation of the Indenture or any agreement relating to any property, asset, or
business acquired by the Company or any of the Restricted Subsidiaries, which
restrictions existed at the time of such acquisition, were not incurred in
connection with or in anticipation of such acquisition and are not applicable to
any person, other than the person acquired, or to any property, asset or
business, other than the property, assets and business so acquired.
Notwithstanding the foregoing, neither (a) reasonable and customary provisions
restricting subletting or assignment of any lease entered into in the ordinary
course of business, consistent with industry practice; nor (b) Liens on assets
securing Senior Indebtedness not incurred in violation of the Indenture, shall
in and of themselves be considered a restriction on the ability of the
applicable Restricted Subsidiary to transfer such property or assets, as the
case may be.
Section 10.17. Restrictions on Sale of Capital Stock of Restricted
---------------------------------------------------
Subsidiaries.
- ------------
The Company shall not sell, and shall not cause or permit any of the
Restricted Subsidiaries to transfer, convey, sell, lease or otherwise dispose of
any Capital Stock of any Restricted Subsidiary to any person (other than the
Company or a Guarantor), unless (a) (i) such transfer, conveyance, sale, lease
or other disposition is of all of the Capital Stock of such Restricted
Subsidiary or (ii) after giving effect to such transfer, conveyance, sale, lease
or other disposition, the Company or the applicable Guarantor remains the owner
of a majority of the Capital Stock of such Restricted Subsidiary and (b) the Net
Cash Proceeds from such transfer, conveyance, sale, lease or other disposition
are applied in accordance with Section 10.13.
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Section 10.18. Limitation on Designations of Unrestricted
------------------------------------------
Subsidiaries.
The Company may designate after the Issue Date any Subsidiary of the
Company (other than a Guarantor in existence on the Issue Date) as an
"Unrestricted Subsidiary" under this Indenture (a "Designation") only if, at the
time of Designation:
(i) no default shall have occurred and be continuing at the
time of or after giving effect to such Designation;
(ii) the Company would be permitted to make an Investment at the
time of Designation (assuming the effectiveness of such Designation)
in an amount (the "Designation Amount") equal to the amount of the
Company's Investment in such Subsidiary on such date;
(iii) neither the Company nor any Restricted Subsidiary has any
Indebtedness with respect to which such Unrestricted Subsidiary is
also an obligor or guarantor; and
(iv) the Company would be permitted under this Indenture to incur
$1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 10.10 at the time of such Designation (assuming
the effectiveness of such Designation).
In the event of any such Designation, the Company shall be deemed to
have made an Investment constituting a Restricted Payment pursuant to Section
10.11 for all purposes of this Indenture in the Designation Amount.
The Company may revoke any Designation of a Subsidiary as an
Unrestricted Subsidiary (a "Revocation") if:
(i) no Default shall have occurred and be continuing at the time
of and after giving effect to such Revocation (unless the Revocation
cures such default); and
(ii) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred
at such time, have been permitted to be incurred by the Company or its
Restricted Subsidiaries for all purposes of this Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions of the Company delivered to the Trustee and an Officer's Certificate
certifying compliance with the foregoing provisions.
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Section 10.19. Limitation on Other Senior Subordinated Indebtedness.
----------------------------------------------------
The Company shall not, and shall not cause or permit any of the
Restricted Subsidiaries to, create, incur, assume, guarantee or in any other
manner become liable with respect to any Indebtedness (other than the Notes and
the Guarantees) that is subordinate in right of payment to any Senior
Indebtedness of the Company or of such Guarantor, as applicable, unless such
Indebtedness is either (a) pari passu in right of payment with the Notes or the
Guarantee, as applicable, or (b) subordinate in right of payment to the Notes or
the Guarantee, as applicable, in the same manner and at least to the same extent
as the Notes are subordinated to Senior Indebtedness or as such Guarantee is
subordinated to Senior Indebtedness of such Guarantor, as applicable.
Section 10.20. Limitation on Lines of Business.
-------------------------------
The Company shall not, and shall not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, engage in any line or lines
of business activity other than in a Related Business.
Section 10.21. Limitation on Status as Investment Company.
------------------------------------------
Neither the Company nor any Guarantor may become an "investment
company" (as such term is defined in the Investment Company Act of 1940, as
amended) or otherwise become subject to regulation under the Investment Company
Act of 1940, as amended.
As used in this section, the phrase "directly or indirectly" shall not
be construed so as to prohibit an Unrestricted Subsidiary from undertaking the
otherwise prohibited action nor shall such phrase be construed to prohibit the
stockholder of an Unrestricted Subsidiary from voting its stock in favor of such
action.
ARTICLE ELEVEN
REDEMPTION OF NOTES
Section 11.01. Optional and Special Redemption.
-------------------------------
Optional Redemption. The Notes will be redeemable at the option of
-------------------
the Company, in whole or in part, at any time on or after July 1, 2002, at the
redemption prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest thereon, if any, to the date of
redemption, if redeemed during the 12-month period beginning on July 1 of the
years indicated below:
Redemption
Year Price
---- -----------
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2002........................ 104.063%
2003........................ 102.708%
2004........................ 101.354%
2005 and thereafter......... 100.000%
Optional Redemption upon Equity Offering. On or prior to July 1, 2001,
----------------------------------------
the Company may, at its option, use the Net Proceeds of an Equity Offering to
redeem up to 35% of the originally issued aggregate principal amount of the
Notes, at a redemption price in cash equal to 108 1/8% of the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the date of
redemption; provided, however, that not less than $97.5 million in aggregate
principal amount of Notes is outstanding following such redemption. Notice of
any such redemption must be given not later than 60 days after the consummation
of the Equity Offering.
As used in the preceding paragraph, an "Equity Offering" means a
public sale of common stock of the Company in a transaction registered with the
SEC.
Section 11.02. Required Regulatory Redemption.
------------------------------
The Notes will be redeemable, in whole or in part, at any time, at
100% of the principal amount thereof, plus accrued and unpaid interest to the
redemption date, (i) pursuant to, and in accordance with, any order of any
Governmental Authority or (ii) to the extent necessary in the reasonable, good
faith judgment of the Board of Directors of the Company to prevent the loss,
failure to obtain or material impairment of, or to secure the reinstatement of,
any Gaming License, which if lost, impaired, not obtained or not reinstated
would reasonably be expected to have a material adverse effect on the Company
and its Restricted Subsidiaries, considered as a whole, or would restrict the
ability of the Company or any of its Restricted Subsidiaries to conduct business
in any Gaming Jurisdiction, in the case of each of (i) and (ii) where such
redemption or acquisition is required because the Holder or beneficial owner of
such Note is required to be found suitable, or otherwise qualify, under any
Gaming Laws and is not found suitable or so qualified (a "Required Regulatory
Redemption").
If a Holder or a beneficial owner of a Note is required by any Gaming
Authority to be found suitable, the Holder shall apply for a finding of
suitability within 30 days after a Gaming Authority requests or sooner if so
required by such Gaming Authority. The applicant for a finding of suitability
must pay all costs of the investigation for such finding of suitability. If a
Holder or beneficial owner is required to be found suitable and is not found
suitable by a Gaming Authority, the Holder shall, to the extent required by
applicable law, dispose of his Notes within 30 days or within that time
prescribed by a Gaming Authority, whichever is earlier.
Section 11.03. Applicability of Article.
------------------------
Redemption of Notes at the election of the Company as permitted or
required by any provision of this Indenture, shall be made in accordance with
such provision and this Article.
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Section 11.04. Election To Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Notes pursuant to Section
11.01(a) shall be evidenced by a Board Resolution of the Company and an
Officers' Certificate. In case of any redemption at the election of the
Company, the Company shall, at least 20 days prior to the Redemption Date fixed
by the Company (unless a shorter notice period shall be satisfactory to the
Trustee), notify the Trustee in writing of such Redemption Date and of the
principal amount of Notes to be redeemed.
Section 11.05. Selection of Notes To Be Redeemed.
---------------------------------
In the event that less than all of the Notes are to be redeemed at any
time, the Trustee shall select the Notes or portions thereof for redemption in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not listed on a
national securities exchange, on a pro rata basis, by lot or in such other
manner as the Trustee deems appropriate and fair; provided, however, that any
such redemption made with the Net Proceeds of an Equity Offering shall be made
on a pro rata basis or on as nearly a pro rata basis as practicable (subject to
the procedures of the DTC). The Notes may be redeemed in part in multiples of
$1,000 only. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the holder thereof upon cancellation of
the original Note. On and after the Redemption Date, interest will cease to
accrue on Notes or portions thereof called for redemption so long as the Company
has deposited with the paying agent for the Notes funds in satisfaction of the
applicable Redemption Price, plus accrued and unpaid interest, pursuant to this
Indenture.
Section 11.06. Notice of Redemption.
--------------------
Notice of any optional or mandatory redemption shall be mailed by
first-class mail, postage prepaid, mailed at least 30 but not more than 60 days
before the Redemption Date, to each Holder of Notes to be redeemed at its
registered address.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price and the amount of accrued and unpaid
interest to be paid;
(c) if fewer than all outstanding Notes are to be redeemed, the
identification of the particular Notes to be redeemed;
(d) in the case of a Note to be redeemed in part, the principal
amount of such Note to be redeemed and that after the Redemption Date
upon surrender of such Note, a new Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be
issued;
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(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(f) that, on the Redemption Date, the Redemption Price will
become due and payable upon each such Note or portion thereof, and
that (unless the Company shall default in payment of the Redemption
Price) interest thereon shall cease to accrue on and after said date;
(g) the place or places where such Notes are to be surrendered
for payment of the Redemption Price;
(h) the CUSIP number, if any, relating to such Notes; and
(i) the paragraph of the Notes pursuant to which the Notes are
being redeemed.
Notice of redemption of Notes to be redeemed shall be given by the
Company or, at the Company's written request, by the Trustee in the name and at
the expense of the Company.
The notice if mailed in the manner herein provided shall be
conclusively presumed to have been given, whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Note.
Section 11.07. Deposit of Redemption Price.
---------------------------
On or prior to 10:00 a.m., New York City time, on each Redemption
Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if
the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 10.03) an amount of money in same day funds sufficient to
pay the Redemption Price of, and accrued interest on, all the Notes or portions
thereof which are to be redeemed on that date.
Section 11.08. Notes Payable on Redemption Date.
--------------------------------
Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price) such Notes shall
cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Notes, or one or more predecessor Notes, registered as such on the
relevant Regular Record Dates according to the terms and the provisions of
Section 3.06.
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On and after any Redemption Date, if money sufficient to pay the
Redemption Price of and accrued interest on Notes called for redemption shall
have been made available in accordance with Section 11.06, the Notes called for
redemption will cease to accrue interest and the only right of the Holders of
such Notes will be to receive payment of the Redemption Price of and subject to
the provision in the preceding paragraph, accrued and unpaid interest on such
Notes to the Redemption Date. If any Note called for redemption shall not be so
paid upon surrender thereof for redemption, the principal and premium, if any,
shall, until paid, bear interest from the Redemption Date at the rate then borne
by such Note.
Section 11.09. Notes Redeemed or Purchased in Part.
-----------------------------------
Any Note which is to be redeemed or purchased only in part shall be
surrendered to the Paying Agent at the office or agency maintained for such
purpose pursuant to Section 10.02 (with, if the Company, the Note Registrar or
the Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to, the Company, the Note Registrar or the Trustee duly
executed by the Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Note without service charge, a new Note or Notes,
of any authorized denomination as requested by such Holder in aggregate
principal amount equal to, and in exchange for, the portion of the principal of
the Note so surrendered that is not redeemed or purchased.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE
Section 12.01. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall be discharged and cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of Notes
herein expressly provided for) as to all outstanding Notes, and the Trustee, on
written demand of and at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture, when
(a) either
(i) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or
paid and Notes for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust) have been
delivered to the Trustee for cancellation or
(ii) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company or any
Guarantor
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has irrevocably deposited or caused to be deposited with the
Trustee funds in an amount sufficient to pay and discharge the entire
Indebtedness on the Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest on the
Notes to the date of deposit together with irrevocable instructions
from the Company directing the Trustee to apply such funds to the
payment thereof at maturity or redemption, as the case may be;
(b) the Company or any Guarantor has paid all other sums payable under
this Indenture by the Company and the Guarantors; and
(c) the Company and each of the Guarantors have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel each stating
that all conditions precedent under this Indenture relating to the
satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07 and, if money shall
have been deposited with the Trustee pursuant to subclause (a)(ii) of this
Section 12.01 the obligations of the Trustee under Section 12.02, shall survive.
Section 12.02. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 10.03, all
money deposited with the Trustee pursuant to Section 12.01 shall be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the persons entitled thereto, of the principal of, premium, if
any, and interest on the Notes for whose payment such money has been deposited
with the Trustee.
ARTICLE THIRTEEN
GUARANTEE OF NOTES
Section 13.01. Guarantee.
---------
Subject to the provisions of this Article Thirteen, each Guarantor, if
any, hereby jointly and severally and fully and unconditionally guarantees to
each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of (i) the validity and
enforceability of this Indenture, the Notes or the obligations of the Company or
any other Guarantors to the Holders or the Trustee hereunder or thereunder or
(ii) the absence of any action to enforce the same or any other circumstances
which might otherwise constitute a legal or equitable discharge or default of a
Guarantor, that: (a) the principal of, premium, if any, and interest on the
Notes will be duly and punctually paid in full when due, whether at maturity, by
acceleration or otherwise, and interest on the overdue principal and (to the
extent permitted by law) interest, if any, on the Notes and all other
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obligations of the Company or the Guarantors to the Holders or the Trustee
hereunder or thereunder (including fees, expenses or other) and all other
Obligations on the Notes will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other Obligations with
respect to the Notes, the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
Stated Maturity, by acceleration or otherwise. Failing payment when due of any
amount so guaranteed, or failing performance of any other obligation of the
Company to the Holders, for whatever reason, each Guarantor will be obligated to
pay, or to perform or cause the performance of, the same immediately. An Event
of Default under this Indenture or the Notes shall constitute an event of
default under this Guarantee, and shall entitle the Holders to accelerate the
obligations of the Guarantors hereunder in the same manner and to the same
extent as the obligations of the Company.
Each of the Guarantors, if any, hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, any release of any other Guarantor, the
recovery of any judgment against the Company, any action to enforce the same,
whether or not a Guarantee is affixed to any particular Note, or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. Each of the Guarantors hereby waives the benefit of
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenants that its Guarantee will not be discharged except by complete
performance of the obligations contained in the Notes, this Indenture and this
Guarantee. If any Holder or the Trustee is required by any court or otherwise
to return to the Company or to any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to the Company or such
Guarantor, any amount paid by the Company or such Guarantor to the Trustee or
such Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor further agrees that, as
between it, on the one hand, and the Holders of Notes and the Trustee, on the
other hand, (a) subject to this Article Thirteen, the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Five
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (b) in the event of any acceleration of such obligations
as provided in Article Five hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantors for the
purpose of this Guarantee.
This Guarantee shall remain in full force and effect and continue to
be effective should any petition be filed by or against the Company for
liquidation or reorganization, should the Company become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of the Company's assets, and shall, to
the fullest extent permitted by law, continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the Notes are,
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pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee on the Notes, whether as a "voidable
preference," "fraudulent transfer" or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Notes shall, to the
fullest extent permitted by law, be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
No stockholder, officer, director, employer or incorporator, past,
present or future, or any Guarantor, as such, shall have any personal liability
under this Guarantee by reason of his, her or its status as such stockholder,
officer, director, employer or incorporator.
The Guarantors shall have the right to seek contribution from any non-
paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under this Guarantee.
Notwithstanding any of the foregoing, each Guarantor's liability under
this Section 13.01 shall be limited to the maximum amount that would not result
in such Guarantor's Guarantee under this Section 13.01 constituting a fraudulent
conveyance or fraudulent transfer under applicable law.
Section 13.02. Execution and Delivery of Guarantee.
-----------------------------------
To further evidence the Guarantee set forth in Section 13.01, each
Guarantor hereby agrees that a notation of such Guarantee, substantially in the
form included in Exhibit E hereto, shall be endorsed on each Note authenticated
and delivered by the Trustee after such Guarantee is executed and executed by
either manual or facsimile signature of an Officer of each Guarantor. The
validity and enforceability of any Guarantee shall not be affected by the fact
that it is not affixed to any particular Note.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 13.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or a
Note no longer holds that office at the time the Trustee authenticates such Note
or at any time thereafter, such Guarantor's Guarantee of such Note shall be
valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of the Guarantor.
Section 13.03. Additional Guarantors.
---------------------
The Company shall cause each Restricted Subsidiary formed or acquired
after the Issue Date or any Unrestricted Subsidiary that is designated a
Restricted Subsidiary after the Issue Date to (i) execute and deliver to the
Trustee a supplemental indenture in a form
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satisfactory to the Trustee pursuant to which such Restricted Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Notes on
the terms set forth in this Indenture and (ii) deliver to the Trustee an Opinion
of Counsel, subject to customary assumptions and exclusions, stating that such
supplemental indenture has been duly executed and delivered by such Restricted
Subsidiary.
Section 13.04. Guarantee Obligations Subordinated to Guarantor Senior
------------------------------------------------------
Indebtedness.
- ------------
Each Guarantor covenants and agrees, and each Holder of a Note, by its
acceptance thereof, likewise covenants and agrees, that, in accordance with the
terms of Articles Thirteen and Fourteen, all payments pursuant to the Guarantee
made by or on behalf of such Guarantor are hereby expressly made subordinate and
subject in right of payment to the prior payment in full of all amounts payable
under all existing and future Guarantor Senior Indebtedness and Senior
Indebtedness, including such Guarantor's Obligations under the Credit Agreement.
This Section 13.04 and Article Fourteen shall constitute a continuing
offer to all persons who, in reliance upon such provisions, become holders of,
or continue to hold Guarantor Senior Indebtedness or any Senior Indebtedness;
and such provisions are made for the benefit of the holders of Guarantor Senior
Indebtedness and Senior Indebtedness; and such holders (to such extent) are made
obligees hereunder and they or each of them may enforce such provisions.
Section 13.05. Release of a Guarantor.
----------------------
(a) In the event of (i) a sale or other disposition of all or
substantially all of the assets of any Guarantor or the sale of a Guarantor by
way of merger, consolidation or otherwise, (ii) a 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 or the corporation acquiring the property, as applicable, shall be
released and relieved of any obligations under its guarantee, provided that the
Company complies with the provisions of the covenant described in Section 10.13.
Upon the release of any Guarantor from its Guarantee pursuant to the provisions
of this Indenture, each other Guarantor not so released shall remain liable for
the full amount of principal of, and interest on, the Notes as and to the extent
provided in this Indenture.
(b) The Trustee shall deliver an appropriate instrument evidencing the
release of a Guarantor upon receipt of a request of the Company accompanied by
an Officers' Certificate certifying as to the compliance with this Section
13.05. Any Guarantor not so released or the entity surviving such Guarantor, as
applicable, will remain or be liable under its Guarantee as provided in this
Article Thirteen.
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The Trustee shall execute any documents reasonably requested by the
Company or a Guarantor in order to evidence the release of such Guarantor from
its obligations under its Guarantee endorsed on the Notes and under this Article
Thirteen.
Except as set forth in Articles Eight and Ten and this Section 13.05,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor or shall prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety to the Company or another
Guarantor.
Section 13.06 Waiver of Subrogation.
---------------------
Each Guarantor hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Company that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under this Guarantee and this Indenture until all obligations under the Notes
have been paid in full, including, without limitation, any right of subrogation,
reimbursement, exoneration, indemnification, and any right to participate in any
claim or remedy of any Holder of Notes against the Company, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Company, directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Notes shall not have been paid in full, such amount shall have
been deemed to have been paid to such Guarantor for the benefit of, and held in
trust for the benefit of, the Holders of the Notes, and shall, subject to the
subordination provisions of this Article Thirteen and to Article Fourteen,
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Notes, whether matured or unmatured, in accordance with the
terms of this Indenture. Each Guarantor acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated by
this Indenture and that the waiver set forth in this Section 13.06 is knowingly
made in contemplation of such benefits.
ARTICLE FOURTEEN
SUBORDINATION OF NOTES AND GUARANTEES
Section 14.01 Notes Subordinate to Senior Indebtedness; Guarantee
---------------------------------------------------
Obligations Subordinated to Guarantor Senior Indebtedness.
- ---------------------------------------------------------
The Company and each Guarantor covenants and agrees, and each Holder
of a Note, by his acceptance thereof, likewise covenants and agrees, that, to
the extent and in the manner hereinafter set forth in this Article Fourteen, the
Indebtedness represented by the Notes and the Guarantees are hereby expressly
made subordinate and subject in right of payment as provided in this Article to
the prior payment in full of all Senior Indebtedness and Guarantor Senior
Indebtedness, as applicable (including the indebtedness under the Credit
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Agreement). This Indenture shall not be secured by a Lien on any assets of the
Company or the Guarantors, including, without limitation, the Company's Indiana
and Illinois gaming licenses.
This Article Fourteen shall constitute a continuing offer to all
persons who, in reliance upon such provisions, become holders of, or continue to
hold Senior Indebtedness or Guarantor Senior Indebtedness; and such provisions
are made for the benefit of the holders of Senior Indebtedness and Guarantor
Senior Indebtedness; and such holders are made obligees hereunder and they or
each of them individually or through their representative may enforce such
provisions.
Section 14.02. Payment Over of Proceeds upon Dissolution, etc.
----------------------------------------------
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relating to the Company or any Guarantor, or
(b) any liquidation, dissolution or other winding-up of the Company or such
Guarantor, as applicable, whether voluntary or involuntary or any assignment for
the benefit of creditors or other marshalling of assets or liabilities of the
Company or such Guarantor, as applicable, and whether or not involving
insolvency or bankruptcy, then and in any such event:
(1) the holders of all Senior Indebtedness or all Guarantor Senior
Indebtedness of such Guarantor, as applicable, shall be entitled to receive
payment in full of all Obligations due in respect of such Senior
Indebtedness or Guarantor Senior Indebtedness, as applicable, before the
Holders are entitled to receive any payment or distribution of any kind or
character (except that Holders of Notes may receive Capital Stock or any
debt securities that are subordinated to Senior Indebtedness to at least
the same extent as the Notes or the Guarantees, as applicable) on account
of the Notes or the Guarantees, as applicable, and until all Senior
Indebtedness or Guarantor Senior Indebtedness, as applicable, is paid in
full, any distribution to which Holders of the Notes or the Guarantees, as
applicable, would be entitled but for this provision shall be made to
holders of Senior Indebtedness or Guarantor Senior Indebtedness, as
applicable, as their interests may appear, except that Holders of the Notes
or the Guarantees, as applicable, may receive Capital Stock or any debt
securities that are subordinated to Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable, to at least the same extent as the Notes or
the Guarantees, as applicable; and
(2) any payment or distribution of assets of the Company or of such
Guarantor, as applicable, of any kind or character, whether in cash,
property or securities, by set-off or otherwise, to which the Holders or
the Trustee would be entitled but for the provisions of this Article shall
be paid by the liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior
Indebtedness or Guarantor Senior Indebtedness, as applicable, or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior
Indebtedness or Guarantor
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Senior Indebtedness, as applicable, may have been issued, ratably according
to the aggregate amounts remaining unpaid on account of the Senior
Indebtedness or Guarantor Senior Indebtedness, as applicable, held or
represented by each, to the extent necessary to make payment in full of all
Senior Indebtedness or Guarantor Senior Indebtedness, as applicable,
remaining unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable; and
(3) in the event that, notwithstanding the foregoing provisions of
this Section 14.02, the Trustee or the Holder of any Note or Guarantee, as
applicable, shall have received any payment or distribution of properties
or assets of the Company or any Guarantor, as applicable, of any kind or
character, whether in cash, property or securities, by set off or otherwise
in respect of the Notes or the Guarantees, as applicable, before all Senior
Indebtedness or Guarantor Senior Indebtedness, as applicable, is paid or
provided for in full, then and in such event such payment or distribution
shall be paid over or delivered forthwith to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other person
making payment or distribution of assets of the Company or such Guarantor,
as applicable, for application to the payment of all Senior Indebtedness or
Guarantor Senior Indebtedness, as applicable, remaining unpaid, to the
extent necessary to pay all Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable, in full, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Indebtedness or
Guarantor Senior Indebtedness, as applicable.
The consolidation of the Company with, or the merger of the Company
with or into, another person or the liquidation or dissolution of the Company
following the conveyance, transfer or lease of its properties and assets
substantially as an entirety to another person upon the terms and conditions set
forth in Article Eight hereof shall not be deemed a dissolution, winding-up,
liquidation, reorganization, assignment for the benefit of creditors or
marshalling of assets and liabilities of the Company for the purposes of this
Article if the person formed by such consolidation or the surviving entity of
such merger or the person which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case may be, shall,
as a part of such consolidation, merger, conveyance, transfer or lease, comply
with the conditions set forth in such Article Eight.
Section 14.03 Suspension of Payment When Designated Senior
--------------------------------------------
Indebtedness is in Default; Suspension of Guarantee Obligations When Guarantor
- ------------------------------------------------------------------------------
Senior Indebtedness in Default.
- ------------------------------
(a) Unless Section 14.02 shall be applicable, during the continuance
of any default in the payment of any Designated Senior Indebtedness or Guarantor
Senior Indebtedness pursuant to which the maturity thereof may immediately be
accelerated beyond any applicable grace period, no payment or distribution of
any assets of the Company or of the applicable Guarantor, as applicable, of any
kind or character (except that Holders of Notes may receive Capital Stock or any
debt securities that are subordinated to Senior Indebtedness and Guarantor
Senior Indebtedness to at least the same extent as the Notes) shall be made on
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account of the principal of, premium, if any, or interest on, or the purchase,
redemption or other acquisition of, the Notes or such Guarantee, as applicable,
unless and until such default has been cured or waived or has ceased to exist or
such Designated Senior Indebtedness or Guarantor Senior Indebtedness, as
applicable, shall have been discharged or paid in full.
(b) Unless Section 14.02 shall be applicable, during the continuance
of any Non-payment Default and after receipt by the Trustee from the
representatives of any holders of Designated Senior Indebtedness or Guarantor
Senior Indebtedness, as applicable, of a written notice of such Non-payment
Default, no payment or distribution of any assets of the Company or the
applicable Guarantor, as applicable, of any kind or character (except that
Holders of Notes may receive Capital Stock or any debt securities that are
subordinated to Senior Indebtedness and Guarantor Senior Indebtedness to at
least the same extent as the Notes) may be made by the Company or such
Guarantor, as applicable, on account of the principal of, premium, if any, or
interest on, or the purchase, redemption or other acquisition of, the Notes or
the applicable Guarantee, as applicable, for a period (the "Payment Blockage
Period") commencing upon the receipt of written notice of a Non-payment Default
by the Trustee from the representatives of holders of Designated Senior
Indebtedness or such Guarantor Senior Indebtedness, as applicable, specifying an
election to effect a Payment Blockage Period and will end on the earlier to
occur of the following events: (i) 179 days shall have elapsed since the
receipt of such notice of a Non-payment Default (provided that such Designated
Senior Indebtedness or such Guarantor Senior Indebtedness, as applicable, shall
not theretofore have been accelerated), (ii) such default is cured or waived or
ceases to exist or such Designated Senior Indebtedness or such Guarantor Senior
Indebtedness, as applicable, is discharged or (iii) such Payment Blockage Period
shall have been terminated by written notice to the Company or the Trustee from
the representatives of holders of Designated Senior Indebtedness or such
Guarantor Senior Indebtedness, as applicable, initiating such Payment Blockage
Period. After the end of any Payment Blockage Period, the Company shall promptly
resume making any and all required payments in respect of the Notes, including
any missed payments, or such Guarantor shall resume making any and all required
payments in respect of its obligations under the Guarantee, as applicable.
Notwithstanding anything in the subordination provisions of this Indenture or
the Notes to the contrary, (x) in no event shall a Payment Blockage Period
extend beyond 179 days from the date of the receipt by the Trustee of the notice
initiating such Payment Blockage Period, (y) there shall be a period of at least
186 consecutive days in each 365-day period when no Payment Blockage Period is
in effect and (z) not more than one Payment Blockage Period with respect to the
Notes or any Guarantee may be commenced within any period of 365 consecutive
days. A Non-payment Default with respect to Designated Senior Indebtedness or
Guarantor Senior Indebtedness, as applicable, that existed or was continuing on
the date of the commencement of any Payment Blockage Period with respect to the
Designated Senior Indebtedness or Guarantor Senior Indebtedness, as applicable,
initiating such Payment Blockage Period cannot be made the basis for the
commencement of a second Payment Blockage Period, whether or not within a period
of 365 consecutive days, unless such default has been cured or waived for a
period of not less than 90 consecutive days and subsequently recurs.
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(c) In the event that, notwithstanding the foregoing, the Trustee or
the Holder of any Note shall have received any payment or distribution
prohibited by the foregoing provisions of this Section 14.03, then and in such
event such payment or distribution shall be paid over and delivered forthwith to
representatives of the holders of Senior Indebtedness or such Guarantor Senior
Indebtedness, as applicable, as a court of competent jurisdiction shall direct
for application to the payment of any due and unpaid Senior Indebtedness or
Guarantor Senior Indebtedness, as applicable, to the extent necessary to pay all
such due and unpaid Senior Indebtedness or Guarantor Senior Indebtedness, as
applicable, after giving effect to any concurrent payment to or for the holders
of Senior Indebtedness or Guarantor Senior Indebtedness, as applicable.
Section 14.04 Trustee's Relation to Senior Indebtedness and Guarantor
-------------------------------------------------------
Senior Indebtedness.
- -------------------
With respect to the holders of Senior Indebtedness and Guarantor
Senior Indebtedness, the Trustee undertakes to perform or to observe only such
of its covenants and obligations as are specifically set forth in this Article
Fourteen, and no implied covenants or obligations with respect to the holders of
Senior Indebtedness or Guarantor Senior Indebtedness, as applicable, shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Senior Indebtedness or Guarantor
Senior Indebtedness, and the Trustee shall not be liable to any holder of Senior
Indebtedness or Guarantor Senior Indebtedness, if it shall mistakenly pay over
or deliver to Holders, the Company, the Guarantors or any other person moneys or
assets to which any holder of Senior Indebtedness or Guarantor Senior
Indebtedness shall be entitled by virtue of this Article Fourteen or otherwise.
Section 14.05 Subrogation.
-----------
Upon the payment in full of all Senior Indebtedness and Guarantor
Senior Indebtedness, the Holders shall be subrogated to the rights of the
holders of such Senior Indebtedness and Guarantor Senior Indebtedness to receive
payments and distributions of cash, property and securities applicable to the
Senior Indebtedness and Guarantor Senior Indebtedness until the principal of and
interest on the Notes and all amounts due under the Guarantees shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness or Guarantor Senior Indebtedness of any cash,
property or securities to which the Holders or the Trustee would be entitled
except for the provisions of this Article, and no payments pursuant to the
provisions of this Article to the holders of Senior Indebtedness or Guarantor
Senior Indebtedness by Holders or the Trustee shall, as among the Company, the
Guarantors, their respective creditors other than holders of Senior Indebtedness
or such Guarantor Senior Indebtedness, and the Holders, be deemed to be a
payment or distribution by the Company or any Guarantor to or on account of the
Senior Indebtedness or any Guarantor Senior Indebtedness.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article Fourteen shall have
been applied, pursuant to the provisions of this Article Fourteen, to the
payment of all amounts payable under the Senior
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Indebtedness of the Company or under the Guarantor Senior Indebtedness of the
Guarantors, then and in such case the Holders shall be entitled to receive from
the holders of such Senior Indebtedness or such Guarantor Senior Indebtedness at
the time outstanding any payments or distributions received by such holders of
such Senior Indebtedness or such Guarantor Senior Indebtedness in excess of the
amount sufficient to pay all amounts payable under or in respect of such Senior
Indebtedness or such Guarantor Senior Indebtedness in full.
Section 14.06 Provisions Solely To Define Relative Rights.
-------------------------------------------
The provisions of this Article Fourteen are and are intended solely
for the purpose of defining the relative rights of the Holders on the one hand
and the holders of Senior Indebtedness and Guarantor Senior Indebtedness on the
other hand. Nothing contained in this Article Fourteen or elsewhere in this
Indenture (other than a release pursuant to Section 13.05) or in the Notes is
intended to or shall (a) impair, as among the Company, each Guarantor, their
respective creditors other than holders of Senior Indebtedness or Guarantor
Senior Indebtedness and the Holders, the obligation of the Company and each
Guarantor, which is absolute and unconditional, to pay to the Holders the
principal of, premium, if any, and interest on the Notes and to make payments in
respect of obligations under the Guarantees as and when the same shall become
due and payable in accordance with their terms; or (b) affect the relative
rights against the Company or any Guarantor of the Holders and creditors of the
Company or any Guarantor other than the holders of Senior Indebtedness or
Guarantor Senior Indebtedness; or (c) prevent the Trustee or the Holder of any
Note from exercising all remedies otherwise permitted by applicable law upon a
Default or an Event of Default under this Indenture, subject to the rights, if
any, under this Article Fourteen of the holders of Senior Indebtedness or
Guarantor Senior Indebtedness (1) in any case, proceeding, dissolution,
liquidation or other winding up, assignment for the benefit of creditors or
other marshalling of assets and liabilities of the Company or any Guarantor
referred to in Section 14.02, to receive, pursuant to and in accordance with
such Section, cash, property and securities otherwise payable or deliverable to
the Trustee or such Holder, or (2) under the conditions specified in Section
14.03, to prevent any payment prohibited by such Section or enforce their rights
pursuant to Section 14.03(c).
The failure by the Company to make a payment on the Notes or by any
Guarantor to make payment in respect of its obligations under a Guarantee by
reason of any provision of this Article Fourteen shall not be construed as
preventing the occurrence of a Default or an Event of Default hereunder.
Section 14.07 Trustee To Effectuate Subordination.
-----------------------------------
Each Holder of a Note by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to effectuate the subordination provided in this Article Fourteen and appoints
the Trustee his attorney-in-fact for any and all such purposes, including, in
the event of any dissolution, winding-up, liquidation or reorganization of the
Company or any Guarantor whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of the Company or any Guarantor owing to such Holder in the
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form required in such proceedings and the causing of such claim to be approved.
If the Trustee does not file such a claim prior to 30 days before the expiration
of the time to file such a claim, the holders of Senior Indebtedness or
Guarantor Senior Indebtedness, or any Senior Representative, may file such a
claim on behalf of Holders of the Notes.
Section 14.08 No Waiver of Subordination Provisions.
-------------------------------------
(a) No right of any present or future holder of any Senior
Indebtedness or Guarantor Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or any Guarantor or by any act or
failure to act, in good faith, by any such holder, or by any non-compliance by
the Company or any Guarantor with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
(b) Without limiting the generality of subsection (a) of this Section
14.08, the holders of Senior Indebtedness or Guarantor Senior Indebtedness may,
at any time and from time to time, without the consent of or notice to the
Trustee or the Holders, without incurring responsibility to the Holders and
without impairing or releasing the subordination provided in this Article
Fourteen or the obligations hereunder of the Holders to the holders of Senior
Indebtedness or such Guarantor Senior Indebtedness, do any one or more of the
following: (1) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness or such Guarantor Senior
Indebtedness or any instrument evidencing the same or any agreement under which
Senior Indebtedness or such Guarantor Senior Indebtedness is outstanding; (2)
sell, exchange, release or otherwise deal with any property pledged, mortgaged
or otherwise securing Senior Indebtedness or such Guarantor Senior Indebtedness;
(3) release any person liable in any manner for the collection or payment of
Senior Indebtedness or such Guarantor Senior Indebtedness; and (4) exercise or
refrain from exercising any rights against the Company or such Guarantor and any
other person; provided, however, that in no event shall any such actions limit
the right of the Holders to take any action to accelerate the maturity of the
Notes pursuant to Article Five hereof or to pursue any rights or remedies
hereunder or under applicable laws if the taking of such action does not
otherwise violate the terms of this Indenture.
Section 14.09 Notice to Trustee.
-----------------
(a) The Company and each Guarantor shall give prompt written notice to
the Trustee of any fact known to the Company or such Guarantor which would
prohibit the making of any payment to or by the Trustee in respect of the Notes
or any Guarantee. Notwithstanding the provisions of this Article Fourteen or any
other provision of this Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment to or by the Trustee in respect of the Notes or any Guarantee, unless
and until the Trustee shall have received written notice thereof from the
Company, such Guarantor or a holder of Senior Indebtedness or Guarantor Senior
Indebtedness or from any trustee, fiduciary or agent therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
this Section 14.09, shall be
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entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 14.09 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose under this Indenture
(including, without limitation, the payment of the principal of or interest on
any Note), then, anything herein contained to the contrary notwithstanding but
without limiting the rights and remedies of the holders of Senior Indebtedness
or Guarantor Senior Indebtedness or any trustee, fiduciary or agent thereof, the
Trustee shall have full power and authority to receive such money and to apply
the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within two
Business Days prior to such date; nor shall the Trustee be charged with
knowledge of the curing of any such default or the elimination of the act or
condition preventing any such payment unless and until the Trustee shall have
received an Officers' Certificate to such effect.
(b) Subject to the provisions of Section 6.01, the Trustee shall be
entitled to rely on the delivery to it of a written notice to the Trustee by a
person representing himself to be a holder of Senior Indebtedness or Guarantor
Senior Indebtedness (or a trustee, fiduciary or agent therefor) to establish
that such notice has been given by a holder of Senior Indebtedness or Guarantor
Senior Indebtedness (or a trustee, fiduciary or agent therefor). In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any person as a holder of Senior Indebtedness or
Guarantor Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Fourteen, the Trustee may request such person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior Indebtedness or Guarantor Senior Indebtedness held by such person, the
extent to which such person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such person under
this Article Fourteen, and if such evidence is not furnished, the Trustee may
defer any payment to such person pending judicial determination as to the right
of such person to receive such payment.
Section 14.10 Reliance on Judicial Order or Certificate of
--------------------------------------------
Liquidating Agent.
- -----------------
Upon any payment or distribution of assets of the Company or any
Guarantor referred to in this Article Fourteen, the Trustee, subject to the
provisions of Section 6.01, and the Holders, shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding-up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other person making such payment or
distribution, delivered to the Trustee or to the Holders, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the Holders of Senior Indebtedness or Guarantor Senior
Indebtedness, as applicable, and other Indebtedness of the Company or such
Guarantor, as applicable, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article; provided, however, that the foregoing shall apply only if such
court has been fully apprised of the provisions of this Article Fourteen.
96
<PAGE>
Section 14.11 Rights of Trustee as a Holder of Senior Indebtedness or
-------------------------------------------------------
Guarantor Senior Indebtedness; Preservation of Trustee's Rights.
- ---------------------------------------------------------------
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Fourteen with respect to any Senior
Indebtedness or any Guarantor Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness or
Guarantor Senior Indebtedness, and nothing in this Indenture shall deprive the
Trustee of any of its rights as such holder. Nothing in this Article Fourteen
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 6.07.
Section 14.12 Article Applicable to Paying Agents.
-----------------------------------
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 shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article Fourteen in addition to or in place of the Trustee;
provided that Section 14.11 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
Section 14.13 No Suspension of Remedies.
-------------------------
Nothing contained in this Article Fourteen shall limit the right of
the Trustee or the Holders to take any action to accelerate the maturity of the
Notes pursuant to Article Five or to pursue any rights or remedies hereunder or
under applicable law, subject to the rights, if any, under this Article Fourteen
of the Holders, from time to time, of Senior Indebtedness or any Guarantor
Senior Indebtedness.
97
<PAGE>
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
EMPRESS ENTERTAINMENT, INC.
By: /s/ Peter A. Ferro, Jr.
-----------------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Executive Officer
EMPRESS RIVER CASINO FINANCE CORPORATION
By: /s/ Peter A. Ferro, Jr.
-----------------------------------------
Name: Peter A. Ferro, Jr.
Title: President
EMPRESS CASINO JOLIET CORPORATION
By: /s/ Peter A. Ferro, Jr.
-----------------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Executive Officer
EMPRESS CASINO HAMMOND CORPORATION
By: /s/ Peter A. Ferro, Jr.
-----------------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Exective Officer
HAMMOND RESIDENTIAL, L.L.C.
By: /s/ Peter A. Ferro, Jr.
-----------------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Executive Officer
U.S. BANK TRUST NATIONAL ASSOCIATION as Trustee
By: /s/ R. Probosch
-----------------------------------------------
Name: Richard H. Probosch
Title: Assistant Vice President
<PAGE>
EXHIBIT A
---------
EMPRESS ENTERTAINMENT, INC.
______________
8 1/8% SENIOR SUBORDINATED NOTE DUE 2006
CUSIP No.
No. _________________ $
EMPRESS ENTERTAINMENT, INC., a Delaware corporation (the "Company," which
term includes any successor under the Indenture hereinafter referred to), for
value received, promises to pay to _________ or registered assigns, the
principal sum of ________ United States Dollars on July 1, 2006, at the office
or agency of the Company referred to below, and to pay interest thereon on
January 1 and July 1, in each year, commencing on January 1, 1999 (each an
"Interest Payment Date"), accruing from the Issue Date or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, at
the rate of 8 1/8% per annum, until the principal hereof is paid or duly
provided for. Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture referred to on the
reverse hereof, be paid in arrears to the person in whose name this Note (or one
or more predecessor Notes) is registered at the close of business on the
December 15 or June 15 (each a "Regular Record Date"), whether or not a Business
Day, as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid, or duly provided for, and interest on such
defaulted interest at the then applicable interest rate borne by the Notes, to
the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the person in whose name this Note (or
one or more predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice of which shall be given to Holders of Notes not less than 10
days prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in such Indenture.
Payment of the principal of, premium, if any, and interest on this Note
will be made at the Corporate Trust office or agency of the Trustee maintained
for that purpose in The City of New York, 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; provided, however, that payment of interest may be
made at the option of the Company by check (which may be a check of the Company)
mailed to the address of the person entitled thereto as such address shall
appear on the Note Register.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
A-2
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned Indenture.
Dated: U.S. BANK TRUST NATIONAL
ASSOCIATION,
as Trustee
By:
---------------------------------
Authorized Signatory
A-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
EMPRESS ENTERTAINMENT, INC.
By:
___________________________
Name:
Title:
By:___________________________
Name:
Title:
A-4
<PAGE>
(REVERSE OF NOTE)
8 1/8% Senior Subordinated Note due 2006
1. Indenture. This Note is one of a duly authorized issue of Notes of
---------
the Company designated as its 8 1/8% Senior Subordinated Notes due 2006 (the
"Notes"), limited (except as otherwise provided in the Indenture referred to
below) in aggregate principal amount to $150,000,000, which may be issued under
an indenture (the "Indenture") dated as of June 18, 1998, by and among the
Company, as Issuer, the Guarantors named therein and U.S. Bank Trust National
Association, as trustee (the "Trustee," which term includes any successor
Trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Guarantors, the Trustee and the Holders, and of the terms upon
which the Notes are, and are to be, authenticated and delivered.
All capitalized terms used in this Note which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
No reference herein to the Indenture and no provisions of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, premium, if any, and interest on
this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
2. Guarantees. This Note is entitled to certain senior subordinated
----------
Guarantees, if any, made for the benefit of the Holders. Reference is hereby
made to Article Thirteen of the Indenture for terms relating to the Guarantees.
3. Subordination. The Indebtedness evidenced by the Notes is, to the
-------------
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full in cash of all existing and future
Senior Indebtedness (including the Indebtedness under the Credit Agreement).
Each Holder, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note shall cease to be so subordinate and subject
in right of payment upon any defeasance of this Note referred to in Paragraph 7
below.
4. Redemption.
----------
(a) Optional Redemption. Subject to earlier redemption in the manner
-------------------
described in the next two succeeding paragraphs, the Notes will be redeemable at
the option of the Company, in whole or in part, at any time on or after July 1,
2002 at the redemption prices (expressed as percentages of principal amount) set
forth below, plus accrued and unpaid interest, if any, to the date of
redemption, if redeemed during the 12-month period beginning July 1 of the years
indicated below:
A-5
<PAGE>
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002 104.063%
2003 102.708%
2004 101.354%
2005 and thereafter 100.000%
</TABLE>
On or prior to July 1, 2001, the Company may, at its option, use the net
proceeds of an Equity Offering to redeem up to 35% of the originally issued
aggregate principal amount of the Notes, at a redemption price in cash equal to
108 1/8% of the principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided, however, that not less
than $97.5 million in aggregate principal amount of Notes is outstanding
following such redemption. Notice of any such redemption must be given not later
than 60 days after the consummation of the Equity Offering.
As used in the preceding paragraph, an ''Equity Offering'' means a public
sale of common stock of the Company in a transaction registered with the
Commission.
(b) Required Regulatory Redemption. The Notes will be redeemable, in whole
------------------------------
or in part, at any time, at 100% of the principal amount thereof, plus accrued
and unpaid interest to the redemption date, (i) pursuant to, and in accordance
with, any order of any Governmental Authority with appropriate jurisdiction and
authority relating to a Gaming License (a "Gaming Authority"), or (ii) to the
extent necessary in the reasonable, good faith judgment of the Board of
Directors of the Company to prevent the loss, failure to obtain or material
impairment of, or to secure the reinstatement of, any Gaming License, which if
lost, impaired, not obtained or not reinstated would reasonably be expected to
have a material adverse effect on the Company or any of its Restricted
Subsidiaries, considered as a whole, or would restrict the ability of the
Company or any of its Restricted Subsidiaries to conduct business in any Gaming
Jurisdiction, in the case of each of (i) and (ii) where such redemption or
acquisition is required because the Holder or beneficial owner of such Note is
required to be found suitable, or otherwise qualify, under any Gaming Laws and
is not found suitable or so qualified.
If a Holder or a beneficial owner of a Note is required by any Gaming
Authority to be found suitable, the Holder shall apply for a finding of
suitability within 30 days after a Gaming Authority requests or sooner if so
required by such Gaming Authority. The applicant for a finding of suitability
must pay all costs of the investigation for such finding of suitability. If a
Holder or beneficial owner is required to be found suitable and is not found
suitable by a Gaming Authority, the Holder shall, to the extent required by
applicable law, dispose of his Notes within 30 days or within that time
prescribed by a Gaming Authority, whichever is earlier.
(c) Redemption Upon Change of Control. Upon the occurrence of a Change of
---------------------------------
Control, each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable, unconditional offer by the Company (a "Change of
Control Offer") to require the Company to repurchase all or any portion of such
Holder's Notes (provided that the principal amount of such Notes at maturity
must be $1,000 or an integral multiple thereof) on a date (the
A-6
<PAGE>
"Change of Control Purchase Date") that is no later than 30 Business Days after
the occurrence of such Change of Control, at a cash price (the "Change of
Control Purchase Price") equal to 101% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to and including the Change of
Control Purchase Date.
The Change of Control Offer must commence within 10 Business Days
following a Change of Control and must remain open for a period of at least 20
Business Days following its commencement, except to the extent that a longer
period is expressly required by applicable law (the "Change of Control Offer
Period"). Upon expiration of the Change of Control Offer Period, the Company
will purchase all Notes tendered in accordance with the terms of the Indenture
in response to the Change of Control Offer.
(d) Sinking Fund. The Company will not be required to make any mandatory
------------
sinking fund payments in respect of the Notes.
(e) Interest Payments. In the case of any redemption of the Notes,
-----------------
interest installments whose Stated Maturity is on or prior to the Redemption
Date will be payable to the Holders of such Notes, or one or more predecessor
Notes, of record at the close of business on the relevant Record Date referred
to on the face hereof. Notes (or portions thereof) for whose redemption and
payment provision is made in accordance with the Indenture shall cease to bear
interest from and after the Redemption Date.
(f) Partial Redemption. In the event of redemption of the Note in part
------------------
only, a new Note or Notes for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.
5. Offers to Purchase. Sections 10.13 and 10.14 of the Indenture
------------------
provide that following certain Asset Sales (with respect to Section 10.13) and
upon the occurrence of a Change of Control (with respect to Section 10.14) and
subject to further limitations contained therein, the Company shall make an
offer to purchase certain amounts of the Notes in accordance with the procedures
set forth in the Indenture.
6. Defaults and Remedies. If an Event of Default shall occur and be
---------------------
continuing, the principal of all of the outstanding Notes, plus all accrued and
unpaid interest, if any, to the date the Notes become due and payable, may be
declared due and payable in the manner and with the effect provided in the
Indenture.
7. Defeasance. The Indenture contains provisions (which provisions
----------
apply to this Note) for defeasance at any time of (a) the entire indebtedness of
the Company on this Note and (b) certain restrictive covenants and related
Defaults and Events of Default, in each case upon compliance by the Company with
certain conditions set forth therein.
8. Amendments and Waivers. The Company and the Trustee (if a party
----------------------
thereto) may, without the consent of the Holders of any Outstanding Notes,
amend, waive or supplement the Indenture or the Notes for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Trust
A-7
<PAGE>
Indenture Act of 1939, as amended, and making any change that does not adversely
affect the rights of any Holder. Other amendments and modifications of the
Indenture or the Notes may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority of the aggregate principal
amount of the Outstanding Notes, subject to certain exceptions requiring the
consent of the Holders of the particular Notes to be affected. Any such consent
or waiver by or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note.
9. Denominations, Transfer and Exchange. The Notes are issuable only in
------------------------------------
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Notes are exchangeable for a like aggregate
principal amount of Notes of the authorized denomination, as requested by the
Holder surrendering the same.
The transfer of this Note is registrable on the Note Register of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose in the Borough of Manhattan
in The City of New York or at such other office or agency of the Company as may
be maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Note
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
10. Persons Deemed Owners. Prior to and at the time of due presentment
---------------------
of this Note for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the person in whose name this Note
is registered as the owner hereof for all purposes, whether or not this Note
shall be overdue, and neither the Company, the Trustee nor any agent shall be
affected by notice to the contrary.
11. Registration Rights. Pursuant to the Registration Rights Agreement
-------------------
among the Company, the Guarantors, if any, and the Initial Purchasers for
themselves and on behalf of the Holders of the Initial Notes, the Company will
be obligated to consummate an exchange offer pursuant to which the Holder of
this Note shall have the right to exchange this Note for the Company's 8 1/8%
Senior Subordinated Notes due 2006, which will have been registered under the
Securities Act, in like principal amount and having terms identical in all
material respects as the Initial Notes. The Holders of the Initial Notes shall
be entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
12. No Recourse Against Others. No director, officer, employee or
--------------------------
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or any Guarantor under the Notes, the
Guarantees or this Indenture. Each Holder by accepting a Note waives and
releases all such liability, and such waiver and release is part of the
consideration for the issuance of the Notes.
A-8
<PAGE>
13. GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE
TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE HOLDERS
AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS
NOTE.
A-9
<PAGE>
ASSIGNMENT FORM
If you, the Holder, want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to
________________________________________________________________________________
(Insert assignee's social security or tax ID number)____________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code) and irrevocably appoint
________________________________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
Date:_________________ Your signature: ____________________________________
(Sign exactly as your name appears
on the other side of this Note)
By:
_________________________________
NOTICE: To be executed by an
executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a participant
in the Securities Transfer Agent Medallion Program ("STAMP") or similar program.
A-10
<PAGE>
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the SEC of the
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) the second anniversary of the Issue Date, the undersigned
confirms that it has not utilized any general solicitation or general
advertising in connection with and that such transfer is:
[Check One]
---------
(1) _ to the Company or a subsidiary thereof; or
(2) _ pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
(3) _ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended) that has furnished to the Trustee a signed letter containing
certain representations and agreements (the form of which letter can
be obtained from the Trustee); or
(4) _ outside the United States to a "foreign person" in compliance with
Rule 904 of Regulation S under the Securities Act of 1933, as amended;
or
(5) _ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof, provided, that if box (3), (4) or (5) is checked, the
--------
Company or the Trustee may require, prior to registering any such transfer of
the Notes, in its sole discretion, such written legal opinions, certifications
(including an investment letter in the case of box (3) or (4)), and other
information as the Trustee, Note Registrar or the Company has reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
If none of the foregoing boxes are checked, the Trustee or Note
Registrar shall not be obligated to register this Note in the name of any person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 2.05 of the Indenture
shall have been satisfied.
Date:______________ Your signature:_________________________________
(Sign exactly as your name
appears on the other side of this
Security)
Signature Guarantee:_____________
A-11
<PAGE>
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Date: ________________ ______________________________________________________
NOTICE: To be executed by an executive officer
A-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to
Section 10.13 or 10.14 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 10.13 or 10.14 of the Indenture, state the amount:
$_____________
Date:___________ Your signature: ___________________________
(Sign exactly as your name
appears on the other side
of this Note)
By:________________________
NOTICE: To be signed by
an executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a participant
in the Securities Transfer Agent Medallion Program ("STAMP") or similar program.
A-13
<PAGE>
EXHIBIT B
---------
EMPRESS ENTERTAINMENT, INC.
_________________
8 1/8% SENIOR SUBORDINATED NOTE DUE 2006
CUSIP No.
No. __________________ $
EMPRESS ENTERTAINMENT, INC., a Delaware corporation (the "Company," which
term includes any successor under the Indenture hereinafter referred to), for
value received, promises to pay to _______________________, or registered
assigns, the principal sum of __________________ United States Dollars on July
1, 2006, at the office or agency of the Company referred to below, and to pay
interest thereon on January 1 and July 1 in each year, commencing on January 1,
1999 (each an "Interest Payment Date"), accruing from the Issue Date or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, at the rate of 8 1/8% per annum, until the principal hereof is
paid or duly provided for. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture referred to on the
reverse hereof, be paid in arrears to the person in whose name this Note (or one
or more predecessor Notes) is registered at the close of business on the
December 15 or June 15 each a "Regular Record Date"), whether or not a Business
Day, as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid, or duly provided for, and interest on such
defaulted interest at the then applicable interest rate borne by the Notes, to
the extent lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the person in whose name this Note (or
one or more predecessor Notes) is registered at the close of business on a
Special Record Date for the payment of such defaulted interest to be fixed by
the Trustee, notice of which shall be given to Holders of Notes not less than 10
days prior to such Special Record Date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in such Indenture.
Payment of the principal of, premium, if any, and interest on this Note
will be made at the corporate trust office or agency of the Trustee maintained
for that purpose in The City of New York, 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: provided, however, that payment of interest may be
made at the option of the Company by check (which may be a check of the Company)
mailed to the address of the person entitled thereto as such address shall
appear on the Note Register.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof.
Unless the certificate of authentication hereon has been duly executed
by the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
B-1
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
Dated: U.S. BANK TRUST NATIONAL
ASSOCIATION,
as Trustee
By:___________________________
Authorized Signatory
B-2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
EMPRESS ENTERTAINMENT, INC.
By:____________________________
Name:
Title:
By:____________________________
Name:
Title:
B-3
<PAGE>
(REVERSE OF NOTE)
8 1/8% Senior Subordinated Note due 2006
1. Indenture. This Note is one of a duly authorized issue of Notes of
---------
the Company designated as its 8% Senior Subordinated Notes due 2006 (the
"Notes"), limited (except as otherwise provided in the Indenture referred to
below) in aggregate principal amount to $150,000,000, which may be issued under
an indenture (the "Indenture") dated as of June 18, 1998, by and among the
Company, as Issuer, the Guarantors named therein and U.S. Bank, National
Association, as trustee (the "Trustee," which term includes any successor
Trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties, obligations and immunities thereunder of the
Company, the Guarantors, the Trustee and the Holders, and of the terms upon
which the Notes are, and are to be, authenticated and delivered.
All capitalized terms used in this Note which are defined in the Indenture
and not otherwise defined herein shall have the meanings assigned to them in the
Indenture.
No reference herein to the Indenture and no provisions of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.
2. Guarantees. This Note is entitled to certain senior subordinated
----------
Guarantees, if any, made for the benefit of the Holders. Reference is hereby
made to Article Thirteen of the Indenture for terms relating to the Guarantees.
3. Subordination. The Indebtedness evidenced by the Notes is, to the
-------------
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full in cash of all existing and future
Senior Indebtedness (including the Indebtedness under the Credit Agreement).
Each Holder, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder, to
take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note shall cease to be so subordinate and subject
in right of payment upon any defeasance of this Note referred to in Paragraph 7
below.
4. Redemption.
----------
(a) Optional Redemption. Subject to earlier redemption in the manner
-------------------
described in the next two succeeding paragraphs, the Notes will be redeemable at
the option of the Company, in whole or in part, at any time on or after July 1,
2002, at the redemption prices (expressed as percentages of principal amount)
set forth below, plus accrued and unpaid interest, if any, to the date of
redemption, if redeemed during the 12-month period beginning July 1 of the years
indicated below:
B-4
<PAGE>
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002 104.063%
2003 102.708%
2004 101.354%
2005 and thereafter 100.000%
</TABLE>
On or prior to July 1, 2001, the Company may, at its option, use the net
proceeds of an Equity Offering to redeem up to 35% of the originally issued
aggregate principal amount of the Notes, at a redemption price in cash equal to
108 1/8% of the principal amount thereof, plus accrued and unpaid interest
thereon, if any, to the date of redemption; provided, however, that not less
than $97.5 million in aggregate principal amount of Notes is outstanding
following such redemption. Notice of any such redemption must be given not later
than 60 days after the consummation of the Equity Offering.
As used in the preceding paragraph, an "Equity Offering" means a public
sale of common stock of the Company in a transaction registered with the
Commission.
(b) Required Regulatory Redemption. The Notes will be redeemable, in whole
------------------------------
or in part, at any time, at 100% of the principal amount thereof, plus accrued
and unpaid interest to the redemption date, (i) pursuant to, and in accordance
with, any order of any Governmental Authority with appropriate jurisdiction and
authority relating to a Gaming License (a "Gaming Authority"), or (ii) to the
extent necessary in the reasonable, good faith judgment of the Board of
Directors of the Company to prevent the loss, failure to obtain or material
impairment of, or to secure the reinstatement of, any Gaming License, which if
lost, impaired, not obtained or not reinstated would reasonably be expected to
have a material adverse effect on the Company or any of its Restricted
Subsidiaries, considered as a whole, or would restrict the ability of the
Company or any of its Restricted Subsidiaries to conduct business in any Gaming
Jurisdiction, in the case of each of (i) and (ii) where such redemption or
acquisition is required because the Holder or beneficial owner of such Note is
required to be found suitable, or otherwise qualify, under any Gaming Laws and
is not found suitable or so qualified.
If a Holder or a beneficial owner of a Note is required by any Gaming
Authority to be found suitable, the Holder shall apply for a finding of
suitability within 30 days after a Gaming Authority requests or sooner if so
required by such Gaming Authority. The applicant for a finding of suitability
must pay all costs of the investigation for such finding of suitability. If a
Holder or beneficial owner is required to be found suitable and is not found
suitable by a Gaming Authority, the Holder shall, to the extent required by
applicable law, dispose of his Notes within 30 days or within that time
prescribed by a Gaming Authority, whichever is earlier.
(c) Redemption Upon Change of Control. Upon the occurrence of a Change of
---------------------------------
Control, each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable, unconditional offer by the Company (a "Change of
Control Offer") to require the Company to repurchase all or any portion of such
Holder's Notes (provided that the principal amount of such Notes at maturity
must be $1,000 or an integral multiple thereof) on a date (the
B-5
<PAGE>
"Change of Control Purchase Date") that is no later than 30 Business Days after
the occurrence of such Change of Control, at a cash price (the "Change of
Control Purchase Price") equal to 101% of the principal amount thereof, plus
accrued and unpaid interest thereon, if any, to and including the Change of
Control Purchase Date.
The Change of Control Offer must commence within 10 Business Days
following a Change of Control and must remain open for a period of at least 20
Business Days following its commencement, except to the extent that a longer
period is expressly required by applicable law (the "Change of Control Offer
Period"). Upon expiration of the Change of Control Offer Period, the Company
will purchase all Notes tendered in accordance with the terms of the Indenture
in response to the Change of Control Offer.
(d) Sinking Fund. The Company will not be required to make any mandatory
------------
sinking fund payments in respect of the Notes.
(e) Interest Payments. In the case of any redemption of the Notes,
-----------------
interest installments whose Stated Maturity is on or prior to the Redemption
Date will be payable to the Holders of such Notes, or one or more predecessor
Notes, of record at the close of business on the relevant Record Date referred
to on the face hereof. Notes (or portions thereof) for whose redemption and
payment provision is made in accordance with the Indenture shall cease to bear
interest from and after the Redemption Date.
(f) Partial Redemption. In the event of redemption of the Note in part
------------------
only, a new Note or Notes for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.
5. Offers to Purchase. Sections 10.13 and 10.14 of the Indenture provide
------------------
that following certain Asset Sales (with respect to Section 10.13) and upon the
occurrence of a Change of Control (with respect to Section 10.14) and subject to
further limitations contained therein, the Company shall make an offer to
purchase certain amounts of the Notes in accordance with the procedures set
forth in the Indenture.
6. Defaults and Remedies. If an Event of Default shall occur and be
---------------------
continuing, the principal of all of the outstanding Notes, plus all accrued and
unpaid interest, if any, to the date the Notes become due and payable, may be
declared due and payable in the manner and with the effect provided in the
Indenture.
7. Defeasance. The Indenture contains provisions (which provisions apply
----------
to this Note) for defeasance at any time of (a) the entire indebtedness of the
Company on this Note and (b) certain restrictive covenants and related Defaults
and Events of Default, in each case upon compliance by the Company with certain
conditions set forth therein.
8. Amendments and Waivers. The Company and the Trustee (if a party
----------------------
thereto) may, without the consent of the Holders of any Outstanding Notes,
amend, waive or supplement the Indenture or the Notes for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Trust
B-6
<PAGE>
Indenture Act of 1939, as amended, and making any change that does not adversely
affect the rights of any Holder. Other amendments and modifications of the
Indenture or the Notes may be made by the Company and the Trustee with the
consent of the Holders of not less than a majority of the aggregate principal
amount of the Outstanding Notes, subject to certain exceptions requiring the
consent of the Holders of the particular Notes to be affected. Any such consent
or waiver by or on behalf of the Holder of this Note shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange herefor or
in lieu hereof whether or not notation of such consent or waiver is made upon
this Note.
9. Denominations, Transfer and Exchange. The Notes are issuable only in
------------------------------------
registered form without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to certain
limitations therein set forth, the Notes are exchangeable for a like aggregate
principal amount of Notes of the authorized denomination, as requested by the
Holder surrendering the same.
The transfer of this Note is registrable on the Note Register of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose in the Borough of Manhattan
in The City of New York or at such other office or agency of the Company as may
be maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Note
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
10. Persons Deemed Owners. Prior to and at the time of due presentment of
---------------------
this Note for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Company, the Trustee nor any agent shall be affected
by notice to the contrary.
11. No Recourse Against Others. No director, officer or employee or
--------------------------
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or any Guarantor under the Notes, the
Guarantees or the Indenture. Each Holder of Notes by accepting a Note waives
and releases all such liability, and such waiver and release is part of the
consideration for the issuance of the Notes.
12. GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF). THE
TRUSTEE, THE COMPANY, ANY OTHER OBLIGOR IN RESPECT OF THE NOTES AND THE HOLDERS
AGREE TO SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR STATE COURT LOCATED IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW YORK IN
ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THIS
NOTE.
B-7
<PAGE>
ASSIGNMENT FORM
If you, the Holder, want to assign this Note, fill in the form below and have
your signature guaranteed:
I or we assign and transfer this Note to
________________________________________________________________________________
(Insert assignee's social security or tax ID number) ___________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code) and
irrevocably appoint
________________________________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for such agent.
Date:__________________ Your signature:----------------------------------
(Sign exactly as your name appears
on the other side of this Note)
By:-------------------------------
NOTICE: To be executed by
an executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a
participant in the Securities Transfer Agent Medallion Program ("STAMP") or
similar program.
B-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Note purchased by the Company pursuant to Section
10.13 or 10.14 of the Indenture, check the Box: [_]
If you wish to have a portion of this Note purchased by the Company
pursuant to Section 10.13 or 10.14 of the Indenture, state the amount:
$_______________
Date: ____________ Your signature:____________________________
(Sign exactly as your name
appears on the other side of
this Note)
By:_________________________
NOTICE: To be signed by
an executive officer
NOTICE: Signature(s) must be guaranteed by an institution which is a
participant in the Securities Transfer Agent Medallion Program ("STAMP") or
similar program.
B-9
<PAGE>
EXHIBIT C
---------
Form of Certificate To Be
Delivered in Connection with Subsequent
Transfers to Non-QIB Accredited Investors
-----------------------------------------
_______________, ____
Re: Empress Entertainment, Inc. (the "Company")
8 1/8% Senior Subordinated Notes due 2006 (the "Notes")
-------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of $_______ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the Indenture
dated as of June 18, 1998 relating to the Notes (the "Indenture") and the
undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Notes except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities
Act").
2. We understand that the Notes have not been registered under
the Securities Act, and that the Notes may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as hereinafter stated, that
if we should sell any Notes within two years after the original issuance of
the Notes, we will do so only (A) to the Company or any subsidiary thereof,
(B) inside the United States in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined therein),
(C) inside the United States to an "institutional accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on
its behalf by a U.S. broker-dealer) to you a signed letter substantially in
the form of this letter, (D) outside the United States in accordance with
Rule 904 of Regulation S under the Securities Act, (E) pursuant to an
effective registration statement under the Securities Act, and we further
agree to provide to any person purchasing any of the Notes from us a notice
advising such purchaser that resales of the Notes are restricted as stated
herein, or (F) pursuant to another available exemption from the
registration requirements of the Securities Act.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Company such certification,
written legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and
C-1
<PAGE>
risks of our investment in the Notes, and we and any accounts for which we
are acting are each able to bear the economic risk of our or its
investment, as the case may be.
5. We are acquiring the Notes purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
C-2
<PAGE>
You the Company and counsel for the Company are entitled to
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By: ______________________________
Authorized Signature
C-3
<PAGE>
EXHIBIT D
---------
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
-----------------------------------
______________, ____
Attention:
Re: Empress Entertainment, Inc. (the "Company")
8 1/8% Senior Subordinated Notes due 2006 (the "Notes")
-------------------------------------------------------
Ladies and Gentlemen:
In connection with our proposed sale of $__________ aggregate principal
amount of the Notes, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States, or (b)
the transaction was executed in, on or through the facilities of a designated
off-shore securities market and neither we nor any person acting on our behalf
knows that the transaction has been pre-arranged with a buyer in the United
States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
D-1
<PAGE>
You, the Company and counsel for the Company are entitled to rely upon
this letter and are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal proceedings or
official inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferee]
By: ________________________
D-2
<PAGE>
EXHIBIT E
SENIOR SUBORDINATED GUARANTEE
-----------------------------
For value received, the undersigned hereby unconditionally guarantees to
the Holder of this Note the payments of principal of, premium, if any, and
interest on this Note in the amounts and at the time when due and interest on
the overdue principal, premium, if any, and interest, if any, of this Note, if
lawful, and the payment or performance of all other obligations of the Company
under the Indenture or the Notes, to the Holder of this Note and the Trustee,
all in accordance with and subject to the terms and limitations of this Note,
Article Thirteen of the Indenture and this Guarantee. This Guarantee will
become effective in accordance with Article Eleven of the Indenture and its
terms shall be evidenced therein. The validity and enforceability of any
Guarantee shall not be affected by the fact that it is not affixed to any
particular Note.
The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth in
Article Thirteen of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates. The Indebtedness evidenced by this
Guarantee is, to the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full in cash
of all Guarantor Senior Indebtedness as defined in the Indenture, and this
Guarantee is issued subject to such provisions. Each Holder of a Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee, on behalf of such Holder, to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such
Holder for such purpose; provided that such subordination provisions shall cease
to affect amounts deposited in accordance with the defeasance provisions of the
Indenture upon the terms and conditions set forth therein.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
[ ]
By:_________________________________
Name:
Title:
E-1
<PAGE>
EXHIBIT 4.2
================================================================================
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of June 18, 1998
by and among
EMPRESS ENTERTAINMENT, INC.
and
EMPRESS CASINO HAMMOND CORPORATION
HAMMOND RESIDENTIAL, L.L.C.
EMPRESS CASINO JOLIET CORPORATION
EMPRESS RIVER CASINO FINANCE CORPORATION
as Guarantors
and
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
WASSERSTEIN PERELLA & CO., INC.
================================================================================
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
---------
entered into as of June 18, 1998 by and among EMPRESS ENTERTAINMENT, INC., a
Delaware corporation (the "Company"), the Guarantors (as defined in the Purchase
-------
Agreement) and MERRILL LYNCH & CO., MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED ("Merrill Lynch"), and WASSERSTEIN PERELLA & CO., INC.(together
-------------
with Merrill Lynch, the "Initial Purchasers").
------------------
This Agreement is made pursuant to the Purchase Agreement dated as of
June 11, 1998 by and among the Company, the Guarantors, and the Initial
Purchasers (the "Purchase Agreement"), which provides for, among other things,
------------------
the sale by the Company to the Initial Purchasers of an aggregate of
$150,000,000 principal amount of the Company's 8 1/8% Senior Subordinated Notes
due 2006 fully and unconditionally guaranteed by the Guarantors (the
"Securities"). In order to induce the Initial Purchasers to enter into the
----------
Purchase Agreement, the Company has agreed to provide to the Initial Purchasers
and their direct and indirect transferees the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions. As used in this Agreement, the following
-----------
capitalized defined terms shall have the following meanings:
"Additional Interest" shall have the meaning set forth in Section 2(e)
-------------------
hereof.
"Advice" shall have the meaning set forth in the last paragraph of
------
Section 3 hereof.
"Applicable Period" shall have the meaning set forth in Section 3(s)
-----------------
hereof.
<PAGE>
-2-
"Business Day" shall mean a day that is not a Saturday, a Sunday, or a
------------
day on which banking institutions in New York, New York are required to be
closed.
"Closing Time" shall mean the Closing Time as defined in the Purchase
------------
Agreement.
"Company" shall have the meaning set forth in the preamble to this
-------
Agreement and also includes the Company's successors and permitted assigns.
"Depositary" shall mean The Depository Trust Company, or any other
----------
depositary appointed by the Company; provided, however, that such depositary
must have an address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" shall have the meaning set forth in Section
--------------------
2(b) hereof.
"Effectiveness Target Date" shall have the meaning set forth in
-------------------------
Section 2(e) hereof.
"Event Date" shall have the meaning set forth in Section 2(e) hereof.
----------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Exchange Offer" shall mean the exchange offer by the Company and the
--------------
Guarantors of Exchange Securities for Securities pursuant to Section 2(a)
hereof.
"Exchange Offer Registration" shall mean a registration under the
---------------------------
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
-------------------------------------
registration statement on an appropriate form under the Securities Act, and all
amendments and supplements to such registration statement, in each case
including the Prospectus contained therein, all exhibits
<PAGE>
-3-
thereto and all material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2(a)
---------------
hereof.
"Exchange Securities" shall mean the 8 1/8% Senior Subordinated Notes
-------------------
due 2006, issued by the Company and guaranteed by the Guarantors to be offered
to Holders of Securities in exchange for Securities pursuant to the Exchange
Offer, which shall be identical to the Securities (except that (i) interest
thereon shall accrue from the last date on which interest was paid on the
Securities or, if no such interest has been paid, from June 18, 1998, (ii) the
transfer restrictions thereon and all registration rights in respect thereof
shall be eliminated and (iii) the provisions relating to Additional Interest
shall be eliminated).
"Holders" shall mean the Initial Purchasers, for so long as they own
-------
any Registrable Securities, each of their direct and indirect successors,
assigns and transferees who become registered owners of Registrable Securities
under and in accordance with the Indenture and each Participating Broker-Dealer
that holds Exchange Securities for so long as such Participating Broker-Dealer
is required to deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of such Exchange Securities.
"Indenture" shall mean the Indenture relating to the Securities dated
---------
as of June 18, 1998 among the Company, the Guarantors and U.S. Bank Trust,
National Association, as trustee, as the same may be amended from time to time
in accordance with the terms thereof.
"Initial Purchasers" shall have the meaning set forth in the preamble
------------------
to this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(m) hereof.
----------
<PAGE>
-4-
"Issue Date" shall mean the date on which the Securities are
----------
originally issued.
"Majority Holders" shall mean the Holders of a majority of the
----------------
aggregate principal amount of outstanding Registrable Securities.
"Participating Broker-Dealer" shall have the meaning set forth in
---------------------------
Section 3(s) hereof.
"Person" shall mean an individual, partnership, corporation, limited
------
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2(a)
----------------
hereof.
"Private Exchange Securities" shall have the meaning set forth in
---------------------------
Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
----------
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble
------------------
to this Agreement.
"Records" shall have the meaning set forth in Section 3(m) hereof.
-------
"Registrable Securities" shall mean each Security and, if issued, each
----------------------
Private Exchange Security; provided, however, that each Security or Private
Exchange Security, as the case may be, shall cease to be a Registrable
<PAGE>
-5-
Security when (i) with respect to a Security only, such Security has been
exchanged or, as of the expiration of the Exchange Offer, could have been
exchanged for freely tradeable Exchange Securities, by a person other than a
Participating Broker-Dealer for an Exchange Security in the Exchange Offer, (ii)
with respect to a Security only, following the exchange by a Participating
Broker-Dealer in the Exchange Offer of a Security for an Exchange Security,
which such Exchange Security is sold to a purchaser who receives from such
Participating Broker-Dealer on or prior to the date of such sale a copy of the
Prospectus contained in the Exchange Offer Registration Statement, as amended or
supplemented, (iii) the date on which such Security or Private Exchange
Security, as the case may be, has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement, (iv) the date on which such Security or Private Exchange Security, as
the case may be, is distributed to the public pursuant to Rule 144 under the
Securities Act (or any similar provision then in force, but not Rule 144A under
the Securities Act), (v) such Security or Private Exchange Security, as the case
may be, shall have been otherwise transferred by the holder thereof and a new
Security not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of such new Security shall
not require registration or qualification under the Securities Act or any
similar state law then in force or (vi) such Security or Private Exchange
Security, as the case may be, ceases to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
---------------------
performance of or compliance by the Company or the Guarantors with this
Agreement, including without limitation: (i) all applicable SEC, stock exchange
or National Association of Securities Dealers, Inc. (the "NASD") registration
and filing fees, (ii) all fees and expenses incurred in connection with
compliance with state securities or blue sky laws (including reasonable fees and
disbursements of one counsel for Holders that are Initial Purchasers in
connection with blue sky qualification of any of the Exchange Securities
<PAGE>
-6-
or Registrable Securities) and compliance with the rules of the NASD, (iii) all
applicable expenses incurred by the Company in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus and any amendments or supplements thereto, and in
preparing or assisting in preparing any other documents relating to the
performance of and compliance with this Agreement, (iv) all rating agency fees,
if any, (v) the fees and disbursements of counsel for the Company, (vii) all
fees and expenses incurred in connection with the listing, if any, of any of the
Registrable Securities on any securities exchange or exchanges, if the Company,
in its discretion, elects to make any such listing; but excluding fees of
counsel to the Holders and underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of Registrable Securities by
a Holder.
"Registration Statement" shall mean any registration statement
----------------------
(including, without limitation, the Exchange Offer Registration Statement and
the Shelf Registration Statement) of the Company which covers any of the
Exchange Securities or Registrable Securities pursuant to the provisions of this
Agreement, and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"SEC" shall mean the Securities and Exchange Commission.
---
"Securities" shall have the meaning set forth in the preamble to this
----------
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Shelf Registration" shall mean a registration effected pursuant to
------------------
Section 2(b) hereof.
<PAGE>
-7-
"Shelf Registration Statement" shall mean a "shelf" registration
----------------------------
statement of the Company and the Guarantors relating to a "shelf" offering in
accordance with Rule 415 of the Securities Act, or any similar rule that may be
adopted by the SEC, pursuant to the provisions of Section 2(b) hereof which
covers all or part of the Registrable Securities or all of the Private Exchange
Securities, as the case may be, on an appropriate form under the Securities Act,
and all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Subsidiary Guarantors" shall mean each of the Company's subsidiaries
---------------------
that has executed a guarantee pursuant to the Indenture guaranteeing the Notes.
"TIA" shall have the meaning set forth in Section 3(k) hereof.
---
"Trustee" shall mean the trustee with respect to the Securities under
-------
the Indenture.
2. Registration Under the Securities Act.
-------------------------------------
(a) Exchange Offer. To the extent not prohibited by any applicable
--------------
law or applicable policy of the SEC, the Company and the Guarantors shall, for
the benefit of the Holders, at the Company's cost, use its best efforts to (i)
cause to be filed with the SEC within 45 days after the Closing Time an Exchange
Offer Registration Statement covering the offer by the Company and the
Guarantors to the Holders to exchange all of the Registrable Securities (other
than Private Exchange Securities) for a like principal amount of Exchange
Securities, (ii) have such Exchange Offer Registration Statement declared
effective under the Securities Act by the SEC not later than the date which is
105 days after the Closing Time, (iii) have such Exchange Offer Registration
Statement remain effective until the closing of the Exchange Offer and (iv)
commence the Exchange Offer and, on or prior to 135 days after the Closing Time,
issue Exchange Securities in exchange for all Securities
<PAGE>
-8-
properly tendered prior thereto in the Exchange Offer. Upon the effectiveness of
the Exchange Offer Registration Statement, the Company and the Guarantors shall
promptly commence the Exchange Offer, it being the objective of such Exchange
Offer to enable each Holder eligible and electing to exchange Registrable
Securities (other than Private Exchange Securities) for Exchange Securities
(assuming that such Holder is not an affiliate of the Company within the meaning
of Rule 405 under the Securities Act and is not a broker-dealer tendering
Registrable Securities acquired directly from the Company for its own account,
acquires the Exchange Securities in the ordinary course of such Holder's
business and has no arrangements or understandings with any Person to
participate in the Exchange Offer for the purpose of distributing (within the
meaning of the Securities Act) the Exchange Securities) and to transfer such
Exchange Securities from and after their receipt without any limitations or
restrictions under the Securities Act and under state securities or blue sky
laws.
In connection with the Exchange Offer, the Company and the Guarantors
shall:
(i) mail to each Holder a copy of the Prospectus forming a part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 20 Business Days after the date notice thereof is mailed to the
Holders (or longer if required by applicable law) (such period referred to
herein as the "Exchange Period");
----------------
(iii) utilize the services of the Depositary for the Exchange Offer;
(iv) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last Business Day of
the Exchange Period, by sending to the institution specified in the notice,
a facsimile transmission or letter setting forth the name of such Holder,
the principal amount of Securities delivered
<PAGE>
-9-
for exchange, and a statement that such Holder is withdrawing his election
to have such Securities exchanged; and
(v) otherwise comply in all material respects with all applicable laws
relating to the Exchange Offer.
If, prior to consummation of the Exchange Offer the Initial Purchasers
hold any Securities acquired by them and having the status of an unsold
allotment in the initial distribution, the Company upon the request of any such
Initial Purchaser shall, to the extent not prohibited by any applicable law or
applicable policy of the SEC, use its best efforts to simultaneously with the
delivery of the Exchange Securities in the Exchange Offer, issue and deliver to
such Initial Purchaser in exchange (the "Private Exchange") for the Securities
----------------
held by such Initial Purchaser, a like principal amount of debt securities of
the Company, that are identical to the Exchange Securities, except that (i) such
securities shall bear appropriate transfer restrictions and (ii) the
registration rights in respect thereof shall continue to apply (the "Private
-------
Exchange Securities").
- -------------------
The Exchange Securities and the Private Exchange Securities shall be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture and which, in either case, has been qualified under
the TIA or is exempt from such qualification and shall provide that the Exchange
Securities shall not be subject to the transfer restrictions set forth in the
Indenture. The Indenture or such indenture shall provide that the Exchange
Securities, the Private Exchange Securities and the Securities shall vote and
consent together on all matters as one class and that none of the Exchange
Securities, the Private Exchange Securities or the Securities will have the
right to vote or consent as a separate class on any matter. The Private
Exchange Securities shall be of the same series as, and the Company shall use
all commercially reasonable efforts to have the Private Exchange Securities bear
the same CUSIP number as, the Exchange Securities. Neither the Company nor any
of its Subsidiaries shall have any liability under this Agreement solely as a
<PAGE>
-10-
result of such Private Exchange Securities not bearing the same CUSIP number as
the Exchange Securities.
The Exchange Offer and the Private Exchange shall not be subject to
any conditions, other than that (i) the Exchange Offer or Private Exchange, as
the case may be, does not violate applicable law or any applicable policy of the
SEC, (ii) no action or proceeding shall have been instituted or threatened in
any court or by any governmental agency which might materially impair the
ability of the Company or the Guarantors to proceed with the Exchange Offer or
the Private Exchange, and no material adverse development shall have occurred in
any existing action or proceeding with respect to the Company or the Guarantors,
(iii) all governmental approvals shall have been obtained, which approvals the
Company and the Guarantors deem necessary for the consummation of the Exchange
Offer or Private Exchange and (iv) the due tendering of Registrable Securities
in accordance with the terms of the Exchange Offer. As soon as practicable after
the close of the Exchange Offer and/or the Private Exchange, as the case may be,
the Company and the Guarantors shall:
(i) accept for exchange all Registrable Securities or portions
thereof properly tendered and not validly withdrawn pursuant to the
Exchange Offer in accordance with the terms of the Exchange Offer
Registration Statement and the letter of transmittal that is an exhibit
thereto;
(ii) accept for exchange all Securities properly tendered pursuant
to the Private Exchange; and
(iii) deliver, or cause to be delivered, to the Trustee for
cancellation all Registrable Securities or portions thereof so accepted for
exchange by the Company, and issue, and cause the Trustee under the
Indenture to promptly authenticate and deliver to each Holder, a new
Exchange Security or Private Exchange Security, as the case may be, equal
in principal amount to the principal amount of the Registrable Securities
surrendered by such Holder and accepted for exchange.
<PAGE>
-11-
To the extent not prohibited by any law or applicable policy of the
SEC, the Company shall use its best efforts to complete the Exchange Offer as
provided above, and shall comply with the applicable requirements of the
Securities Act, the Exchange Act and other applicable laws in connection with
the Exchange Offer. The Exchange Offer shall not be subject to any conditions,
other than those set forth in the immediately preceding paragraph. Each Holder
of Registrable Securities (other than Private Exchange Securities) who wishes to
exchange such Registrable Securities for Exchange Securities in the Exchange
Offer will be required to make certain customary representations in connection
therewith, including representations that such Holder is not an affiliate of the
Company within the meaning of Rule 405 under the Securities Act, that it is not
a broker-dealer tendering Registrable Securities acquired directly from the
Company for its own account, that any Exchange Securities to be received by it
will be acquired in the ordinary course of business and that at the time of the
commencement of the Exchange Offer it has no arrangement or understanding with
any Person to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Securities. The Company shall inform the
Initial Purchasers of the names and addresses of the Holders to whom the
Exchange Offer is made, and the Initial Purchasers shall have the right to
contact such Holders and otherwise facilitate the tender of Registrable
Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with this
Section 2(a), the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Registrable Securities that are Private
Exchange Securities and Exchange Securities held by Participating Broker-
Dealers, and the Company shall have no further obligation to register
Registrable Securities (other than Private Exchange Securities) pursuant to
Section 2(b) hereof.
(b) Shelf Registration. In the event that (i) the Company or the
------------------
Guarantors are not permitted to file the Exchange Offer Registration Statement
or to consummate the Exchange Offer because the Exchange Offer is not permitted
by applicable law or Commission policy, (ii) the Exchange Offer is not for any
other reason consummated within 180 days after the
<PAGE>
-12-
Issue Date, (iii) any holder of Securities notifies the Company within 15
Business Days after the commencement of the Exchange Offer that (a) due to a
change in applicable law or SEC policy it is not entitled to participate in the
Exchange Offer, (b) due to a change in applicable law or SEC policy it may not
resell the Exchange Securities to be acquired by it in the Exchange Offer to the
public without delivering a prospectus and the prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such holder or (c) it is a broker-dealer and owns Securities acquired
directly from the Company for its own account or (iv) the holders of a majority
of the Securities may not resell the Exchange Securities to be acquired by them
in the Exchange Offer to the public without restriction under the Securities Act
(other than the delivery of the Prospectus included in the Exchange Offer
Registration Statement) or any Securities are Private Exchange Securities, then
the Company shall, at its cost, use its best efforts to cause to be filed as
promptly as practicable after such determination or date, as the case may be,
and, in any event, prior to the later of (A) 105 days after the Issue Date or
(B) 30 days after such filing obligation arises a Shelf Registration Statement,
and use its best efforts to cause the Shelf Registration Statement to be
declared effective by the SEC on or prior to 60 days after such obligation
arises; provided, however, that if the Company has not consummated the Exchange
Offer within 180 days of the Issue Date, then the Company will file with the SEC
on or prior to the 181st day after the Issue Date, a Shelf Registration
Statement providing for the sale by the Holders of all of the Registrable
Securities, and shall use its best efforts to have such Shelf Registration
Statement declared effective by the SEC as soon as practicable. No Holder of
Registrable Securities may include any of its Registrable Securities in any
Shelf Registration pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 15 days after receipt of a request
therefor, such information as the Company may, after conferring with counsel
with regard to information relating to Holders that would be required by the SEC
to be included in such Shelf Registration Statement or Prospectus included
therein, reasonably request for inclusion in any Shelf Registration Statement or
Prospectus included therein. Each Holder as to which any Shelf Registration is
<PAGE>
-13-
being effected agrees to furnish to the Company all information with respect to
such Holder necessary to make any information previously furnished to the
Company by such Holder not materially misleading.
The Company and the Guarantors agree to use their best efforts to keep
the Shelf Registration Statement continuously effective for a period of two
years from the Issue Date (subject to extension pursuant to the last paragraph
of Section 3 hereof) (or such shorter period that will terminate when all of the
Registrable Securities covered by such Shelf Registration Statement have been
sold pursuant thereto) or cease to be outstanding (the "Effectiveness Period");
--------------------
provided, however, that if such Shelf Registration Statement has been filed
solely at the request of any Initial Purchasers pursuant to clause (iv) of this
Section 2(b), the Company and the Guarantors shall only be required to use its
best efforts to keep such Shelf Registration Statement continuously effective
for a period of one year from the Issue Date (subject to extension pursuant to
the last paragraph of Section 3 hereof) or for such shorter period which will
terminate when all of the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or cease to be outstanding. Upon expiration of the Effectiveness
Period, the Company's obligations under this Section 2(b) shall expire. The
Company and the Guarantors shall not permit any securities other than
Registrable Securities to be included in the Shelf Registration. The Company
and the Guarantors further agree, if necessary, to supplement or amend the Shelf
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form used by the Company and the Guarantors for
such Shelf Registration Statement or by the Securities Act or by any other rules
and regulations thereunder for shelf registrations, and the Company and the
Guarantors agree to furnish to the Holders of Registrable Securities copies of
any such supplement or amendment promptly after its being used or filed with the
SEC.
(c) Expenses. The Company and the Guarantors shall pay all
--------
Registration Expenses in connection with the registration pursuant to Sections
2(a) or 2(b) hereof and the
<PAGE>
-14-
reasonable fees and expenses of one counsel, if any, designated in writing by
the Majority Holders to act as counsel for the Holders of the Registrable
Securities in connection with a Shelf Registration Statement. Except as provided
in the preceding sentence, each Holder shall pay all expenses of its counsel,
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Securities pursuant to the
Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer Registration
--------------------------------
Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement
pursuant to Section 2(b) hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
after it has been declared effective, the offering of Registrable Securities
pursuant to a Shelf Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other governmental
agency or court, such Registration Statement will be deemed not to have been
effective during the period of such interference, until the offering of
Registrable Securities may legally resume. The Company and the Guarantors will
be deemed not to have used their best efforts to cause the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
to become, or to remain, effective during the requisite period if it voluntarily
takes any action that would result in any such Registration Statement not being
declared effective or in the Holders of Registrable Securities covered thereby
not being able to exchange or offer and sell such Registrable Securities during
that period, unless such action is required by applicable law or unless such
action is taken by the Company in good faith and for valid business reasons,
including the acquisition or divestiture of assets, so long as the Company
promptly thereafter complies with the requirements of Section 3(b) hereof, if
applicable.
(e) Additional Interest. In the event that (i) the applicable
-------------------
Registration Statement is not filed with the SEC on or prior to the date
specified herein for such filing, (ii) the applicable Registration Statement is
not declared effective on or prior to the date specified herein for such
effectiveness
<PAGE>
-15-
after such obligation arises (the "Effectiveness Target Date"), (iii) if the
-------------------------
Exchange Offer is required to be consummated hereunder, the Company and the
Guarantors fail to consummate the Exchange Offer within 30 Business Days of the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) the applicable Registration Statement is filed and declared
effective prior to the Effectiveness Target Date but shall thereafter cease to
be effective or usable without being succeeded immediately by an additional
Registration Statement covering the Registrable Securities which has been filed
and declared effective (each such event referred to in clauses (i) through (iv),
a "Registration Default"), then the interest rate on the Registrable Securities
--------------------
as to which such Registration Default relates will increase ("Additional
----------
Interest"), with respect to the first 90-day period (or portion thereof) while a
- --------
Registration Default is continuing immediately following the occurrence of such
Registration Default, in an amount equal to 0.25% per annum of the principal
amount of the Securities. The rate of additional Interest will increase by an
additional 0.25% per annum of the principal amount of the Securities for each
subsequent 90-day period (or portion thereof) while a Registration Default is
continuing until all Registration Defaults have been cured, up to an aggregate
maximum increase in the interest rate of 1.00% per annum of the principal amount
of the Securities. Additional Interest shall be computed based on the actual
number of days elapsed during which any such Registration Defaults exist.
Following the cure of a Registration Default, the accrual of Additional Interest
with respect to such Registration Default will cease and the interest will
revert to the original rate.
The Company shall notify the Trustee within three Business Days after
each and every date on which an event occurs in respect of which Additional
Interest is required to be paid (an "Event Date"). Additional Interest shall be
----------
paid in arrears by depositing with the Trustee, in trust, for the benefit of the
Holders of Registrable Securities, on or before the applicable semiannual
interest payment date, immediately available funds in sums sufficient to pay the
Additional Interest then due. The Additional Interest due shall be payable in
arrears on each interest payment date to the record
<PAGE>
-16-
Holder of Securities entitled to receive the interest payment to be paid on such
date as set forth in the Indenture. Each obligation to pay Additional Interest
shall be deemed to accrue from and including the day following the applicable
Event Date.
(f) Specific Enforcement. Without limiting the remedies available to
--------------------
the Initial Purchasers and the Holders, the Company and the Guarantors
acknowledge that any failure by the Company or the Guarantors to comply with
their obligations under Section 2(a) and Section 2(b) hereof may result in
material irreparable injury to the Initial Purchasers or the Holders for which
there is no adequate remedy at law, that it would not be possible to measure
damages for such injuries precisely and that, in the event of any such failure,
the Initial Purchasers or any Holder may obtain such relief as may be required
to specifically enforce the Company's or the Guarantors' obligations under
Section 2(a) and Section 2(b) hereof.
3. Registration Procedures. In connection with the obligations
-----------------------
of the Company and the Guarantors with respect to the Registration Statements
pursuant to Sections 2(a) and 2(b) hereof, the Company and the Guarantors shall:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof
within the relevant time period specified in Section 2 hereof on the
appropriate form under the Securities Act, which form (i) shall be selected
by the Company, (ii) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Securities by the selling Holders
thereof and (iii) shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the SEC to be filed therewith; and use its best efforts to
cause such Registration Statement to become effective and remain effective
in accordance with Section 2 hereof. The Company and the Guarantors shall
not file any Registration Statement or Prospectus or any amendments or
supplements thereto in respect of which the Holders must provide
information for inclusion therein without the Holders
<PAGE>
-17-
being afforded an opportunity to review such documentation a reasonable time
prior to the filing of such document or if the Majority Holders or such
Participating Broker-Dealer, as the case may be, their counsel or the managing
underwriters, if any, shall reasonably object by written notice to the Company
within three Business Days after receipt of such documentation;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the Effectiveness Period or the Applicable
Period, as the case may be; and cause each Prospectus to be supplemented by any
required prospectus supplement and as so supplemented to be filed pursuant to
Rule 424 (or any similar provision then in force) under the Securities Act, and
comply with the provisions of the Securities Act, the Exchange Act and the rules
and regulations promulgated thereunder applicable to it with respect to the
disposition of all securities covered by each Registration Statement during the
Effectiveness Period or the Applicable Period, as the case may be, in accordance
with the intended method or methods of distribution by the selling Holders
thereof described in this Agreement (including sales by any Participating
Broker-Dealer);
(c) in the case of a Shelf Registration, (i) furnish to each Holder of
Registrable Securities, without charge, as many copies of each Prospectus, and
any amendment or supplement thereto and such other documents as such Holder may
reasonably request, in order to facilitate the disposition of the Registrable
Securities and (ii) subject to the last paragraph of Section 3 hereof, hereby
consent to the use of the Prospectus or any amendment or supplement thereto by
each of the selling Holders of Registrable Securities in connection with the
offering and sale of the Registrable Securities covered by such Prospectus or
any amendment or supplement thereto subject to the limitations on the use
thereof provided in Sections 2(b) and 2(c);
<PAGE>
-18-
(d) in the case of a Shelf Registration, use its best efforts to
register or qualify, as may be required by applicable law, the Registrable
Securities under all applicable state securities or "blue sky" laws of such
jurisdictions by the time the applicable Registration Statement is declared
effective by the SEC as any Holder of Registrable Securities covered by a
Registration Statement shall reasonably request in advance of such date of
effectiveness, and do any and all other acts and things which may be reasonably
necessary or advisable to enable such Holder to consummate the disposition in
each such jurisdiction of such Registrable Securities owned by such Holder;
provided, however, that the Company shall not be required to (i) qualify as a
foreign corporation or as a broker or dealer in securities in any jurisdiction
where it would not otherwise be required to qualify but for this Section 3(d),
(ii) file any general consent to service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not so subject;
(e) in the case of (1) a Shelf Registration or (2) Participating Broker-
Dealers who have notified the Company that they will be utilizing the Prospectus
contained in the Exchange Offer Registration Statement as provided in Section
3(s) hereof, notify each Holder of Registrable Securities, or such Participating
Broker-Dealers, as the case may be, their counsel, if any, promptly and if
requested by such Holder or Participating Broker-Dealer confirm such notice in
writing (i) when a Registration Statement has become effective and when any
post-effective amendments and supplements thereto become effective, (ii) of any
request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement or Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) if the Company receives any notification
with respect to the suspension of the qualification of the Registrable
Securities or the Exchange Securities to be sold by any Participating
<PAGE>
-19-
Broker-Dealer for offer or sale in any jurisdiction or the initiation of any
proceeding for such purpose, (v) of the happening of any event or the failure of
any event to occur or the discovery of any facts or otherwise, during the period
a Shelf Registration Statement is effective which makes any statement made in
such Registration Statement or the related Prospectus untrue in any material
respect or which causes such Registration Statement or Prospectus to omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading and (vi) the
Company's reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement as soon as practicable;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement relating to such Shelf Registration and any post-
effective amendment thereto (without documents incorporated therein by reference
or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates not bearing any restrictive legends representing
Securities covered by such Shelf Registration to be sold and relating to the
subsequent transfer of such Securities; and cause such Registrable Securities to
be in such denominations (consistent with the provisions of the Indenture) and
registered in such names as the selling Holders may reasonably request at least
two Business Days prior to the closing of any sale of Registrable Securities;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by Section
3(e)(ii), 3(e)(iii),
<PAGE>
-20-
3(e)(iv), 3(e)(v) or 3(e)(vi) hereof, use its best efforts to prepare a
supplement or post-effective amendment to a Registration Statement or the
related Prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and to notify each Holder to suspend use of the Prospectus
as promptly as practicable after the occurrence of such an event, and each
Holder hereby agrees to suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or omission;
(j) obtain a CUSIP number for all Exchange Securities or Registrable
Securities, as the case may be, not later than the effective date of a
Registration Statement, and provide the Trustee with certificates for the
Exchange Securities or the Registrable Securities, as the case may be, in a form
eligible for deposit with the Depositary;
(k) cause the Indenture to be qualified under the Trust Indenture Act of
1939, as amended, (the "TIA") in connection with the registration of the
---
Exchange Securities or Registrable Securities, as the case may be, cooperate
with the Trustee and the Holders to effect such changes to the Indenture as may
be required for the Indenture to be so qualified in accordance with the terms of
the TIA and execute, and use its best efforts to cause the Trustee to execute,
all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(l) in the case of a Shelf Registration, enter into such agreements and
take all such other appropriate actions as are reasonably requested in order to
expedite or facilitate the registration or the disposition of such Registrable
Securities, and in such connection, (i) make
<PAGE>
-21-
such representations and warranties to Holders of such Registrable Securities
with respect to the business of the Company and its subsidiaries as then
conducted and the Registration Statement, Prospectus and documents, if any,
incorporated or deemed to be incorporated by reference therein, in each case, as
are customarily made by issuers to underwriters in underwritten offerings, and
confirm the same if and when requested; (ii) obtain opinions of counsel to the
Company and updates thereof in form and substance reasonably satisfactory to the
Holders of a majority in principal amount of the Registrable Securities covered
by such Registration Statement, addressed to each selling Holder covering the
matters customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Holders; (iii) obtain
"cold comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to the
Company and the selling Holders of Registrable Securities (other than
Participating Broker-Dealers, unless such Participating Broker-Dealers would be
deemed to be "underwriters" as a result of the sale of Securities covered by
such Shelf Registration Statement), such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings and such other matters as reasonably
requested by such selling Holders; and (iv) if an underwriting agreement is
entered into, the same shall contain indemnification provisions and procedures
no less favorable than those set forth in Section 4 hereof (or such other
provisions and procedures acceptable to the Company and the Holders of a
majority in aggregate principal amount of Registrable Securities covered by such
Registration Statement) with respect to all parties to be indemnified pursuant
to said Section (including, without limitation, such selling Holders). The above
shall be done at each closing in respect of the sale of Registrable Securities,
or as and
<PAGE>
-22-
to the extent required thereunder. Notwithstanding the foregoing, the Company
and the Guarantors shall not be required to hold such closings more than once
per calendar month;
(m) if (1) a Shelf Registration is filed pursuant to Section 2(b) or (2)
a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2(a) is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, make available for inspection by each such person who would
be an "underwriter" as a result of either (i) the sale by such person of
Securities covered by such Shelf Registration Statement or (ii) the sale during
the Applicable Period by a Participating Broker-Dealer of Exchange Securities
(provided that a Participating Broker-Dealer shall not be deemed to be an
underwriter solely as a result of it being required to deliver a prospectus in
connection with any resale of Exchange Securities) and any attorney, accountant
or other agent retained by any such person (collectively, the "Inspectors"), at
----------
the offices where normally kept, during reasonable business hours, all financial
and other records, pertinent corporate documents and properties of the Company
and its subsidiaries (collectively, the "Records") as shall be reasonably
-------
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of the Company
and its subsidiaries to supply all information in each case reasonably requested
by any such Inspector in connection with such Registration Statement. Records
which the Company determines, in good faith, to be confidential and any Records
which it notifies the Inspectors are confidential shall not be disclosed by the
Inspectors to any other Person unless (i) the disclosure of such Records is
necessary to avoid or correct a material misstatement or omission in such
Registration Statement, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction or (iii) the
information in such Records has been made generally available to the public
<PAGE>
-23-
through no fault or action of any selling Holder of such Registrable Securities,
any such Participating Broker-Dealer or any Inspector. Each such Holder and
each such Participating Broker-Dealer will be required to agree that information
obtained by it as a result of such inspections shall be deemed confidential and
shall not be used by it as the basis for any market transactions in the
securities of the Company unless and until such is made generally available to
the public through no fault or action of such Holder, such Participating Broker-
Dealer or any Inspector. Each selling Holder of such Registrable Securities and
each such Participating Broker-Dealer will be required to further agree that it
will, upon learning that disclosure of such Records is necessary under (i) or
(ii) above, give notice to the Company and allow the Company at its expense to
undertake appropriate action to prevent disclosure of the Records deemed
confidential;
(n) comply with all applicable rules and regulations of the SEC and make
generally available to its securityholders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods;
(o) upon consummation of an Exchange Offer or a Private Exchange, obtain
an opinion of counsel to the Company and the Guarantors addressed to the Trustee
for the benefit of all Holders of Registrable Securities participating in the
Exchange Offer or the Private Exchange, as the case may be, and which includes
an opinion that (i) the Company and the Guarantors have duly
<PAGE>
-24-
authorized, executed and delivered the Exchange Securities and Private Exchange
Securities, and (ii) each of the Exchange Securities or the Private Exchange
Securities, as the case may be, constitute a legal, valid and binding obligation
of the Company and the Guarantors, enforceable against the Company and the
Guarantors in accordance with its respective terms (in each case, with customary
exceptions);
(p) if an Exchange Offer or a Private Exchange is to be consummated,
upon proper delivery of the Registrable Securities by Holders to the Company (or
to such other Person as directed by the Company) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the Company
shall mark, or cause to be marked, on such Registrable Securities and on the
books of the Trustee, the Note Registrar (as defined in the Indenture) and, if
necessary, the Depositary, delivered by such Holders that such Registrable
Securities are being canceled in exchange for the Exchange Securities or the
Private Exchange Securities, as the case may be; but in no event shall such
Registrable Securities be marked as paid or otherwise satisfied solely as a
result of being exchanged for Exchange Securities or Private Exchange Securities
in the Exchange Offer or the Private Exchange, as the case may be;
(q) cooperate with each seller of Registrable Securities covered by any
Registration Statement participating in the disposition of such Registrable
Securities and one counsel acting on behalf of all such sellers in connection
with the filings, if any, required to be made with the NASD;
(r) use its best efforts to take all other steps necessary to effect the
registration of the Registrable Securities covered by a Registration Statement
contemplated hereby; and
(s) (A) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled "Plan of
<PAGE>
-25-
Distribution," which section shall be reasonably acceptable to Merrill Lynch, as
representative of the Initial Purchasers, and which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer (a
"Participating Broker-Dealer") that holds Registrable Securities acquired for
---------------------------
its own account as a result of market-making activities or other trading
activities and that will be the beneficial owner (as defined in Rule 13d-3 under
the Exchange Act) of Exchange Securities to be received by such broker-dealer in
the Exchange Offer, whether such positions or policies have been publicly
disseminated by the staff of the SEC or such positions or policies, in the
reasonable judgment of Merrill Lynch, as representative of the Initial
Purchasers or such other representative, represent the prevailing views of the
staff of the SEC, including a statement that any such Participating Broker-
Dealer who receives Exchange Securities for Registrable Securities pursuant to
the Exchange Offer may be deemed a statutory underwriter and must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Securities, (ii) furnish to each Participating Broker-
Dealer who has delivered to the Company the notice referred to in Section 3(e),
without charge, as many copies of each Prospectus included in the Exchange Offer
Registration Statement, and any amendment or supplement thereto, as such
Participating Broker-Dealer may reasonably request; (iii) hereby consent to the
use of the Prospectus forming part of the Exchange Offer Registration Statement
or any amendment or supplement thereto, by any Person subject to the prospectus
delivery requirements of the SEC, including all Participating Broker-Dealers, in
connection with the sale or transfer of the Exchange Securities covered by the
Prospectus or any amendment or supplement thereto, (iv) use its best efforts to
keep the Exchange Offer Registration Statement effective and to amend and
supplement the Prospectus contained therein in order to permit such Prospectus
to be lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time
<PAGE>
-26-
as such Persons must comply with such requirements in order to resell the
Exchange Securities; provided, however, that such period shall not be
required to exceed 90 days (or such longer period if extended pursuant to
the last sentence of Section 3 hereof) (the "Applicable Period"), and (iv)
-----------------
include in the transmittal letter or similar documentation to be executed
by an exchange offeree in order to participate in the Exchange Offer (x)
the following provision:
"If the exchange offeree is a broker-dealer holding Registrable
Securities acquired for its own account as a result of market-
making activities or other trading activities, it will deliver a
prospectus meeting the requirements of the Securities Act in
connection with any resale of Exchange Securities received in
respect of such Registrable Securities pursuant to the Exchange
Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, such broker-dealer
will not be deemed to admit that it is an underwriter within the meaning of
the Securities Act; and
(B) in the case of any Exchange Offer Registration Statement, the
Company agrees to deliver, upon request, to the Trustee and to
Participating Broker-Dealers who have delivered to the Company the notice
referred to in Section 3(e) upon consummation of the Exchange Offer (i) an
opinion of counsel substantially in the form attached hereto as Exhibit A,
and (ii) an officers' certificate containing certifications substantially
similar to those set forth in Section 5(c) of the Purchase Agreement.
The Company and the Guarantors may require each seller of Registrable
Securities as to which any registration is being effected to furnish to the
Company and the Guarantors such information regarding such seller and the
proposed distribution of such Registrable Securities, as the Company and
<PAGE>
-27-
the Guarantors may from time to time reasonably request in writing. The Company
and the Guarantors may exclude from such registration the Registrable Securities
of any seller who fails to furnish such information within a reasonable time
(not to exceed 10 Business Days) after receiving such request and shall be under
no obligation to compensate any such seller for any lost income, interest or
other opportunity forgone, or any liability incurred, as a result of the
Company's or the Guarantors' decision to exclude such seller.
In the case of (1) a Shelf Registration Statement or (2) Participating
Broker-Dealers who have notified the Company that they will be utilizing the
Prospectus contained in the Exchange Offer Registration Statement as provided in
Section 3(s) hereof, that are seeking to sell Exchange Securities and are
required to deliver Prospectuses, each Holder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3(e)(ii), 3(e)(iii), 3(e)(iv), 3(e)(v) or 3(e)(vi) hereof, such Holder
will forthwith discontinue disposition of Registrable Securities pursuant to a
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof or until
it is advised in writing (the "Advice") by the Company that the use of the
------
applicable Prospectus may be resumed, and, if so directed by the Company, such
Holder will deliver to the Company (at the Company's expense) all copies in such
Holder's possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities or Exchange
Securities, as the case may be, current at the time of receipt of such notice.
If the Company shall give any such notice to suspend the disposition of
Registrable Securities or Exchange Securities, as the case may be, pursuant to a
Registration Statement, the Company and the Guarantors shall use their best
efforts to file and have declared effective (if an amendment) as soon as
practicable an amendment or supplement to the Registration Statement and, in the
case of an amendment, have such amendment declared effective as soon as
practicable and shall extend the period during which such Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
in the period from and including the date of the giving of such notice to and
<PAGE>
-28-
including the date when the Company shall have made available to the Holders (x)
copies of the supplemented or amended Prospectus necessary to resume such
dispositions or (y) the Advice.
4. Indemnification and Contribution. (a) The Company and the
--------------------------------
Guarantors shall indemnify and hold harmless each Initial Purchaser, each
Holder, each Participating Broker-Dealer, each underwriter who participates in
an offering of Registrable Securities, their respective affiliates, each Person,
if any, who controls any of such parties within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment or supplement thereto), covering
Registrable Securities or Exchange Securities, including all documents
incorporated therein by reference, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, joint or several, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any court or governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission; provided
that (subject to Sections 4(c) and 4(d) below) any such
<PAGE>
-29-
settlement is effected with the prior written consent of the Company; and
(iii) against any and all expenses whatsoever, as incurred (including
reasonable fees and disbursements of one counsel chosen as provided in
Section 4(c) below) reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
court or governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) of this Section 4(a);
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission (i) made in reliance upon and
in conformity with written information furnished in writing to the Company by or
on behalf of such Initial Purchaser, such Holder, such Participating Broker-
Dealer or any underwriter with respect to such Initial Purchaser, Holder,
Participating Broker-Dealer or underwriter, as the case may be, expressly for
use in the Registration Statement (or any amendment or supplement thereto) or
any Prospectus (or any amendment or supplement thereto) or (ii) contained in any
preliminary Prospectus or the final Prospectus if such Initial Purchaser, such
Holder, such Participating Broker-Dealer or such underwriter failed to send or
deliver a copy of the final Prospectus (or any amendment or supplement thereto)
to the Person asserting such losses, claims, damages or liabilities on or prior
to the delivery of written confirmation of any sale of securities covered
thereby to such Person in any case where the Company shall have previously
furnished copies thereof to such Initial Purchaser, such Holder, such
Participating Broker-Dealer or such underwriter, as the case may be, in
accordance with this Agreement, at or prior to the written confirmation of the
sale of such Securities to such Person and the untrue statement contained in or
the omission from the preliminary Prospectus or the final Prospectus was
corrected in the final Prospectus (or any amendment or supplement thereto).
<PAGE>
-30-
Any amounts advanced by the Company to an indemnified party pursuant to this
Section 4 as a result of such losses shall be returned to the Company if it
shall be finally determined by a court of competent jurisdiction in a judgment
not subject to appeal or final review that such indemnified party was not
entitled to indemnification by the Company.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company and the Guarantors, each of their officers who signs
any Registration Statement, each Initial Purchaser, each underwriter who
participates in an offering of registrable Securities and the other selling
Holders and each of their respective directors and each Person, if any, who
controls any of the Company and the Guarantors, the Initial Purchasers, any
underwriter or any other selling Holder within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, against any and all loss, liability,
claim, damage and expense whatsoever described in the indemnity contained in
Section 4(a) hereof, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment or supplement thereto) or any Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such selling Holder with
respect to such Holder expressly for use in the Registration Statement (or any
supplement thereto), or any such Prospectus (or any amendment thereto);
provided, however, that, in the case of the Shelf Registration Statement, no
such Holder shall be liable for any claims hereunder in excess of the amount of
net proceeds received by such Holder from the sale of Registrable Securities
pursuant to the Shelf Registration Statement.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and
in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties
<PAGE>
-31-
indemnified pursuant to Section 4(a) above, one counsel to all the indemnified
parties shall be selected by Merrill Lynch, and, in the case of parties
indemnified pursuant to Section 4(b) above, counsel to all the indemnified
parties shall be selected by the Company. An indemnifying party may participate
at its own expense in the defense of any such action; provided, however, that
counsel to the indemnifying party shall not (except with the consent of the
indemnified party) also be counsel to the indemnified party. Notwithstanding the
foregoing, if it so elects within a reasonable time after receipt of such
notice, an indemnifying party, jointly with any other indemnifying parties
receiving such notice, may assume the defense of such action with counsel chosen
by it and approved by the indemnified parties defendant in such action (which
approval shall not be unreasonably withheld), unless such indemnified parties
reasonably object to such assumption on the ground that there may be legal
defenses available to them which are different from or in addition to those
available to such indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions
arising out of the same general allegations or circumstances. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution is sought under this Section 4, unless such
settlement, compromise or consent (i) includes a full and unconditional release
of each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and the offer and sale of any Securities and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
<PAGE>
-32-
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees and
expenses of counsel pursuant to Section 4(a)(iii) above, then such indemnifying
party agrees that it shall liable for any settlement of the nature contemplated
by Section 4(a)(ii) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) In order to provide for just and equitable contribution in
circumstances under which any of the indemnity provisions set forth in this
Section 4 is for any reason held to be unavailable to the indemnified parties
although applicable in accordance with its terms, the Company, the Guarantors,
the Initial Purchasers and the Holders, as applicable, shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnity agreement incurred by the Company, the
Guarantors, the Initial Purchasers and the Holders; provided, however, that no
Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
that was not guilty of such fraudulent misrepresentation. As between the
Company, or the Guarantors, and the Initial Purchasers and the Holders, such
parties shall contribute to such aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement in such
proportion as shall be appropriate to reflect the relative fault of the Company
or the Guarantors, on the one hand, and of the Holder of Registrable Securities,
the Participating Broker-Dealer or Initial Purchasers, as the case may be, on
the other hand, in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
<PAGE>
-33-
The relative fault of the Company and the Guarantors, on the one hand,
and the Holder of Registrable Securities, the Participating Broker-Dealer or the
Initial Purchasers, as the case may be, on the other hand, shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, or by the Holder
of Registrable Securities, the Participating Broker-Dealer or the Initial
Purchasers, as the case may be, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company, the Guarantors and the Holders of the Registrable
Securities and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 4 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 4.
For purposes of this Section 4, each affiliate of any Person, if any,
who controls a Holder of Registrable Securities, a Initial Purchaser or a
Participating Broker-Dealer within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act shall have the same rights to contribution
as such other Person, and each director of the Company or the Guarantors, each
affiliate of the Company or the Guarantors, each executive officer of the
Company or the Guarantors who signed the Registration Statement, and each
Person, if any, who controls any Issuer within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company and the Guarantors.
5. Participation in Underwritten Registrations. No Holder may
-------------------------------------------
participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
<PAGE>
-34-
reasonably required under the terms of such underwriting arrangements. The
Company or the Guarantors shall be under no obligation to compensate any Holder
for lost income, interest or other opportunity foregone, or other liability
incurred, as a result of the Company's or the Guarantors' decision to exclude
such Holder from any underwritten registration if such Holder has not complied
with the provisions of this Section 5 in all material respects following 10
business days' written notice of non-compliance and the Company's or the
Guarantors' decision to exclude such Holder.
6. Selection of Underwriters. The Holders of Registrable
-------------------------
Securities covered by the Shelf Registration Statement who desire to do so may
sell the securities covered by such Shelf Registration in an underwritten
offering. In any such underwritten offering, the underwriter or underwriters
and manager or managers that will administer the offering will be selected by
the Holders of a majority in aggregate principal amount of the Registrable
Securities covered by the Shelf Registration Statement; provided, however, that
such underwriters and managers must be reasonably satisfactory to the Company.
7. Miscellaneous.
-------------
(a) Rule 144 and Rule 144A. So long as any of the Registrable
----------------------
Securities are outstanding, the Company and the Guarantors will file with the
Commission, to the extent then permitted by the Commission, the annual reports,
quarterly reports and other documents that the Company and the Guarantors would
have been required to file with the Commission pursuant to Sections 13(a) and
15(d) of the Exchange Act if the Company and the Guarantors were subject to such
Sections, and the Company and the Guarantors will promptly provide to the
Trustee copies of such reports and documents; provided, however, that if the
Company and the Guarantors are for any reason unable to make such filings they
will make available, upon request, to any Holder of Registrable Securities or
prospective purchaser of Registrable Securities the information specified in
Rule 144A(d)(4) of the Securities Act.
<PAGE>
-35-
(b) No Inconsistent Agreements. The rights granted to the Holders
--------------------------
hereunder do not, and will not for the term of this Agreement in any way
conflict with and are not, and will not during the term of this Agreement be
inconsistent with the rights granted to the holders of the Company's or the
Guarantors' other issued and outstanding securities under any other agreements
entered into by the Company.
(c) Amendments and Waivers. The provisions of this Agreement,
----------------------
including provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of the Company
and the Majority Holders; provided, however, that no amendment, modification, or
supplement or waiver or consent to the departure with respect to the provisions
of Section 4 hereof shall be effective as against any Holder of Registrable
Securities or the Company or the Guarantors unless consented to in writing by
such Holder of Registrable Securities or the Company or the Guarantors, as the
case may be.
(d) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, registered first-
class mail, facsimile, or any courier guaranteeing overnight delivery (i) if to
a Holder, at the most current address given by such Holder to the Company by
means of a notice given in accordance with the provisions of this Section 7(d),
which address initially is, with respect to the Initial Purchasers, the address
set forth in the Purchase Agreement; and (ii) if to the Company, initially at
the Company's address set forth in the Purchase Agreement and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 7(d).
All such notices and communications 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 receipt
is confirmed, if sent by facsimile; and on the next Business Day, if timely
delivered to an air courier guaranteeing overnight delivery.
<PAGE>
-36-
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors, assigns and transferees of the Initial
Purchasers, including, without limitation and without the need for an express
assignment, subsequent Holders; provided, however, that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the Indenture.
If any transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all of the terms of this Agreement, and by taking and
holding such Registrable Securities, such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such Person shall be entitled to receive the benefits hereof.
(f) Third Party Beneficiary. Each of the Initial Purchasers and each
-----------------------
Holder shall be a third party beneficiary of the agreements made hereunder
between the Company, on the one hand, and the Initial Purchasers, on the other
hand, and shall have the right to enforce such agreements directly to the extent
it deems such enforcement necessary or advisable to protect its rights or the
rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF
<PAGE>
-37-
NEW YORK, WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
All specified times of day refer to New York City time.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Securities Held by the Company or any of its Affiliates. Whenever
-------------------------------------------------------
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
any of its affiliates (as such term is defined in Rule 405 under the Securities
Act) shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage.
(l) Subsidiary Guarantor a Party. Immediately upon the designation of
----------------------------
any Subsidiary of the Company as a Guarantor (as defined in the Indenture), the
Company shall cause such Subsidiary to become a party hereto as a Subsidiary
Guarantor by executing and delivering to the Initial Purchasers a counterpart
hereof.
<PAGE>
S-1
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
EMPRESS ENTERTAINMENT, INC.
By: /s/ Peter A. Ferro
-------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Executive Officer
EMPRESS CASINO HAMMOND
CORPORATION
By: /s/ Peter A. Ferro
-------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Executive Officer
HAMMOND RESIDENTIAL,
LLC
By: /s/ Peter A. Ferro
-------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Executive Officer
EMPRESS CASINO JOLIET
CORPORATION
By: /s/ Peter A. Ferro
-------------------------------
Name: Peter A. Ferro, Jr.
Title: Chief Executive Officer
EMPRESS RIVER CASINO
FINANCE CORPORATION
By: /s/ Peter A. Ferro
-------------------------------
Name: Peter A. Ferro, Jr.
Title: President
<PAGE>
S-2
Confirmed and accepted as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
WASSERSTEIN PERELLA & CO., INC.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
By: /s/ Chris Johnson
---------------------------------
Name: CHRIS JOHNSON
Title: MANAGING DIRECTOR
<PAGE>
Exhibit A
---------
Form of Opinion of Counsel
--------------------------
1. Each of the Exchange Offer Registration Statement and the
Prospectus (other than the financial statements, notes or schedules thereto and
other financial information and supplemental schedules included or referred to
therein or omitted therefrom and the Form T-1, as to which such counsel need
express no opinion), complies as to form in all material respects with the
applicable requirements of the Securities Act and the applicable rules and
regulations promulgated under the Securities Act.
2. We have participated in conferences with officers and other
representatives of the Company, your representatives and representatives of the
independent accountants for the Company at which conferences the contents of the
Exchange Offer Registration Statement and related matters were discussed.
However we do not express an opinion with respect to, and do not assume any
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Exchange Offer Registration Statement or make any
representation that we have independently verified or checked the accuracy,
completeness or fairness of such statements. On the basis of and subject to
the foregoing, we advise you that nothing has come to our attention that has led
us to believe that the Prospectus, as of its date or as of the date hereof,
included or includes an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that we express no belief with respect to the financial
statements, including the notes thereto, or any other financial data set forth
or referred to in the Exchange Offer Registration Statement).
<PAGE>
EXHIBIT 4.3
________________________________________________________________________________
EMPRESS RIVER CASINO FINANCE CORPORATION
ISSUER
AND
THE GUARANTORS NAMED HEREIN
AND
FIRST TRUST NATIONAL ASSOCIATION
TRUSTEE
____________________
INDENTURE
Dated as of April 1, 1994
____________________
$150,000,000
10 3/4% Senior Notes due 2002
________________________________________________________________________________
<PAGE>
CROSS - REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
- ------- -------
<S> <C>
310 (a) (1)........................................................... 8.10
(a) (2)........................................................... 8.10
(a) (3)........................................................... N.A.
(a) (4)........................................................... N.A.
(a) (5)........................................................... 8.10
(b) ........................................................... 8.8;
........................................................... 8.10;
........................................................... 14.2
(c) ........................................................... N.A.
311 (a) ........................................................... 8.11
(b) ........................................................... 8.11
(c) ........................................................... N.A.
312 (a) ........................................................... 2.5
(b) ........................................................... 14.3
(c) ........................................................... 14.3
313 (a) ........................................................... 8.6
(b) (1)........................................................... 8.6
(b) (2)........................................................... 8.6
(c) ........................................................... 8.6;
........................................................... 14.2
(d) ........................................................... 8.6
314 (a) ........................................................... 5.8;
........................................................... 14.2
(b) ........................................................... 4.2
(c) (1)........................................................... 2.2;
........................................................... 8.2;
........................................................... 14.4
(c) (2)........................................................... 8.2;
........................................................... 14.4
(c) (3)........................................................... 4.2
(d) ........................................................... 4.4
(e) ........................................................... 14.5
(f) ........................................................... N.A.
315 (a) ........................................................... 8.1
(b) ........................................................... 8.5;
........................................................... 8.6;
........................................................... 14.2
(c) ........................................................... 8.1 (a)
(d) ........................................................... 2.8;
........................................................... 7.12;
........................................................... 8.1
(e) ........................................................... 7.13
316 (a) (last sentence)............................................... 2.9
(a) (1) (A)....................................................... 7.11
(a) (1) (B)....................................................... 7.12
(a) (2)........................................................... N.A.
</TABLE>
i
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<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
- ------- -------
<S> <C>
(b) ........................................................... 7.7;
........................................................... 7.8
317 (a) (1)........................................................... 7.3
(a) (2)........................................................... 7.4
(b) ........................................................... 2.4
318 (d) ........................................................... 14.1
</TABLE>
_________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITION AND INCORPORATION BY REFERENCE..................... 1
Section 1.1 Definitions................................................ 1
Section 1.2 Incorporation by Reference of TIA.......................... 26
Section 1.3 Rules of Construction...................................... 26
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating............................................ 27
Section 2.2 Execution and Authentication............................... 27
Section 2.3 Registrar and Paying Agent................................. 28
Section 2.4 Paying Agent to Hold Assets in Trust....................... 29
Section 2.5 Securityholder Lists....................................... 29
Section 2.6 Transfer................................................... 30
Section 2.7 Replacement Securities..................................... 30
Section 2.8 Outstanding Securities..................................... 31
Section 2.9 Treasury Securities........................................ 31
Section 2.10 Temporary Securities....................................... 31
Section 2.11 Cancellation............................................... 32
Section 2.12 Defaulted Interest......................................... 32
ARTICLE III
REDEMPTION
Section 3.1 Right of Redemption........................................ 32
Section 3.2 Redemption Pursuant to Gaming Laws......................... 33
Section 3.3 Notices to Trustee......................................... 33
Section 3.4 Selection of Securities to Be Redeemed..................... 34
Section 3.5 Notice of Redemption....................................... 34
Section 3.6 Effect of Notice of Redemption............................. 35
Section 3.7 Deposit of Redemption Price................................ 36
Section 3.8 Securities Redeemed in Part................................ 36
ARTICLE IV
SECURITY
Section 4.1 Security Interest.......................................... 37
Section 4.2 Recording; Opinions of Counsel............................. 37
Section 4.3 Guarantor Loan Agreement and Collateral Accounts........... 38
Section 4.4 Certain Releases of Collateral............................. 39
Section 4.5 Payment of Expenses........................................ 40
Section 4.6 Suits to Protect the Collateral............................ 40
</TABLE>
iii
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<TABLE>
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Section 4.7 Trustee's Duties........................................... 40
ATRICLE V
COVENANTS
Section 5.1 Payment of Securities...................................... 41
Section 5.2 Maintenance of Office or Agency............................ 41
Section 5.3 Limitation on Restricted Payments.......................... 42
Section 5.4 Corporate Existence........................................ 44
Section 5.5 Payment of Taxes and Other Claims.......................... 45
Section 5.6 Maintenance of Insurance................................... 45
Section 5.7 Compliance Certificate; Notice of Default.................. 45
Section 5.8 Reports.................................................... 46
Section 5.9 Waiver of Stay, Extension or Usury Laws.................... 46
Section 5.10 Limitation on Transactions with Affiliates................. 47
Section 5.11 Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital
Stock.................................................... 47
Section 5.12 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries...................... 49
Section 5.13 Limitation on Liens........................................ 49
Section 5.14 Limitation on Sales of Assets and Subsidiary
Stock; Event of Loss..................................... 50
Section 5.15 Limitation on Use of Proceeds.............................. 54
Section 5.16 Construction and Licensure................................. 55
Section 5.17 Limitation on Liens of Business............................ 59
Section 5.18 Limitation on Status as Investment Company................. 59
Section 5.19 Limitation on Sales and Issuances of
Capital Stock by Subsidiaries............................ 59
Section 5.20 Limitation on Sale of a Guarantor.......................... 59
Section 5.21 Ownership of the Company................................... 63
Section 5.22 Future Guarantors.......................................... 63
ARTICLE VI
SUCCESSOR CORPORATION
Section 6.1 Limitation on Merger, Sale or Consolidation................ 63
Section 6.2 Successor Corporation Substitued........................... 64
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default.......................................... 64
Section 7.2 Acceleration of Maturity Date; Rescission
and Annulment............................................ 66
</TABLE>
iv
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<TABLE>
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<S> <C>
Section 7.3 Collection of Indebtedness and Suits for
Enforcement by Trustee................................... 68
Section 7.4 Trustee May File Proofs of Claim........................... 68
Section 7.5 Trustee May Enforce Claims Without Possession
of Securities............................................ 69
Section 7.6 Priorities................................................. 70
Section 7.7 Limitation on Suits........................................ 70
Section 7.8 Unconditional Right of Holders to Receive
Principal, Premium and Interest.......................... 71
Section 7.9 Rights and Remedies Cumulative............................. 71
Section 7.10 Delay or Omission Not Waiver............................... 72
Section 7.11 Control by Holders......................................... 72
Section 7.12 Waiver of Past Default..................................... 72
Section 7.13 Undertaking for Costs...................................... 73
Section 7.14 Restoration of Rights and Remedies......................... 73
ARTICLE VIII
TRUSTEE
Section 8.1 Duties of Trustee.......................................... 74
Section 8.2 Rights of Trustee.......................................... 75
Section 8.3 Individual Rights of Trustee............................... 76
Section 8.4 Trustee's Disclaimer....................................... 76
Section 8.5 Notice of Default.......................................... 76
Section 8.6 Reports by Trustee to Holders.............................. 77
Section 8.7 Compensation and Imdemnity................................. 77
Section 8.8 Replacement of Trustee..................................... 78
Section 8.9 Successor Trustee by Merger, Etc........................... 79
Section 8.10 Eligibility; Disqualification.............................. 79
Section 8.11 Preferential Collection of Claims against Company.......... 79
ARTICLE IX
SATISFACTION AND DISCHARGE;
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 9.1 Option to Effect Legal Defeasance or
Covenant Defeasance...................................... 80
Section 9.2 Legal Defeasance and Discharge............................. 80
Section 9.3 Covenant Defeasance........................................ 80
Sectio 9.4 Conditions to Legal Defeasance and Covenant
Defeasance............................................... 81
Section 9.5 Deposited U.S. Leagal Tender and U.S. Government
Obligations to be Held in Trust; Other
Miscellaneous Provisions................................. 83
Section 9.6 Application of Trust Assets................................ 83
Section 9.7 Repayment to the Company................................... 84
</TABLE>
v
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<TABLE>
<CAPTION>
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<S> <C>
Section 9.8 Reinstatement.............................................. 84
Section 9.9 Termination of Obligations upon Cancellation of
the Securities........................................... 85
ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 10.1 Supplemental Indentures Without Consent of
Holders.................................................. 85
Section 10.2 Amendments, Supplemental Indentures and Waivers
With Consent of Holders.................................. 86
Section 10.3 Compliance with TIA........................................ 88
Section 10.4 Revocation and Effect of Consents.......................... 88
Section 10.5 Notation on or Exchange of Securities...................... 89
Section 10.6 Trustee to Sign Amendments, Etc............................ 89
ARTICLE XI
MEETINGS OF SECURITYHOLDERS
Section 11.1 Purposes for Which Meetings May Be Called.................. 89
Section 11.2 Manner of Calling Meetings................................. 90
Section 11.3 Call of Meetings by Company or Holders..................... 90
Section 11.4 Who May Attend and Vote at Meetings........................ 91
Section 11.5 Regulations May Be Made by Trustee; Conduct
of the Meeting; Voting Rights; Adjourment................ 91
Section 11.6 Voting at the Meeting and Record to be Kept................ 92
Section 11.7 Exercise of Rights of Trustee or
Securityholders May Not Be Hindered or
Delayed by Call of Meeting............................... 92
ARTICLE XII
RIGHT TO REQUIRE REPURCHASE UPON CHANGE OF CONTROL
Section 12.1 Repurchase of Securities at Option of the
Holder Upon Change of Control............................ 93
ARTICLE XIII
GUARANTY
Section 13.1 Guaranty................................................... 96
Section 13.2 Execution and Delivery of Guaranty......................... 98
Section 13.3 Future Guarantors.......................................... 98
Section 13.4 Certain Bankruptcy Events.................................. 98
</TABLE>
vi
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<TABLE>
<CAPTION>
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<S> <C>
Section 13.5 Release of Certain Guarantors.............................. 99
ARTICLE XIV
MISCELLANEOUS
Section 14.1 TIA Controls............................................... 99
Section 14.2 Notices.................................................... 99
Section 14.3 Communications by Holders with Other Holders............... 100
Section 14.4 Certificate and Opinion as to Conditions
Precedent................................................ 100
Section 14.5 Statements Required in Certificate or Opinion.............. 101
Section 14.6 Rules by Trustee, Paying Agent, Registrar.................. 101
Section 14.7 Legal Holidays............................................. 101
Section 14.8 Governing Law.............................................. 101
Section 14.9 No Adverse Interpretation of Other Agreements.............. 102
Section 14.10 No Recourse against Others................................. 102
Section 14.11 Successors................................................. 102
Section 14.12 Duplicate Originals........................................ 102
Section 14.13 Severability............................................... 103
Section 14.14 Table of Contents, Headings, Etc........................... 103
</TABLE>
vii
<PAGE>
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Guaranty
viii
<PAGE>
INDENTURE, dated as of April 1, 1994, among Empress River Casino
Finance Corporation, a Delaware corporation (the "Company"), the Guarantors
referred to below and First Trust National Association, a national association,
as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's 10
3/4% Senior Notes due 2002:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Acceleration Notice" shall have the meaning specified in Section 7.2.
"Acceptance Amount" shall have the meaning specified in Section 5.14.
"Accumulated Amount" shall have the meaning specified in Section 5.14.
"Acquired Indebtedness" with respect to a person means Indebtedness of
another person existing at the time such person becomes a Subsidiary of the
subject person or is merged or consolidated into or with the subject person or
one of its Subsidiaries, and not incurred in connection with or in anticipation
of, such merger or consolidation or of such person becoming a Subsidiary of such
subject person.
"Acquisition" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation or other transfer, and whether or not for
consideration.
"Additional Guarantor" means any corporation which is engaged in a
Related Business, provided that (i) no less than a majority of the shares of
Capital Stock of such Additional Guarantor are owned by Excluded Persons (or
100% by the Parent Guarantor after an Initial Public Equity offering) and no
less than a majority of the members of the Board of Directors of such Additional
Guarantor are directors of Empress; and (ii) such Additional Guarantor expressly
agrees by supplemental indenture to be bound by all of the obligations to which
the Guarantors are bound under the Notes and the Indenture.
"Adjusted Combined Net Income" means Combined Net Income, minus 100%
of the amount of any writedowns, writeoffs, or
1
<PAGE>
negative extraordinary charges not otherwise reflected in Combined Net Income
during such period.
"Adjusted Consolidated Net Income" means Consolidated Net Income,
minus 100% of the amount of writedowns, writeoffs, or negative extraordinary
charges not otherwise reflected in Consolidated Net Income during such period.
"Affiliate" means (i) any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
of the Guarantors, (ii) with respect to any Guarantor, so long as such Guarantor
is an S Corporation, any director or stockholder of such Guarantor, (iii) any
spouse, immediate family member, or other relative who has the same principal
residence of any person described in clause (i) or (ii) above, and (iv) any
trust in which any person described in clause (i) or (ii) above has a beneficial
interest. For purposes of this definition, the term "control" means (a) the
power to direct the management and policies of a person, directly or through one
or more intermediaries, whether through the ownership of voting securities, by
contract, or otherwise, or (b) the beneficial ownership of 10% or more of any
class of voting Capital Stock of a person (on a fully diluted basis) or of
warrants or other rights to acquire such class of Capital Stock (whether or not
presently exercisable).
"Affiliate Transaction" shall have the meaning specified in Section
5.10.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Approvals" means all material approvals, licenses (including Gaming
Licenses), permits, authorizations, findings and other filings necessary under
applicable Gaming Laws.
"Asset Sale" shall have the meaning specified in Section 5.14.
"Asset Sale Offer" shall have the meaning specified in Section 5.14.
"Asset Sale Offer Amount" shall have the meaning specified in Section
5.14.
"Asset Sale Offer Period" shall have the meaning specified in Section
5.14.
"Asset Sale Offer Price" shall have the meaning specified in Section
5.14.
2
<PAGE>
"Asset Sale Purchase Date" shall have the meaning specified in Section
5.14.
"Asset Sale Put Date" shall have the meaning specified in Section
5.14.
"Average Life" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (i) the sum of the
products of the number of years from the date of determination to the date of
each successive scheduled principal (or redemption) payment of such security or
instrument multiplied by the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"beneficial owner" for purposes of the definition of Change of Control
has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange
Act, whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time.
"Board of Directors" means, with respect to any person, the Board of
Directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly adopted
resolution of the Board of Directors of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Capitalized Lease Obligation" means obligations under a lease,
entered into on or after the Issue Date, that are required to be capitalized for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligations shall be the capitalized amount of
such obligations, as determined in accordance with GAAP.
3
<PAGE>
"Cash" means U.S. Legal Tender or U.S. Government Obligations.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500,000,000 and commercial paper issued by others rated at least
A-2 or the equivalent thereof by Standard & Poor's Corporation or at least P-2
or the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition and (iii) investments in
money market funds substantially all of whose assets comprise securities of the
types described in clauses (i) and (ii) above.
"Casino" means a gaming establishment owned or operated by a Guarantor
or any of its Subsidiaries, and containing at least 200 slot machines or at
least 15 gaming tables, or containing at least 10,000 square feet dedicated to
the operation of games of chance, and any hotel, building, restaurant, theater,
parking facilities, retail shops, land, equipment and other property or asset
directly ancillary thereto or used in connection therewith.
"Casino Offer Amount" shall have the meaning specified in Section
5.16.
"Casino Offer Period" shall have the meaning specified in Section
5.16.
"Casino Offer Payment Date" shall have the meaning specified in
Section 5.16.
"Casino Offer Price" shall have the meaning specified in Section 5.16.
"Casino Offer Put Date" shall have the meaning specified in Section
5.16.
"Casino Purchase Offer" shall have the meaning specified in Section
5.16.
"Change of Control" means (i) any merger or consolidation of, or any
sale, transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of, Empress (or, if applicable, the Parent
Guarantor) in each case on a consolidated basis, in one transaction or a series
of related transactions, if, immediately after giving effect to such
transaction, any "person" or "group" (as such terms are used for
4
<PAGE>
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), other than Excluded Persons, is or becomes the "beneficial owner,"
directly or indirectly, of more than 40% of the aggregate voting power normally
entitled to vote in the election of directors of the transferee; (ii) the time
that any "person" or "group" (as such terms are used for purposes of Sections
13(d) and 14(d) of the Exchange Act, whether or not applicable), other than
Excluded Persons, is or becomes the "beneficial owner," directly or indirectly,
of more than 40% of the aggregate voting power of all classes of Capital Stock
then outstanding of Empress (or, if applicable, the Parent Guarantor) normally
entitled to vote in elections of directors; or (iii) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the Board of Directors of Empress (or, if
applicable, the Parent Guarantor) (together with any new directors whose
election by such Board or whose nomination for election by the shareholders of
Empress was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period of whose
election or nomination for election was previously so approved), cease for any
reason to constitute a majority of the Board of Directors of Empress (or, if
applicable, the Parent Guarantor) then in office.
"Change of Control Offer" shall have the meaning specified in Section
12.1.
"Change of Control Offer Period" shall have the meaning specified in
Section 12.1.
"Change of Control Offer Price" shall have the meaning specified in
Section 12.1.
"Change of Control Payment Date" shall have the meaning specified in
Section 12.1.
"Change of Control Put Date" shall have the meaning specified in
Section 12.1.
"Collateral" means the funds held in the Hammond Empress Collateral
Account, pursuant to the Hammond Empress Disbursement Agreement, and the Hammond
Leasing Collateral Account, pursuant to the Hammond Leasing Disbursement
Agreement, and the Mirror Notes.
"Collateral Agent" shall have the meaning specified in Section 4.4.
"Combined EBITDA" means the combined Consolidated EBITDA of the
Guarantors, adjusted to eliminate (only to the extent included in computing such
EBITDA and without duplication) any inter-Guarantor transactions, so as to
reflect EBITDA as if
5
<PAGE>
all of the Guarantors had been a consolidated entity measured in accordance with
GAAP.
"Combined Fixed Charge Coverage Ratio" on any date of determination
(the "Transaction Date") means, the ratio, on a pro forma basis, of (a) the
aggregate amount of Combined EBITDA attributable to continuing operations and
businesses (exclusive of amounts attributable to operations and businesses
permanently discontinued or disposed of) for the Reference Period to (b) the
aggregate Combined Fixed Charges (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of, but only to
the extent that the obligations giving rise to such Consolidated Fixed Charges
would no longer be obligations contributing to Consolidated Fixed Charges
subsequent to the Transaction Date) during the Reference Period or subsequent to
the Reference Period and on or prior to the Transaction Date shall be assumed to
have occurred on the first say of the Reference Period; (ii) transactions giving
rise to the need to calculate the Combined Fixed Charge Coverage Ratio shall be
assumed to have occurred on the first day of the Reference Period; (iii) the
incurrence of any Indebtedness or issuance of any Disqualified Capital Stock
during the Reference Period; (iii) the incurrence of any Indebtedness or
issuance of any Disqualified Capital Stock during the Reference Period or
subsequent to the Reference Period and on or prior to the relevant Transaction
Date (and the application of the proceeds therefrom to the extent used to
refinance or retire other Indebtedness) shall be assumed to have occurred on the
first day of such Reference Period; and (iv) the Consolidated Fixed Charges
attributable to interest on any Indebtedness or dividends on any Disqualified
Capital Stock bearing a floating interest (or dividend) rate shall be computed
on a pro forma basis as if the average rate in effect from the beginning of the
Reference Period to the relevant Transaction Date had been the applicable rate
for the entire period, unless such Person or any of its Subsidiaries is a party
to an Interest Swap Obligation (which shall remain in effect for the 12-month
period immediately following the Transaction Date) that has the effect of fixing
the interest rate on the date of computation in which case such rate (whether
higher or lower) shall be used.
"Combined Fixed Charges" means the combined Consolidated Fixed Charges
of the Guarantors, adjusted to eliminate any inter-Guarantor transactions so as
to reflect combined Consolidated Fixed Charges as if all of the Guarantors had
been a consolidated entity, measured in accordance with GAAP.
"Combined Net Income" means the combined Consolidated Net Income of
the Guarantors, adjusted to eliminate (only to extent included in computing such
net income (or loss) without duplication) any inter-Guarantor transactions so as
to reflect Combined Net Income as if all of the Guarantors had been a
consolidated entity measured in accordance with GAAP.
6
<PAGE>
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the Indenture and thereafter means such
successor.
"Company Request" means a written request of the Company or a
Guarantor, as the case may be, in the form of an Officers' Certificate.
"Consolidated Depreciation and Amortization Expense" for any person
means the total depreciation and amortization for such person and its
Consolidated Subsidiaries, as determined in accordance with GAAP.
"Consolidated EBITDA" means, with respect to any person, for any
period, the Consolidated Net Income of such person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of (i) Consolidated
Income Tax Expense, (ii) Consolidated Depreciation and Amortization Expense and
(iii) Consolidated Fixed Charges.
"Consolidated Fixed Charges" of any person means, for any period, the
aggregate amount (without duplication) of (a) interest expensed or capitalized,
paid, accrued, or scheduled to be paid or accrued in accordance with GAAP
(including, in accordance with the following sentence, interest attributable to
Capitalized Lease Obligations) during such period in respect of all
Indebtedness of such person and its Consolidated Subsidiaries including (i)
original issue discount and non-cash interest payments or accruals on any
Indebtedness; (ii) the interest portion of all deferred payment obligations,
calculated in accordance with GAAP; and (iii) all commissions, discounts and
other fees and charges owed with respect to bankers' acceptance financings and
currency and Interest Swap Obligations, in each case to the extent attributable
to such period and determined on a consolidated basis in accordance with GAAP;
(b) one-third of the rental expense for such period attributable to operating
leases of such person and its Consolidated Subsidiaries; and (c) the amount of
dividends payable by such person or any of its Consolidated Subsidiaries in
respect of Disqualified Capital Stock (other than by Subsidiaries of such person
to such person or such person's wholly owned Subsidiaries). For purposes of
this definition; (x) interest on a Capitalized Lease Obligation shall be deemed
to accrue at an interest rate reasonably determined by such person to be the
rate of interest implicit in such Capitalized Lease Obligation in accordance
with GAAP; and (y) interest expense attributable to any Indebtedness represented
by the guaranty by such person or a Subsidiary of such person of an obligation
of another person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed.
7
<PAGE>
"Consolidated Income Tax Expense" for any person means the total net
income tax expenses for such person and its Consolidated Subsidiaries, as
determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any person for any
period, the net income (or loss) of such person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) all gains which are either
extraordinary (as determined in accordance with GAAP) or are either unusual or
nonrecurring (including, without limitation, any gain from the sale or other
disposition of assets outside the ordinary course of business or from the
issuance or sale of any capital stock); (b) the net income, if positive, of any
person, other than a Consolidated Subsidiary, in which such person or any of its
Consolidated Subsidiaries has an interest, except to the extent of the amount of
any dividends or distributions actually paid in Cash to such person or a
Consolidated Subsidiary of such person during such period up to (and not in
excess of) the amount of such person's pro rata share of such person's net
income for such period; (c) the net income, if positive, of any person acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition; and (d) the net income, if positive, of any of such person's
Consolidated Subsidiaries to the extent that the declaration or payment of
dividends or similar distributions is not at the time permitted by operation of
the terms of its charter or bylaws or any other agreement, instrument, judgment,
decree, order, law, statute, rule or governmental regulation applicable to such
Consolidated Subsidiary.
"Consolidated Net Worth" of any person at any date means the aggregate
of capital, surplus and retained earnings of such person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of capital, surplus and accrued but unpaid dividends
attributable to any Disqualified Capital Stock; (b) all upward revaluations and
other write-ups in the book value of any asset of such person or a Consolidated
Subsidiary of such person subsequent to the Issue Date; and (c) all investments
in Subsidiaries that are not Consolidated Subsidiaries and in persons that are
not Subsidiaries.
"Consolidated Subsidiary" means, for any person, each Subsidiary of
such person (whether now existing or hereafter created or acquired) the
financial statements of which shall be (or should have been) consolidated for
financial statement reporting purposes with the financial statements of such
person in accordance with GAAP.
8
<PAGE>
"Corporate Trust Office" means the Corporate Trust Office of the
Trustee located in New York, New York.
"Covenant Defeasance" shall have the meaning specified in Section 9.3.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Disqualified Capital Stock" means (a) except as set forth in (b),
with respect to any person, Capital Stock of such person that, by its terms or
by the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Notes; and (b) with respect to any
Subsidiary of such person, any Capital Stock.
"Empress" means Empress River Casino Corporation, an Illinois
corporation.
"Empress I" means that certain riverboat casino, U.S. Coast Guard
Registration Number 984286.
"Empress II" means that certain riverboat casino, U.S. Coast Guard
Registration Number 998517.
"Empress III" means that certain riverboat casino that is being
constructed pursuant to the terms of that certain Sales and Construction
Contract dated October 12, 1993 between River Casino and Atlantic Marine, Inc.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"Event of Default" shall have the meaning specified in Section 7.1.
"Event of Loss" means, with respect to any property or asset, any
loss, destruction or damage of such property or asset or any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
9
<PAGE>
"Event of Loss Amount" shall have the meaning specified in Section
5.14.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Excluded Persons" means, collectively, the existing shareholders of
Empress as of the Issue Date, and Martin J. McNally, and any of their respective
estates, spouses, heirs, ancestors, lineal descendants, legatees, and legal
representatives and the trustee of any bona fide trust of which one or more of
the foregoing are the sole beneficiaries and, for purposes of clauses (i) and
(ii) of the definition of "Change of Control," any Parent Guarantor formed to be
the issuer of an Initial Public Equity Offering; provided that all holders of
all classes of Capital Stock of Empress, Hammond Empress, Hammond Leasing and
any Additional Guarantor then outstanding would be entitled to receive Capital
Stock in the Parent Guarantor in amounts proportionate to their relative
holdings in Empress, Hammond Empress, Hammond Leasing and any Additional
Guarantor.
"Final Completion Date" means that date by which (a) each required
certificate of occupancy has been issued by the building department and other
relevant agencies, including the U.S. Coast Guard, if applicable, with respect
to the Hammond Facility; (b) all Gaming Licenses and other Approvals required to
commence gaming operations at the Hammond Facility have been obtained by the
Company, Hammond Empress, Hammond Leasing and any of their Subsidiaries and
their respective officers, directors and stockholders, with respect to the
Hammond Facility; (c) the Hammond Facility is in a condition (including the
installation of fixtures, furnishings and equipment) to receive customers
substantially in the ordinary course of its gaming operations; and (d) the
Hammond Facility is open for business to the general public and operates,
therein, at least 200 slot machines.
"GAAP" means United States generally accepted accounting principles as
in effect on the Issue Date.
"Gaming Authority" means any Governmental Authority with the power to
regulate gaming in any Gaming Jurisdiction, and the corresponding Governmental
Authorities with responsibility to interpret and enforce the laws and
regulations applicable to gaming in any Gaming Jurisdiction.
"Gaming Jurisdiction" means any Federal, state or local jurisdiction
in which the Company, the Guarantors or any of their Subsidiaries has a direct
or indirect beneficial, legal or voting interest in an entity that conducts
casino gaming.
10
<PAGE>
"Gaming Law" means any law, rule, regulation or ordinance governing
gaming activities, including the Riverboat Gambling Act of Illinois and Article
33 of the Indiana Code, any administrative rules or regulations promulgated
thereunder, and any of the corresponding statutes, rules and regulations in each
Gaming Jurisdiction.
"Gaming Licenses" means every license, franchise or other
authorization on the Issue Date or thereafter required to own, lease, operate or
otherwise conduct riverboat, dockside or land-based gaming in any Gaming
Jurisdiction, and any applicable liquor licenses.
"Governmental Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or a foreign government, any state, province or any city or
other political subdivision or otherwise and whether now or hereafter in
existence, or any officer or official thereof, and any maritime authority.
"Guarantor Loan Agreement" means the Guarantor Loan Agreement dated
the Issue Date by and between the Company and Empress.
"Guarantors" means Empress, Hammond Empress, Hammond Leasing, the
Additional Guarantors, if any, and all of their future Subsidiaries.
"Guarantor Sale Offer" shall have the meaning specified in Section
5.20.
"Guarantor Sale Offer Period" shall have the meaning specified in
Section 5.20.
"Guarantor Sale Offer Put Date" shall have the meaning specified in
Section 5.20.
"Guarantor Sale Payment Date" shall have the meaning specified in
Section 5.20.
"Guarantor Sale Purchase Price" shall have the meaning specified in
Section 5.20.
"Guarantor Sale Repurchase Amount" means (i) the outstanding principal
amount of the Mirror Notes, plus accrued and unpaid interest, of Hammond
Empress, Hammond Leasing or an Additional Guarantor, as applicable, plus (ii) to
the extent in excess of such amount, an amount equal to the principal amount of
Notes that would be required to be repurchased such that after giving pro forma
effect to such Sale of a Guarantor and such repurchase of Notes pursuant to such
Sale of a Guarantor (x) the
11
<PAGE>
aggregate amount of all Indebtedness of the continuing Guarantors would not
exceed 3.0 times Combined EBITDA and (y) the Combined Fixed Charge Coverage
Ratio of the continuing Guarantors for the two full fiscal quarters immediately
preceding such Sale of a Guarantor would be at least 3.5 to 1.
Notwithstanding the foregoing, in the case of a sale of all or
substantially all of the assets of Hammond Empress, Hammond Leasing or an
Additional Guarantor, in the event (i) aggregate fair market value of all
proceeds of such Sale of a Guarantor are less than the Guarantor Sale Repurchase
Amount as determined in accordance with the immediately preceding paragraph,
(ii) the Combined Fixed Charge Coverage Ratio of the continuing Guarantors after
giving pro forma effect to such Sale of a Guarantor and redemption of the Notes
--- -----
equal in principal amount to the Guarantor Sale Repurchase Amount (as determined
in accordance with this paragraph) would be equal to or greater than the
Combined Fixed Charge Coverage Ratio of all Guarantors for the two full fiscal
quarters immediately prior to such Sale of a Guarantor; and (iii) during the
twelve months preceding the date of such Sale of a Guarantor, neither such
Guarantor nor any of its Subsidiaries made any Restricted Payments, then the
Guarantor, Sale Repurchase Amount shall be equal to the greater of (x) the
aggregate fair market value of all proceeds of such Sale of a Guarantor; and (y)
the outstanding principal amount of the Mirror Notes, plus accrued and unpaid
interest, of such Guarantor.
"Guaranty" shall have the meaning provided in Section 13.1(a).
"Hammond Access Construction" means the construction of certain roads
and bridges necessary to provide increased access to the proposed location of
the Hammond Facility, including costs necessary to acquire certain parcels of
real property, which construction shall be funded either directly or indirectly
by Hammond Empress.
"Hammond Empress" means Lake Michigan Charters, Ltd., an Indiana
corporation.
"Hammond Empress Collateral Account" means the collateral account
established at the Collateral Agent by Hammond Empress pursuant to the Hammond
Empress Disbursement Agreement.
"Hammond Empress Disbursement Agreement" means that certain Hammond
Empress Cash Collateral and Disbursement Agreement, dated the date hereof, by
and among the Collateral Agent, Hammond Empress, Empress and the Trustee.
"Hammond Empress Note Proceeds" means $33 million loaned by Empress to
Hammond Empress as evidenced by the Mirror Note executed by Hammond Empress in
favor of Empress, which
12
<PAGE>
amount shall be deposited into the Hammond Empress Collateral Account pursuant
to the Hammond Empress Disbursement Agreement.
"Hammond Facility" means the proposed land-based facility to be
maintained by Hammond Empress for the purpose of conducting riverboat gaming in
the state of Indiana, the county of Lake and the city of Hammond as described in
the Registration Statement.
"Hammond Leasing" means LMC Leasing, Ltd., a Delaware corporation.
"Hammond Leasing Collateral Account" means the collateral account
established at the Collateral Agent by Hammod Leasing pursuant to the Hammond
Leasing Disbursement Account.
"Hammond Leasing Disbursement Agreement" means that certain Hammond
Leasing Cash Collateral and Disbursement Agreement, dated the date hereof, by
and among the Collateral Agent, Empress, Hammond Leasing and the Trustee.
"Hammond Leasing Note Proceeds" means $25 million loaned by Empress to
Hammond Leasing as evidenced by the Mirror Note executed by Hammond Leasing in
favor of Empress, which amount shall be deposited into the Hammond Leasing
Collateral Account pursuant to the Hammond Leasing Disbursement Agreement.
"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Registrar's books.
"incur" or "incurrence" shall have the meaning specified in Section
5.11.
"Incurrence Date" shall have the meaning specified Section 5.11.
"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, with respect to any
person, (i) in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such person or only to a portion
thereof), (ii) evidenced by bonds, notes, debentures or similar instruments,
(iii) representing the balance deferred and unpaid of the purchase price of any
property or services, except such as would constitute trade payables to trade
creditors in the ordinary course of business that are not more than ninety (90)
days past their original due date or are being contested in good faith, (iv)
evidenced by bankers' acceptances or similar instruments issued or accepted by
banks, (v) for the payment of money relating to a Capitalized Lease Obligation,
or (vi) evidenced by a letter of credit or a reimbursement obligation of such
person with respect to any letter of credit; (b) all net obligations of
13
<PAGE>
such person under Interest Swap Obligations and foreign currency hedges; (c) all
liabilities of others of the kind described in the preceding clauses (a) or (b)
that such person has guaranteed or that is otherwise its legal liability; (d)
all obligations to purchase, redeem or acquire any Capital Stock; (e) all
obligations secured by a Lien, to which the property or assets (including,
without limitation, leasehold interests and any other tangible or intangible
property rights) of such person are subject, whether or not the obligations
secured thereby shall have been assumed by or shall otherwise be such person's
legal liability, provided, that the amount of such obligations shall be limited
--------
to the lesser of the fair market value of the assets or property to which such
Lien attaches and the amount of the obligation so secured; and (f) any and all
deferrals, renewals, extensions, refinancings and refundings (whether direct or
indirect) of, any liability of the kind described in any of the preceding
clauses (a), (b), (c), (d) or (e), or this clause (f), whether or not between or
among the same parties.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Indenture Obligations" means the obligations of the Company and the
Guarantors pursuant to this Indenture and the Securities (and any other obligor
hereunder or under the Securities) now or hereafter existing, to pay principal
of, and premium, if any, and interest on, the Securities when due and payable,
whether on the Maturity Date or an Interest Payment Date, by acceleration, call
for redemption, acceptance of any Offer to Purchase or otherwise, and interest
on the overdue principal and premium, if any, of, and (to the extent lawful)
interest, if any, on, the Securities and all other amounts due or to become due
in connection with this Indenture and the Securities, including any and all
extensions, renewals or other modifications thereof, in whole or in part, and
the performance of all other obligations of the Company (and any other obligor
hereunder or under the Securities) and the Guarantors, including all costs and
expenses incurred by the Trustee or the Holders in the collection or enforcement
of any such obligations or realization upon the Collateral.
"Initial Public Equity Offering" means an initial underwritten public
offering of common stock of Empress or, to the extent the proceeds are
contributed in cash to Empress or the other Guarantors, the Parent Guarantor,
pursuant to an effective registration statement under the Securities Act as a
consequence of which the common stock of Empress or the Parent Guarantor, as
applicable, is listed on a national securities exchange or quoted on the
national market system of the National Association of Securities Dealers, Inc.
14
<PAGE>
"Interest Payment Date" means the stated due date of an installment of
---------------------
interest on the Securities.
"Interest Swap Obligation" means, when used with reference to any
------------------------
person, the obligations of such person pursuant to any arrangement with any
other person whereby, directly or indirectly, such person is entitled to receive
from time to time periodic payments calculated by applying either a floating or
a fixed rate of interest on a stated notional amount in exchange for periodic
payments made by such person calculated by applying a fixed or a floating rate
of interest on the same notional amount.
"Investment" by any person in any other person means (without
----------
duplication) (a) the acquisition by such person (whether for cash, property,
services, securities or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities, including any
options or warrants, of such other person or any agreement to make any such
acquisition; (b) the making by such person of any deposit with, or advance, loan
or other extension of credit to, such other person (including the purchase of
property from another person subject to an understanding or agreement,
contingent or otherwise, to resell such property from another person to such
other person) or any commitment to make any such advance, loan or extension (but
excluding accounts receivable arising in the ordinary course of business that
are not more than 90 days past their original due date); (c) other than the
Guarantees of the Notes, the entering into by such person of any guarantee of,
or other credit support or contingent obligation with respect to, Indebtedness
or other liability of such other person; or (d) the making of any capital
contribution by such person to such other person.
"Issue Date" means the date of first issuance of the Notes under the
----------
Indenture.
"Joliet Facility" means the land-based facility maintained by Empress
---------------
for the purpose of conducting riverboat gaming located in the state of Illinois,
the county of Will and the city of Joliet which currently consists of an
approximately 65,280 square foot pavilion.
"Legal Defeasance" shall have the meaning specified in Section 9.2.
----------------
"Legal Holiday" shall have the meaning provided in Section 14.7.
-------------
"Lien" means any mortgage, lien, pledge, charge, security interest, or
----
other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agree-
15
<PAGE>
ment and any lease deemed to constitute a security interest, and any option or
other agreement to give any security interest).
"Maturity Date," when used with respect to any Security, means the
-------------
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at Stated Maturity, a Casino Offer Payment Date, a
Change of Control Payment Date, an Asset Sale Purchase Date, a Guarantor Sale
Payment Date, or by declaration of acceleration, call for redemption or
otherwise.
"Minimum Accumulation Date" shall have the meaning specified in
-------------------------
Section 5.14.
"Mirror Notes" means, collectively, (a) the note in aggregate
------------
principal amount of $150,000,000 executed by Empress in favor of Finance; (b)
the note in the aggregate principal amount of $33,000,000 executed by Hammond
Empress in favor of Empress; and (c) the note in the aggregate principal amount
of $25,000,000 executed by Hammond Leasing in favor of Empress, each such note
containing interest and default terms that are substantially identical to those
contained in the Securities.
"Net Cash Proceeds" means the aggregate amount of U.S. Legal Tender of
-----------------
Cash Equivalents received by a Guarantor in the case of a sale of Qualified
Capital Stock and by a Guarantor and its Subsidiaries in respect of an Asset
Sale, less, in each case, the sum of all fees, commissions and other (in the
case of an Asset Sale, reasonable and customary) expenses incurred in connection
with such Asset Sale or sale of Qualified Capital Stock, and, in the case of an
Asset Sale only, less the amount (estimated reasonably and in good faith by such
Guarantor) of income, franchise, sales and other applicable taxes required to be
paid by such Guarantor or any of its Subsidiaries in connection with such Asset
Sale.
"Net Proceeds" means the aggregate Net Cash Proceeds and fair market
------------
value of property (valued at the fair market value thereof at the time of
receipt in good faith by the Board of Directors of the applicable Guarantor),
other than securities of a Guarantor or any of its Subsidiaries, received by a
Guarantor after payment of expenses, commissions, discounts and the like
incurred in connection therewith.
"Net Retained Repurchase Amount" means an amount equal to the
------------------------------
aggregate principal amount of the Mirror Notes of Hammond Empress, Hammond
Leasing or any Additional Guarantor, as applicable, which are offered by the
Company to be repurchased and are not tendered pursuant to a Guarantor Sale
Offer.
"Non-recourse Indebtedness" means Indebtedness of a person to the
-------------------------
extent that under the terms thereof or any other
16
<PAGE>
document, instrument or filing no personal recourse shall be had against such
person for the payment of the principal of, premium, if any, or interest on,
such Indebtedness, and enforcement of obligations on such Indebtedness is
limited only to recourse against interests in property and assets purchased with
the proceeds of the incurrence of such Indebtedness and as to which none of the
Company, any Guarantor or any of their Subsidiaries provides any credit support
or is directly or indirectly liable.
"Offer to Purchase" means any Casino Purchase Offer, Change of Control
-----------------
Offer, Asset Sale Offer (including in connection with an Event of Loss) or
Guarantor Sale Offer.
STOP 1
"Offer to Purchase Price" means any Casino Offer Price, Change of
-----------------------
Control Offer Price, Asset Sale Offer Price (including in connection with an
Event of Loss), or Guarantor Sale Purchase Price.
"Officer" means, with respect to the Company, the Chairman of the
-------
Board, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary or Assistant Secretary of the
Company.
"Officers' Certificate" means, with respect to the Company or any
---------------------
Guarantor, a certificate signed by two Officers of the Company or such Guarantor
and otherwise complying with the requirements of Sections 14.4 and 14.5.
"Opinion of Counsel" means a written opinion from legal counsel to the
------------------
Company complying with the requirements of Sections 14.4 and 14.5. Unless
otherwise required by this Indenture, the counsel may be in-house counsel to the
Company.
"Parent Guarantor" means, subsequent to an Initial Public Equity
----------------
Offering of such corporation, a Publicly Traded Company that owns 100% of the
Capital Stock, and any other equity interests, of the Guarantors and has
guaranteed irrevocably and unconditionally the obligations of the Company under
the Indenture and the Notes.
"Paying Agent" shall have the meaning specified in Section 2.3
------------
provided, however, that for purposes of Articles III, IX, XII and Sections 5.14,
5.16 and 5.20, the Company or any Affiliate of the Company shall not act as
Paying Agent.
"Payment Guarantor" shall have the meaning specified in Section 5.3.
-----------------
"Permitted FF&E Slot Machine Indebtedness" means Indebtedness which is
----------------------------------------
Non-recourse Indebtedness and is incurred to finance the acquisition or lease
after the Issue Date of newly acquired or leased slot machines ("FF&E") used
directly in the
17
<PAGE>
operation of Casinos owned or operated by a Guarantor and secured by an
exclusive Lien on such FF&E, but, in each case, not exceeding the purchase price
of the slot machines being financed.
"Permitted Indebtedness" means any of the following:
----------------------
(a) Indebtedness solely in respect of performance bonds (to the
extent that such incurrence does not result in the incurrence of any obligation
for the payment of borrowed money others), in the ordinary course of business,
in amounts and for the purposes customary in the Guarantors' industry for gaming
operations similar to those of the Guarantors; provided, that the aggregate
principal amount outstanding of such Indebtedness (including any Indebtedness
issued to refinance, refund or replace such Indebtedness) shall at no time
exceed $2.5 million;
(b) Indebtedness under Interest Swap Obligations, provided that
in each case the notional principal amount of such Interest Swap Obligation does
not exceed the principal amount of Indebtedness to which such Interest Swap
Obligation relates; and
(c) Permitted FF&E Slot Machine Indebtedness.
"Permitted Liens" means any of the following:
---------------
(a) Liens for taxes, assessments or other governmental charges
not yet due or which are being contested in good faith and by appropriate
proceedings by the applicable Guarantor or Subsidiary if adequate reserves with
respect thereto are maintained on the books of such Guarantor or Subsidiary, as
the case may be, in accordance with GAAP;
(b) statutory Liens of carriers, warehousemen, mechanics,
landlords, materialmen, repairmen or other like Liens arising by operation of
law in the ordinary course of business and consistent with industry practices
and Liens on deposits made to obtain the release of such Liens if (i) the
underlying obligations are not overdue; or (ii) such Liens are being contested
in good faith and by appropriate proceedings by the applicable Guarantor or
Subsidiary and adequate reserves with respect thereto are maintained on the
books of such Guarantor or Subsidiary, as the case may be, in accordance with
GAAP;
(c) easements, rights-of-way, zoning and similar restrictions
and other similar encumbrances or title defects incurred in the ordinary course
of business and consistent with industry practices which, in the aggregate, are
not substantial in amount, and which do not in any case materially detract from
the value of the property subject thereto (as such property is used by any
Guarantor or any of its Subsidiaries) or interfere with the ordinary conduct of
the business of such Guarantor or any of its Subsidiaries; provided, that any
--------
such Liens are not
18
<PAGE>
incurred in connection with any borrowing of money or any commitment to loan any
money or to extend any credit; and
(d) Liens created by the Indenture.
"Permitted Proceed Uses" means (i) distributions from time to time by
----------------------
Empress of up to an aggregate of $50.0 million to the shareholders of Empress,
representing the undistributed taxable income of Empress as well as a return of
equity to such shareholders, provided that no distributions shall be permitted
--------
under this clause (i) if, after giving effect, on a pro forma basis, to such
distribution, the shareholder's equity of Empress would be less than $25
million; (ii) loans by Empress to Hammond Leasing of the Hammond Leasing Note
Proceeds to finance, construct, equip and operate the Empress III and to
reimburse Empress for all payments made by River Casino with respect to the
construction of the Empress III, to be distributed to Hammond Leasing pursuant
to the Hammond Leasing Disbursement Agreement; (iii) loans by Empress to Hammond
Empress of the Hammond Empress Note Proceeds to finance, develop, construct,
equip and operate the Hammond Facility including funds necessary to perform the
Hammond Access Construction, to be distributed to Hammond Empress pursuant to
the Hammond Empress Disbursement Agreement; (iv) payments by Empress of up to
$21 million for the mandatory prepayment of amounts owed by Empress to Riverboat
Gaming Management, Inc. ("RGMI") pursuant to that certain Settlement Agreement,
dated October 3, 1992, among Empress, RGMI, Jerome H. Turk and Philip D.
Griffith; (v) for working capital purposes at Empress, including expansion and
refurbishment of the Joliet Facility; (vi) payments by Empress of up to $3.0
million for the mandatory repayment by Empress of that certain mortgage loan,
dated June 30, 1992, between Empress and Caterpillar Financial Services
Corporation; and (vii) as and when done in accordance with the terms of this
Indenture, payments to consummate a Casino Purchase Offer.
"Permitted Regulatory Redemption" means a redemption by the Company of
-------------------------------
such person's securities (i) pursuant to, and in accordance with, any order of
any Governmental Authority with appropriate jurisdiction and authority relating
to a Gaming License, or (ii) to the extent necessary in the reasonable, good
faith judgment of the Board of Directors of Finance to prevent the loss, failure
to obtain or material impairment or to secure the reinstatement of, any material
Gaming License, where in the case of (i) and (ii) such redemption or acquisition
is required because the holder or beneficial owner of such security is required
to be found suitable or to otherwise qualify under any Gaming Laws and is not
found suitable or so qualified within a reasonable period of time.
"person" means any individual, limited liability company, corporation,
------
partnership, joint venture, association, joint-
19
<PAGE>
stock company, trust, unincorporated organization or government or other agency
or political subdivision thereof.
"Plans" means all drawings, plans and specifications prepared by or on
-----
behalf of a Guarantor or any of its Subsidiaries, as the same may be amended or
supplemented from time to time in good faith, and, if required by applicable
law, submitted to and approved by the building or other relevant governmental
agency, which describe and show the Empress III, the Hammond Facility and the
Joliet Facility, as applicable, and the labor and materials necessary for
construction thereof.
"Principal" of any Indebtedness (including the Securities) means the
---------
principal of such Indebtedness plus any applicable premium, if any, on such
Indebtedness.
"Property" or "property" means any right or interest in or to property
-------- --------
or assets of any kind whatsoever, whether real, personal or mixed and whether
tangible, intangible, contingent, indirect or direct.
"Proportionate Share" means, as of any date of determination, a ratio
-------------------
(i) the numerator of which is the aggregate outstanding principal amount of the
Mirror Notes of Hammond Empress, Hammond Leasing or an Additional Guarantor, as
applicable, or, in the case of Empress, the aggregate outstanding principal
amount of the Notes less the outstanding aggregate principal amount of the
Mirror Notes of all the Guarantors (other than Empress); and (ii) the
denominator of which is the aggregate principal amount outstanding of the Notes.
"Publicly Traded Company" means a company, the common stock of which
-----------------------
is registered pursuant to the Securities Act and listed on a national securities
exchange or quoted on the national market system of the National Association of
Securities Dealers, Inc.
"Purchase Money Indebtedness" means any Non-recourse Indebtedness of
---------------------------
such person owed to any seller or other person which is incurred to finance the
acquisition of any real or personal tangible property of a Related Business
within 90 days of such acquisition.
"Purchase Price" means any Casino Offer Price, Change of Control Offer
--------------
Price, Asset Sale Offer Price or Guarantor Sale Purchase Price.
"Qualified Capital Stock" means any Capital Stock of a Guarantor that
-----------------------
is not Disqualified Capital Stock.
"Qualified Exchange" means any defeasance, redemption, repurchase or
------------------
other acquisition of Capital Stock or Indebtedness
20
<PAGE>
of a Guarantor with the Net Proceeds received by such Guarantor from the
substantially concurrent sale of Qualified Capital Stock of such Guarantor or in
exchange for Qualified Capital Stock of such Guarantor.
"Qualified Inter-Guarantor Loans" means loans solely between
-------------------------------
Guarantors, of which the sole source of funds is Indebtedness incurred in
accordance with paragraph (a) or (f) of Section 5.11, and evidenced by a written
loan agreement containing provisions substantially similar to the provisions of
such underlying Indebtedness (including restrictions on prepayments) and in
principal amounts not exceeding such corresponding underlying Indebtedness, as
determined in good faith by the Board of Directors of the Guarantor incurring
such indebtedness.
"Qualified Loans" means loans from Empress to an Additional Guarantor,
---------------
evidenced by notes with terms which are substantially similar to the terms of
the Mirror Notes, including provisions restricting prepayment.
"Reconciled Tax Amount" means the taxable income of the relevant
---------------------
Guarantor as reported on such Guarantor's Internal Revenue Service Form 1120S
for the applicable taxable year.
"Record Date" means a Record Date specified in the Securities whether
-----------
or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
---------------
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the form of Security.
"Redemption Price," when used with respect to any Security to be
----------------
redeemed, means the redemption price for such redemption set forth in Paragraph
5 in the form of Security, plus in each case accrued and unpaid interest with
respect to such Security to the applicable Redemption Date.
"Reference Period" with regard to any person means the four full
----------------
fiscal quarters, or in the case of Sections 5.16 and 5.20 the two full fiscal
quarters (or such lesser period during which such person has been in existence),
ended immediately preceding the relevant date upon which such determination is
to be made pursuant to the terms of the Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital
------------------------
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, decrease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to; or a deferral or
renewal of ((a) and (b) above are,
21
<PAGE>
collectively, a "Refinancing"), any Indebtedness or Disqualified Capital Stock
of such person in a principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, not to exceed (after deduction of reasonable and
customary fees and expenses incurred in connection with the Refinancing) the
lesser of (i) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, of the Indebtedness or Disqualified Capital Stock
so Refinanced and (ii) if such Indebtedness being Refinanced was issued with an
original issue discount, the accredited value thereof (as determined in
accordance with GAAP) at the time of such Refinancing; provided, that (A)
--------
Refinancing Indebtedness of any Subsidiary of a Guarantor shall only be used to
Refinance outstanding Indebtedness or Disqualified Capital Stock of such
Subsidiary; (B) Refinancing Indebtedness shall not have an Average Life less
than that of the Indebtedness or Disqualified Capital Stock to be so refinanced
at the time of such refinancing; (C) such Refinancing Indebtedness shall have no
installment of principal (or redemption payment) scheduled to come due earlier
than the scheduled maturity of any installment of principal of the Indebtedness
(or Disqualified Capital Stock) to be so refinanced which was scheduled to come
due on or prior to the Stated Maturity; and (D) if the Indebtedness or
Disqualified Capital Stock to be so refinanced was subordinate or junior in
right of payment to the Guarantee, then the Refinancing Indebtedness shall be
subordinate or junior in right of payment to such Guarantee to an extent no less
favorable in respect thereof to the Holders.
"Registrar" shall have the meaning specified in Section 2.3.
---------
"Registration Statement" means the registration statement of the
----------------------
Company, Empress, Hammond Empress and Hammond Leasing, dated February 4, 1994,
as amended.
"Related Business" means the gaming business conducted (or proposed to
----------------
be conducted) by the Guarantors and their Subsidiaries as of the Issue Date and
any and all related businesses in support of and ancillary to the gaming
business of such Guarantors and additionally expressly includes any riverboat,
dockside or land-based gaming businesses.
"Required Regulatory Redemption" means a redemption of Holder's
------------------------------
Securities (i) pursuant to, and in accordance with, any order of any
Governmental Authority with appropriate jurisdiction and authority relating to a
Gaming License, or (ii) to the extent necessary in the reasonable, good faith
judgment of the Board of Directors of the Company to prevent the loss, failure
to obtain or material impairment or to secure the reinstatement of, any Gaming
License, which if lost, impaired or not obtained or reinstated would reasonably
be expected to have a material adverse effect on any of the Guarantors or would
restrict the
22
<PAGE>
ability of any of the Guarantors to conduct business in any Gaming Jurisdiction,
in the case of each of (i) and (ii) where such redemption or acquisition is
required because the Holder or beneficial owner of such Security is required to
be found suitable, or to otherwise qualify, under any Gaming Laws and is not
found suitable or so qualified.
"Restricted Investment" means, in one or a series of related
---------------------
transactions, any Investment, other than Cash Equivalents; provided, that a
--------
Restricted Investment shall not include (i) the extension of credit to customers
of Casinos consistent with industry practice in the ordinary course of business;
and (ii) a guaranty by a Guarantor of Indebtedness incurred by another Guarantor
in accordance with Section 5.11.
"Restricted Payment" means, with respect to any person, (a) the
------------------
declaration or payment of any dividend or other distribution in respect of
Capital Stock of such person or any Subsidiary of such person; (b) any payment
on account of the purchase, redemption or other acquisition or retirement for
value of Capital Stock of such person or any Subsidiary of such person; (c) any
purchase, redemption, or other acquisition or retirement for value of, and any
payment in respect of any amendment of the terms of or any defeasance of, any
subordinated Indebtedness, directly or indirectly, by such person or a
Subsidiary of such person prior to the scheduled maturity, scheduled repayment
of principal, or scheduled sinking fund payment, as the case may be, of such
Indebtedness; and (d) any Restricted Investment by such person; provided,
--------
however, that the term "Restricted Payment" does not include (i) any dividend,
- -------
distribution or other payment on or with respect to Capital Stock of an issuer
to the extent payable solely in shares of Qualified Capital Stock of such
issuer; (ii) any dividend, distribution or other payment to any of the
Guarantors, by any of their respective Subsidiaries; and (iii) Restricted
Investments solely among the Guarantors in the form of Qualified Inter-Guarantor
Loans; (iv) amounts distributed by any Guarantor to any of its wholly owned
Subsidiaries; and amounts distributed by a Guarantor to the Company to enable
the Company to make an offer to Purchase or to make payments of principal of,
premium, if any, or interest on, the Notes.
"River Casino" means River Casino Corporation, a Delaware corporation.
------------
"Sale of a Guarantor" means (i) any merger or consolidation of, or any
-------------------
sale, transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of, any of Hammond Empress, Hammond Leasing, or
any Additional Guarantor in each case on a consolidated basis, in one
transaction or a series of related transactions; or (ii) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the
23
<PAGE>
Board of Directors of Hammond Empress, Hammond Leasing, or any Additional
Guarantor (together with any new directors whose election by such Board or whose
election by the stockholders of Hammond Empress, Hammond Leasing or such
Additional Guarantor was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved), cease for
any reason to constitute a majority of the Board of Directors of Hammond
Empress, Hammond Leasing, or such Additional Guarantor then in office, as
applicable. Notwithstanding the foregoing, a Sale of a Guarantor with respect to
-----------------------------
Hammond Leasing shall not have been deemed to have occurred as long as
thereafter a Casino remains in operation by either Hammond Empress or Hammond
Leasing at the Hammond Facility.
"SEC" means the Securities and Exchange Commission.
---
"Securities" or "Notes" means 10 3/4% Senior Notes due 2002, as
----------
amended or modified from time to time in accordance with the terms hereof,
issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the SEC promulgated thereunder.
"Security Documents" shall have the meaning specified in Section 4.1.
------------------
"Securityholder" See "Holder."
-------------- ------
"Security Interests" shall have the meaning specified in Section 4.7.
------------------
"Stated Maturity," when used with respect to any Note, means April 1,
---------------
2002.
"subordinated Indebtedness" means Indebtedness of a Guarantor that is
-------------------------
subordinated in right of payment to the Guarantee of such Guarantor to any
extent.
"Subsidiary" with respect to any person, means (i) a corporation a
----------
majority of whose Capital Stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such person,
by such person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person or (ii) any other person (other than a corporation)
in which such person, one or more Subsidiaries of such person, or such person
and one or more Subsidiaries of such person, directly or indirectly, at the date
of determination thereof has at least majority ownership interest.
24
<PAGE>
"Tax Reimbursement Agreement" shall have the meaning specified in
---------------------------
Section 5.3.
"Tax Amounts" with respect to any year means (a) an amount equal to
-----------
the higher of (i) the product of (A) the taxable income of the relevant
Guarantor for such year as determined in good faith by its Board of Directors;
and (B) the Tax Percentage and (ii) the product of (A) the alternative minimum
taxable income attributable to such Guarantor for such year as determined in
good faith by its Board of Directors; and (B) the Tax Percentage, in either
case, reduced by (b) to the extent not previously taken into account, any income
tax benefit attributable to such Guarantor which could be realized by such
Guarantor's stockholders in the current or a prior taxable year (including,
without limitation, tax losses, alternative minimum tax credits, other tax
credits and carryforwards and carrybacks thereof).
"Tax Percentage" means the highest aggregate applicable effective
--------------
marginal rate of Federal, state and local income tax or, when applicable,
alternative minimum tax, to which an individual resident of Chicago, Illinois
would be subject in the relevant year of determination (as certified to the
Trustee by a nationally recognized tax accounting firm) provided, however, that
--------
in no event shall such Tax Percentage exceed the lesser of (1) the highest
aggregate applicable effective marginal rate of Federal, state and local income
tax or, when applicable, alternative minimum tax, to which a corporation doing
business in Chicago, Illinois would be subject in the relevant year of
determination (as certified to the Trustee by a nationally recognized tax
accounting firm) plus 500 Basis Points and (2) 60%.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S)
---
77aaa-77bbbb) as in effect on the date of the execution of this Indenture.
"Trustee" means the party named as such in this Indenture until a
-------
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
-------------
department (or any successor group) of the Trustee including any vice president,
assistant vice president, secretary, assistant secretary or any other officer or
assistant officer of the Trustee customarily performing functions similar to
those performed by the persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer of
the corporate trust department (or any successor group) of the Trustee to whom
such trust matter is referred because of his knowledge of and familiarity with
the particular subject.
25
<PAGE>
"U.S. Government Obligations" means direct non-callable obligations
---------------------------
of, or noncallable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit of the
United States or America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
-----------------
of America as at the time of payment is legal tender for the payment of public
and private debts.
"Vessel Offer Amount" shall have the meaning specified in Section
-------------------
5.16.
"wholly owned" with respect to a Subsidiary of any person means (i)
------------
with respect to a Subsidiary that is a limited liability company or similar
entity, a Subsidiary whose capital stock is 99% or greater beneficially owned by
such person and (ii) with respect to a Subsidiary that is other than a limited
liability company or similar entity, a Subsidiary whose capital stock or other
equity interest is 100% beneficially owned by such person.
Section 1.2 Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such
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:
"Commission" means the SEC.
----------
"indenture securities" means the Securities.
--------------------
"indenture securityholder" means a Holder or a Securityholder.
------------------------
"indenture to be qualified" means this Indenture.
-------------------------
"indenture trustee" or "institutional trustee" means the Trustee.
----------------- ---------------------
"obligor" on the indenture securities means the Company and any other
------
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
Section 1.3 Rules of Construction.
---------------------
Unless the context otherwise requires:
26
<PAGE>
(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 words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or
other subdivision; and
(vii) references to Sections or Articles means reference to such
Section or Article in this Indenture, unless stated otherwise.
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating.
---------------
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto which is
---------
part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Company shall
approve the form of the Securities and any notation, legend or endorsement on
them. Any such notations, legends or endorsements not contained in the form of
Security attached as Exhibit A hereto shall be delivered in writing to the
---------
Trustee. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the form of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
27
<PAGE>
Section 2.2 Execution and Authentication.
----------------------------
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Securities for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted, or
reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security, but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate Securities for original issue in the
aggregate principal amount of up to $150,000,000 upon a written order of the
Company in the form of an Officers' Certificate. The Officers' Certificate
shall specify the amount of Securities to be authenticated and the date on which
the Securities are to be authenticated. The aggregate principal amount of
Securities outstanding at any time may not exceed $150,000,000, except as
provided in Section 2.7.
Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Securities in substitution of
Securities originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities 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, any Affiliate of the Company
or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof.
28
<PAGE>
Section 2.3 Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("Registrar") and an office or agency
in the Borough of Manhattan, The City of New York where Securities may be
presented for payment ("Paying Agent") and an office or agency where notices and
demands to or upon the Company in respect of the Securities may be served. The
Company may act as its own Registrar or Paying Agent, except that, for the
purposes of Articles III, IX, XII and Sections 5.14, 5.16 and 5.20, neither the
Company nor any Affiliate of the Company shall act as Paying Agent. The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-Registrars and one or more
additional Paying Agents. The term "Paying Agent" includes any additional
Paying Agent. The Company hereby initially appoints the Trustee as Registrar
and Paying Agent, and the Trustee hereby initially agrees so to act.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
Section 2.4 Paying Agent to Hold Assets in Trust.
------------------------------------
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities (whether such assets have been
distributed to it by the Company or any other obligor on the Securities), and
shall notify the Trustee in writing of any Default by the Company (or any other
obligor on the Securities) in making any such payment. If the Company or a
Subsidiary of the Company acts as Paying Agent, it shall segregate such assets
and hold them as a separate trust fund for the benefit of the Holders or the
Trustee. The Company at any time may require a Paying Agent to distribute all
assets held by it to the Trustee and account for any assets disbursed and the
Trustee may at any time during the continuance of any payment Default, upon
written request to a Paying Agent, require such Paying Agent to distribute all
assets held by it to the Trustee and to account for any assets distributed.
Upon distribution to the Trustee of all assets that shall have been delivered by
the Company to the Paying Agent, the Paying Agent (if other than the Company)
shall have no further liability for such assets.
29
<PAGE>
Section 2.5 Securityholder 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
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee on or before the third Business Day preceding each Interest Payment Date
and at such other times as the Trustee may reasonably request in writing a list
in such form and as of such date as the Trustee reasonably may require of the
names and addresses of Holders. The Trustee, the Registrar and the Company shall
provide a current securityholder list to any Gaming Authority upon demand.
Section 2.6 Transfer.
--------
When Securities are presented to the Registrar or a co-Registrar with
a request to register the transfer of such Securities, the Registrar or co-
Registrar shall register the transfer as requested if its reasonable
requirements for such transaction are met; provided, however, that the
-------- -------
Securities surrendered for transfer shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the Company
and the Registrar or co-Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing. To permit registrations of transfers, the
Company shall execute and the Trustee shall authenticate Securities at the
Registrar's or co-Registrar's request. No service charge shall be made for any
registration of transfer, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer taxes,
assessments, or similar governmental charge payable upon transfers pursuant to
Sections 2.2, 2.10, 3.6, 5.14, 5.16, 5.20, 10.5, or 12.1). Except for a
Required Regulatory Redemption pursuant to Section 3.2 of this Indenture or an
order of any Gaming Authority, the Registrar or co-Registrar shall not be
required to register the transfer of (a) any Security selected for redemption in
whole or in part pursuant to Article Three, except the unredeemed portion of any
Security being redeemed in part, or (b) any Security for a period beginning 15
Business Days before the mailing of a notice of an offer to repurchase pursuant
to Sections 5.14, 5.16 or 5.20 or redeem Securities pursuant to Article III
hereof and ending at the close of business on the day of such mailing.
Section 2.7 Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims and submits an affidavit or other evidence, satisfactory to
the Trustee, to the Trustee to the effect that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements
30
<PAGE>
are met. If required by the Trustee or the Company, such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Security is replaced. The Company may
charge such Holder for its reasonable, out-of-pocket expenses in replacing a
Security.
Every replacement Security is an additional obligation of the Company.
Section 2.8 Outstanding Securities.
----------------------
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those cancelled by it, those delivered
to it for cancellation and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security, except as provided in Section
2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
---- ----
upon surrender of such Security and replacement thereof pursuant to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of the Company) holds U.S. Legal Tender or U.S.
Government Obligations sufficient to pay all of the principal and interest due
on the Securities payable on that date and payment of the Securities called for
redemption is not otherwise prohibited, then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue.
Section 2.9 Treasury Securities.
-------------------
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Company, any Guarantor and Affiliates of the
Company or of any Guarantor shall be disregarded, except that, for the purposes
of determining whether the Trustee shall be protected in relying on any such
direction, amendment, supplement, waiver or consent, only Securities that the
Trustee knows or has reason to know are so owned shall be disregarded.
31
<PAGE>
Section 2.10 Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the Company may
prepare, the Guarantor shall endorse and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form
of definitive Securities but may have variations that the Company reasonably and
in good faith considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare, the Guarantor shall endorse and
the Trustee shall authenticate definitive Securities in exchange for temporary
Securities. Until so exchanged, the temporary Securities shall in all respects
be entitled to the same benefits under this Indenture as permanent Securities
authenticated and delivered hereunder.
Section 2.11 Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else, shall
cancel and, at the written direction of the Company, shall dispose of all
Securities surrendered for transfer, exchange, payment or cancellation. Subject
to Section 2.7, the Company may not issue new Securities to replace Securities
it has paid or delivered to the Trustee for cancellation. No Securities shall
be authenticated in lieu of or in exchange for any Securities cancelled as
provided in this Section 2.11, except as expressly permitted in the form of
Securities and as permitted by this Indenture.
Section 2.12 Defaulted Interest.
------------------
If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent lawful) interest on the
defaulted interest, to the persons who are Holders on a Record Date (or at its
option a subsequent special record date) which date shall be the fifteenth day
next preceding the date fixed by the Company for the payment of defaulted
interest, whether or not such day is a Business Day, unless the Trustee fixes
another record date. At least 15 days before the subsequent special record date,
the Company shall mail to each Holder with a copy to the Trustee a notice that
states the subsequent special record date, the payment date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any, to
be paid.
32
<PAGE>
ARTICLE III
REDEMPTION
Section 3.1 Right of Redemption.
-------------------
Redemption of Securities shall be made only in accordance with this
Article III. At its election, the Company may redeem the Securities in whole or
in part, at any time on or after April 1, 1999, at the Redemption Prices
specified under the caption "Redemption," in the Form of Note attached as
Exhibit A hereto, plus accrued and unpaid interest to the Redemption Date. In
- ---------
the event an Initial Public Equity Offering is completed at any time prior to
April 1, 1997, the Company may, at its election, one time only, redeem up to an
aggregate amount of $50,000,000 of the Securities with the proceeds of such
Initial Public Equity Offering, at a redemption price of 110%, plus accrued and
unpaid interest to the date of redemption, provided that such redemption occurs
--------
within 60 days of the closing of such Initial Public Equity Offering, and that
after giving effect to any such redemption with the proceeds of the Initial
Public Equity offering there shall remain not less than an aggregate principal
amount of $100,000,000 of the Securities outstanding. Except as provided in this
paragraph, Section 3.2 and paragraph 5 of the Notes, the Notes may not otherwise
be redeemed at the option of the Company.
Section 3.2 Redemption Pursuant to Gaming Laws.
----------------------------------
Notwithstanding any other provision of this Indenture, the Notes shall
also be redeemable, in whole or in part, at any time pursuant to, and in
accordance with, a Required Regulatory Redemption. If the Company requires the
redemption of any Security pursuant to this Section 3.2, then the redemption
price shall be 100% of the principal amount thereof, plus accrued and unpaid
interest to the date of redemption. The Company shall tender the redemption
price (together with any accrued and unpaid interest) to the Trustee no later
than 30 days after the Company gives the Securityholder or owner of a beneficial
or voting interest written notice of redemption or such earlier date as may be
ordered by any Gaming Authority. The Company shall notify the Trustee of any
disposition or redemption required under this Section 3.2, and upon receipt of
such notice, the Trustee shall not accord any rights or privileges under this
Indenture or any Security to any Securityholder or owner of a beneficial or
voting interest who is required to dispose of any Security or tender it for
redemption, except to pay the redemption price (together with any accrued but
unpaid interest) upon tender of such Security.
33
<PAGE>
Section 3.3 Notices to Trustee.
------------------
If the Company elects to redeem Securities pursuant to Article III, it
shall notify the Trustee in writing of the Redemption Date and the principal
amount of Securities to be redeemed and whether it wants the Trustee to give
notice of redemption to the Holders.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to Paragraph 5 of the Securities by crediting against any
such redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice.
The Company shall give each notice to the Trustee provided for in this
Section 3.3 at least 35 days before the Redemption Date (unless a shorter notice
shall be required by applicable Gaming Laws or by order of any Gaming
Authority).
Section 3.4 Selection of Securities to Be Redeemed.
--------------------------------------
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5 thereof, the Trustee shall select the Securities to be redeemed pro
---
rata or by lot or by such other method as the Trustee shall determine to be fair
- ----
and appropriate and in such manner as complies with any applicable legal and
stock exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
Section 3.5 Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to each Holder whose Securities are to be redeemed (unless a shorter
notice shall be required by applicable Gaming Laws). At the Company's request,
the Trustee shall give the notice of redemption in the Company's name and at the
Company's expense. Each notice for redemption shall identify the Securities to
be redeemed and shall state:
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(1) that the notice is being sent pursuant to this Section 3.5 and
pursuant to the optional redemption provisions of Paragraph 5 of the Securities;
(2) the Redemption Price (including the amount of accrued and unpaid
interest to be paid upon such redemption) and the Redemption Date;
(3) that any Security or portion thereof not redeemed will continue
to accrue interest if interest is then accruing;
(4) that, unless (a) the Company defaults in its obligation to
deposit U.S. Legal Tender with the Paying Agent in accordance with Section 3.7
hereof or (b) such redemption payment is prevented for any reason, interest on
Securities called for redemption ceases to accrue on and after the Redemption
Date and the only remaining right of the Holders of such Securities is to
receive payment of the Redemption Price, plus accrued and unpaid interest, upon
surrender to the Paying Agent of the Securities called for redemption and to be
redeemed;
(5) that the Company shall redeem Securities such that only
Securities in denominations of $1,000 at maturity or integral multiples of
$1,000 shall be acquired;
(6) that Holders whose Securities are redeemed only in part will be
issued a new Security or Securities equal in aggregate principal amount to the
unredeemed portion of the Securities redeemed;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be redeemed,
as well as the aggregate principal amount of such Securities to be redeemed and
the aggregate principal amount of Securities to be outstanding after such
partial redemption;
(8) the CUSIP number of the Securities to be redeemed;
(9) the name, address and telephone number of the Paying Agent;
(10) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the Redemption
Price; and
(11) if the Redemption Date is on or after an interest payment record
date and on or before the related interest payment date, any accrued interest
will be paid to the person in whose name a Security is registered at the close
of business on such Security record date, and no additional interest will be
payable to Securityholders whose Securities are so redeemed.
35
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Section 3.6 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.5,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, plus accrued and unpaid interest. Upon surrender
to the Trustee or Paying Agent, such Securities called for redemption shall be
paid at the Redemption Price, plus accrued and unpaid interest to the Redemption
Date; provided that if the Redemption Date is after a regular Record Date and on
--------
or prior to the Interest Payment Date, the accrued and unpaid Interest shall be
payable to the Holder of the redeemed Securities registered on the relevant
Record Date; and provided, further, that if a Redemption Date is a Legal
-------- -------
Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
Section 3.7 Deposit of Redemption Price.
---------------------------
On or before the close of business on the Business Day immediately
preceding the Redemption Date, each of Hammond Empress, Hammond Leasing and any
Additional Guarantors shall deposit with Empress U.S. Legal Tender in an amount
equal to its Proportionate Share of the amount Empress is required to deposit
with the Company pursuant to this Section 3.7 (subject to the joint and several
obligations of each Guarantor with respect to such payments). No later than
12:00 noon, New York City time, on the Redemption Date, Empress shall
irrevocably deposit with the Company, and the Company shall irrevocably deposit
with the Paying Agent U.S. Legal Tender in an amount sufficient to pay the
Redemption Price of, plus accrued and unpaid interest on, all Securities to be
redeemed on such Redemption Date (other than Securities or portions thereof
called for redemption on that date that have been delivered by the Company to
the Trustee for cancellation). The Paying Agent shall promptly return to the
Company any U.S. Legal Tender so deposited which is not required for that
purpose upon the written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not prevented for any reason, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph and the other
provisions of this Article III, interest shall continue to accrue and be paid
from the Redemption Date until such payment is made on the unpaid principal,
and, to the extent lawful, on any interest not paid on
36
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such unpaid principal, in each case at the rate and in the manner provided in
Section 5.1 hereof and the Securities.
Section 3.8 Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is to be redeemed in part, the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in principal
amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
SECURITY
Section 4.1 Security Interest.
-----------------
(a) In order to secure the Indenture Obligations, the Company
and Empress have entered into the Guarantor Loan Agreement, Hammond Empress,
Empress, the Collateral Agent and the Trustee have entered into the Hammond
Empress Disbursement Agreement and Hammond Leasing, Empress, the Collateral
Agent and the Trustee have entered into the Hammond Leasing Disbursement
Agreement (collectively, the "Security Documents"). Each Holder, by accepting a
Security, agrees to all of the terms and provisions of the Security Documents
and the Trustee agrees to all of the terms and provisions of the Security
Documents as the Security Documents may be amended from time to time pursuant to
the provisions thereof and hereof.
(b) The Collateral as now or hereafter constituted shall be held
for the equal and ratable benefit of the Holders without preference, priority or
distinction of any thereof over any other by reason of difference in time of
issuance, sale or otherwise, as security for the Indenture Obligations.
(c) The provisions of TIA (S) 314(d), and the provisions of TIA
(S) 314(c) (3) to the extent applicable by specific reference in this Article
IV, are hereby incorporated by reference herein as if set forth in their
entirety and to the same extent as if the Indenture were qualified under the
TIA.
Section 4.2 Recording; Opinions of Counsel.
------------------------------
(a) The Company and each of the Guarantors represent that they
have caused or will promptly cause to be executed and delivered, filed and
recorded and covenant that they will promptly cause to be executed and
delivered, filed and recorded, all instruments and documents, and have done and
will do or will cause to be done all such acts and other things, at the
Company's expense, as are necessary to subject the Collateral to valid
37
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security interests and to perfect those security interests. Until all of the
funds in the Hammond Empress Disbursement Account and the Hammond Leasing
Disbursement Account have been disbursed in accordance with the terms of the
Hammond Empress Disbursement Agreement and the Hammond Leasing Disbursement
Agreement, respectively, the Company and each of the Guarantors shall, as
promptly as practicable, cause to be executed and delivered, filed and recorded
all instruments and do all acts and other things as may be required by law to
perfect, maintain and protect the security interests under the Security
Documents and herein.
(b) The Company shall furnish to the Trustee, promptly after the
execution and delivery of this Indenture and the Security Documents and promptly
after the execution and delivery of any amendment thereto or any other
instrument of further assurance, an Opinion(s) of Counsel stating that, in the
opinion of such counsel, subject to customary exclusions and exceptions
reasonably acceptable to the Trustee, either (i) this Indenture, the Security
Documents, any such amendment and all other instruments of further assurance are
in appropriate form for filing and recording under the Uniform Commercial Code
as then in effect in the State of Illinois (the "Illinois UCC"), and the
security interest in favor of the Trustee in the Collateral will be perfected
upon the filing and recording of such financing statements in the office of the
Secretary of State of the State of Illinois, in compliance with Section 9-302 of
the Illinois UCC evidenced by means of a signed letter in the form of Exhibit B
---------
to the Disbursement Agreements (assuming such letter is acknowledged and
consented to by the Collateral Agent) and continuous possession of the Mirror
Notes by the Trustee, and reciting the details of such action or referring to
prior Opinions of Counsel in which such details are given, or (ii) no such
action is necessary to maintain the validity of the security interests under the
Security Documents and hereunder.
(c) The Company shall furnish to the Trustee, on or prior to
April 1 of each year (commencing on April 1, 1995) an Opinion(s) of Counsel,
dated as of such date, stating that, in the opinion of such counsel, subject to
customary exclusions and exceptions, either (A) all such action has been taken
with respect to the recording, registering, filing, rerecording and refiling of
the Indenture, all supplemental indentures, the Security Documents, financing
statements, continuation statements and all other instruments of further
assurance as is necessary to maintain the security interests under the Security
Documents and hereunder in full force and effect 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 statements
have been executed and filed and such other actions taken that are necessary
fully to preserve and protect the rights of the Holders and the Trustee
hereunder and
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under the Security Documents, or (B) no such action is necessary to maintain the
security interests in full force and effect. Notwithstanding the foregoing, the
Company shall not be required to furnish an Opinion of Counsel to the Trustee if
all of the funds in the Hammond Empress Disbursement Account and the Hammond
Leasing Disbursement Account have been disbursed in accordance with the terms of
the Hammond Empress Disbursement Agreement and the Hammond Leasing Disbursement
Agreement, respectively.
Section 4.3 Guarantor Loan Agreement and Collateral Accounts.
------------------------------------------------
(a) The Company and Empress shall enter into the Guarantor Loan
Agreement pursuant to which the Company shall loan the net proceeds of the
Securities to Empress and Empress shall establish and maintain with the
collateral agent (the "Collateral Agent") (i) subject to the Hammond Empress
Disbursement Agreement, the Hammond Empress Collateral Account and (ii) subject
to the Hammond Leasing Disbursement Agreement, the Hammond Leasing Collateral
Account. The Company and the Guarantors shall grant a valid, perfected and
exclusive security interest in favor of the Trustee for the equal and ratable
benefit of the Holders in the Collateral without preference, priority, or
distinction of any thereof over any other thereof by reason of difference in
time of issuance, sale or otherwise, as security for the prompt and complete
performance and payment in full of Indenture Obligations. The funds deposited
in the Hammond Empress Collateral Account and the Hammond Leasing Collateral
Account may be disbursed from such account only for the purposes and in the
manner provided for in the Hammond Empress Disbursement Agreement and the
Hammond Leasing Disbursement Agreement, respectively. The funds held in such
collateral accounts shall be released from the security interests granted to
Holders pursuant to this Article IV upon disbursement of such funds in
accordance with the Hammond Empress Disbursement Agreement and the Hammond
Leasing Disbursement Agreement, respectively, and the Holders shall not have a
security interest in the assets acquired or constructed with such funds. Upon a
prepayment of any of the Mirror Notes pursuant to their respective terms, such
Mirror Notes shall be released from the security interests granted to Holders
pursuant to this Article IV to the extent of such prepayment.
(b) The Collateral Agent shall hold and invest the Hammond
Empress Note Proceeds in U.S. Legal Tender or Cash Equivalents pursuant to the
Hammond Empress Disbursement Agreement. The Collateral Agent shall hold and
invest the Hammond Leasing Note Proceeds in U.S. Legal Tender or Cash
Equivalents pursuant to the Hammond Leasing Disbursement Agreement. Interest and
other amounts earned on such funds shall be held in the respective collateral
accounts as provided in the Hammond Empress Disbursement Agreement and the
Hammond Leasing Disbursement Agreement, respectively.
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Section 4.4 Certain Releases of Collateral.
------------------------------
Subject to applicable law, the release of any collateral from the
terms of the Security Documents or the release of, whole or in part, the Liens
created by the Security Documents, will not be deemed to impair the Security
Documents in contravention of the provisions of this Indenture if and to the
extent the Collateral or Liens are released pursuant to, and in accordance with,
the terms hereof, which are (i) the release of Collateral as a result of
disbursements made pursuant to the Hammond Empress Disbursement Agreement or the
Hammond Leasing Disbursement Agreement, as applicable, and (ii) the release of
the security interest in the Mirror Notes upon and to the extent of any
prepayments pursuant to the terms of such Mirror Notes. To the extent
applicable, without limitation, the Company and each obligor on the Securities
shall cause TIA (S) 314(d) relating to the release of property or securities
from the Liens of the Security Documents to be complied with. Any certificate or
opinion required by TIA (S) 314(d) may be made by one officer prior to the
qualification of the Indenture under the TIA and by two officers after such
qualification, except in cases which TIA (S) 314(d) requires that such
certificate or opinion be made by an independent person.
Upon written request of the Company, subject to applicable law, and
presentation to the Trustee and the Collateral Agent of an Officers' Certificate
evidencing compliance with the Hammond Empress Disbursement Agreement and the
Hammond Leasing Disbursement Agreement, as applicable, the Collateral Agent
shall release funds (and the Trustee's Lien with respect thereto) in accordance
with the terms of the respective disbursement agreements.
Section 4.5 Payment of Expenses.
-------------------
On demand of the Trustee, the Company forthwith shall pay or
satisfactorily provide for all reasonable expenditures incurred by the Trustee
under this Article IV, including the reasonable fees and expenses of counsel and
all such sums shall be a Lien upon the Collateral and shall be secured thereby.
Section 4.6 Suits to Protect the Collateral.
-------------------------------
Subject to Section 4.1 of this Indenture and to the provisions of the
Security Documents, the Trustee shall have power to institute and to maintain
such suits and proceedings as it may deem expedient to prevent any impairment of
the Collateral by any acts which may be unlawful or in violation of the Security
Documents or this Indenture, 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
40
<PAGE>
or if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interests in contravention of this Indenture or be
prejudicial to the interests of the Holders or of the Trustee. The Trustee shall
give notice to the Company promptly following the institution of any such suit
or Proceeding.
Section 4.7 Trustee's Duties.
----------------
The powers and duties conferred upon the Trustee by this Article IV
are solely to protect the security interests created by the Security Documents
in favor of the Trustee for the benefit of the Holders (the "Security
Interests") and shall not impose any duty upon the Trustee to exercise any such
powers and duties, except as expressly provided in this Indenture. The Trustee
shall be under no duty to the Company or any Guarantor whatsoever to make or
give any presentment, demand for performance, notice of nonperformance, protest,
notice of protest, notice of dishonor, or other notice or demand in connection
with any Collateral, or to take any steps necessary to preserve any rights
against prior parties except as expressly provided in this Indenture. The
Trustee shall not be liable to the Company or the Guarantors for failure to
collect or realize upon any or all of the Collateral, or for any delay in so
doing, nor shall the Trustee be under any duty to the Company or the Guarantors
to take any action whatsoever with regard thereto. The Trustee shall have no
duty to the Company or the Guarantors to comply with any recording, filing, or
other legal requirements necessary to establish or maintain the validity,
priority or enforceability of the Security Interests in, or the Trustee's rights
in or to, any of the Collateral.
ARTICLE V
COVENANTS
Section 5.1 Payment of Securities.
---------------------
The Company shall pay the principal of, and interest on, the
Securities on the dates and in the manner provided in the Securities and this
Indenture. An installment of principal of, or interest on, the Securities shall
be considered paid on the date it is due if the Trustee or Paying Agent (other
than the Company or an Affiliate of the Company) holds for the benefit of the
Holders, on or before 10:00 a.m. New York City time on that date, U.S. Legal
Tender deposited and designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
41
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Section 5.2 Maintenance of office or Agency.
-------------------------------
The Company and the Guarantors shall maintain in the Borough of
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company and the Guarantors in respect of the Securities and this Indenture
may be served. The Company and the Guarantors 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 and the Guarantors 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 address of the Trustee set forth in Section 14.2.
The Company and the Guarantors may also from time to time designate
one or more other offices or agencies where the Securities 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 and the Guarantors of their obligation to
maintain an office or agency in the Borough of Manhattan, The City of New York,
for such purposes. The Company and the Guarantors 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. The Company and the Guarantors
hereby initially designate the Corporate Trust Office of the Trustee as such
office.
Section 5.3 Limitation on Restricted Payments.
---------------------------------
The Guarantors shall not, and shall not permit any of their
Subsidiaries to, directly or indirectly, make any Restricted Payment if,
immediately prior to such proposed Restricted Payment or after giving effect to
such proposed Restricted Payment on a pro forma basis, (1) a Default or an Event
of Default shall have occurred and be continuing; or (2) the Guarantor proposing
to make such Restricted Payment (the "Payment Guarantor") would not be permitted
to incur at least $1.00 of additional Indebtedness solely by virtue of the
Combined Fixed Charge Coverage Ratio provision contained in clause (ii) of
paragraph (a) of Section 5.11; or (3) the aggregate amount of all Restricted
Payments made by such Payment Guarantor and its Subsidiaries, including after
giving pro forma effect to such proposed Restricted Payment, from and after the
Issue Date, would exceed the sum of (a) 50% of the amount by which the aggregate
Adjusted Consolidated Net Income of such Payment Guarantor for the period (taken
as one accounting period) commencing on the first day of the first full fiscal
quarter that commenced after the Issue Date, to and including the last day of
the fiscal
42
<PAGE>
quarter ended immediately prior to the date of each such calculation exceeds
permitted distributions of Tax Amounts (in accordance with clause (v) of the
next paragraph) for such Payment Guarantor for such period (or, in the event
Adjusted Consolidated Net Income less permitted distributions of Tax Amounts for
such period is a deficit, then minus 100% of such deficit) plus (b) the
aggregate Net Cash Proceeds received by such Payment Guarantor as a capital
contribution or from the sale of its Qualified Capital Stock (other than (i) to
a Guarantor or Subsidiary of a Guarantor, including of such Payment Guarantor,
or (ii) other than in connection with a Qualified Exchange) after the Issue
Date; or (4) the aggregate amount of all Restricted Payments, including after
giving pro forma effect to such proposed Restricted Payment, of all the
Guarantors and their Subsidiaries from and after the Issue Date would exceed the
sum of (a) 50% of the amount by which the Adjusted Combined Net Income for the
period (taken as one accounting period) commencing on the first day of the first
full fiscal quarter which commenced after the Issue Date, to and including the
last day of the fiscal quarter ended immediately prior to the date of each such
calculation exceeds permitted distributions of Tax Amounts (in accordance with
clause (v) of the next paragraph) for all of the Guarantors for such period (or,
in the event Adjusted Combined Net Income less permitted distributions of Tax
Amounts for such period is a deficit, then minus 100% of such deficit) plus (b)
the aggregate Net Cash Proceeds received by the Guarantors as a capital
contribution or from the sale of their Qualified Capital Stock (other than (i)
to a Guarantor or Subsidiary of a Guarantor; or (ii) in connection with a
Qualified Exchange) after the Issue Date.
The foregoing clauses (2), (3) and (4) of the immediately preceding
paragraph, however, will not prohibit (p) as and when required pursuant to the
terms of the Indenture, payments of principal of, premium, if any, and interest
on, the Mirror Notes and Qualified Loans, in accordance with their respective
terms; (q) any repayment of the Indebtedness described in subparagraphs (w) and
(y) of this paragraph; (r) distributions made pursuant to Permitted Proceed
Uses; (s) the payment of any dividend within 60 days after the date of its
declaration, if such dividend could have been made on the date of such
declaration in compliance with the foregoing provisions; (t) a Qualified
Exchange; (u) a Permitted Regulatory Redemption of Indebtedness (other than the
Notes) or Capital Stock of such Payment Guarantor; (v) with respect to each tax
year that a Guarantor qualifies as an S Corporation under the Code, or any
similar provision of state or local law, distributions of Tax Amounts; provided
however that prior to any distribution of Tax Amounts a knowledgeable and duly
authorized officer of the Guarantor making such distribution certifies, and
counsel reasonably acceptable to the Trustee opines, that such Guarantor
qualifies as an S Corporation for Federal income tax purposes and for the states
in respect of which such distributions are being made and that at the time of
such distributions,
43
<PAGE>
the most recent audited financial statements of such Guarantor provide that such
Guarantor was treated as an S Corporation for Federal income tax purposes for
the period of such financial statements; (w) unsecured, subordinated loans by
Empress to Hammond Empress or Hammond Leasing as and when necessary to fund
interest payments on their respective Mirror Notes in an amount not to exceed
$11 million, including up to $2 million of which can be used for working capital
purposes; (x) Restricted Investments in the form of Qualified Loans to
Additional Guarantors in an amount equal to the Net Retained Repurchase Amount
(only to the extent that such amounts were not otherwise included in Combined
Net Income or Consolidated Net Income of Empress); (y) any loan from Hammond
Empress or Hammond Leasing to Empress, evidenced by an unsecured subordinated
promissory note, provided that immediately prior to such proposed Restricted
Investment and after giving effect to such proposed Restricted Investment, on a
pro forma basis, the then outstanding aggregate principal amount of such loans
by Hammond Empress or Hammond Leasing, as applicable, would not exceed the
lesser of (i) 100% of the aggregate amount by which the Adjusted Consolidated
Net Income of Hammond Empress or Hammond Leasing, as applicable, for the period
(taken as one accounting period) commencing on the first day of the first full
fiscal quarter that commenced after the Issue Date, to and including the last
day of the fiscal quarter ended immediately prior to the date of each such
calculation exceeds permitted distributions of Tax Amounts (in accordance with
clause (v) of this paragraph) by Hammond Empress or Hammond Leasing, as
applicable; and (ii) with respect to Hammond Empress, $33 million, or, with
respect to Hammond Leasing, $25 million; and (z) any Restricted Investment by
Empress in the form of Qualified Loans to Additional Guarantors, of which the
source of funds is indebtedness incurred by Empress pursuant to the foregoing
clause (y). The full amount of any Restricted Payment made pursuant to any of
the foregoing clauses (s), (t), (u) and (y), however, will be deducted in the
calculation of the aggregate amount of Restricted Payments available to be made
referred to in clauses (3) and (4) of the immediately preceding paragraph.
Distributions of Tax Amounts may be made from time to time with
respect to a tax year based on reasonable estimates, with a reconciliation
within 40 days of the earlier of (i) the Guarantor's filing of Internal Revenue
Service Form 1120S for the applicable taxable year; and (ii) the last date such
form is required to be filed (without regard to any extensions), provided that
-------- ----
the stockholders of each Guarantor shall have entered into a binding agreement
(the "Tax Reimbursement Agreement") with each Guarantor to reimburse the
applicable Guarantor for certain positive differences between distributed Tax
Amounts and the Reconciled Tax Amount, which difference must be paid at the time
of such reconciliation. Any part of Tax Amounts not distributed in respect of a
tax period for which it is calculated shall be available for distribution in
subsequent tax periods.
44
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The Company shall not, directly or indirectly, make any Restricted
Payment to any party, other than to its parent Guarantors.
Section 5.4 Corporate Existence.
-------------------
Subject to Article VI, the Company and the Guarantors shall do or
cause to be done all things necessary to preserve and keep in full force and
effect their corporate existence and the corporate or other existence of each of
their Subsidiaries in accordance with the respective organizational documents of
each of them and the rights (charter and statutory) and corporate franchises of
the Company and their Guarantors and each of their Subsidiaries; provided,
--------
however, that neither the Company nor any of the Guarantors shall be required to
- -------
preserve, with respect to itself, any right or franchise if (a) the Board of
Directors of the Company shall determine reasonably and in good faith that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and (b) the loss thereof is not disadvantageous in any material
respect to the Holders.
Section 5.5 Payment of Taxes and Other Claims.
---------------------------------
The Company and the Guarantors shall, and shall cause each of their
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges (including withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon the Company, any Guarantor or any of their
Subsidiaries or properties and assets of the Company, any Guarantor or any of
their Subsidiaries; and (ii) all lawful claims, whether for labor, materials,
supplies, services or anything else, which have become due and payable and which
by law have or may become a Lien upon the property and assets of the Company,
any Guarantor or any of their Subsidiaries; provided, however, that neither the
-------- -------
Company nor any Guarantor shall be required to pay or discharge or cause to be
paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which disputed amounts adequate reserves have been
established in accordance with GAAP.
Section 5.6 Maintenance of Insurance.
------------------------
From and at all times after the Issue Date, the Company and each of
the Guarantors shall have in effect customary insurance for business
interruptions, comprehensive general liability and (as applicable) brown water
coverage, and shall have completion, performance or similar bonds in place for
all ongoing projects, in each case on terms and in an amount reasonably
sufficient (taking into account, among other factors, the creditworthiness of
the insurer) to avoid a material adverse
45
<PAGE>
change in the financial condition or results of operation of the Company and the
Guarantors taken as a whole.
Section 5.7 Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Company and each of the Guarantors shall deliver to the
Trustee within 90 days after the end of their respective fiscal years an
Officers' Certificate complying (whether or not required) with Section 314(a)(4)
of the TIA and stating that a review of the activities of the Company and each
of the Guarantors, respectively, during the preceding fiscal year has been made
under the supervision of the signing Officers with a view to determining whether
the Company and the Guarantors, as the case may be, has kept, observed,
performed and fulfilled its obligations under this Indenture and further
stating, as to each such Officer signing such certificate, whether or not the
signer knows of any failure by the Company or any Guarantor to comply with any
conditions or covenants in this Indenture and, if such signer does know of such
a failure to comply, the certificate shall describe such failure with
particularity. The Officers' Certificate shall also notify the Trustee should
the relevant fiscal year end on any date other than the current fiscal year end
date.
(b) So long as not contrary to the then current recommendation of
the American Institute of Certified Public Accountants, the Company shall
deliver to the Trustee within 120 days after the end of each of its fiscal years
a written report of a firm of independent certified public accountants with an
established national reputation stating that in conducting their audit for such
fiscal year, nothing has come to their attention that caused them to believe
that the Company or any Guarantor was not in compliance with the provisions set
forth in Sections 5.3, 5.11, 5.14, 5.16, 5.19 or 5.20 of this Indenture.
(c) The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, immediately upon becoming aware of any
Default or Event of Default under this Indenture, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
Section 5.8 Reports.
-------
Whether or not the Company or any of the Guarantors is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, each shall
deliver to the Trustee and to each Holder, within 15 days after it is or would
have been required to file such with the SEC, annual and quarterly consolidated
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the SEC if such person were subject to
the requirements of Section 13 or
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15(d) of the Exchange Act including, with respect to annual information only, a
report thereon by certified independent public accountants as such would be so
required in such reports to the SEC and, in each case, together with a
management's discussion and analysis of financial condition and results of
operations which would be so required.
Section 5.9 Waiver of Stay, Extension or Usury Laws.
---------------------------------------
The Company and each Guarantor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law wherever enacted which would
prohibit or forgive the Company or any Guarantor from paying all or any portion
of the principal of, or interest on, the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that they may
lawfully do so) the Company and each Guarantor hereby expressly waives all
benefit or advantage of any such law insofar as such law applies to the
Securities, and covenants that it shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
Section 5.10 Limitation on Transactions with Affiliates.
------------------------------------------
None of the Guarantors shall be permitted, and none shall permit any
of their Subsidiaries, on or after the Issue Date, to enter into any
transaction, including any contract, arrangement, agreement, loan, advance,
guarantee or understanding and including any series of related transactions,
with or for the benefit of any Affiliate (an "Affiliate Transaction") except for
transactions made in good faith the terms of which are fair and reasonable to
such Guarantor or such Subsidiary, as the case may be, and are at least as
favorable as the terms that could be obtained by such Guarantor or such
Subsidiary, as the case may be, in a comparable transaction made on an arms'
length basis between unaffiliated parties, provided, that with respect to any
--------
Affiliate Transaction (including any series of related Affiliate Transactions)
involving consideration to either party in excess of (x) $2.0 million, a
majority of the Board of Directors of such Guarantor approves such Affiliate
Transaction, as evidenced by a Board Resolution, and (y) $10.0 million, such
Guarantor or such Subsidiary, as the case may be, delivers to the Trustee and
the Holders a written favorable opinion as to the fairness of such transaction
to the Guarantor, from a financial point of view, from an independent investment
banking firm of national reputation. Any transactions solely between or among
the Company, Empress, Hammond Empress or Hammond Leasing or any Guarantors
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that are wholly owned Subsidiaries of such Guarantors shall not be deemed to be
Affiliate Transactions for purposes of this Section 5.10.
Section 5.11 Limitation on Incurrence of Additional Indebtedness and
-------------------------------------------------------
Disqualified Capital Stock.
- --------------------------
Except as set forth in any one of the paragraphs below, the Guarantors
shall not, and shall not permit any of their Subsidiaries to, directly or
indirectly, issue, assume, guaranty, incur, become directly or indirectly liable
with respect to (including as a result of an acquisition, merger or
consolidation), extend the maturity of, or otherwise become responsible for,
contingently or otherwise (individually and collectively, to "incur," or, as
appropriate, an "incurrence"), any Indebtedness or any Disqualified Capital
Stock on or after the Issue Date. Notwithstanding the foregoing:
(a) If (i) no Default or Event of Default shall have occurred and be
--
continuing at the time of, or would occur after giving effect, on a pro
forma basis, to such incurrence of such Indebtedness or Disqualified
Capital Stock; and (ii) (A) in the case of senior Indebtedness, on the date
of the incurrence of such Indebtedness (the "Incurrence Date"), the
Combined Fixed Charge Coverage Ratio for the Reference Period immediately
preceding the Incurrence Date, after giving effect, on a pro forma basis,
to the incurrence of such Indebtedness, would be at least 2.75 to 1 and,
after giving effect, on a pro forma basis, to the incurrence of such
Indebtedness, the aggregate amount of all senior Indebtedness of the
Guarantors would not exceed 2.5 times Combined EBITDA; or (B) in the case
of subordinated Indebtedness or Disqualified Capital Stock, on the
Incurrence Date, the Combined Fixed Charge Coverage Ratio for the Reference
Period immediately preceding the Incurrence Date, after giving effect, on a
pro forma basis, to such incurrence of such Indebtedness or Disqualified
Capital Stock, would be at least 2.25 to 1 and the Indebtedness or
Disqualified Capital Stock, as applicable, being incurred has an Average
Life that is greater than the Average Life of the Notes and has a final
maturity date (or final redemption date in the case of Disqualified Capital
Stock) after the Stated Maturity of the Notes, then the Guarantors may
----
incur, in the case of (ii)(A), such senior Indebtedness or, in the case of
(ii)(B), such subordinated Indebtedness or Disqualified Capital Stock;
(b) The Guarantors may incur Indebtedness pursuant to (i) the Mirror
Notes and the Guarantor Loan Agreement up to the amounts specified therein
as of the date thereof; (ii) Qualified Inter-Guarantor Loans; (iii)
Qualified Loans; and
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(iv) loans made pursuant to clauses (w) and (y) of the second paragraph of
Section 5.3;
(c) The Guarantors may incur Purchase Money Indebtedness, provided
that the amount of such Indebtedness outstanding at any time pursuant to
this paragraph (c) shall not, in the aggregate, exceed $7.5 million;
(d) The Guarantors may incur Refinancing Indebtedness with respect to
any Indebtedness or Disqualified Capital Stock, as applicable, described in
clauses (a) and (c) of this covenant (so long as, in the case of
Indebtedness used to refinance, replace or retire Indebtedness in clause
(c), such Refinancing Indebtedness is non-recourse as to any assets other
than the assets that secure such Indebtedness refinanced, replaced or
retired);
(e) The Guarantors may incur Permitted Indebtedness; and
(f) The Guarantors may also incur Indebtedness in a principal amount
outstanding at any time of up to $15 million in the aggregate.
Notwithstanding the foregoing or anything herein to the contrary, the
Guarantors will not, and will not permit any of their Subsidiaries to, directly
or indirectly, incur any Indebtedness in a principal amount outstanding at any
time in excess of $75 million, which Indebtedness is secured by the Empress I or
the Empress II.
The Company shall not, directly or indirectly, incur any Indebtedness
or any Disqualified Capital Stock, other than the Indebtedness evidenced by the
Notes.
Section 5.12 Limitation on Dividends and Other Payment Restrictions
------------------------------------------------------
Affecting Subsidiaries.
- ----------------------
None of the Guarantors shall, and none shall permit any of its
respective Subsidiaries to, directly or indirectly, create, assume or suffer to
exist any consensual encumbrance or restriction on the ability of any Subsidiary
to pay dividends or make other distributions to, or to pay any obligation to, or
to otherwise transfer assets or make or pay loans or advances to, the Company or
any of the Guarantors, except (a) restrictions imposed by the Notes, the Mirror
Notes or the Indenture, or restrictions imposed by other senior Indebtedness
which are substantially the same as (and apply only to the same persons and
property as) such restrictions; (b) restrictions imposed by applicable Gaming
Law; and (c) restrictions under any Acquired Indebtedness or any agreement
relating to any property, asset, or business acquired by a Guarantor or any of
its Subsidiaries,
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which restrictions existed at the time of such acquisition, were not incurred in
connection with or in anticipation of such acquisition and are not applicable to
any person, other than the person acquired, or to any property, asset or
business, other than the property, assets and business so acquired.
Notwithstanding the foregoing, neither (a) reasonable and customary provisions
restricting subletting or assignment of any lease entered into in the ordinary
course of business, consistent with industry practice; nor (b) Liens on assets
securing permitted senior Indebtedness, shall in and of themselves be considered
a restriction on the ability of the applicable Subsidiary to transfer such
property or assets, as the case may be.
Section 5.13 Limitation on Liens.
-------------------
None of the Guarantors shall, and none shall permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien in or on any right, title or interest to any of their respective
properties or assets, expect (a) Permitted Liens; (b) Liens incurred pursuant to
Purchase Money Indebtedness incurred in accordance with the provisions of
paragraph (c) of Section 5.11; (c) with respect to each Guarantor, Liens
incurred pursuant to senior Indebtedness incurred in accordance with the
provisions of clause (ii) (A) of paragraph (a) of Section 5.11; and (d) Liens
incurred pursuant to Permitted FF& E Slot Machine Indebtedness.
The Company shall not create, assume, or suffer to exist any Liens on
any of its property or assets, except Liens created under the Indenture and the
Notes.
Section 5.14 Limitation on Sales of Assets and Subsidiary Stock;
--------------------------------------------------
Event of Loss.
- -------------
(a) The Guarantors shall not, and none shall permit any of its
Subsidiaries to, in one or a series of related transactions, convey, sell,
lease, transfer, assign or otherwise suffer to dispose of, directly or
indirectly, any of its property, business or assets, including without
limitation upon any sale or other transfer or issuance of any Capital Stock or
other ownership interest of any Subsidiary of such Guarantor or any sale and
leaseback transaction whether by such Guarantor or a Subsidiary of such
Guarantor or through the issuance, sale or transfer of Capital Stock or other
ownership interest by a Subsidiary (an "Asset Sale") that results in Net Cash
Proceeds in excess of $5.0 million unless or that has a fair market value in
excess of $5.0 million unless (i) (a) the Net Cash Proceeds therefrom (the
"Asset Sale Offer Amount") are applied to the repurchase of the Notes pursuant
to an irrevocable, unconditional offer (the "Asset Sale Offer") to repurchase
Notes at a purchase price (the "Asset Sale Offer Price") of 101% of the
principal amount of such Notes, plus accrued and unpaid interest to the date of
payment;
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or (b) within 180 days of such Asset Sale, the Net Cash Proceeds therefrom are
invested in assets and property that are part of a Related Business of a
continuing Guarantor; (2) at least 75% of the consideration for such conveyance,
sale, lease, transfer or other disposition or issuance consists of (i) U.S.
Legal Tender; or (ii) Cash Equivalents; or (iii) the securities of a company
with a market capitalization in excess of $500 million, which securities are
traded on a national securities exchange and are of a class and series of
securities with a minimum public float of $100 million; or (iv) liabilities
assumed (other than subordinated Indebtedness) by the transferee; or (v)
property that promptly (and in no event more than 10 days) after such Asset Sale
is converted into U.S. Legal Tender; (3) no Default or Event of Default shall
have occurred and be continuing at the time of, or would occur after giving
effect, on a pro forma basis, to, such Asset Sale; and (4) the Board of
Directors of the applicable Guarantor determines in good faith that such
Guarantor or such Subsidiary, as applicable, receives fair market value for such
Asset Sale, as evidence by an Officers' Certificate delivered to the Trustee.
Notwithstanding the foregoing provisions of the prior paragraph, an
Asset Sale shall not be deemed to have occurred if:
(i) the Guarantors in the ordinary course of business and
consistent with past practice, convey, sell, lease, transfer, assign, or
otherwise dispose of assets acquired and held for resale in the ordinary
course of business;
(ii) Hammond Leasing leases the Empress III to Hammond Empress,
or if Hammond Empress, or if Hammond Empress fails to commence gaming
operations, leases the Empress III to a third party;
(iii) Hammond Leasing merges or consolidates into Hammond
Empress;
(iv) the Guarantors convey, sell, lease, transfer or otherwise
dispose of assets pursuant to and in accordance with the provisions of
Article VI; or
(v) a Sale of a Guarantor is made in accordance with the
provisions of Section 5.20.
The Company and the Guarantors shall accumulate all Net Cash Proceeds
from Asset Sales (including any cash as and when received from the proceeds of
any property which itself was acquired in consideration of an Asset Sale) and
the aggregate amount of such accumulated Net Cash Proceeds not used for the
purposes permitted, and within the time period provided, by
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Section 5.14 (a) (1) (b) shall be referred to as the "Accumulated Amount."
(b) For the purposes of this Section 5.14, "Minimum Accumulation
Date" means each date on which the Accumulated Amount exceeds $10.0 million. Not
later than 10 Business Days after each Minimum Accumulation Date the Company (or
the Trustee, upon the request and at the expense of the Company) shall commence
an Asset Sale Offer to purchase, on a pro rata basis, for U.S. Legal Tender,
--- ----
Securities in an aggregate principal amount equal to the Accumulated Amount
divided by the Asset Sale Offer Price (the "Asset Sale Offer Amount") by sending
written notice by first-class mail to each Holder at its registered address,
with a copy to the Trustee, of the commencement of such Asset Sale Offer. The
Company shall use its best efforts to provide the Trustee with notice of the
Asset Sale Offer at least 5 Business Days before the commencement of any Asset
Sale Offer. An Asset Sale Offer shall remain open for 20 Business Days following
its commencement and no longer, except to the extent that a longer period is
expressly required by applicable law (the "Asset Sale Offer Period"). Upon
expiration of the Asset Sale Offer Period (the "Asset Sale Put Date"), Holders
electing to have a Security (or portion thereof) purchased pursuant to an Asset
Sale Offer must surrender their Security as set forth in Section 5.14 (b) (5)
below. On the third Business Day following the Asset Sale Put Date (the "Asset
Sale Purchase Date"), the Asset Sale Offer shall be consummated.
The notice to the Holders shall contain all information, instructions
and materials required by applicable law or otherwise material to such Holders'
decision to tender Securities pursuant to the Asset Sale Offer. The notice (to
the extent consistent with this Indenture) shall govern the terms of the Asset
Sale Offer and shall state:
(1) that the Asset Sale Offer is being made pursuant to such
notice and this Section 5.14;
(2) the Asset Sale Offer Amount, the Asset Sale Offer Price
(including the amount of accrued and unpaid interest), the Asset Sale Put Date,
and the Asset Sale Purchase Date;
(3) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest if interest is then
accruing;
(4) that, unless the Company defaults in depositing U.S.
Legal Tender with the Paying Agent, as provided pursuant to the last paragraph
of this Section 5.14 (b), in an amount sufficient to purchase the principal
amount of, any pay accrued and unpaid interest on, Securities to be acquired
pursu-
52
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ant to the Asset Sale Offer, any Security, or portion thereof, accepted for
payment pursuant to the Asset Sale Offer shall cease to accrue interest after
the Asset Sale Purchase Date;
(5) That Holders electing to have a Security, or any portion
thereof, purchased pursuant to an Asset Sale Offer, will be required to
surrender their Security, together with the properly completed form entitled
"Option of Holder to Elect Purchase" (located on the reverse of the Security),
to the Paying Agent at the address specified in the notice on or prior to the
close of business on the Asset Sale Put Date;
(6) that Holders will be entitled to withdraw their elections to
have Securities purchased pursuant to the Asset Sale Offer, in whole or in part,
if the Paying Agent receives, on or prior to the close of business on the Asset
Sale Put Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the securities such Holder is
withdrawing and a statement that such Holder is withdrawing its election to have
such principal amount of Securities purchased pursuant to the Asset Sale Offer;
(7) that if Securities in a principal amount in excess of the
Asset Sale Offer Amount are tendered and not withdrawn, the Company shall
purchase Securities on a pro rata basis (with such adjustment as may be deemed
--- ----
appropriate by the Company so that only Securities in denominations of $1,000 or
integral multiples of $1,000 shall be acquired);
(8) That Holders whose Securities were purchased only in part
will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered;
(9) if the Asset Sale Purchase Date is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest will be paid to the person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be payable to Securityholders who tender Securities pursuant to
the Asset Sale Offer; and
(10) a brief description of the circumstances and relevant facts
regarding such Asset Sales.
Any such Asset Sale Offer shall comply with all applicable provisions
of Federal and state laws, including those regulating tender offers, if
applicable, and any provisions of this Indenture that conflict with such laws
shall be deemed to be superseded by the provisions of such laws.
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No later than 12:00 noon New York City time on an Asset Sale Purchase
Date, the Company (i) shall accept for payment Securities or portions thereof
properly tendered pursuant to the Asset Sale Offer (on a pro rata basis if
--- ----
required pursuant to paragraph (7) above) and (ii) deliver to the Trustee
Securities so accepted together with an Officers' Certificate setting forth the
Securities or portions thereof being purchased by the Company. No later than
12:00 noon New York City time on an Asset Sale Purchase Date, Empress shall
irrevocably deposit with the Company and the Company shall irrevocably deposit
with the Paying Agent U.S. Legal Tender in an amount sufficient to purchase the
principal amount of, and pay accrued and unpaid interest on, all Securities or
portions thereof so accepted. In the event an Asset Sale Offer pursuant to this
Section 5.14 is commenced, in whole or in part, as a result of one or more Asset
Sales by any Guarantor other than Empress, each such Guarantor shall, on or
prior to the close of business on the Business Day immediately preceding the
Asset Sale Purchase Date, pay to Empress U.S. Legal Tender in an amount equal to
the product of (A) the amount Empress is required to deposit with the Company
pursuant to this paragraph and (B) a fraction, the numerator of which is the Net
Cash Proceeds received by a Guarantor from such Guarantor's Asset Sale and the
denominator of which is the Accumulated Amount applicable to such Asset Sale
Offer, subject to the joint and several obligations of each Guarantor with
respect to such payments. Empress' payment to the Company pursuant to this
paragraph shall represent a pre-payment of principal of, premium, if any, and
interest on, the Mirror Note of Empress in an amount equal to the amount paid by
Empress to the Company. Any payment made by any Guarantor Empress pursuant to
this paragraph shall represent a prepayment of principal of, premium, if any,
and interest on, the Mirror Note of such Guarantor in an amount equal to such
amount paid to Empress. The Paying Agent shall promptly mail or deliver to
Holders of Securities so accepted payment in an amount equal to the Asset Sale
Offer Price (plus accrued and unpaid interest) for such Securities, and the
Company shall execute and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so accepted
shall be promptly mailed or delivered by the Company to the Holder thereof. The
Company (or the Trustee, upon the request and at the expense of the Company)
shall notify the Holders of the results of the Asset Sale Offer promptly after
the Asset Sale Purchase Date.
(c) If the amount required to acquire all Securities tendered by
Holders pursuant to the Asset Sale Offer (the "Acceptance Amount") is less than
the Accumulated Amount, the excess of the Accumulated Amount over the Acceptance
Amount may be used by the applicable Guarantor or Guarantors, as the case may
be, for general corporate purposes without regard to the restrictions set forth
in this Section 5.14, unless otherwise restricted by the
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other provisions of this Indenture. Upon consummation of any Asset Sale Offer
made in accordance with the terms of this Section 5.14, the Accumulated Amount
(but only to the extent offered to the Holders pursuant to the terms of this
Section 5.14) as of the Minimum Accumulation Date shall be reduced to zero and
accumulations thereof shall be deemed to recommence from the day next following
such Minimum Accumulation Date.
(d) Upon an Event of Loss relating to property with a fair market
value in excess of $5 million, the Guarantors shall make an Asset Sale Offer to
repurchase at the Asset Sale Offer Price, plus accrued and unpaid interest, that
principal amount of Notes equal to the Net Cash Proceeds of such Event of Loss
(the "Event of Loss Amount") within 210 days thereafter, unless the Asset Sale
Amount related to such Event of Loss is invested, within 180 days after such
Event of Loss, in assets and property directly related to a Related Business of
a continuing Guarantor. Notwithstanding the foregoing, the applicable Guarantor
may first retire senior Indebtedness secured by the property subject to the
Event of Loss, if and to the extent required by the terms of such senior
Indebtedness and all amounts so expended shall reduce the Asset Sale Offer
Amount upon such an Event of Loss.
Section 5.15 Limitation on Use of Proceeds.
-----------------------------
On the Issue Date, the Company shall loan the net proceeds of the
offering of the Securities to Empress pursuant to the Guarantor Loan Agreement.
Empress shall use the loan from the Company only for Permitted Proceeds Uses.
Section 5.16 Construction and Licensure.
--------------------------
(a) The Guarantors shall cause construction of the Empress III
and the Hammond Facility and the expansion and refurbishment of the Joliet
Facility to be prosecuted with diligence in a good and workmanlike manner in
accordance with the Plans. The Company shall be required to make an irrevocable,
unconditional offer (except as set forth in Section 5.16 (b)) to all Holders to
repurchase, for U.S. Legal Tender (a "Casino Purchase Offer") on a pro rata
basis, at a purchase price (the "Casino Offer Price") of 101% of the principal
amount of the Notes, plus accrued and unpaid interest to the purchase date, (i)
$33 million of the principal amount of Notes (the "Casino Offer Amount") (a)
within 10 Business Days of a final determination (without regard to any
administrative appeals or judicial review) by the applicable Governmental
Authority with jurisdiction over such matters that Hammond Empress or Hammond
Leasing will not receive the necessary Gaming Licenses to operate riverboat
gaming activities at the Hammond Facility; (b) on September 1, 1995, if the
Final Completion Date has not occurred on or prior to such date and for the
immediately preceding two fiscal quarters, the Combined Fixed Charge Coverage
Ratio is less than 3.5 to 1; (c)
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<PAGE>
on March 1, 1996, if the Final Completion Date has not occurred on or prior to
such date; (d) within 10 Business Days of (A) any revocation of any of Hammond
Empress' or Hammond Leasing's Gaming Licenses to conduct gaming activities; (B)
the prohibition by any Governmental Authority with jurisdiction as to such
matters of gaming activities at the location of the Hammond Facility, which
prohibition has not been rescinded or otherwise terminated within 90 days
thereafter; or (C) a determination by Hammond Empress to cease its efforts to
obtain a Gaming License to conduct gaming activities in Hammond or to open the
Hammond Facility; and (ii) an additional $25 million principal amount of Notes
(the "Vessel Offer Amount") on March 1, 1996, if, the Final Completion Date has
not occurred on or prior to such date and, for the immediately preceding two
fiscal quarters, the Combined Fixed Charge Coverage Ratio is less than 3.5 to 1.
(b) In the event that, pursuant to this Section 5.16, the Company
shall be required to commence a Casino Purchase Offer, the Company (or the
Trustee, upon the request and at the expense of the Company shall commence a
Casino Purchase Offer by sending written notice by first-class mail to each
Holder at its registered address, with a copy to the Trustee, of the
commencement of such Casino Purchase Offer. The Company shall use its best
efforts to provide the Trustee with notice of the Casino Purchase Offer at least
5 Business Days before the commencement of any Casino Purchase Offer. A Casino
Purchase Offer shall remain open for 20 Business Days following its
commencement, except to the extent that a longer period is expressly required by
applicable law (the "Casino Offer Period"). On or before the expiration of the
Casino Offer Period (the "Casino Offer Put Date") (unless with respect to the
matters referred to in clauses ((i) (a) and (i) (d) of Section 5.16 (a) above,
the event(s) that gave rise to the Company's obligation to make the Casino
Purchase Offer have all been cured as of the expiration of the Casino Purchase
Offer have all been cured as of the expiration of the Casino Offer Period),
Holders electing to have a Security (or portion thereof) purchased pursuant to a
Casino Purchase Offer must surrender their Security as set forth in Section 5.16
(b) (5) below. On the third Business Day following the Casino Offer Put Date
(the "Casino Offer Payment Date"), the Company shall apply the Casino Offer
Amount or the Vessel Offer Amount, as the case may be (plus, in each case,
accrued and unpaid interest) to all Securities tendered on a pro rata basis if
the Casino Offer Amount or the Vessel Offer Amount (or, if applicable, the
combined amounts thereof), as the case may be, is insufficient to purchase all
Securities so tendered or, if less than the applicable Casino Offer Amount or
Vessel Offer Amount, as the case may be, has been tendered, shall purchase all
of the Securities tendered in response to the Casino Purchase Offer.
The notice to the Holders shall contain all information, instructions
and materials required by applicable law or otherwise material to such Holders'
decision to tender Securities
56
<PAGE>
pursuant to the Casino Purchase Offer. The notice (to the extent consistent with
this Indenture) shall govern the terms of the Casino Purchase Offer and shall
state:
(1) that the Casino Purchase Offer is being made pursuant to such
notice and this Section 5.16;
(2) the Casino Offer Amount and the Vessel Offer Amount, as
applicable, the Casino Offer Price (including the amount of accrued and
unpaid interest), the Casino Offer Put Date and the Casino Offer Payment
Date;
(3) that any Security or portion thereof not tendered or accepted
for payment will continue to accrue interest if interest is then accruing;
(4) that, unless the Company defaults in depositing U.S. Legal
Tender with the Paying Agent, as provided pursuant to the last paragraph of
this Section 5.16(b), in an amount sufficient to purchase the principal
amount of, and pay accrued and unpaid interest on, Securities to be
acquired pursuant to the Casino Purchase Offer, any Security or portion
thereof accepted for payment pursuant to the Casino Purchase Offer shall
cease to accrue interest after the Casino Offer Payment Date;
(5) that Holder electing to have a Security, or any portion
thereof, purchased pursuant to any Casino Purchase Offer will be required
to surrender the Security, together with the properly completed form
entitled "Option of Securityholder to Elect Purchase" (located on the
reverse of the Security) to the Paying Agent at the address specified in
the notice on or prior to the close of business on the Casino Offer Put
Date;
(6) that Holders will be entitled to withdraw their elections to
have Securities purchased pursuant to the Casino Purchase Offer, in whole
or in part, if the Paying Agent receives, on or prior to the close of
business on the Casino Offer Put Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Securities the Holder is withdrawing and a statement that
such Holder is withdrawing its election to have such principal amount of
Securities purchased pursuant to the Casino Purchase Offer;
(7) that, if Securities in a principal amount in excess of the
Casino Offer Amount or Vessel Offer Amount (or, if applicable, the combined
amounts thereof), as the case may be, are tendered and not withdrawn, the
Company shall purchase Securities on a pro rata basis (with such
--- ----
57
<PAGE>
adjustments as may be deemed appropriate by the Company so that only
Securities in denominations of $1,000, or integral multiples thereof, shall
be acquired);
(8) that Holders whose Securities were purchased only in part
will be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered;
(9) if the Casino Offer Payment Date is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest will be paid to the person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be payable to Securityholders who tender Securities pursuant
to the Casino Purchase Offer; and
(10) a brief description of the circumstances and relevant facts
regarding such Casino Purchase Offer.
Any such Casino Purchase Offer shall comply with all applicable
provisions of Federal and state laws, including those, regulating tender offers,
if applicable, and any provisions of this Indenture that conflict with such laws
shall be deemed to be superseded by the provisions of such laws.
No later than 12:00 noon New York City time on the Casino Offer
Payment Date, the Company shall (i) accept for payment Securities or portions
thereof tendered pursuant to the Casino Purchase Offer (on a pro rata basis if
--- ----
required pursuant to paragraph (7) above) and (ii) deliver to the Trustee
Securities so accepted together with an Officers' Certificate setting forth the
Securities or portions thereof being purchased by the Company. No later than
12:00 noon New York City time on the Casino Offer Payment Date, Empress shall
irrevocably deposit with the Company and the Company shall irrevocably deposit
with the Paying Agent U.S. Legal Tender in an amount sufficient to purchase the
principal amount of, and pay accrued and unpaid interest on, all Securities or
portions thereof so accepted. On or prior to the close of business on the
Business Day immediately preceding the Casino Offer Payment Date, each of
Hammond Empress and Hammond Leasing shall pay to Empress U.S. Legal Tender in an
amount equal to the Casino Offer Amount and the Vessel Offer Amount (or, if
applicable, the combined amounts thereof), respectively, subject to the joint
and several obligations of each Guarantor with respect to such payments.
Empress' payment to the Company pursuant to this paragraph shall represent a
prepayment of principal of, premium, if any, and interest on, the Mirror Note of
Empress in an amount equal to the amount paid to the Note of Empress in an
amount equal to the amount paid to the Company. Any payment made by Hammond
Empress and Hammond Leasing, respectively, to Empress pursuant to this paragraph
shall
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represent, in each case, a prepayment of principal of, premium, if any, and
interest on, the Mirror Note of Hammond Empress and Hammond Leasing, as
applicable, in an amount equal to such amount paid to Empress. The Paying Agent
shall promptly mail or deliver to each Holder of Securities so accepted, payment
in an amount equal to the Casino Offer Price, plus accrued and unpaid interest,
for such Securities, and the Company shall execute and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new Security equal
in principal amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the Paying
Agent to the Holder thereof. The Company (or the Trustee, upon the request and
at the expense of the Company) shall notify the Holders of the results of the
Casino Purchase Offer promptly after the Casino Offer Payment Date.
(c) If the amount required to acquire all Securities tendered by
Holders pursuant to the Casino Purchase Offer (the "Acceptance Amount") shall be
less than the Casino Offer Amount or the Vessel Offer amount (or, if applicable,
the combined amounts thereof), the excess of such amount over the Acceptance
Amount may be used by the applicable Guarantor or Guarantors, as the case may
be, for general corporate purposes without regard to the restrictions set forth
in this Section 5.16, unless otherwise restricted by the other provisions of
this Indenture.
Section 5.17 Limitation on Lines of Business.
-------------------------------
None of the Guarantors and their respective Subsidiaries shall
directly or indirectly and the Parent Guarantor shall not directly engage, to
any substantial extent, in any line or lines of business activity other than in
a Related Business.
Section 5.18 Limitation on Status as Investment Company.
------------------------------------------
None of the Company, the Guarantors and their respective Subsidiaries
shall become "investment companies" (as that term is defined in the Investment
Company Act of 1940, as amended), or otherwise become subject to regulation
under the Investment Company Act.
Section 5.19 Limitation on Sales and Issuances of Capital Stock by
-----------------------------------------------------
Subsidiaries.
- ------------
No Subsidiary of a Guarantor shall issue or sell, other than to such
Guarantor, any shares of its Capital Stock to any person ( other than common
stock with no preferences or special rights or privileges and with no redemption
or prepayment provisions, which shares of common stock constitute in the
aggregate
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less than 20% of the voting interest and less than 20% of the economic interest
of such Subsidiary).
Section 5.20 Limitation on Sale of a Guarantor.
---------------------------------
(a) Upon a Sale of a Guarantor: (i) the applicable Guarantor
shall pay to Empress the Guarantor Sale Repurchase Amount relating to such
Guarantor; and (ii) the Company shall make an irrevocable, unconditional offer
(the "Guarantor Sale Offer" ) to purchase for U.S. Legal Tender the principal
amount of Notes equal to the Guarantor Sale Repurchase Amount at a purchase
price (the "Guarantor Sale Purchase Price") of 101% thereof, plus accrued and
unpaid interest to the date of payment.
(b) In the event that, pursuant to this Section 5.20, the Company
shall be required to commence a Guarantor Sale Offer, the Company (or the
Trustee, upon the request and at the expense of the Company) shall, within 10
Business Days following a Sale of a Guarantor, commence a Guarantor sale Offer
by sending written notice by first-class mail to each Holder at its registered
address, with a copy to the Trustee, of the commencement of such Guarantor Sale
Offer. The Company shall use its best efforts to provide the Trustee with
notice of the Guarantor Sale Offer at least 5 Business Days before the
commencement of any Guarantor Sale Offer. A guarantor Sale Offer shall remain
open for 20 Business Days following its commencement, except to the extent that
a longer period is expressly required by applicable law (the "Guarantor Sale
Offer Period"). On or prior to the date of the expiration of the Guarantor Sale
Offer Period (the "Guarantor Sale Put Date"), Holders electing to have a
Security (or portion thereof) purchased pursuant to a Guarantor Sale Offer must
surrender their Security as set forth in Section 5.20 (b) (5) below. On the
third Business Day following the Guarantor Sale Put Date (the "Guarantor Sale
Payment Date"), the Company shall apply the Guarantor Sale Repurchase Amount
(plus accrued and unpaid interest) to all Securities tendered on a pro rata
basis if the principal amount of Securities tendered exceeds the Guarantor Sale
Repurchase Amount or, if less than the Guarantor Sale Repurchase Amount has been
tendered, shall purchase all the Securities tendered in response to the
Guarantor Sale Offer.
The notice to the Holders shall contain all information, instructions
and materials required by applicable law or otherwise material to such Holders'
decision to tender Securities pursuant to the Guarantor Sale Offer. The notice
(to the extent consistent with this Indenture) shall govern the terms of the
Guarantor Sale Offer and shall state:
(1) that the Guarantor Sale Offer is being made pursuant to such
notice and this Section 5.20;
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(2) the Guarantor Sale Repurchase Amount, the Guarantor Sale Purchase
Price (including the amount of accrued and unpaid interest), the Guarantor Sale
Put Date and the Guarantor Sale Payment Date;
(3) that any Security or portion thereof not tendered or accepted for
payment will continue to accrue interest if interest is then accruing;
(4) that, unless the Company defaults in depositing U.S. Legal Tender
with the Paying Agent, as provided pursuant to the last paragraph of this
Section 5.20(b), in an amount sufficient to purchase the principal amount of,
and pay accrued and unpaid interest on, Securities to be acquired pursuant to
the Guarantor Sale Offer, any Security or portion thereof accepted for payment
pursuant to the Guarantor Sale Offer shall cease to accrue interest after the
Guarantor Sale Payment Date;
(5) that Holders electing to have a Security, or any portion thereof,
purchased pursuant to a Guarantor Sale Offer will be required to surrender the
Security, together with the properly completed form entitled "Option of Holder
to Elect Purchase" (located on the reverse of the Security), to the Paying Agent
at the address specified in the notice on or prior to the close of business on
the Guarantor Sale Put Date;
(6) that Holders will be entitled to withdraw their elections to have
Securities purchased pursuant to the Guarantor Sale Offer, in whole or in part,
if the Paying Agent receives, on or prior to the close of business on the
Guarantor Sale Put Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Securities the
Holder is withdrawing and a statement that such Holder is withdrawing his
election to have such principal amount of Securities purchased pursuant to the
Guarantor Sale Offer;
(7) that if Securities in a principal amount in excess of the
Guarantor Sale Repurchase Amount are tendered and not withdrawn, the Company
shall purchase Securities on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Securities in denominations of
$1,000 or integral multiples of $1,000 shall be acquired);
(8) that Holders whose Securities were purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered;
(9) if the Guarantor Sale Payment Date is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest will be paid to the person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be
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payable to Securityholders who tender Securities pursuant to the Guarantor Sale
Offer; and
(10) a brief description of the circumstances and relevant facts
regarding such a Sale of a Guarantor.
Any such Guarantor Sale Offer shall comply with all applicable
provisions of Federal and state laws, including those regulating tender offers,
if applicable, and any provisions of this Indenture that conflict with such laws
shall be deemed to be superseded by the provisions of such laws.
No later than 12:00 noon, New York City Time, on a Guarantor Sale
Payment Date, the Company (i) shall accept for payment Securities or portions
thereof properly tendered pursuant to the Guarantor Sale Offer (on a pro rata
--- ----
basis if required pursuant to paragraph (7) above) and (ii) deliver to the
Trustee Securities so accepted together with an Officers' Certificate listing
the Securities or portion thereof being purchased by the Company. No later than
12:00 noon, New York City Time, on a Guarantor Sale Payment Date, Empress shall
irrevocably deposit with the Company and the Company shall irrevocably deposit
with the Paying Agent U.S. Legal Tender sufficient to purchase the principal
amount of, and pay accrued and unpaid interest on, all Securities so accepted;
and on or prior to the close of business of the Business Day immediately
preceding the Guarantor Sale Payment Date, Hammond Empress, Hammond Leasing or
an Additional Guarantor, as applicable, shall pay to Empress U.S. Legal Tender
in an amount equal to the Guarantor Sale Repurchase Amount, subject to the joint
and several obligations of each Guarantor with respect to such payments.
Empress' payment to the Company pursuant to this paragraph shall represent a
prepayment of principal of, premium, if any, and interest on, the Mirror Note of
Empress in an amount equal to the amount paid to the Company. Any payment made
by Hammond Empress, Hammond Leasing or any Additional Guarantor, as applicable,
to Empress pursuant to this paragraph shall represent, in each case, a
prepayment of principal of, premium, if any, and interest on, the Mirror Note of
Hammond Empress, Hammond Leasing and such Additional Guarantor, as applicable,
in an amount equal to such amount paid to Empress. The Paying Agent shall
promptly mail or deliver to each Holder of Securities so accepted, payment in an
amount equal to the Guarantor Sale Offer Price, plus accrued and unpaid
interest, for such Securities, and the Company shall execute and the Trustee
shall promptly authenticate and mail or deliver to such Holders a new Security
equal in principal amount to an unpurchased portion of the Security surrendered.
Any Securities not so accepted shall be promptly mailed or delivered by the
Paying Agent to the Holder thereof. The Company (or the Trustee, upon the
request and at
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the expense of the Company) shall notify the Holders of the results of the
Guarantor Sale Offer promptly after the Guarantor Sale Payment Date.
(c) Any amounts paid by Hammond Empress, Hammond Leasing or an
Additional Guarantor to Empress pursuant to a Sale of a Guarantor in excess of
such Guarantor's Mirror Notes outstanding immediately prior to such Sale of a
Guarantor shall be treated as a loan to Empress and be evidenced by a note which
note must (i) be unsecured; (ii) be subordinated in all respects to Empress'
Guarantee of the Notes; (iii) have a final maturity date after the Stated
Maturity of the Notes; and (iv) have no payment of principal (or cash payment of
interest), other than an amount for each year equal to the product of (a) the
Tax Percentage; and (b) the lesser of (i) the amount that would be imputed to
the Guarantor or its stockholders for Federal income tax purposes as interest
income under such note for such year; or (ii) the amount of interest accrued
under such note for such year) due (whether scheduled or optional at either
Empress' or the holder's option on) or prior to the Stated Maturity of the
Notes.
(d) If the amount required to acquire all Securities tendered by
Holders pursuant to the Guarantor Sale Offer (the "Acceptance Amount") shall be
less than the Guarantor Sale Repurchase Amount, the excess of the Guarantor Sale
Repurchase Amount over the Acceptance Amount may be used by Empress for general
corporate purposes without regard to the restrictions set forth in this Section
5.20, unless otherwise restricted by the other provisions of this Indenture.
Upon payment by the Company of the Guarantor Sale Repurchase Amount
and consummation of the Guarantor Sale Offer as provided pursuant to this
Section 5.2, Hammond Empress, Hammond Leasing or any Additional Guarantor, as
applicable, shall be released from its obligations as a Guarantor of the
Securities, as set forth in Section 13.5 hereof.
Section 5.21 Ownership of the Company. Notwithstanding any other
------------------------
provisions in this Indenture to the contrary, Empress, or Empress and one or
more of the other Guarantors, shall at all times own 100% of the Capital Stock
and any other equity interests of the Company.
Section 5.22 Future Guarantors. Each Guarantor shall cause each of
-----------------
its respective Subsidiaries (and the Parent Guarantor and any Additional
Guarantors) created or acquired after the Issue Date to enter into a
supplemental indenture for the purpose of jointly and severally guaranteeing, on
a senior basis, the Company's obligation to pay principal, premium and interest
on the Securities on terms identical to those contained in Article XIII hereof.
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ARTICLE VI
SUCCESSOR CORPORATION
Section 6.1 Limitation on Merger, Sale or Consolidation.
-------------------------------------------
Neither the Company nor Empress shall consolidate with or merge with
or into another person or, directly or indirectly, sell, lease or convey all or
substantially all of its assets (computed on a consolidated basis), whether in a
single transaction or a series of related transactions, to another person or
group of affiliated persons, unless:
(1) either (a) the Company or Empress, as the case may be, is the
continuing entity or (b) the resulting, surviving or transferee entity is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of the Company or Empress, as the case may be, in connection
with the Notes and the Indenture;
(2) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a pro forma basis to such transaction;
--- -----
(3) immediately after giving effect to such transaction, on a pro
---
forma basis, the Consolidation Net Worth of the consolidated, surviving or
- -----
transferee entity is at least equal to the Consolidated Net Worth of the Company
or Empress, as the case may be, immediately prior to such transaction;
(4) immediately after giving effect to such transaction, on a pro
---
forma basis, the surviving or transferee entity would immediately thereafter be
- -----
permitted to incur at least $1.00 of additional Indebtedness pursuant to
paragraph (a) of Section 5.11;
(5) such transaction will not result in the loss of any Gaming
License; and
(6) the Company or such Guarantor, as the case may be, has delivered
to the Trustee an Officers' Certificate stating that such consolidation, merger,
assignment, or transfer and such supplemental indenture complies with this
Article VI and that all conditions precedent herein provided relating to such
transaction have been satisfied.
For purposes of this Section 6.1, the Combined Fixed Charge Coverage
Ratio shall be determined on a pro forma consolidated basis (giving effect, on a
--- -----
pro forma basis, to the transaction and any related incurrence of Indebtedness
- --- -----
or Disqualified
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Capital Stock) for the four fiscal quarters which ended immediately preceding
such transaction.
Section 6.2 Successor Corporation Substituted.
---------------------------------
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company or Empress in accordance with
Section 6.1, the successor corporation formed by such consolidation or into
which the Company or Empress, as the case may be, is merged or to which such
transfer is made, shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or Empress, as the case may be, under the
Indenture and the Notes with the same effect as if such successor corporation
had been named therein as the Company or Empress, as the case may be, and the
Company or Empress, as applicable, shall be released from its obligations under
the Indenture and the Notes, except as to any obligations that arise from or as
a result of such transaction.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default
------------------
(a) "Event of Default," wherever used herein, means any one of
the following events (whatever the reason for such Event of Default and whether
it shall be caused voluntarily or involuntarily or effected, without limitation,
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the failure by the Company or any Guarantor to pay any installment
of interest on the Notes or any of the Mirror Notes, as applicable, as and when
due and payable and the continuance of any such failure for 30 days;
(2) the failure by the Company to pay all or any part of the principal
of, premium, if any, on the Notes, when and as the same become due and payable
at maturity, redemption, by acceleration or otherwise, including, without
limitation, failure to pay any Offer to Purchase Price, or otherwise, or the
failure by any Guarantor to pay or prepay any of the Mirror Notes in an amount
sufficient to enable the Company to make any such payment;
(3) except as otherwise provided herein, the failure by the Company or
any Guarantor to observe or perform any other covenant or agreement contained in
the Notes, the Mirror Notes, the Indenture or the Guarantor Loan Agreement, as
applicable, and the continuance of such failure for a period of 30 days after
written notice is given to the Company by the Trustee or to the
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Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Notes outstanding;
(4) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudging the Company, any of the Guarantors or any of
their Subsidiaries as bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization of the Company, such Guarantors or any of their
Subsidiaries under any bankruptcy or similar law, and such decree or order shall
have continued undischarged and unstayed for a period of 60 days; or a decree or
order of a court of competent jurisdiction over the appointment of a receiver,
liquidator, trustee, or assignee in bankruptcy or insolvency of the Company,
such Guarantors or any of their Subsidiaries, or of the property of any such
person, or for the winding up or liquidation of the affairs of any such person,
shall have been entered, and such decree, judgment, or order shall have remained
in force undischarged and unstayed for a period of 60 days;
(5) the Company, any of the Guarantors or any of their Subsidiaries
shall institute proceedings to be adjudicated a voluntary bankrupt, or shall
consent to the filing of a bankruptcy proceeding against it, or shall file a
petition or answer or consent seeking reorganization under any bankruptcy or
similar law or similar statute, or shall consent to the filing of any such
petition, or shall consent to the appointment of a Custodian, receiver,
liquidator, trustee, or assignee in bankruptcy or insolvency of it or any of its
assets or property, or shall make a general assignment for the benefit of
creditors, or shall take any corporate action in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing, or shall admit in
writing its inability to pay its debts generally as they become due, or shall,
within the meaning of any Bankruptcy Law, (i) with respect to Empress only,
become insolvent, or (ii) fail generally to pay its debts as they become due.
(6) a default in the payment of principal of, premium or interest when
due which extends beyond any stated period of grace applicable thereto or an
acceleration for any other reason of maturity of any Indebtedness of the
Company, any of the Guarantors or any of their respective Subsidiaries with an
aggregate principal amount in excess of $5,000,000;
(7) final unsatisfied judgments no longer subject to appeal not
covered by insurance aggregating in excess of $5,000,000, at any one time
rendered against the Company, any of the Guarantors or any of their respective
Subsidiaries and not stayed, bonded or discharged within 60 days; and
(8) the loss for 90 days of the legal right to conduct gaming
operations at any Casino.
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(b) If a Default occurs and is continuing, the Trustee shall,
within 90 days after the occurrence of such default, give to the Holders notice
of such default; provided, however, that Empress shall have the right to cure
--------
any Default and thereupon such Default shall be deemed never to have occurred,
including any payment default (but excluding any default pursuant to Section
7.1(a)(4), (5) or (8)) by the Company or any other Guarantor; and provided
--------
further, that with respect to any optional redemption or Required Regulatory
- -------
Redemption pursuant to Article III or any Offer to Purchase or the payment of
principal of, premium, if any, or interest on, the Notes and/or the Mirror Notes
on any Payment Date, the failure by a Guarantor (other than Empress) to deposit
funds (including the payment of interest) as required by this Indenture shall
not constitute a Default so long as Empress has deposited U.S. Legal Tender with
the Company in an amount sufficient to enable the Company to purchase the
principal amount of, and pay accrued and unpaid interest on, Securities to be
acquired as required pursuant to the terms of this Indenture.
Section 7.2 Acceleration of Maturity Date; Rescission and Annulment.
-------------------------------------------------------
(a) If an Event of Default (other than an Event of Default
specified in Sections 7.1(a)(4) or (5)) occurs and is continuing relating to the
Company, any Guarantor or any of their Subsidiaries, then, and in every such
case, unless the principal of all of the Securities shall have already become
due and payable, either the Trustee or the Holders of not less then 25% in
aggregate principal amount of then outstanding Securities, by a notice in
writing to the Company (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all of the principal of, premium, if any,
and accrued and unpaid interest on, the Securities, determined as set forth
below to be due and payable immediately. If an Event of Default specified in
Sections 7.1(a)(4) or (5) occurs, all principal of, premium, if any, and accrued
and unpaid interest on, the Securities shall be immediately due and payable on
all outstanding Securities without any declaration or other act on the part of
the Trustee or the Holders.
(b) At any time before or after such a declaration of
acceleration is made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter provided in this Article
VII, the Holders of a majority in aggregate principal amount of then outstanding
Securities, by written notice to the Company and the Trustee, may waive, on
behalf of all Holders, any Default or an Event of Default if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
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(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any,
applicable to) any Securities which would become due
otherwise than by such declaration of acceleration, and
interest thereon at the rate borne by the Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities,
(D) all sums paid or advanced by the Trustee
hereunder and the compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and
(2) all Events of Default, other than the non-payment of amounts which
have become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 7.12.
Notwithstanding the previous sentence of this Section 7.2, no waiver shall be
effective for any Default or Event of Default with respect to any covenant or
provision which cannot be modified or amended without the consent of the Holder
of each outstanding Security affected, unless all such affected Holders agree,
in writing, to waive such Default or Event of Default. No such waiver shall
cure or waive any subsequent default or impair any right consequent thereon.
Section 7.3 Collection of Indebtedness and Suits for Enforcement by
-------------------------------------------------------
Trustee.
- -------
The Company covenants that if an Event of Default in payment of
principal of, premium, if any, or interest on, the Notes as specified in Section
7.1(a)(1) and (2) occurs and is continuing, the Company shall, upon demand of
the Trustee, pay to the Trustee, for the benefit of the Holders of such
Securities, the whole amount then due and payable on such Securities for
principal, premium, if any, and interest on, the Notes, and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal (and premium, if any) and on any overdue interest, at the rate borne
by the Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including compensation
to, and expenses, disbursements and advances of the Trustee, its agents and
counsel.
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If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial Proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 7.4 Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise to take any and
all actions under the TIA, including
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Securities and to file such 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 agent and counsel) and of the Holders allowed in
such judicial proceeding, and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding
is hereby authorized by each Holder to make such
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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 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 8.7.
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 Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
Section 7.5 Trustee May Enforce Claims Without Possession of
------------------------------------------------
Securities.
- ----------
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of compensation to, and
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities in respect of which
such judgment has been recovered.
Section 7.6 Priorities.
----------
Any money collected by the Trustee pursuant to this Article VII shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal of,
premium, if any, or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 8.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium, if any, and accrued and unpaid interest on, the
Securities in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according to the
amounts due and payable for principal of, premium, if any, and interest on, such
Securities, respectively; and
THIRD: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
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Section 7.7 Limitation on Suits.
-------------------
No Holder of any Security shall have any right to order or direct the
Trustee to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(A) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% of the
aggregate principal amount of the then outstanding
Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(C) such Holder or Holders have offered to
the Trustee reasonable security or indemnity against the
costs, expenses and liabilities to be incurred or reasonably
probable to be incurred in compliance with such request;
(D) the Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has failed
to institute any such proceeding; and
(E) no direction inconsistent with such
written request has been given to the Trustee during such 60-day
period by the Holders of a majority in principal amount of the
outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 7.8 Unconditional Right of Holders to Receive Principal,
---------------------------------------------------
Premium and Interest.
- --------------------
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is abso-
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lute and unconditional, to receive payment of the principal of, premium, if any,
and interest on, such Security on the Maturity Dates of such payments as
expressed in such Security (in the case of redemption, the Redemption Price on
the applicable Redemption Date, in the case of the Change of Control Offer
Price, on the applicable Change of Control Payment Date, in the case of the
Guarantor Sale Purchase Price, on the applicable Guarantor Sale Payment Date, in
the case of the Asset Sale Offer Price, on the Asset Sale Purchase Date and, in
the case of a Casino Purchase Offer, on the applicable Casino Offer Payment
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
Section 7.9 Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 7.10 Delay or Omission Not Waiver.
----------------------------
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall impair
the exercise of any such right or remedy or constitute a waiver of any such
Event of Default. Every right and remedy given by this Article VII or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
Section 7.11 Control by Holders.
------------------
The Holder or Holders of a majority of the aggregate principal amount
of the then outstanding Securities shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred upon the Trustee, provided,
--------
that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee shall not determine that the action so directed would
be unjustly prejudicial to the Holders not taking part in such direction, and
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(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 7.12 Waiver of Past Default.
-----------------------
Subject to Section 7.8, the Holder or Holders of not less than a
majority of the aggregate principal amount of the then outstanding Securities
may, by written notice to the Trustee on behalf of all Holders, prior to the
declaration of the maturity of the Securities, waive any past Default or Event
of Default hereunder and its consequences, except a Default or Event of Default
(A) in the payment of the principal of,
premium, if any, or interest on, any Security as specified
in clauses (1) and (2) of Section 7.1(a), or
(B) in respect of a covenant or provision
hereof which, under, Article X, cannot be modified or
amended without the consent of the Holder of each
outstanding Security affected.
Upon any such waiver, such Default or Event of 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 Event of Default or impair the exercise of
any right arising therefrom.
Section 7.13 Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, 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,
suffered or omitted to be taken by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section 7.13 shall not apply to any suit instituted
by the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
aggregate principal amount of the outstanding Securities, or to any suit
instituted by any Holder for enforcement of the payment of principal of,
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premium, if any, or accrued and unpaid interest on, any Security on or after the
Maturity Date of such Security.
Section 7.14 Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Guarantor, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
ARTICLE VIII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
Section 8.1 Duties of Trustee.
-----------------
(a) If a Default or 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 use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are specifically
set forth in this Indenture and no others, and no covenants or obligations shall
be implied in or read into this Indenture which are adverse to the Trustee.
(2) 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 to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
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(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of this
Section 8.1.
(2) The Trustee shall comply with any order or directive of a Gaming
Authority that the Trustee submit an application for any license, finding of
suitability or other approval pursuant to any Gaming Law and will cooperate
fully and completely in any proceeding related to such application.
(3) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(4) 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 7.11.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 8.1.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
Section 8.2 Rights of Trustee.
-----------------
Subject to Section 8.1:
(a) The Trustee may rely on 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.
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(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 14.4 and 14.5. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such certificate or opinion.
(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 which it believes to be authorized or within its
rights or powers.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.
(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, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Except with respect to Section 5.1, the Trustee shall have
no duty to inquire as to the performance of the Company's covenants in Article V
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 Sections 7.1(a)(1), 7.1(a)(2) and 5.1, or (ii) any Default or Event of
Default of which the Trustee shall have received written notification or
obtained actual knowledge.
Section 8.3 Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company, any
Guarantor, any of their respective Subsidiaries, or their respective Affiliates
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights. However, the Trustee must comply with Sections 8.10 and
8.11.
Section 8.4 Trustee's Disclaimer.
--------------------
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The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities and it shall not be accountable for the
Company's use of the proceeds from the Securities following the release of such
proceeds in accordance with the terms of this Indenture, and it shall not be
responsible for any statement in the Securities, other than the Trustee's
certificate of authentication, or the use or application of any funds received
by a Paying Agent other than the Trustee.
Section 8.5 Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if it
is known to the Trustee, the Trustee shall mail to each Securityholder notice of
the uncured Default or Event of Default within 90 days after such Default or
Event of Default occurs. Except in the case of a Default or an Event of Default
in payment of principal of, premium, if any, or interest on, any Security
(including the payment of the Change of Control Offer Price on the Change of
Control Payment Date, the Redemption Price on the Redemption Date, the Asset
Sale Offer Price on the Asset Sale Purchase Date, the Casino Offer Price on the
Casino Offer Payment Date and the Guarantor Sale Purchase Price on the Guarantor
Sale Payment Date, as the case may be), the Trustee may withhold the notice if
and so long as a Trust Officer in good faith determines that withholding the
notice is in the interest of the Securityholders.
Section 8.6 Reports by Trustee to Holders.
-----------------------------
If required by law, within 60 days after each May 15 beginning with
the May 15 following the date of this Indenture, the Trustee shall mail to each
Securityholder a brief report dated as of such May 15 that complies with TIA (S)
313(a). If required by law, the Trustee also shall comply with TIA (S)(S) 313(b)
and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
Section 8.7 Compensation and Indemnity.
--------------------------
The Company shall pay (or the Guarantors shall cause to be paid) to
the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse (or the Guarantors
shall
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cause to be reimbursed) the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents, accountants, experts and counsel.
The Company and the Guarantors shall indemnify the Trustee (in its
capacity as Trustee) and each of its officers, directors, attorneys-in-fact and
agents for, and hold it harmless against, any claim, demand, expense (including
but not limited to reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel), loss or liability incurred by them without
negligence or bad faith on its part, arising out of or in connection with the
administration of this trust and their rights or duties hereunder including the
reasonable costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder. The Trustee shall notify the Company promptly of any claim
asserted against the Trustee for which it may seek indemnity. The Company shall
defend the claim and the Trustee shall provide reasonable cooperation at the
Company's expense in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel; provided,
--------
that the Company and the Guarantors will not be required to pay such fees and
expenses if it assumes the Trustee's defense and there is no conflict of
interest between the Company and the Guarantors and the Trustee in connection
with such defense. The Company and the Guarantors need not pay for any
settlement made without its written consent. The Company and the Guarantors
need not reimburse any expense or indemnify against any loss or liability to the
extent incurred by the Trustee through its negligence, bad faith or willful
misconduct.
To secure the Company's and the Guarantors' payment obligations in
this Section 8.7, the Trustee shall have a lien prior to the Securities on all
assets held or collected by the Trustee, in its capacity as Trustee, except
assets held in trust to pay principal of, premium, if any, or interest on
particular Securities.
When the Trustee incurs expenses or renders services after a Default
or Event of Default specified in Section 7.1(a)(4) or (5) occurs, the expenses
and the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's and the Guarantors' obligations under this Section 8.7
and any lien arising hereunder shall survive the resignation or removal of the
Trustee, the discharge of the Company's and the Guarantors' obligations pursuant
to Article IX of this Indenture and any rejection or termination of this
Indenture under any Bankruptcy Law.
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Section 8.8 Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company in writing. The
Holder or Holders of a majority of the principal amount of the then outstanding
Securities may remove the Trustee by so notifying the Company and the Trustee in
writing and may appoint a successor trustee with the Company's consent. The
Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 8.1(e) or 8.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver, Custodian, or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
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. Within one year after the successor Trustee takes office,
the Holder or Holders of a majority of the principal amount of the Securities
then outstanding may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 8.7 have
been paid, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided in Section 8.7,
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. A successor Trustee shall mail notice of its
succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% of the principal amount of the then
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 8.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
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Notwithstanding replacement of the Trustee pursuant to this Section
8.8, the Company's obligations under Section 8.7 shall continue for the benefit
of the retiring Trustee.
Section 8.9 Successor Trustee by Merger, Etc.
--------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
Section 8.10 Eligibility; Disqualification.
-----------------------------
The Trustee shall at all times satisfy the requirements of TIA (S)
310(a)(1) and TIA (S) 310(a)(5). The Trustee shall have a combined capital and
surplus of at least $25,000,000 as set forth in its most recent published annual
report of condition. The Trustee shall comply with TIA (S) 310(b).
Section 8.11 Preferential Collection of Claims against Company.
-------------------------------------------------
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated.
ARTICLE IX
SATISFACTION AND DISCHARGE;
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 9.1 Option to Effect Legal Defeasance or Covenant
---------------------------------------------
Defeasance.
- ----------
The Company may, at its option at any time within the final year of
the Stated Maturity of the Securities, elect to have Section 9.2 or, at any
time, Section 9.3 applied to all outstanding Securities upon compliance with the
conditions set forth below in this Article IX.
Section 9.2 Legal Defeasance and Discharge
------------------------------
Upon the Company's exercise under Section 9.1 of its option applicable
to this Section 9.2, the Company shall be deemed to have paid and discharged its
obligations and the Indenture shall cease to be of further effect with respect
to all outstanding Securities and the Guarantees from and after the date the
conditions set forth below are satisfied (hereinafter, "Legal
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Defeasance"). For this purpose, such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Securities and the Guarantees, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 9.5 and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Securities 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 which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in Section 9.4, and as more fully set forth in such section, payments
in respect of the principal of, premium, if any, and interest on such Securities
when such payments are due, (b) the Company's obligations with respect to such
Securities under Sections 2.4, 2.6, 2.7, 2.10 and 5.2, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Section 9.2 relating to Legal
Defeasance. Subject to compliance with this Article IX, the Company may exercise
its option under this Section 9.2 notwithstanding the prior exercise of its
option under Section 9.3 with respect to the Securities.
Section 9.3 Covenant Defeasance. Upon the Company's exercise of its
-------------------
option under Section 9.1 applicable to this Section 9.3, the Company, all
Guarantors and the Parent Guarantor, if any, shall be released from their
respective obligations under the covenants contained in Sections 5.3, 5.6, 5.7,
5.8, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.16, 5.17, 5.18, 5.19, 5.20, 5.21 and
5.22 and Articles VI and XII with respect to the outstanding Securities on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Securities shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (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 Securities shall not be deemed
outstanding for accounting purposes). For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Securities, the Company
need not 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, but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby. In addition, upon
the Company's exercise of its option applicable to this Section 9.3, Sections
7.1(a)(3), 7.1(a)(6) and 7.1(a)(8) shall not constitute Events of Default.
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Section 9.4 Conditions to Legal Defeasance and Covenant Defeasance.
------------------------------------------------------
The following shall be the conditions to the application of either
Section 9.2 or 9.3 to the outstanding Securities:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 8.10 who shall agree to comply with the provisions of this Article IX
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Securities, (a) U.S. Legal Tender in an
amount, or (b) U.S. Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, U.S. Legal
Tender in an amount, or (c) a combination thereof, in such amounts, as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge the principal of, premium, if
any, and interest on, the outstanding Securities on the Stated Maturity date for
payment thereof or on the applicable Redemption Date, as the case may be, of
such principal or installment of principal of, premium, if any, or interest on
such Securities; provided that the Trustee shall have been irrevocably
--------
instructed to apply such U.S. Legal Tender or the proceeds of such U.S.
Government Obligations to said payments with respect to the Securities.
(b) In the case of an election under Section 9.2, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably satisfactory to the Trustee confirming that (i) the Company has
received from, or there has been published by the Internal Revenue Service a
ruling, or (ii) since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the outstanding Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such Legal Defeasance and will be subject to 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;
(c) In the case of an election under Section 9.3, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee to the effect that the Holders of the
outstanding Securities will not recognize income, gain or loss for Federal
income tax purpos-
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es as a result of such Covenant Defeasance and will be subject to Federal income
tax in the same amount, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as Section 7.1(a)(4) or
7.1(a)(5) is concerned, at any time in the period ending on the 91st day after
the date of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the Company,
the Guarantors, the Parent Guarantor or any of their Subsidiaries is a party or
by which any of them is bound;
(f) In the case of an election under Section 9.2 or 9.3, the
Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit made by the Company pursuant to its election under such Section
was not made by the Company with the intent of preferring the Holders over other
creditors of the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company or others; and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States, each stating that
all conditions precedent provided for or relating to either the Legal Defeasance
or the Covenant Defeasance have been complied with as contemplated by this
Section 9.4.
Section 9.5 Deposited U.S. Legal Tender and U.S. Government
-----------------------------------------------
Obligations to be Held in Trust; Other Miscellaneous Provisions.
- ---------------------------------------------------------------
Subject to Section 9.7, all U.S. Legal Tender and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 9.5 the
"Trustee,") pursuant to Section 9.4 in respect of the outstanding Securities
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal of, premium, if any, and interest on, the Securities but such money
need not be segregated from other funds except to the extent required by law.
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The Company, the Guarantors and the Parent Guarantor, jointly and
severally, agree to pay and indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against the U.S. Legal Tender or U.S. Government
Obligations deposited pursuant to Section 9.4 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the outstanding Securities.
Anything in this Article IX to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time any U.S. Legal
Tender or U.S. Government Obligations held by it as provided in Section 9.4
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 9.4(a)), are in excess
of the amount thereof which would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
Section 9.6 Application of Trust Assets.
----------------------------
The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it in the irrevocable trust established pursuant to
Section 9.4. The Trustee shall apply the deposited U.S. Legal Tender or U.S.
Government Obligations, together with earnings thereon, through the Paying
Agent, in accordance with this Indenture and the terms of the Securities, to the
payment of principal of, and interest on, the Securities.
Section 9.7 Repayment to the Company.
------------------------
Upon termination of the trust established pursuant to Section 9.4, by
payment of the trust property to the Holders, the Trustee and the Paying Agent
shall promptly pay to the Company any excess U.S. Legal Tender or U.S.
Government Obligations held by them.
The Trustee and the Paying Agent shall promptly pay to the Company,
and, if applicable, in accordance with the irrevocable trust established
pursuant to Section 9.4, any U.S. Legal Tender or U.S. Government Obligations
held by them for the payment of principal of or interest on the Securities that
remain unclaimed for two years after the date on which such payment shall have
been become due; 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 a newspaper customarily published on
each Business Day and of general circulation in the Borough of Manhattan, The
City of New York, 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 publication, any unclaimed balance of
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such money then remaining shall be repaid to the Company. After payment to the
Company, Holders entitled to such payment must look to the Company for such
payment as general creditors unless an applicable abandoned property law
designates another person.
Section 9.8 Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 9.2 or 9.3 by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 9.2 or 9.3 until such time as the Trustee or Paying Agent is
permitted to apply all such U.S. Legal Tender or U.S. Government Obligations in
accordance with Section 9.2 or 9.3; provided, however, that if the Company or a
-------- -------
Guarantor has made any payment of principal of, premium, if any, or interest on,
any Securities because of the reinstatement of its obligations, the Company or
such Guarantor shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the U.S. Legal Tender or U.S. Government
Obligations held by the Trustee or Paying Agent.
Section 9.9 Termination of Obligations upon Cancellation of the
---------------------------------------------------
Securities.
- ----------
In addition to the Company's rights under Section 9.1 the Company and
the Guarantors may terminate all of their obligations under this Indenture
(subject to Section 9.3) when:
(1) all Securities theretofore authenticated and delivered (other
than Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.7) have been delivered to the Trustee
for cancellation;
(2) the Company or a Guarantor has paid or caused to be paid all sums
payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel (who may be outside counsel to the Company, but not
in-house counsel to the Company or any of its Subsidiaries), each in form and
substance satisfactory to the Trustee, stating that all conditions precedent
specified herein relating to the satisfaction and discharge contemplated by this
Section 9.9 have been complied with and that such satisfaction and discharge
will not result in a breach or violation of, or constitute a Default under, this
Indenture or any other instrument to which the Company, any Guarantor or any of
their Subsidiaries is a party or by which it or their property is bound.
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ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 10.1 Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holder, the Company or any Guarantor, when
authorized by Board Resolutions, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto for any of the
following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or to make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this Indenture,
provided such action pursuant to this clause (1) shall not adversely affect the
interests of any Holder in any respect;
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company or
to make any other change that does not adversely affect the rights of any
Holder; provided, that the Company has delivered to the Trustee an Opinion of
--------
Counsel stating that such change does not adversely affect the rights of any
Holder;
(3) to provide for additional Guarantors of the Securities;
(4) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(5) to evidence the succession of another person to the Company, and
the assumption by any such successor of the obligations of the Company, herein
and in the Securities in accordance with Article VI; or
(6) to comply with the TIA.
Section 10.2 Amendments, Supplemental Indentures and Waivers with
----------------------------------------------------
Consent of Holders.
- ------------------
Subject to Section 7.8 and the last sentence of this paragraph, with
the consent of the Holders of not less than a majority of the aggregate
principal amount of the then outstanding Securities, by written act of said
Holders delivered to the Company and the Trustee, the Company and any Guarantor,
when authorized by Board Resolutions, and the Trustee may amend or supplement
this Indenture or the Securities or enter into an indenture or indentures
supplemental hereto for the purpose of
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adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or the Securities or of modifying in any manner the
rights of the Holders under this Indenture or the Securities. Subject to Section
7.8 and the last sentence of this paragraph, the Holder or Holders of a
majority, of the aggregate principal amount of the then outstanding Securities
may waive compliance by the Company or any Guarantor with any provision of this
Indenture or the Securities. Notwithstanding the foregoing provisions of this
Section 10.2, no such amendment, supplemental indenture or waiver shall, without
the consent of the Holders of at least 66-2/3% of the aggregate principal amount
of outstanding Securities, change any provision of Article IV or Article XIII or
(except for the Stated Maturity, which is governed by clause (4) below) extend
any Maturity Date of any Security, and no such amendment, supplemental indenture
or waiver shall, without the consent of the Holder of each outstanding Security
affected thereby:
(1) reduce the percentage of principal amount of Securities whose
Holders must consent to an amendment, supplement or waiver of any provision of
this Indenture or the Securities;
(2) reduce the rate or extend the time for payment of interest on any
Security;
(3) reduce the principal amount of any Security, or reduce any
Purchase Price of, or any premium payable upon the redemption of, any Security;
(4) change the Stated Maturity of any Security;
(5) alter the redemption provisions of Article III in a manner
adverse to any Holder;
(6) make any changes in the provisions concerning waivers of Defaults
or Events of Default by Holders of the Securities (except to increase any
required percentage or to provide that certain other provisions hereof cannot be
modified or waived without the consent of the Holders of each outstanding
Security affected thereby) or the rights of Holders to recover the principal or
premium of, interest on, or redemption payment with respect to, any Security;
(7) make any changes in Section 7.4, 7.7 or this third sentence of
this Section 10.2;
(8) make the principal of, or the interest on, any Security payable
with anything or in any manner (including, without limitation, changing the
place of payment where, or the coin or currency in which, any Security, or any
premium or interest thereon is payable) other than as provided for in this
Indenture and the Securities as in effect on the date hereof; or
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(9) make the Securities, the Guarantees or the Mirror Notes
subordinated in right of payment to any extent or under any circumstances to any
other Indebtedness.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders 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 supplemental indenture.
After an amendment, supplement or waiver under this Section 10.2 or
10.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article X, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
Section 10.3 Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 10.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by written notice to the
Company or the person designated by the Company as the person to whom consents
should be sent if such revocation is received by the Company or such person
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite principal amount of Securities have
consented (and not theretofore revoked such consent) to the amendment,
supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding
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the provisions of the TIA. If a record date is fixed, then notwithstanding the
last sentence of the immediately preceding paragraph, those persons who were
Holders at such record date, and only those persons (or their duly designated
proxies), shall be entitled to revoke any consent previously given, whether or
not such persons continue to be Holders after such record date. No such consent
shall be valid or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (9) of Section 10.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided, that any such
--------
waiver shall not impair or affect the right of any Holder to receive payment of
principal of, premium, if any, and interest on, a Security, on or after the
respective dates set for such amounts to become due and payable expressed in
such Security, or to bring suit for the enforcement, of any such payment on or
after such respective dates.
Section 10.5 Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee
or require the Holder to put an appropriate notation on the Security. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue, the
Guarantors shall endorse and the Trustee shall authenticate a new Security that
reflects the changed terms. Any failure to make the appropriate notation or to
issue a new Security shall not affect the validity of such amendment, supplement
or waiver.
Section 10.6 Trustee to Sign Amendments, Etc.
-------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article X, provided, that the Trustee may, but shall
not be obligated to, execute any such amendment, supplement or waiver which
affects the Trustee's own rights, duties or immunities under this Indenture.
The Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of any amendment,
supplement or waiver authorized pursuant to this Article X is authorized or
permitted by this Indenture.
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ARTICLE XI
MEETINGS OF SECURITYHOLDERS
Section 11.1 Purposes for Which Meetings May Be Called.
-----------------------------------------
A meeting of Securityholders may be called at any time and from time
to time pursuant to the provisions of this Article XI for any of the following
purposes:
(a) to give any notice to the Company, any Guarantor or to the
Trustee, or to give any directions to the Trustee, or to waive or to consent to
the waiving of any Default or Event of Default hereunder and its consequences,
or to take any other action authorized to be taken by Securityholders pursuant
to any of the provisions of Article VII;
(b) to remove the Trustee or appoint a successor Trustee
pursuant to the provisions of Article VIII;
(c) to consent to an amendment, supplement or waiver pursuant to
the provisions of Section 10.2; or
(d) to take any other action (i) authorized to be taken by or on
behalf of the Holder or Holders of any specified aggregate principal amount of
the Securities under any other provision of this Indenture, or authorized or
permitted by law or (ii) which the Trustee deems necessary or appropriate in
connection with the administration of this Indenture.
Section 11.2 Manner of Calling Meetings.
---------------------------
The Trustee may at any time call a meeting of Securityholders to take
any action specified in Section 11.1, to be held at such time and at such place
in The City of New York, State of New York or elsewhere as the Trustee shall
determine. Notice of every meeting of Securityholders, setting forth the time
and place of such meeting and in general terms the action proposed to be taken
at such meeting, shall be mailed by the Trustee, first-class postage prepaid, to
the Company, the Guarantors and to the Holders at their last addresses as they
shall appear on the registration books of the Registrar, not less than 10 nor
more than 60 days prior to the date fixed for a meeting. The Company shall pay
the costs and expenses of preparing and mailing such notice.
Any meeting of Securityholders shall be valid without notice if the
Holders of all Securities then outstanding are present in person or by proxy, or
if notice is waived before or after the meeting by the Holders of all Securities
outstanding, and if the Company and the Trustee are either present by duly
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authorized representatives or have, before or after the meeting, waived notice.
Section 11.3 Call of Meetings by Company or Holders.
--------------------------------------
In case at any time the Company, pursuant to a Board Resolution, or
the Holders of not less than 10% in aggregate principal amount of the Securities
then outstanding, shall have requested the Trustee to call a meeting of
Securityholders to take any action specified in Section 11.1, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed the notice of such meeting within
20 days after receipt of such request, then the Company or the Holders of
Securities in the amount above specified may determine the time and place in The
City of New York, State of New York or elsewhere for such meeting and may call
such meeting for the purpose of taking such action, by mailing or causing to be
mailed notice thereof as provided in Section 11.2, or by causing notice thereof
to be published at least once in each of two successive calendar weeks (on any
Business Day during such week) in a newspaper or newspapers printed in the
English language, customarily published at least five days a week of a general
circulation in The City of New York, State of New York, the first such
publication to be not less than 10 nor more than 60 days prior to the date fixed
for the meeting.
Section 11.4 Who May Attend and Vote at Meetings.
-----------------------------------
To be entitled to vote at any meeting of Securityholders, a person
shall (a) be a registered Holder of one or more Securities, or (b) be a person
appointed by an instrument in writing as proxy for the registered Holder or
Holders of Securities. The only persons who shall be entitled to be present or
to speak at any meeting of Securityholders shall be the persons entitled to vote
at such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company, the Guarantors and their
counsel.
Section 11.5 Regulations May Be Made by Trustee; Conduct of the
--------------------------------------------------
Meeting; Voting Rights; Adjournment.
- -----------------------------------
Notwithstanding any other provision of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any action by or
any meeting of Securityholders, in regard to proof of the holding of Securities
and of the appointment of proxies, and in regard to the appointment and duties
of inspectors of votes, and submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think appropriate. Such regulations may fix
a record date and time for determining the Holders of record of Securities
entitled
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to vote at such meeting, in which case those and only those persons who are
Holders of Securities at the record date and time so fixed, or their proxies,
shall be entitled to vote at such meeting whether or not they shall be such
Holders at the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 11.3, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Holders of a majority
in principal amount of the Securities represented at the meeting and entitled to
vote.
At any meeting each Securityholder or proxy shall be entitled to one
vote for each $1,000 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
- -------- -------
respect of any Securities challenged as not outstanding and ruled by the
chairman of the meeting to be not then outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of Securities held by him or
instruments in writing as aforesaid duly designating him as the proxy to vote on
behalf of other Securityholders. Any meeting of Securityholders duly called
pursuant to the provisions of Section 11.2 or Section 11.3 may be adjourned from
time to time by vote of the Holder or Holders of a majority in aggregate
principal amount of the Securities represented at the meeting and entitled to
vote, and the meeting may be held as so adjourned without further notice.
Section 11.6 Voting at the Meeting and Record to Be Kept.
-------------------------------------------
The vote upon any resolution submitted to any meeting of
Securityholders shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amount of the Securities voted by the ballot. The permanent
chairman of the meeting shall appoint two inspectors of votes, who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to such record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts, setting forth a
copy of the notice of the meeting and showing that such notice was mailed as
provided in Section 11.2 or published as provided in Section 11.3. The
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record shall be signed and verified by the affidavits of the permanent chairman
and the secretary of the meeting and one of the duplicates shall be delivered to
the Company and the other to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 11.7 Exercise of Rights of Trustee or Securityholders May
----------------------------------------------------
Not Be Hindered or Delayed by Call of Meeting.
- ---------------------------------------------
Nothing contained in this Article XI shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Securityholders or
any rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Securityholders under any of the provisions of
this Indenture or of the Securities.
ARTICLE XII
RIGHT TO REQUIRE REPURCHASE UPON CHANGE OF CONTROL
Section 12.1 Repurchase of Securities at Option of the Holder Upon
-----------------------------------------------------
Change of Control.
- -----------------
(a) In the event that a Change of Control occurs, each Holder of
Securities shall have the right pursuant to an irrevocable, unconditional offer
by the Company (the "Change of Control Offer"), at such Holder's option, subject
to the terms and conditions of this Indenture, to require the Company to
repurchase all or any portion of such Holder's Notes (provided, that the
principal amount of such Notes at maturity must be $1,000 or an integral
multiple thereof) on the date that is no later than 35 Business Days after the
occurrence of such Change of Control (the "Change of Control Payment Date"), at
a cash price (the "Change of Control Offer Price") equal to 101% of the
principal amount thereof, plus accrued and unpaid interest to and including the
Change of Control Payment Date.
(b) In the event that, pursuant to this Section 12.1, the Company
shall be required to commence a Change of Control Offer, the Company (or the
Trustee, upon the request and at the expense of the Company) shall, within 10
Business Days following a Change of Control, commence a Change of Control Offer
by sending written notice by first-class mail to each Holder at its registered
address, with a copy to the Trustee, of the commencement of such Change of
Control Offer. The Company shall use its best efforts to provide the Trustee
with notice of the Change
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of Control Offer at least 5 Business Days before the commencement of any Change
of Control Offer. A Change of Control Offer shall remain open for 20 Business
Days following its commencement, except to the extent that a longer period is
expressly required by applicable law (the "Change of Control Offer Period"). On
or prior to the date of the expiration of the Change of Control Offer Period
(the "Change of Control Put Date"), Holders electing to have a Security (or
portion thereof) purchased pursuant to a Change of Control Offer must surrender
their Security as set forth in Section 12.1(b)(5) below. On or prior to the
Change of Control Payment Date, the Company shall purchase all Notes tendered in
accordance with the terms hereof in response to the Change of Control Offer.
The notice to the Holders shall contain all information, instructions
and materials required by applicable law or otherwise material to such Holders'
decision to tender Securities pursuant to the Change of Control Offer. The
notice (to the extent consistent with this Indenture) shall govern the terms of
the Change of Control Offer and shall state:
(1) that the change of Control Offer is being made pursuant to such
notice and this Section 12.1;
(2) the Change of Control Offer Price (including the amount of
accrued and unpaid interest), the Change of Control Put Date and the Change of
Control Payment Date;
(3) that any Security or portion thereof not tendered or accepted for
payment will continue to accrue interest if interest is then accruing;
(4) that, unless the Company defaults in depositing U.S. Legal Tender
with the Paying Agent, as provided pursuant to the last paragraph of this
Section 12.1(b), in an amount sufficient to purchase the principal amount of,
and pay accrued and unpaid interest on, Securities to be acquired pursuant to
the Change of Control Offer, any Security or portion thereof accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
(5) that Holders electing to have a Security, or any portion thereof,
purchased pursuant to a Change of Control Offer will be required to surrender
the Security, together with the properly completed form entitled "Option of
Holder to Elect Purchase" (located on the reverse of the Security), to the
Paying Agent at the address specified in the notice on or prior to the close of
business on the Change of Control Put Date;
(6) that Holders will be entitled to withdraw their elections to have
Securities purchased pursuant to the Change of Control Offer, in whole or in
part, if the Paying Agent receives,
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on or prior to the close of business on the Change of Control Put Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Securities the Holder is withdrawing and a
statement that such Holder is withdrawing his election to have such principal
amount of Securities purchased pursuant to the Change of Control Offer;
(7) that the Company shall purchase Securities such that only
Securities in denominations of $1,000 at maturity or integral multiples of
$1,000 shall be acquired;
(8) that Holders whose Securities were purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion of
the Securities surrendered;
(9) if the Change of Control Payment Date is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest will be paid to the person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be payable to Securityholders who tender Securities pursuant to
the Change of Control offer; and
(10) a brief description of the circumstances and relevant facts
regarding such Change of Control.
Any such Change of Control Offer shall comply with all applicable
provisions of Federal and state laws, including those regulating tender offers,
if applicable, and any provisions of this Indenture that conflict with such laws
shall be deemed to be superseded by the provisions of such laws.
No later than 12:00 noon, New York City Time, on Change of Control
Payment Date, the Company (i) shall accept for payment Securities or portions
thereof properly tendered pursuant to the Change of Control Offer and (ii)
deliver to the Trustee Securities so accepted together with an Officers'
Certificate listing the Securities or portions thereof being purchased by the
Company. No later than 12:00 noon, New York City Time, on a Change of Control
Payment Date, Empress shall irrevocably deposit with the Company and the Company
shall irrevocably deposit with the Paying Agent U.S. Legal Tender sufficient to
purchase the principal amount of, and pay accrued and unpaid interest on, all
Securities so accepted. On or prior to the close of business of the Business
Day immediately preceding the Change of Control Payment Date, Hammond Empress,
Hammond Leasing or any Additional Guarantor, as applicable, shall pay to Empress
U.S. Legal Tender in an amount equal to its Proportionate Share of the amount
Empress is required to deposit with the Company pursuant to this paragraph,
subject to the joint and several obligations of each Guarantor with respect to
such payments. Empress' payment to the Company pursuant to this paragraph shall
represent a prepayment of
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principal of, premium, if any, and interest on, the Mirror Note of Empress in an
amount equal to the amount paid to the Company. Any payment made by Hammond
Empress, Hammond Leasing or any Additional Guarantor, as applicable, to Empress
pursuant to this paragraph shall represent, in each case, a prepayment of
principal of, premium, if any, and interest on, the Mirror Note of Hammond
Empress, Hammond Leasing and such Additional Guarantor, as applicable, in an
amount equal to such amount paid to Empress. The Paying Agent shall promptly
mail or deliver to each Holder of Securities so accepted, payment in an amount
equal to the Change of Control Offer Price, plus accrued and unpaid interest,
for such Securities, and the Company shall execute and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new Security equal
in principal amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the Paying
Agent to the Holder thereof. The Company (or the Trustee, upon the request and
at the expense of the Company) shall notify the Holders of the results of the
Change of Control Offer promptly after the Change of Control Payment Date.
ARTICLE XIII
GUARANTY
Section 13.1 Guaranty.
--------
(a) In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of the Guarantors
hereby, jointly and severally, and irrevocably and unconditionally guarantees
(the "Guaranty") to each Holder of a Security authenticated and delivered by the
Trustee and to the Trustee and its successors and assigns, irrespective of the
validity and enforceability of this Indenture, the Securities or the obligations
of the Company under this Indenture or the Securities, that: (w) the principal
of, premium, if any, and interest on, the Securities will be paid in full when
due, whether at the maturity or interest payment date, by acceleration, call for
redemption, upon an Offer to Purchase, or otherwise; (x) all other obligations
of the Company to the Holders or the Trustee under this Indenture or the
Securities will be promptly paid in full or performed, all in accordance with
the terms of this Indenture and the Securities; and (y) in case of any extension
of time of payment or renewal of any Securities or any of such other
obligations, the Securities or such other obligations will be paid in full when
due or performed in accordance with the terms of the extension or renewal,
whether at maturity, by acceleration, call for redemption, upon an Offer to
Purchase or otherwise. Failing payment when due of any amount so guaranteed for
whatever reason, each Guarantor shall be obligated promptly to pay in full the
same before failure so to
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pay becomes an Event of Default without the necessity of any action by the
Trustee or any Holder.
(b) Each Guarantor hereby agrees that its obligations with
regard to this Guaranty shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities or this indenture, the absence of
any action to enforce the same, any delays in obtaining or realizing upon or
failures to obtain or realize upon collateral, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstances
that might otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company or
right to require the prior disposition of the assets of the Company to meet its
obligations, protest, notice and all demands whatsoever and covenants that this
Guaranty will not be discharged except by complete performance of the
obligations contained in the Securities and this Indenture or as provided by
Section 13.5 hereof.
(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 either the Company or such Guarantor to the
Trustee or such Holder, this Guaranty, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor agrees that it will
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 has been made. 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
accelerated as provided in Section 7.2 for the purposes of this Guaranty,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration as to the Company of the obligations guaranteed hereby, and (ii) in
the event of any declaration of acceleration of those obligations as provided in
Section 7.2, those obligations (whether or not due and payable) will forthwith
become due and payable by each of the Guarantors for the purpose of this
Guaranty.
(d) It is the intention of each Guarantor and the Company that
the obligations of each Guarantor hereunder shall be in, but not in excess of,
the maximum amount permitted by applicable law. Accordingly, if the obligations
in respect of the Guaranty would be annulled, avoided or subordinated to the
creditors of any Guarantor by a court of competent jurisdiction in a proceeding
actually pending before such court as a result of a determination both that such
Guaranty was made without fair
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consideration and, immediately after giving effect thereto, such Guarantor was
insolvent or unable to pay its debts as they mature or left with an unreasonably
small capital, then the obligations of such Guarantor under such Guaranty shall
be reduced by such court if such reduction would result in the avoidance of such
annulment, avoidance or subordination; provided, however, that any reduction
pursuant to this paragraph shall be made in the smallest amount as is strictly
necessary to reach such result. For purposes of this paragraph, "fair
consideration", "insolvency", "unable to pay its debts as they mature",
"unreasonably small capital" and the effective times of reductions, if any,
required by this paragraph shall be determined in accordance with applicable
law.
Section 13.2 Execution and Delivery of Guaranty.
----------------------------------
To evidence its Guaranty set forth in Section 13.1, each Guarantor
agrees that a notation of such Guaranty substantially in the form annexed hereto
as Exhibit B shall be endorsed on each Security authenticated and delivered by
the Trustee and that this indenture shall be executed on behalf of such
Guarantor by two Officers or an Officer and an Assistant Secretary by manual or
facsimile signature.
Each Guarantor agrees that its Guaranty set forth in section 13.1
shall remain in full force and effect and apply to all the Securities
notwithstanding any failure to endorse on each Security a notation of such
Guaranty.
If an officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security on which a Guaranty is
endorsed, the Guaranty shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guaranty set forth in
this Indenture on behalf of each Guarantor.
Section 13.3 Future Guarantors.
-----------------
The Company and the Guarantors covenant and agree that they shall
cause each person that is or becomes a Subsidiary of the Company or any
Guarantor or the Parent Guarantor to execute a Guaranty in the form of Exhibit B
---------
hereto and will and cause such Subsidiary to execute an Indenture supplemental
hereto for the purpose of adding such Subsidiary as a Guarantor hereunder.
98
<PAGE>
Section 13.4 Certain Bankruptcy Events.
-------------------------
Each Guarantor hereby covenants and agrees that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, such Guarantor shall not file or join in any filing of), or otherwise
seek to participate in the filing of, any motion or request seeking to stay or
to prohibit (even temporarily) execution on the Guaranty and hereby waives and
agrees not to take the benefit of any such stay of execution, whether under
Section 362 or 105 of the United States Bankruptcy Code or otherwise.
Section 13.5 Release of Certain Guarantors.
-----------------------------
Upon payment by the Company of the Guarantor Sale Repurchase Amount
and consummation of the Guarantor Sale Offer as provided pursuant to Section
5.20 hereof, Hammond Empress, Hammond Leasing or any Additional Guarantor, as
applicable, shall be released from its obligations as a guarantor of the
Securities.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
Section 14.2 Notices.
-------
Any notices or other communications to the Company, the Guarantors or
the Trustee required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company or any Guarantor:
Empress River Casino Corporation
2300 Empress Drive
P.O. Box 2789
Joliet, Illinois 60434
Attention: Chief Financial Officer
Fax: (815) 744-9455
99
<PAGE>
with a copy to:
D'Ancona & Pflaum
30 N. LaSalle Street
Chicago, Illinois 60602
Attention: Joel D. Rubin
Fax: (312) 580-0923
if to the Trustee:
First Trust National Association
180 E. 5th Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Dept.
Fax: (612) 244-0711
The Company, the Guarantors or the Trustee by notice to each other
party may designate additional or different addresses as shall be furnished in
writing by such party. Any notice or communication to the Company, the
Guarantors or the Trustee shall be deemed to have been given or made as of the
date so delivered, if personally delivered; when answered back, if telexed; when
receipt is acknowledged, if telecopied; and 5 Business Days after mailing if
sent by registered or certified mail, postage prepaid (except that a notice of
change of address shall not be deemed to have been given until actually received
by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Section 14.3 Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Guarantors, the Trustee, the Registrar and any
other person shall have the protection of TIA (S) 312(c).
100
<PAGE>
Section 14.4 Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
Section 14.5 Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) 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;
(3) a statement that, in the opinion of such person, he 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
complied with; and
(4) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with; provided, however,
-------- -------
that with respect to matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
Section 14.6 Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Paying Agent or Registrar may make reasonable rules for
its functions.
Section 14.7 Legal Holidays.
--------------
101
<PAGE>
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York, New
York are not required to be open. If a payment date is a Legal Holiday in New
York, New York, payment may be made at such place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue for the intervening
period.
Section 14.8 Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY SUBMIT TO
THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN
IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN
IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE COMPANY AND EACH GUARANTOR
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
Section 14.9 No Adverse Interpretation of other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company, the Guarantors or any of their
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 14.10 No Recourse against Others.
--------------------------
No direct or indirect owner, stockholder, employee, agent, officer or
director, as such, past, present or future of the Company, the Guarantors, the
Parent Guarantor, any of their Subsidiaries or any successor entity shall have
any personal liability in respect of the obligations of the Company, the
Guarantors, the Parent Guarantor or any of their Subsidiaries under the
Indenture or the Notes by reason of his or its status as such owner,
stockholder, employee, agent, officer or director.
102
<PAGE>
Each Securityholder by accepting a Security waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
Section 14.11 Successors.
----------
All agreements of the Company and the Guarantors in this Indenture and
the Securities shall bind their successors. All agreements of the Trustee in
this Indenture shall bind its successor.
Section 14.12 Duplicate Originals.
-------------------
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
Section 14.13 Severability.
------------
In case any one or more of the provisions, in this Indenture or in the
Securities shall be held invalid, illegal or unenforceable, in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
Section 14.14 Table of Contents, Headings, Etc.
--------------------------------
The Table of Contents, Cross-Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
103
<PAGE>
SIGNATURE
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
EMPRESS RIVER CASINO FINANCE
CORPORATION
By:/s/ Kevin D. Larson
------------------------------
Name: Kevin D. Larson
Title: President
Attest: [SIGNATURE ILLEGIBLE]^^
-----------------------
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By:______________________________
Name:
Title:
Attest: _____________________
GUARANTORS:
EMPRESS RIVER CASINO CORPORATION
By:/s/ Kevin D. Larson
------------------------------
Name: Kevin D. Larson
Title: President
LAKE MICHIGAN CHARTERS, LTD.
By:/s/ Kevin D. Larson
------------------------------
Name: Kevin D. Larson
Title: President
104
<PAGE>
SIGNATURE
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
EMPRESS RIVER CASINO FINANCE
CORPORATION
By:_____________________________________
Name: Kevin D. Larson
Title: President
Attest:___________________
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By: /s/ Frank P. Leslie
-------------------------------------
Name: Frank P. Leslie III
Title: Asst. Vice Pres
Attest: SIGNATURE ILLEGIBLE
----------------------------
GUARANTORS:
EMPRESS RIVER CASINO CORPORATION
By:_____________________________________
Name:
Title:
LAKE MICHIGAN CHARTERS, LTD.
By:_____________________________________
Name:
Title:
105
<PAGE>
LMC LEASING, LTD
By:/s/ Kevin D. Larson
------------------------------
Name: Kevin D. Larson
Title: President
106
<PAGE>
EXHIBIT A
[FORM OF NOTE]
EMPRESS RIVER CASINO FINANCE CORPORATION
10 3/4% SENIOR NOTES
DUE 2002
No. $
Empress River Casino Finance Corporation, a Delaware corporation
(hereinafter called the "Company," which term includes any successor
corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ______, or registered assigns, the
principal sum of ______ Dollars, on April 1, 2002.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the COmpany has caused this Instrument to be duly
executed under its corporate seal.
Dated: April 7, 1994
EMPRESS RIVER CASINO FINANCE CORPORATION
By: ____________________________________
Attest:
____________________________
Secretary
A-1
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
______________________________
as Trustee
By:___________________________
Authorized Signatory
Dated:
A-2
<PAGE>
EMPRESS RIVER CASINO FINANCE CORPORATION
10 3/4% Senior Notes
due 2002
1. Interest.
--------
Empress River Casino Finance Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
a rate of 10 3/4% per annum. To the extent it is lawful, the Company promises to
pay interest on any interest payment due but unpaid on such principal amount at
a rate of 10 3/4% per annum compounded semi-annually.
The Company will pay interest semi-annually on April 1 and October 1
of each year (each, an "Interest Payment Date"), commencing October 1, 1994.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from April 7, 1994.
Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months.
2. Method of Payment.
-----------------
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal and interest in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by wire transfer of Federal
funds, or interest by its check payable in such U.S. Legal Tender. The Company
may deliver any such interest payment to the Paying Agent or the Company may
mail any such interest payment to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
--------------------------
Initially, First Trust National Association (the "Trustee") will act
as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or Co-registrar without notice to the Holders. The Company or any of
its Subsidiaries may, subject to certain exceptions, act as Paying Agent,
Registrar or Co-registrar.
A-3
<PAGE>
4. Indenture.
---------
The Company issued the Securities under an Indenture, dated April 1,
1994 (the "Indenture"), between the Company, the Guarantors named therein and
the Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act, as in effect on the date of the Indenture. The Securities
are subject to all such terms, and Holders of Securities are referred to the
Indenture and said Act for a statement of them. The Securities are senior
obligations of the Company limited in aggregate principal amount to
$150,000,000.
5. Redemption.
----------
The Securities are redeemable, in whole or from time to time in part,
at any time on and after April 1, 1999, at the option of the Company, at the
Redemption Price (expressed as a percentage of principal amount) set forth
below, if redeemed during the 12-month period commencing April 1 of each of the
years indicated below, in each case, plus accrued and unpaid interest to the
Redemption Date. Except as provided in the following two paragraphs, the
Securities may not otherwise be redeemed.
Year Redemption Price
---- ----------------
1999........................... 105.38%
2000........................... 102.69%
2001........................... 100.00%
The Securities may also be redeemed, in whole or in part, at any time
at 100% of the principal amount thereof plus accrued and unpaid interest to the
redemption date, pursuant to, and in accordance with, a Required Regulatory
Redemption.
The Company may, at its election, one time only, also redeem up to an
aggregate of $50,000,000 of the Securities with the proceeds of an Initial
Public Equity Offering at any time prior to April 1, 1997, at a redemption price
of 110%, plus accrued and unpaid interest to the date of redemption, provided
--------
that such redemption occurs within 60 days of the closing of such Initial Public
Equity Offering and that after giving effect to any such redemption, there shall
remain not less than an aggregate principal amount of $100,000,000 of the
Securities outstanding.
A-4
<PAGE>
Any redemption of the Notes shall comply with Article III of the
Indenture.
6. Notice of Redemption.
--------------------
Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the Redemption Date (unless a shorter
notice shall be required by applicable Gaming Laws or by order of any Gaming
Authority) to each Holder of Securities to be redeemed at his registered
address. Securities in denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption shall
have been deposited with the Paying Agent (which shall not be the Company, any
of the Guarantors or the Parent Guarantor) on such Redemption Date, the
Securities called for redemption will cease to bear interest and the only right
of the Holders of such Securities will be to receive payment of the Redemption
Price, including any accrued and unpaid interest to the Redemption Date.
7. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
---------------------
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. Unclaimed Money.
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company. After that, all liability of the Trustee and such Paying Agent(s)
with respect to such money shall cease.
A-5
<PAGE>
10. Discharge Prior to Redemption or Maturity.
If the Company at any time deposits into an irrevocable trust with the
Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the
principal of, premium, if any, and interest on, the Securities to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Securities (including the financial covenants, but excluding its
obligation to pay the principal of, premium, if any, and interest on, the
Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of a majority,
and in certain cases at least two-thirds, of the aggregate principal amount of
the Securities then outstanding, and any existing Default or Event of Default or
compliance with any provision may be waived with the consent of the Holders of
a majority of the aggregate principal amount of the Securities then outstanding.
Without notice to or consent of any Holder, the parties thereto may amend or
supplement the Indenture or the Securities to, among other things, cure any
ambiguity, defect or inconsistency, provide for uncertificated Securities in
addition to or in place of certificated Securities, or make any other change
that does not adversely affect the rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company, the Guarantors and any of their Subsidiaries to, among other things,
incur additional Indebtedness and Disqualified Capital Stock; make Restricted
Payments; enter into transactions with Affiliates; incur Liens; enter into any
line of business other than a Related Business; merge or consolidate with any
other person; and sell, lease, transfer or otherwise dispose of substantially
all of its properties or assets. The limitations are subject to a number of
important qualifications and exceptions. The Indenture prohibits the Company
from (i) incurring any Indebtedness other than the Notes, (ii) making any
Restricted Payments to any party other than its parent Guarantor, or (iii)
creating, assuming or suffering to exist any Lien on any of its property or
assets, except Liens created under the Indenture and the Notes. The Company must
annually report to the Trustee on compliance with such limitations.
A-6
<PAGE>
13. Change of Control.
-----------------
In the event there shall occur any Change of Control, each Holder of
Securities shall have the right, at such Holder's option, but subject to the
limitations, and conditions set forth in the Indenture, to require the Company
to purchase on the Change of Control Payment Date in the manner specified in the
Indenture, all or any part (in integral multiples of $1,000) of such Holder's
Securities at a price equal to 101% of the principal amount thereof, plus
accrued and unpaid interest to and including the purchase date.
14. Security.
--------
In order to secure the obligations under the Indenture, the Mirror
Notes have been pledged as security for the Indenture Oblations and the Company,
the Guarantors and the Trustee have entered into certain security agreements
pursuant to which security interests have been granted to the Trustee for the
benefit of the Holders in funds held in certain collateral and disbursement
accounts of the Guarantors.
15. Sale of Assets.
--------------
The Indenture imposes certain limitations on the ability of the
Guarantors and any of their respective Subsidiaries to sell assets. In the event
the proceeds from a permitted Asset Sale exceed certain amounts, as specified in
the Indenture, the applicable Guarantor will be required either to reinvest the
proceeds of such Asset Sale in a Related Business of a continuing Guarantor or
the Company will be required to make an offer to purchase each Holder's
Securities at 101% of the principal amount thereof, plus accrued and unpaid
interest to the date of purchase.
16. Construction and Licensure.
--------------------------
The Indenture imposes obligations on the Guarantors to commence
operations at the Hammond Facility by certain dates (subject to extension if
certain financial tests are met), such that if the requisite licenses therefor
are not timely received or such construction is not timely completed and certain
financial tests are not met, then the Company must offer to purchase designated
aggregate principal amounts of Securities at a purchase price equal to 101% of
the principal amount thereof, plus accrued and unpaid interest to the date of
purchase.
A-7
<PAGE>
17. Limitation on Sale of a Guarantor.
---------------------------------
The Indenture imposes certain limitations on the ability of Hammond
Empress, Hammond Leasing or any Additional Guarantor to merge or consolidate,
sell, transfer or convey, directly or indirectly, substantially all of its
assets or to effect certain changes in the composition of its Board of
Directors. Upon a Sale of a Guarantor: (a) Hammond Empress, Hammond Leasing or
an Additional Guarantor, as applicable, is required to pay to Empress the
Guarantor Sale Repurchase Amount; and (b) the Company is required to make a
Guarantor Sale Offer to purchase for U.S. Legal Tender the principal amount of
Notes equal to the Guarantor Sale Repurchase Amount at 101% of the principal
amount thereof, plus accrued and unpaid interest to the date of payment.
18. Gaming Laws.
-----------
The rights of the Holder of this Security and any owner of any
beneficial interest in this Security are subject to the Gaming Laws and the
jurisdiction and requirements of the Gaming Authorities and the further
limitations and requirements set forth in the Indenture.
19. Successors.
----------
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
20. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% of the aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of Securities
may not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
Holders of a majority of the aggregate principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of any continuing Default
or Event of Default (except a Default in payment of principal or interest), if
it determines that withholding notices is in their interest.
A-8
<PAGE>
21. Trustee Dealings with Company.
-----------------------------
The Trustee under the Indenture, 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.
22. No Recourse Against Others.
--------------------------
No direct or indirect owner, stockholder, employee, agent, officer or
director, as such, past, present or future of the Company, the Guarantors, the
Parent Guarantor, any of their Subsidiaries or any successor entity shall have
any personal liability in respect of the obligations of the Company, the
Guarantors, the Parent Guarantor or any of their Subsidiaries under the
Indenture or the Notes by reason of his or its status as such owner,
stockholder, employee, agent, officer or director. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
23. Authentication.
--------------
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
24. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a
Security 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).
25. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
A-9
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign this Security to
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number assignee
____________ and irrevocably appoint _____________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Dated: ________________ Signed: _________________________________________
________________________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)
A-10
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to any of the following provisions of the Indenture, check the
appropriate box:
[_] Section 5.14; [_] Section 5.16; [_] Section 5.20;
[_] Article XII.
If you want to elect to have only part of this Security purchased by
the Company pursuant to the Indenture, state the principal amount you want to be
purchased: $_________
Date: ______________ Signature: ________________________________________________
(Sign exactly as your name appears on the
Security)
A-11
<PAGE>
EXHIBIT B
---------
FORM OF GUARANTY
----------------
For value received, _______________, a ______________ corporation, hereby
unconditionally guarantees to the Holder of the Security upon which this
Guaranty is endorsed the due and punctual payment, as set forth in the Indenture
pursuant to which such Security and this Guaranty were issued, of the principal
of, premium, if any, and interest on, such Security when and as the same shall
become due and payable for any reason according to the terms of such Security
and Article XIII of the Indenture. The Guaranty of the Security upon which this
Guaranty is endorsed will not become effective until the Trustee signs the
certificate of authentication on such Security.
__________________________________
By:_______________________________
Attest:___________________________
B-1
<PAGE>
EXHIBIT 4.4
SUPPLEMENTAL INDENTURE
THIS SUPPLEMENTAL INDENTURE (the "Supplement") is dated as of November 6,
1997, among Empress River Casino Finance Corporation, a Delaware corporation
(the "Company"), Empress Casino Joliet Corporation, f/k/a Empress River Casino
Corporation, an Illinois corporation ("Empress"), Empress Casino Hammond
Corporation, f/k/a Lake Michigan Charters, Ltd., an Indiana corporation
("Hammond Empress"), LMC Leasing, Ltd., a Delaware corporation ("Hammond
Leasing," and together with Empress Joliet and Empress Hammond, collectively
referred to herein as the "Guarantors"), First Trust National Association, a
national association, as Trustee, and New Empress Hammond, Inc., an Indiana
corporation ("New Hammond"). Except as otherwise defined herein, terms used in
this Supplement shall have the meanings assigned to them in the Indenture (as
defined below).
RECITALS
WHEREAS, the Company, the Guarantors and the Trustee are parties to that
certain Indenture dated as of April 1, 1994 (the "Indenture"), pursuant to which
the Company issued $150.0 million in 10.75% Senior Notes due 2002 (the "Notes");
and
WHEREAS, Section 10.1(1) of the Indenture permits the Company or any
Guarantor and the Trustee to enter into a supplemental indenture without the
consent of any holders of the Notes in order to cure ambiguities or
inconsistencies in the Indenture as long as such action does not adversely
affect the interest of any holder of the Notes in any respect; and
WHEREAS, the parties desire to cure certain ambiguities by entering into
this Supplement on the terms set forth below; and
WHEREAS, Section 10.1(3) of the Indenture permits the Company or any
Guarantor and the Trustee to enter into a supplemental indenture without the
consent of any holders of the Notes in order to provide for additional
Guarantors of the Securities; and
WHEREAS, New Hammond desires to become an Additional Guarantor under the
Indenture, as required by Section 5.22 of the Indenture;
NOW THEREFORE, in consideration of the mutual premises set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
<PAGE>
AGREEMENTS
1. STATUS OF INDENTURE. Except as specifically set forth herein, the Indenture
-------------------
and all related documents executed and delivered to the Trustee in connection
with the Indenture and the Company's and each Guarantor's liabilities thereunder
shall remain in full force and effect, and shall not be waived, modified,
superseded or otherwise affected by this Supplement. This Supplement is not to
be construed as a release, waiver or modification of any of the terms,
conditions, representations, warranties, covenants, rights or remedies set forth
in the Indenture and such other related documents, except as specifically set
forth herein.
2. SALE OF GUARANTOR. The definition of "Sale of a Guarantor" in Section 1.1
-----------------
of the Indenture is hereby deleted in its entirety and replaced with the
following:
"Sale of a Guarantor" means (i) any merger or consolidation of, or any
-------------------
sale, transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of, any of Hammond Empress, Hammond
Leasing, or any Additional Guarantor in each case on a consolidated basis,
in one transaction or a series of related transactions; or (ii) during any
period of 12 consecutive months after the Issue Date, individuals who at
the beginning of any such 12-month period constituted the Board of
Directors of Hammond Empress, Hammond Leasing, or any Additional Guarantor
(together with any new directors whose election by such Board or whose
election by the stockholders of Hammond Empress, Hammond Leasing or such
Additional Guarantor was approved by a vote of a majority of the directors
then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved), cease for any reason to constitute a majority of the Board of
Directors of Hammond Empress, Hammond Leasing, or such Additional Guarantor
then in office, as applicable. Notwithstanding the foregoing, a Sale of a
Guarantor with respect to Hammond Empress, Hammond Leasing or any
Additional Guarantor shall not have been deemed to have occurred if
immediately after giving effect to the transaction giving rise to a Sale of
a Guarantor, (i) at least fifty-one percent (51%) of the outstanding
capital stock of the Guarantor which was a party to such transaction is
beneficially owned, directly or indirectly, by the Excluded Persons
immediately after the consummation of such transaction, (ii) a majority of
the members of the Board of Directors of such Guarantor prior to such Sale
of a Guarantor constitute at least a majority of the Board of Directors of
the surviving or transferee entity immediately after the consummation of
such transaction, and (iii) the Consolidated Net Worth of the Guarantor
which was a party to such transaction on a pro forma basis is at least
--- -----
equal to the Consolidated Net Worth of such Guarantor immediately prior to
such transaction.
3. BENEFICIAL OWNER. The definition of "beneficial owner" in Section 1.1 of
----------------
the Indenture is hereby deleted in its entirety and replaced with the following:
<PAGE>
"beneficial owner," for purposes of the definitions of Change of Control
-----------------
and Sale of a Guarantor, has the meaning attributed to it in Rules 13d-3
and 13d-5 under the Exchange Act, whether or not applicable, except that a
"person" shall be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time.
4. ASSET SALE. The second paragraph of Section 5.14(a), beginning
----------
"Notwithstanding the foregoing provisions of the prior paragraph", is hereby
deleted in its entirety and replaced with the following:
"Notwithstanding the foregoing provisions of the prior paragraph, an Asset
Sale shall not be deemed to have occurred if:
(i) the Guarantors in the ordinary course of business and
consistent with past practice, convey, sell, leases, transfer, assign,
or otherwise dispose of assets acquired and held for resale in the
ordinary course of business;
(ii) Hammond Leasing leases the Empress III to Hammond
Empress, or if Hammond Empress fails to commence gaming operations,
leases the Empress III to a third party;
(iii) Hammond Leasing merges or consolidates into Hammond
Empress;
(iv) the Guarantors convey, sell, lease, transfer or
otherwise dispose of assets pursuant to and in accordance with the
provisions of Article VI;
(v) a Sale of a Guarantor is made in accordance with the
provisions of Section 5.20 or a transaction is excluded from the
definition of a Sale of a Guarantor; or
(vi) any amounts are paid, loaned, conveyed, assigned,
distributed or otherwise transferred by a Guarantor to one of its
wholly-owned Subsidiaries.
5. GUARANTY. New Hammond hereby agrees to guaranty, jointly and severally
--------
with the existing Guarantors and on a senior basis, the Company's obligation to
pay principal, premium and interest on the Securities on terms identical to
those contained in Article XIII of the Indenture, as if New Hammond had been an
original party to Article XIII of the Indenture, and in furtherance thereof
agrees to execute and deliver to the Trustee the form of Guaranty attached
hereto as Exhibit A.
---------
<PAGE>
6. COUNTERPARTS. This Supplement may be executed in any number of
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
*****
IN WITNESS WHEREOF, the parties hereto have executed this Supplement as of
the date first above written.
EMPRESS RIVER CASINO FINANCE EMPRESS CASINO JOLIET
CORPORATION CORPORATION (f/k/a Empress River
Casino Corporation)
By:/s/ Peter A. Ferro, Jr. By:/s/ Peter A. Ferro, Jr.
--------------------------------- ----------------------------------
Name: Peter A. Ferro, Jr. Name: Peter A. Ferro, Jr.
------------------------------- -------------------------------
Title: Cheif Executive Officer Title: Cheif Executive Officer
------------------------------ ------------------------------
EMPRESS CASINO HAMMOND LMC LEASING, LTD.
CORPORATION (f/k/a Lake Michigan
Charters, Ltd.)
By:/s/ Peter A. Ferro, Jr. By:/s/ Peter A. Ferro, Jr.
--------------------------------- ---------------------------------
Name: Peter A. Ferro, Jr. Name: Peter A. Ferro, Jr.
------------------------------- -------------------------------
Title: Cheif Executive Officer Title: Cheif Executive Officer
------------------------------ ------------------------------
FIRST TRUST NATIONAL ASSOCIATION, NEW EMPRESS HAMMOND, INC.
as Trustee
By:/s/ Richard H Prokosch By:/s/ Peter A. Ferro, Jr.
--------------------------------- ---------------------------------
Name: Richard H Prokosch Name: Peter A. Ferro, Jr.
------------------------------- -------------------------------
Title: Assistant Vice President Title: Cheif Executive Officer
------------------------------ ------------------------------
<PAGE>
EXHIBIT A
---------
GUARANTY
For value received, ________________________, a _________________
corporation, hereby unconditionally guarantees to the Holder of the Security
upon which this Guaranty is endorsed the due and punctual payment, as set forth
in the Indenture pursuant to which such Security and this Guaranty were issued,
of the principal of, premium, if any, and interest on, such Security when and as
the same shall become due and payable for any reason according to the terms of
such Security and Article XIII of the Indenture. The Guaranty of the Security
upon which this Guaranty is endorsed will not become effective until the Trustee
signs the certificate of authentication on such Security.
___________________________________
By:________________________________
Attest:____________________________
<PAGE>
EXHIBIT 4.5
SUPPLEMENTAL AGREEMENT NO. 2
THIS SUPPLEMENTAL AGREEMENT NO. 2 (this "Supplement No. 2"), dated as of
---------------
May 27, 1998, between Empress Casino Hammond Corporation, an Indiana corporation
("Borrower") and Bank of America National Trust and Savings Association (as
--------
successor to Bank of America Illinois), a national chartered bank having its
principal office at 231 South LaSalle Street, Chicago, Illinois 60697 (f/k/a
Bank of America Illinois) (the "Bank"), is made to that certain Amended and
----
Restated Secured Promissory Note dated as of June 30, 1997 as supplemented by
that certain Supplemental Agreement No. 1 dated as of November 13, 1997 (the
"Promissory Note"; capitalized terms therein defined have the same respective
---------------
meanings herein, unless herein otherwise defined), by the Borrower in favor of
the Bank.
WITNESSETH;
WHEREAS, the Borrower has requested that the Bank consent to the merger of
New Empress Joliet, Inc, an Illinois corporation ("Transitory Sub") and a
---------------
wholly-owned subsidiary of LMC Leasing, Ltd. a Delaware corporation ("Parent")
------
into Empress Casino Joliet Corporation, an Illinois corporation ("Empress
-------
Joliet"), with Empress Joliet surviving the merger as the wholly-owned
- ------
subsidiary of Parent and with shares of Empress Joliet being canceled and
converted into the right to receive shares of Parent. The foregoing transactions
are collectively referred to herein as the "Merger". After giving effect to the
Merger, Parent shall change its name to "Empress Entertainment, Inc."
- ------
NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. Modification of Promissory Note. On and from the Supplement No. 2
-------------------------------
Effective Date (as defined in Section 3 hereof), the Promissory Note shall be
amended as follows:
a. The definition of "Loan Documents" in Section 1 of the Promissory
--------------
Note is amended by inserting immediately after the words "Supplemental Agreement
No. 1", a comma and the words "Supplemental Agreement No. 2".
b. Section 1 of the Promissory Note is amended by adding thereto, in
alphabetical order, the following definition:
"Supplemental Agreement No. 2" means the Supplemental Agreement No. 2
----------------------------
dated as of May 27, 1998 among the parties hereto.
c. Section 6(p)(i)(a) of the Promissory Note is amended and restated
in its entirety:
1
<PAGE>
"(a) any Subsidiary other than Empress Finance, Hammond
Residential, L.L.C. and Hammond Bridge and Roadworks, L.L.C.
("Hammond Bridge"), in the case of Borrower, and in the case of
Hammond Leasing, Borrower and Empress, or"
d. Section 6(t) is amended by adding thereto, immediately after the
words "Supplemental Agreement No. 1", the words "and Supplemental Agreement No.
2".
e. Section 7(r) is amended by adding thereto, immediately after the
words "provided that," the word "Empress,".
2. Consent and Waiver. On and from the Supplement No. 2 Effective
-------------------
Date, the Bank hereby consents to the Merger and waives any Default or Event of
Default that arises solely as a result thereof.
3. Effectiveness. This Supplement No. 2 shall become effective as of
--------------
the date hereof on the date (the "Supplement No. 2 Effective Date") that the
-------------------------------
Bank shall have received each of the following, in form and substance
satisfactory to it:
a. counterparts hereof executed by Borrower and the Bank and
acknowledged by the Parent;
b. a guaranty executed by Hammond Residential, L.L.C. ("Hammond
Residential") in favor of the Bank;
c. a pledge agreement executed by Parent in favor of the Bank;
d. satisfactory evidence that the Merger has occurred and is
effective under all applicable Requirements of Law;
e. a certificate, dated as of the Supplement No. 2 Effective Date,
of the Secretary or Assistant Secretary of Parent certifying as to
resolutions of its Board of Directors then in full force and effect
authorizing the execution and delivery of an acknowledgment of this
Supplement No. 2 and the other documents contemplated hereby to which it is
a party, the certified copies of the Articles of Incorporation and By-Laws
of Parent after giving effect to the Merger, the directors and officers of
Parent after giving effect to the Merger, and incumbency and signatures of
the officers of Parent signing the acknowledgment of this Supplement No. 2;
f. a certificate, dated as of the Supplement No. 2 Effective Date,
of the Secretary or Assistant Secretary of Hammond Residential certifying
as to resolutions of its governing body then in full force and effect
authorizing the execution and delivery of an acknowledgment of the guaranty
referred to in clause b. above and the other documents contemplated hereby
to which it is a party, the certified copies of the Limited Liability
2
<PAGE>
Company Agreement and other Organization Documents of Hammond, and the
incumbency and signatures of the persons authorized to sign on behalf of
Hammond Residential the guaranty referred to in clause b. above and the
other documents contemplated hereby to which it is a party;
g. a certificate, dated as of the Supplement No. 2 Effective Date, of
the Secretary or Assistant Secretary of the Borrower certifying as to
resolutions of its Board of Directors then in full force and effect
authorizing the execution and delivery of this Supplement No. 2 and the
other documents contemplated hereby to which it is a party;
h. a certificate, dated as of the Supplement No. 2 Effective Date, of
an authorized officer of the Borrower as to (i) no Default or Event of
Default as of the Supplement No. 2 Effective Date after giving effect to
Sections 2, 5 and 6 of this Supplement No. 2, (ii) the Transitory Sub not
conducting any business or having any obligation or liability being
succeeded to by Empress Joliet or Parent as a result of the Merger, (iii)
the correctness of the representations and warranties contained in the Loan
Documents as of the Supplement No. 2 Effective Date after giving effect to
Sections 1(c), 1(d), 1(e), 5 and 6 of this Supplement No. 2, (iv) certified
copies of all approvals, consents, exemptions, authorization, notices to,
or filings with, any Governmental Authority or any other Person necessary
or required in connection with the effectiveness of the Merger or the
execution, delivery or performance by, or enforcement against, Borrower or
any Guarantor of this Supplement No. 2 or the Promissory Note or any other
Loan Document after giving effect to Sections 5 and 6 of the Supplement No.
2, (v) the satisfaction of each of the conditions precedent contained in
this Section 3 and (vi) the organizational structure of Parent and its
Susidiaries after giving effect to the Merger; and
i. Each of Borrower and each Guarantor shall have complied with the
requests of Bank pursuant to Section 7 hereof.
4. Representations and Warranties. Borrower hereby certifies that
------------------------------
each of the representations and warranties made pursuant to the Loan Documents
is true and correct as of the Supplement No. 2 Effective Date after giving
effect to Sections 1(c), 1(d), 1(e), 5 and 6 of this Supplement No. 2 Borrower
hereby further certifies that the execution, delivery and performance of the
agreements, documents and instruments necessary or desirable to consummate the
Merger by any party thereto (the "Merger Documents") have been duly authorized
----------------
by such party and constitute a valid and binding obligation of such party
enforceable in accordance with its terms. The execution and delivery by the
parties to the Merger Documents and the consummation of the transactions
contemplated thereby and related thereto, do not and shall not (1) conflict with
or result in a breach of the terms, conditions or provisions of, (2) constitute
a default under, (3) result in the creation of any Lien upon any Person's equity
interest or assets pursuant to, (4) give any third party the right to modify,
terminate or accelerate any obligation under, (5) result in a violation of, or
(6) require any authorization, consent, approval, exemption or other action by
or notice or declaration to, or filing with, any court or administrative or
Governmental Authority or other Person pursuant to (i) the organizational
documents of any Person or (ii) any Requirements of Law to which any Person is
3
<PAGE>
subject, or (iii) any agreement, instrument, order, judgment or decree or other
contractual obligation to which any Person is subject.
5. Loan Documents Remain in Effect. Except as amended, modified or waived
-------------------------------
by this Supplement No. 2, each Loan Document remains in full force and effect,
and each of the Borrower and the Guarantor hereby ratifies and confirms its
representations, warranties, covenants and agreements contained in, and
obligations and liabilities under, the Promissory Note and the other Loan
Documents.
6. References in Other Loan Documents. Upon the occurrence of the
----------------------------------
Supplement No. 2 Effective Date (i) references to the Promissory Note in any
Loan Document shall be deemed to include a reference to the Promissory Note, as
amended by this Supplement No. 2, whether or not reference is made to this
Supplement No. 2 and (ii) references to LMC Leasing, Ltd. in any Loan Document
shall refer to Empress Entertainment, Inc. (formerly known as "LMC Leasing,
Ltd.").
7. Further Assurances. Borrower and the Guarantor will do (and cause to
------------------
be done) such acts and things (including the execution, delivery and filing of
agreements, documents and instruments) as the Bank shall reasonably request from
time to time to establish and maintain a valid, first perfected security
interest in the collateral described in the Security Documents, free and clear
of all Liens other than Permitted Liens, to secure payment and performance of
the Obligations.
8. Governing Law. This Supplement No. 2 is made under and governed by the
-------------
laws of the State of Illinois without regard to principles of conflicts of law.
9. Counterparts. This Supplement No. 2 may be executed in any number of
------------
counterparts and by different parties hereto on separate counterparts and each
such counterpart shall be deemed to be an original, but all such counterparts
shall together constitute one and the same Supplement No. 2.
*******
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplement No. 2 to
be executed by their respective officers thereunto duly authorized as of the day
and year first above written.
EMPRESS CASINO HAMMOND CORPORATION
By: /s/ John G. Costello
-------------------------------
Name: John G. Costello
Title: Vice President and
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVING ASSOCIATION
By:_______________________________
Name:
Title:
<PAGE>
The undersigned hereby consents to the terms of the foregoing Supplement
No. 2, and agrees that nothing contained in Supplement No. 1 or Supplement No. 2
shall impair or otherwise modify the obligations of the undersigned under the
Guaranty dated June 30, 1997 or any of the Security Documents to which the
undersigned is a party and affirms that all of its obligations under such
Guaranty and Security Documents remain in full force and effect.
EMPRESS ENTERTAINMENT, INC. (F/K/A LMC
LEASING, LTD.)
By: /s/ John G. Costello
-----------------------------------
Name: John G. Costello
Title: Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT 4.6
SUPPLEMENTAL INDENTURE NO. 3
THIS SUPPLEMENTAL INDENTURE NO. 3 (the "Supplement") is dated as of April
29, 1998, among Empress River Casino Finance Corporation, a Delaware corporation
(the "Company"), Empress Casino Joliet Corporation, f/k/a Empress River Casino
Corporation, an Illinois corporation ("Empress"), Empress Casino Hammond
Corporation, f/k/a Lake Michigan Charters, Ltd., an Indiana corporation
("Hammond Empress"), Hammond Residential, L.L.C., an Indiana limited liability
company ("Hammond Residential"), LMC Leasing, Ltd., a Delaware corporation
("Hammond Leasing," and together with Empress, Empress Hammond and Hammond
Residential, collectively referred to herein as the "Guarantors"), U.S. Bank
Trust National Association, f/k/a/ First Trust National Association, a national
association, as Trustee, and New Empress Joliet, Inc., an Illinois corporation
("New Joliet"). Except as otherwise defined herein, terms used in this
Supplement shall have the meanings assigned to them in the Indenture (as defined
below).
RECITALS
WHEREAS, the Company, the Guarantors and the Trustee are parties to that
certain Indenture dated as of April 1, 1994, as supplemented by that certain
Supplemental Indenture dated as of November 6, 1997 and that certain
Supplemental Indenture No. 2 dated as of February 23, 1998 (as so supplemented,
the "Indenture"), pursuant to which the Company issued $150.0 million in 10.75%
Senior Notes due 2002 (the "Notes"); and
WHEREAS, Section 10.1(1) of the Indenture permits the Company or any
Guarantor and the Trustee to enter into a supplemental indenture without the
consent of any holders of the Notes in order to cure ambiguities or
inconsistencies in the Indenture as long as such action does not adversely
affect the interest of any holder of the Notes in any respect; and
WHEREAS, the parties desire to cure certain ambiguities by entering into
this Supplement on the terms set forth below; and
WHEREAS, Section 10.1(3) of the Indenture permits the Company or any
Guarantor and the Trustee to enter into a supplemental indenture without the
consent of any holders of the Notes in order to provide for additional
Guarantors of the Securities; and
WHEREAS, New Joliet desires to become an Additional Guarantor under the
Indenture, as required by Section 5.22 of the Indenture;
NOW THEREFORE, in consideration of the mutual premises set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
<PAGE>
AGREEMENTS
1. STATUS OF INDENTURE. Except as specifically set forth herein, the
-------------------
Indenture and all related documents executed and delivered to the Trustee in
connection with the Indenture and the Company's and each Guarantor's liabilities
thereunder shall remain in full force and effect, and shall not be waived,
modified, superseded or otherwise affected by this Supplement. This Supplement
is not to be construed as a release, waiver or modification of any of the terms,
conditions, representations, warranties, covenants, rights or remedies set forth
in the Indenture and such other related documents, except as specifically set
forth herein.
2. CHANGE OF CONTROL. Clauses (i) and (ii) in the definition of "Change of
-----------------
Control" in Section 1.1 of the Indenture are hereby deleted in their entirety
and replaced with the following:
"(i) any merger or consolidation of, or any sale, transfer or other
conveyance, whether direct or indirect, of all or substantially all of the
assets of, Empress (or, if applicable, the Parent Guarantor) in each case
on a consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction, any
"person" or "group" (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable), other than
Excluded Persons or any entity of which a majority of the aggregate voting
power of all classes of Capital Stock then outstanding of such entity is
owned by the Excluded Persons, is or becomes the "beneficial owner,"
directly or indirectly, of more than 40% of the aggregate voting power
normally entitled to vote in the election of directors of the transferee;
(ii) the time that any "person" or "group" (as such terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), other than Excluded Persons or any entity of which a majority
of the aggregate voting power of all classes of Capital Stock then
outstanding of such entity is owned by the Excluded Persons, is or becomes
the "beneficial owner," directly or indirectly, of more than 40% of the
aggregate voting power of all classes of Capital Stock then outstanding of
Empress (or, if applicable, the Parent Guarantor) normally entitled to vote
in elections of directors;"
3. GUARANTY. New Joliet hereby agrees to guaranty, jointly and severally
--------
with the existing Guarantors and on a senior basis, the Company's obligation to
pay principal, premium and interest on the Securities on terms identical to
those contained in Article XIII of the Indenture, as if New Joliet had been an
original party to Article XIII of the Indenture, and in furtherance thereof
agrees to execute and deliver to the Trustee the form of Guaranty attached
hereto as Exhibit A.
---------
4. COUNTERPARTS. This Supplement may be executed in any number of
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
*****
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Supplement as of
the date first above written.
EMPRESS RIVER CASINO FINANCE EMPRESS CASINO JOLIET
CORPORATION CORPORATION (f/k/a Empress River
Casino Corporation)
By: /s/ John Costello By: /s/ John Costello
------------------------------------- ------------------------------
Name: John Costello Name: John Costello
----------------------------------- -----------------------------
Title: Vice President & Chief Financial Title: Vice President & Chief
Office Financial Officer
---------------------------------- -----------------------------
EMPRESS CASINO HAMMOND LMC LEASING, LTD.
CORPORATION (f/k/a Lake Michigan
Charters, Ltd.)
By: /s/ John Costello By: /s/ John Costello
-------------------------------------- -------------------------------
Name: John Costello Name: John Costello
-------------------------------------- -------------------------------
Title: Vice President & Chief Financial Title: Vice President & Chief
Officer Financial Officer
-------------------------------------- -------------------------------
U.S. BANK TRUST NATIONAL NEW EMPRESS JOLIET, INC.
ASSOCIATION (f/k/a/ First Trust National
Association)
By: /s/ Richard H. Prokosch By: /s/ John Costello
-------------------------------------- ------------------------------
Name: Richard H. Prokosch Name: John Costello
------------------------------------ -----------------------------
Title: Vice President & Chief
Title: Assistant Vice President Financial Officer
----------------------------------- ----------------------------
HAMMOND RESIDENTIAL, L.L.C.
By: /s/ John Costello
-------------------------------------
Name: John Costello
------------------------------------
Title: Vice President & Chief
Financial Officer
-----------------------------------
<PAGE>
EXHIBIT A
---------
GUARANTY
For value received, ________________________, a _________________
corporation, hereby unconditionally guarantees to the Holder of the Security
upon which this Guaranty is endorsed the due and punctual payment, as set forth
in the Indenture pursuant to which such Security and this Guaranty were issued,
of the principal of, premium, if any, and interest on, such Security when and as
the same shall become due and payable for any reason according to the terms of
such Security and Article XIII of the Indenture. The Guaranty of the Security
upon which this Guaranty is endorsed will not become effective until the Trustee
signs the certificate of authentication on such Security.
___________________________________
By:________________________________
Attest:____________________________
<PAGE>
EXHIBIT 4.7
SUPPLEMENTAL INDENTURE NO. 4
THIS SUPPLEMENTAL INDENTURE NO. 4 (the "Supplement") is dated as of June
10, 1998, among Empress River Casino Finance Corporation, a Delaware
corporation (the "Company"), Empress Casino Joliet Corporation, f/k/a Empress
River Casino Corporation, an Illinois corporation ("Empress"), Empress Casino
Hammond Corporation, f/k/a Lake Michigan Charters, Ltd., an Indiana corporation
("Hammond Empress"), Hammond Residential, L.L.C., an Indiana limited liability
company ("Hammond Residential"), Empress Entertainment, Inc., f/k/a LMC Leasing,
Ltd., a Delaware corporation ("Hammond Leasing," and together with Empress,
Empress Hammond and Hammond Residential, collectively referred to herein as the
"Guarantors"), and U.S. Bank Trust National Association, f/k/a/ First Trust
National Association, a national association, as Trustee ("Trustee"). Except as
otherwise defined herein, terms used in this Supplement shall have the meanings
assigned to them in the Indenture (as defined below).
RECITALS
WHEREAS, the Company, the Guarantors and the Trustee are parties to that
certain Indenture dated as of April 1, 1994, as supplemented by that certain
Supplemental Indenture dated as of November 6, 1997, that certain Supplemental
Indenture No. 2 dated as of February 23, 1998 and that certain Supplemental
Indenture No. 3 dated as of April 29, 1998 (as so supplemented, the
"Indenture"), pursuant to which the Company issued $150.0 million in 10.75%
Senior Notes due 2002 (the "Notes"); and
WHEREAS, Section 10.1(1) of the Indenture permits the Company or any
Guarantor and the Trustee to enter into a supplemental indenture without the
consent of any holders of the Notes in order to cure ambiguities or
inconsistencies in the Indenture as long as such action does not adversely
affect the interest of any holder of the Notes in any respect; and
WHEREAS, the parties desire to cure certain inconsistencies by entering
into this Supplement on the terms set forth below.
NOW THEREFORE, in consideration of the mutual premises set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
AGREEMENTS
1. STATUS OF INDENTURE. Except as specifically set forth herein, the
-------------------
Indenture and all related documents executed and delivered to the Trustee in
connection with the Indenture and the Company's and each Guarantor's liabilities
thereunder shall remain in full force and effect, and
<PAGE>
shall not be waived, modified, superseded or otherwise affected by this
Supplement. This Supplement is not to be construed as a release, waiver or
modification of any of the terms, conditions, representations, warranties,
covenants, rights or remedies set forth in the Indenture and such other related
documents, except as specifically set forth herein.
2. EFFECTIVENESS. This Supplement shall automatically become effective on and
-------------
as of the date (the "Supplement Effective Date") that the Trustee has received
each of the following:
a. the written Opinion of Counsel to the Company as to the permissibility
of this Supplement under the Indenture, pursuant to Section 10.6 of
the Indenture; and
b. Officers' Certificates from the Company and the Guarantors as to the
compliance with the conditions precedent to the entry into this
Supplement by the Company, the Guarantors and the Trustee.
3. CONDITIONS TO LEGAL DEFEASANCE AND COVENANT DEFEASANCE. As of the
------------------------------------------------------
Supplement Effective Date, Section 9.4(d) of the Indenture shall be deleted in
its entirety and replaced with the following:
"(d) (i) In the event of an election to apply Section 9.2 to the
outstanding Securities, no Default or Event of Default shall have occurred
and be continuing on the date of such deposit or, insofar as Section
7.1(a)(4) or 7.1(a)(5) is concerned, at any time in the period ending on
the 91st day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such
period); or (ii) in the event of an election to apply Section 9.3 to the
outstanding Securities, no Default or Event of Default shall have occurred
and be continuing on the date of such deposit, and the Trustee shall have
received from the Company (i) the written opinion of a reputable financial
advisory firm that each of the Company and the Guarantors are not insolvent
for purposes of Section 547 of the Bankruptcy Law, as of the date of, and
after giving effect to, such deposit; (ii) the written Opinion of Counsel
to the Company stating that if each of the Company and the Guarantors are
not insolvent for purposes of Section 547 of the Bankruptcy Law as of the
date of, and after giving effect to, such deposit, such deposit cannot be a
preference under applicable bankruptcy law;"
4. COUNTERPARTS. This Supplement may be executed in any number of
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
*****
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Supplement as of
the date first above written.
EMPRESS RIVER CASINO FINANCE EMPRESS CASINO JOLIET
CORPORATION CORPORATION (f/k/a Empress River
Casino Corporation
By: ____________________________ By: ______________________________
Name:___________________________ Name:_____________________________
Title:__________________________ Title:____________________________
EMPRESS CASINO HAMMOND EMPRESS ENTERTAINMENT, INC. (f/k/a
CORPORATION (f/k/a Lake Michigan LMC Leasing, Ltd.)
Charters, Ltd.)
By: ____________________________ By: ______________________________
Name:___________________________ Name:_____________________________
Title:__________________________ Title:____________________________
U.S. BANK TRUST NATIONAL
ASSOCIATION (f/k/a First Trust HAMMOND RESIDENTIAL, L.L.C.
National Association)
By: /s/ Richard H. Prokosch By: ______________________________
-----------------------------
Name: RICHARD H. PROKOSCH Name:_____________________________
---------------------------
Title: ASSISTANT VICE PRESIDENT Title:____________________________
--------------------------
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Supplement as of
the date first above written.
EMPRESS RIVER CASINO FINANCE EMPRESS CASINO JOLIET
CORPORATION CORPORATION (f/k/a Empress River
Casino Corporation)
By: /s/ Peter A. Ferro By: /s/ Peter A. Ferro
----------------------------- ---------------------------------
Name: PETER A. FERRO, JR. Name: PETER A. FERRO, JR.
--------------------------- -------------------------------
Title: CHIEF EXECUTIVE OFFICER Title: CHIEF EXECUTIVE OFFICER
-------------------------- ------------------------------
EMPRESS CASINO HAMMOND EMPRESS ENTERTAINMENT, INC. (f/k/a
CORPORATION (f/k/a Lake Michigan LMC Leasing, Ltd.)
Charters, Ltd.)
By: /s/ Peter A. Ferro By: /s/ Peter A. Ferro
----------------------------- ---------------------------------
Name: PETER A. FERRO, JR. Name: PETER A. FERRO, JR.
--------------------------- -------------------------------
Title: CHIEF EXECUTIVE OFFICER Title: CHIEF EXECUTIVE OFFICER
-------------------------- ------------------------------
U.S. BANK TRUST NATIONAL
ASSOCIATION (f/k/a First Trust HAMMOND RESIDENTIAL, L.L.C.
National Association)
By:_____________________________ By: /s/ Peter A. Ferro
---------------------------------
Name:___________________________ Name: PETER A. FERRO, JR.
-------------------------------
Title:__________________________ Title: CHIEF EXECUTIVE OFFICER
------------------------------
<PAGE>
EXHIBIT 4.8
________________________________________________________________________________
________________________________________________________________________________
CREDIT AGREEMENT
DATED AS OF JUNE 17, 1998
AMONG
EMPRESS ENTERTAINMENT, INC.,
A DELAWARE CORPORATION,
EMPRESS CASINO JOLIET CORPORATION,
AN ILLINOIS CORPORATION AND
EMPRESS CASINO HAMMOND CORPORATION,
AN INDIANA CORPORATION, AS BORROWERS
THE LENDERS HEREIN NAMED
WELLS FARGO BANK, NATIONAL ASSOCIATION,
AS SWINGLINE LENDER, L/C ISSUER AND AGENT BANK
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
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RECITALS......................................................................
ARTICLE I - DEFINITIONS.......................................................
Section 1.01. Definitions...............................................
Section 1.02. Interpretation and Construction...........................
Section 1.03. Use of Defined Terms......................................
Section 1.04. Cross-References..........................................
Section 1.05. Exhibits and Schedules....................................
ARTICLE II - AMOUNT, TERMS AND SECURITY OF THE BANK FACILITIES................
Section 2.01. The Credit Facility.......................................
Section 2.02. Use of Proceeds of the Credit Facility....................
Section 2.03. Notice of Borrowings and Exercise of
Interest Rate Options.....................................
Section 2.04. Conditions of Borrowings..................................
Section 2.05. The Revolving Credit Note and
Interest Rate Options.....................................
Section 2.06. Security for the Credit Facility..........................
Section 2.07. Place and Manner of Payment...............................
Section 2.08. The Swingline Facility....................................
Section 2.09. Issuance of Letters of Credit.............................
Section 2.10. Fees......................................................
Section 2.11. Interest on Overdue Amounts and Default Rate..............
Section 2.12. Net Payments..............................................
Section 2.13. Increased Costs...........................................
Section 2.14. Mitigation; Exculpation; Replacement Lender...............
Section 2.15. Credit Agreement and Loan Documents
Not Enforceable Against ECJC until Occurrence
of IGB Approval Date......................................
ARTICLE III - CONDITIONS PRECEDENT TO THE CLOSING DATE........................
A. Closing Conditions..................................................
Section 3.01. Credit Agreement..........................................
Section 3.02. The Notes.................................................
Section 3.03. ECHC Security Documentation...............................
Section 3.04. Other Loan Documents......................................
</TABLE>
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<TABLE>
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Section 3.05. Articles of Incorporation, Bylaws,
Corporate Resolutions, Certificates of
Good Standing and Closing
Certificate..............................................
Section 3.06. Opinion of Counsel - Indiana.............................
Section 3.07. ECHC Title Insurance Policy..............................
Section 3.08. Intentionally omitted.
Section 3.09. Payment of Taxes.........................................
Section 3.10. Indiana Insurance........................................
Section 3.11. Payment of Fee...........................................
Section 3.12. Reimbursement for Expenses and
Fees.....................................................
Section 3.13. Schedules of Spaceleases and
Equipment Leases and
Contracts................................................
Section 3.14. Environmental Reports....................................
Section 3.15. Evidence of Right to Occupancy
of ECHC Casino Facilities................................
Section 3.16. Hammond Leases and Licenses..............................
Section 3.17. Payment of Existing Bank Loan,
Occurrence of Defeasement Effective
Date and Funding of Initial Senior
Subordinated Notes.......................................
Section 3.18. Regulatory Approvals, Permits,
Consents, Etc............................................
Section 3.19. Subsidiary Stock.........................................
Section 3.20. Schedule of all Significant
Litigation...............................................
Section 3.21. Financial Statements.....................................
Section 3.22. No Injunction or Other Litigation........................
Section 3.23. Additional Documents and
Statements...............................................
B. Conditions Precedent to all Borrowings.............................
Section 3.24. Notice of Borrowing......................................
Section 3.25. Certain Statements.......................................
Section 3.26. Gaming Permits...........................................
C. Conditions Precedent to Illinois Effective
Date...............................................................
Section 3.27. IGB Approval Date........................................
Section 3.28. ECJC Security Documents..................................
Section 3.29. Other Loan Documents.....................................
Section 3.30. Closing Certificate......................................
Section 3.31. Opinion of Counsel - Illinois............................
Section 3.32. ECJC Title Insurance Policy..............................
</TABLE>
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Section 3.33. Survey...................................................
Section 3.34. Payment of Taxes.........................................
Section 3.35. Illinois Insurance.......................................
Section 3.36. Reimbursement for Expenses and
Fees.....................................................
Section 3.37. Phase I Environmental Site
Assessments..............................................
Section 3.38. Evidence of Right to Occupancy of
ECJC Casino Facilities...................................
Section 3.39. Regulatory Approvals, Permits,
Consents, Etc............................................
Section 3.40. No Injunction or Other Litigation........................
Section 3.41. Additional Documents and
Statements...............................................
ARTICLE IV - REPRESENTATIONS AND WARRANTIES..................................
Section 4.01. Organization; Power and
Authorization............................................
Section 4.02. No Conflict With, Violation of or
Default Under Laws or Other
Agreements...............................................
Section 4.03. Litigation...............................................
Section 4.04. Agreements Legal, Binding, Valid
and Enforceable..........................................
Section 4.05. Information and Financial Data
Accurate; Financial Statements;
No Adverse Event.........................................
Section 4.06. Governmental Approvals...................................
Section 4.07. Payment of Taxes.........................................
Section 4.08. Title to Properties......................................
Section 4.09. No Untrue Statements.....................................
Section 4.10. Brokerage Commissions....................................
Section 4.11. No Defaults..............................................
Section 4.12. Employee Retirement Income Security
Act of 1974..............................................
Section 4.13. Hammond Lease Documents..................................
Section 4.14. Availability of Utility Services
and Facilities...........................................
Section 4.15. Spaceleases..............................................
Section 4.16. Equipment Leases and Contracts...........................
Section 4.17. Policies of Insurance....................................
Section 4.18. Gaming Permits...........................................
Section 4.19. Environmental Certificate................................
Section 4.20. New Venture Subsidiaries.................................
Section 4.21. Compliance with Statutes, etc............................
Section 4.22. Investment Company Act...................................
Section 4.23. Public Utility Holding Company Act.......................
</TABLE>
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Section 4.24. Labor Relations........................................
Section 4.25. Patents, Licenses, Franchises
and Formulas...........................................
Section 4.26. Contingent Liabilities.................................
ARTICLE V - GENERAL COVENANTS OF BORROWERS.................................
Section 5.01. FF&E...................................................
Section 5.02. Permits; Licenses and Legal
Requirements...........................................
Section 5.03. Hammond Lease Documents................................
Section 5.04. Protection Against Lien Claims.........................
Section 5.05. No Change in Character of Primary
Business...............................................
Section 5.06. Preservation and Maintenance of
Properties and Assets; Acquisition
of Additional Property.................................
Section 5.07. Repair of Properties and Assets........................
Section 5.08. Financial Statements; Reports;
Certificates and Books and
Records................................................
Section 5.09. Insurance..............................................
Section 5.10. Taxes..................................................
Section 5.11. Permitted Encumbrances Only............................
Section 5.12. Advances...............................................
Section 5.13. Further Assurances.....................................
Section 5.14. Indemnification........................................
Section 5.15. Inspection of the Collateral and
Appraisal..............................................
Section 5.16. Compliance With Other Loan Documents,
Execution of Subsidiary Guaranties
and Pledge of Restricted Subsidiary
Stock...................................................
Section 5.17. Suits or Actions Affecting
Borrowers...............................................
Section 5.18. Occurrence of Senior Subordinated
Notes Effective Date, Designation
of Senior Debt and Required
Payments from Proceeds of Senior
Subordinated Notes......................................
Section 5.19. Consents of and Notice to Gaming
Authorities.............................................
Section 5.20. Tradenames, Trademarks and
Servicemarks............................................
Section 5.21. Notice of Hazardous Materials...........................
Section 5.22. Compliance with Hammond
Lease Documents.........................................
Section 5.23. Compliance with Access Laws.............................
</TABLE>
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Section 5.24. Limitation of Prepayment or
Defeasance of New Senior
Subordinated Notes or New
Indenture................................................
Section 5.25. Acceleration of Maturity Date............................
ARTICLE VI - FINANCIAL COVENANTS.............................................
Section 6.01. Leverage Ratio...........................................
Section 6.02. Fixed Charge Coverage Ratio..............................
Section 6.03. Adjusted Fixed Charge Coverage
Ratio....................................................
Section 6.04. Minimum Tangible Net Worth...............................
Section 6.05. Limitation on Capital Expenditures.......................
Section 6.06. Contingent Liability(ies)................................
Section 6.07. Investment Restrictions..................................
Section 6.08. Total Liens..............................................
Section 6.09. Limitation on Indebtedness...............................
Section 6.10. Minimum Subordinated Debt................................
Section 6.11. Restriction on Distributions.............................
Section 6.12. No Change of Control.....................................
Section 6.13. Consolidation, Merger, Sale of
Assets, etc..............................................
Section 6.14. Transactions with Affiliates.............................
Section 6.15. No Transfer of Ownership.................................
Section 6.16. ERISA....................................................
Section 6.17. Margin Regulations.......................................
Section 6.18. No Additional ECHC or ECJC
Subsidiaries.............................................
Section 6.19. Restriction on Equity Offering...........................
Section 6.20. Limitation on Consolidated Tax
Liability................................................
Section 6.21. Change in Accounting Principles..........................
ARTICLE VII - EVENTS OF DEFAULT..............................................
Section 7.01. Events of Default........................................
Section 7.02. Default Remedies.........................................
Section 7.03. Application of Proceeds..................................
Section 7.04. Notices..................................................
Section 7.05. Agreement to Pay Attorney's Fees and
Expenses.................................................
Section 7.06. No Additional Waiver Implied by One
Waiver...................................................
Section 7.07. Licensing of Agent Bank and
Lenders..................................................
</TABLE>
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Section 7.08. Exercise of Rights Subject to
Applicable Law...........................................
Section 7.09. Discontinuance of Proceedings............................
ARTICLE VIII - DAMAGE, DESTRUCTION AND CONDEMNATION..........................
Section 8.01. No Abatement of Payments.................................
Section 8.02. Distribution of Capital Proceeds
Upon Occurrence of Fire, Casualty,
Other Perils or Condemnation.............................
ARTICLE IX - AGENCY PROVISIONS...............................................
Section 9.01. Appointment..............................................
Section 9.02. Nature of Duties.........................................
Section 9.03. Disbursement of Borrowings...............................
Section 9.04. Distribution and Apportionment
of Payments..............................................
Section 9.05. Rights, Exculpation, Etc.................................
Section 9.06. Reliance.................................................
Section 9.07. Indemnification..........................................
Section 9.08. Agent Individually.......................................
Section 9.09. Successor Agent Bank; Resignation
of Agent Bank; Removal of Agent
Bank.....................................................
Section 9.10. Consent and Approvals....................................
Section 9.11. Agency Provisions Relating to
Collateral...............................................
Section 9.12. Lender Actions Against
Collateral and Restriction on
Exercise of Set-Off......................................
Section 9.13. Ratable Sharing..........................................
Section 9.14. Delivery of Documents
Section 9.15. Notice of Events of Default..............................
ARTICLE X - GENERAL TERMS AND CONDITIONS.....................................
Section 10.01. Amendments and Waivers...................................
Section 10.02. Failure to Exercise Rights...............................
Section 10.03. Notices and Delivery.....................................
Section 10.04. Modification in Writing..................................
Section 10.05. Other Agreements.........................................
Section 10.06. Counterparts.............................................
Section 10.07. Rights, Powers and Remedies are
Cumulative...............................................
Section 10.08. Continuing Representations...............................
Section 10.09. Successors and Assigns...................................
Section 10.10. Assignment of Loan Documents by
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by Borrowers or Syndication Interests
by Lenders...............................................
Section 10.11. Action by Lenders........................................
Section 10.12. Time of Essence..........................................
Section 10.13. Choice of Law and Forum..................................
Section 10.14. Arbitration..............................................
Section 10.15. Waiver of Jury Trial.....................................
Section 10.16. Scope of Approval and Review.............................
Section 10.17. Severability of Provisions...............................
Section 10.18. Cumulative Nature of Covenants...........................
Section 10.19. Costs to Prevailing Party................................
Section 10.20. Expenses.................................................
Section 10.22. Security and Loan Documentation..........................
Section 10.23. Setoff...................................................
Section 10.24. Borrowers' Waivers and Consents..........................
Section 10.25. Confidentiality..........................................
Section 10.26. Schedules Attached.......................................
</TABLE>
Schedule 2.01(a) - Schedule of Lenders'
Proportions in Credit Facility
Schedule 2.01(c) - Aggregate Commitment Reduction
Schedule 2.01(c) - Schedule
Schedule 3.11 - Schedule of Existing Bank Loan
Security Documents
Schedule 3.20 - Schedule of Significant
Litigation
Schedule 4.15 - Schedules of Spaceleases
(A) ECHC Schedule Schedule of
Spaceleases
(B) ECJC Schedule of
Spaceleases
Schedule 4.16 - Schedules of Equipment Leases
and Contracts
(A) ECHC Schedule of Equipment Leases and
Contracts
(B) ECJC Schedule of Equipment Leases and
Contracts
Schedule 4.20 - Schedule of Restricted and
Unrestricted Subsidiaries
Schedule 4.25 - Schedule of Trademarks,
Patents, Licenses, Franchises,
Formulas and Copyrights
Schedule 4.26 - Schedule of Contingent
Liabilities
Schedule 6.05 - Schedule of Budgeted Capital
Expenditures
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Section 10.27. Exhibits Attached..................................
Exhibit A - Revolving Credit Note - Form
Exhibit B - Swingline Note - Form
Exhibit C - Notice of Borrowing - Form
Exhibit D - Continuation/Conversion Notice -
Form
Exhibit E - Notice of Swingline Advance - Form
Exhibit F - Compliance Certificate - Form
Exhibit G - Pricing Certificate - Form
Exhibit H - Authorized Officer Certificate -
Form
Exhibit I - Closing Certificate - Form
Exhibit I-1 - Illinois Closing Certificate - Form
Exhibit J - Legal Opinion (Indiana) - Form
Exhibit K - Legal Opinion (Illinois) - Form
Exhibit L - Assignment and Assumption Agreement
- Form
Exhibit M - Cash Collateral Pledge Agreement -
Form
Exhibit N - Stock Pledge (Gaming) - Form
Exhibit 0 - Stock Pledge (General) - Form
Exhibit P - Subsidiary Guaranty - Form
Exhibit Q - ECJC Property - Description
Exhinit R - Hammond Fee Property - Description
Exhibit S - Joilet Excess Land - Description
</TABLE>
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<PAGE>
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT ("Credit Agreement") is made and entered into as
of the 17th day of June, 1998, by and among EMPRESS ENTERTAINMENT, INC., a
Delaware corporation, formerly known as LMC Leasing, Ltd., a Delaware
corporation ("EEI"), EMPRESS CASINO JOLIET CORPORATION, an Illinois corporation,
formerly known as Empress River Casino Corporation, an Illinois corporation
("ECJC") and EMPRESS CASINO HAMMOND CORPORATION, an Indiana corporation,
formerly known as Lake Michigan Charters, Ltd., a Indiana corporation ("ECHC"
and together with EEI and ECJC, collectively the "Borrowers"), each financial
institution whose name is set forth on the signature pages of this Credit
Agreement and each lender which may hereafter become a party to this Credit
Agreement pursuant to Section 10.10(b) (each individually a "Lender" and
collectively the "Lenders"), WELLS FARGO BANK, National Association, as the
swingline lender (herein in such capacity, together with its successors and
assigns, the "Swingline Lender"), WELLS FARGO BANK, National Association, as the
issuer of letters of credit hereunder (herein in such capacity, together with
its successors and assigns, the "L/C Issuer") and WELLS FARGO BANK, National
Association, as the arranger and administrative and collateral agent for the
Lenders, Swingline Lender and L/C Issuer (herein, in such capacity, called the
"Agent Bank" and, together with the Lenders, Swingline Lender and L/C Issuer,
collectively referred to as the "Banks").
R E C I T A L S:
- - - - - - - -
WHEREAS:
A. In this Credit Agreement all capitalized words and terms shall
have the respective meanings and be construed herein as hereinafter provided in
Section 1.01 of this Credit Agreement and shall be deemed to incorporate such
words and terms as a part hereof in the same manner and with the same effect as
if the same were fully set forth.
B. ECJC and ECHC are each a wholly owned subsidiary of EEI. ECJC is
the owner and operator of the ECJC Casino Facilities. ECHC is the owner of the
ECHC Riverboat and Hammond Fee Property and is the developer/lessee/licensee
under the Hammond Lease Documents. ECHC is the operator of the ECJC Casino
Facilities.
<PAGE>
C. On or about April 1, 1994, Empress Finance issued One Hundred
Fifty Million Dollars ($150,000,000.00) in 10-3/4% Senior Notes due 2002 (the
"Existing Senior Notes") pursuant to the terms of the Indenture of even date
therewith (the "Existing Indenture") executed by and among Empress Finance, as
issuer, EEI, ECJC and ECHC, as guarantors and First Trust National Association,
as trustee.
D. On or about June 30, 1997, ECHC issued the Existing Bank Note in
the original principal sum of Sixty Million Dollars ($60,000,000.00), payable to
the order of Existing Bank Lender.
E. EEI desires to issue up to One Hundred Fifty Million Dollars
($150,000,000.00) in Senior Subordinated Notes due 2006 (the "Initial Senior
Subordinated Notes") in a limited offering to Qualified Institutional Buyers (as
defined in Rule 144A of the Securities and Exchange Commission (the "SEC")) and
outside the United States to certain persons in reliance on Regulation S of the
SEC, which Initial Senior Subordinated Notes are intended to be issued under and
pursuant to an indenture (the "New Indenture") dated concurrently or
substantially concurrently herewith executed by and among EEI, as issuer, ECJC,
Empress Finance, ECHC and Hammond Residential, as guarantors and U.S. Bank
Trust, National Association, as trustee, prepared and executed consistent with
the Confidential Offering Memorandum dated June 11th, 1998. EEI intends to use
all net proceeds from the issuance of the Initial Senior Subordinated Notes to
cause a "Covenant Defeasance", of the Existing Indenture.
F. Following the issuance of the Initial Senior Subordinated Notes
and in order to facilitate trading in such debt securities, EEI intends to file
a registration statement with the SEC seeking to register an exchange offer for
the exchange of the Initial Senior Subordinated Notes for an issue of up to One
Hundred Fifty Million Dollars ($150,000,000.00) in Senior Subordinated Notes due
2006 (the "Exchange Senior Subordinated Notes") under and pursuant to the New
Indenture. The Exchange Senior Subordinated Notes will be identical in all
material respects to the Initial Senior Subordinated Notes.
G. The Borrower Consolidation desires to refinance the Existing Bank
Loan, finance a portion of the costs of the Covenant Defeasance and provide
working capital for the Borrower Consolidation by establishing a bank financed
revolving line of credit in the principal amount of One
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<PAGE>
Hundred Million Dollars ($100,000,000.00), including a swingline subfacility for
fundings in smaller minimum amounts and on shorter notice in the maximum amount
of Five Million Dollars ($5,000,000.00) at any time outstanding, and also
including a subfacility for the issuance of Letters of Credit in the maximum
amount of Three Million Dollars ($3,000,000.00) at any time outstanding.
H. Lenders are willing, subject to the terms, covenants and
conditions hereinafter set forth, to establish the Credit Facility in the
initial principal amount of One Hundred Million Dollars ($100,000,000.00),
including the L/C Facility, as a subfacility for the issuance of standby and
documentary letters of credit by the L/C Issuer in the maximum aggregate amount
of Three Million Dollars ($3,000,000.00) in Letters of Credit at any time
outstanding and further including the Swingline Facility to be funded by the
Swingline Lender, as a subfacility in the maximum aggregate amount of Five
Million Dollars ($5,000,000.00) at any time outstanding, all on the terms and
subject to the conditions, covenants and understandings hereinafter set forth
and contained in each of the Loan Documents.
I. Until the Credit Agreement, Notes and each of the Loan Documents
has been approved by the IGB: (i) the Credit Agreement, Notes and Loan Documents
shall not be binding upon or enforceable against ECJC, (ii) only one-half of the
Credit Facility shall be available for Borrowing, and (iii) the Swingline
Facility and the L/C Facility shall not be available to Borrowers.
NOW, THEREFORE, in consideration of the foregoing, and other valuable
considerations as hereinafter described, the parties hereto do promise, covenant
and agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.01. Definitions. For the purposes of this Credit Agreement,
-----------
each of the following terms shall have the meaning specified with respect
thereto, unless a different meaning clearly appears from the context:
"Access Laws" shall have the meaning set forth in Section 5.23.
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<PAGE>
"Adjusted Fixed Charge Coverage Ratio" as of the end of any Fiscal
Quarter shall mean with reference to the Borrower Consolidation:
For the Fiscal Quarter under review, together with the most recently
ended three (3) preceding Fiscal Quarters, the sum of: (i) EBITDA,
less (ii) the aggregate amount of actually paid federal and state
taxes on or measured by income, less (iii) Distributions actually
paid, exclusive of prior Fiscal Year(s) Deferred Distributions, less
(iv) the amount of the Minimum Cap Ex Requirement for such period
Divided by (divided by)
The sum of: (i) the aggregate amount of actually paid Interest
Expense, plus (ii) the aggregate amount of Scheduled Reductions
actually paid, plus (iii) principal payments or reductions (without
duplication) required to be made on all other Indebtedness, plus (iv)
the current portion of Capitalized Lease Liabilities, to the extent
not included in (i) above; in each case of (i) through (iv) determined
for the Fiscal Quarter under review together with the most recently
ended three (3) preceding Fiscal Quarters.
"Affiliate(s)" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person. A Person shall be deemed to be "controlled by" any other Person if such
other Person possesses, directly or indirectly, power to:
(a) vote ten percent (10%) or more of the equity securities (on
a fully diluted basis) having ordinary voting power for the election
of directors or managing general partners; or
(b) direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Agent Bank" shall mean WFB in its capacity as administrative and
collateral agent for Lenders, Swingline Lender and L/C Issuer.
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"Aggregate Commitment" shall mean reference to the aggregate amount
committed by Lenders for advance to or on behalf of the Borrower Consolidation
as Borrowings under the Credit Facility in the initial principal amount of One
Hundred Million Dollars ($100,000,000.00), subject to the limitations for
advance as set forth in the definition of Maximum Permitted Balance.
"Aggregate Commitment Reduction Schedule" shall mean the Aggregate
Commitment Reduction Schedule marked "Schedule 2.01(c)", affixed hereto and by
this reference incorporated herein and made a part hereof, setting forth the
Scheduled Reductions and Maximum Scheduled Balance as of each Reduction Date
under the Credit Facility.
"Aggregate Outstandings" shall mean collective reference to the sum of
the Funded Outstandings, Swingline Outstandings and L/C Exposure as of any given
date of determination.
"Applicable Margin" means for any Base Rate Loan or LIBOR Loan during
the period commencing on the Closing Date and continuing until the Maturity
Date, the applicable percentage amount to be added to the Base Rate or LIBO
Rate, as the case may be, as set forth in Table One below in each instance based
on the Leverage Ratio calculated with regard to the Borrower Consolidation as of
each Fiscal Quarter end, any change in the applicable percentage amount by
reason thereof to be effective as of the 1st day of the third (3rd) month
immediately following each such Fiscal Quarter end:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TABLE ONE TABLE TWO
- -------------------------------------------------------------------------------
LIBO
BASE RATE RATE COMMITMENT
LEVERAGE RATIO MARGIN MARGIN PERCENTAGE
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Greater than 3.50 to 1.0 Default Default 0.375%
Rate Rate
- -------------------------------------------------------------------------------
Greater than 3.25 to 1.0 but less 1.00% 2.125% 0.375%
than or equal to 3.50 to 1.00
- -------------------------------------------------------------------------------
Greater than 3.00 to 1.0 but less 0.75% 1.875% 0.375%
than or equal to 3.25 to 1.00
- -------------------------------------------------------------------------------
Greater than 2.50 to 1.0 but less 0.50% 1.625% 0.375%
than or equal to 3.00 to 1.00
- -------------------------------------------------------------------------------
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TABLE ONE TABLE TWO
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Greater than 2.00 2.00 to 1.0 but less 0.25% 1.375% 0.25%
than or equal to 2.50 to 1.00
- --------------------------------------------------------------------------------
Greater than 1.50 to 1.0 but less 0.00% 1.125% 0.25%
than or equal to 2.00 to 1.00
- --------------------------------------------------------------------------------
Less than or equal to 1.50 to 1.00 0.00% .875% 0.225%
- --------------------------------------------------------------------------------
</TABLE>
"Assets" shall mean the total assets of the Borrower Consolidation
determined in accordance with GAAP.
"Assignment and Assumption Agreement" shall mean the document
evidencing an assignment of a Syndication Interest by any Lender to an Eligible
Assignee in the form of the Assignment, Assumption and Consent Agreement marked
"Exhibit L", affixed hereto and by this reference incorporated herein and made a
part hereof.
"Assignments" shall mean collective reference to the Assignments of
Spaceleases, Contracts, Rents and Revenues and Assignments of Permits, Licenses
and Contracts.
"Assignments of Permits, Licenses and Contracts" shall mean collective
reference to the ECHC Assignment of Permits, Licenses and Contracts and ECJC
Assignment of Permits, Licenses and Contracts.
"Assignments of Spaceleases, Contracts, Rents and Revenues" shall mean
collective reference to the ECHC Assignment of Spaceleases, Contracts, Rents and
Revenues and ECJC Assignment of Spaceleases, Contracts, Rents and Revenues.
"Authorized Officer(s)" shall mean, relative to the Borrowers, those
of the respective officers whose signatures and incumbency shall have been
certified to Agent Bank and the Banks as required in Section 3.05(iv) of the
Credit Agreement with the authority and responsibility to deliver Notices of
Borrowing, Continuation/Conversion Notices, Pricing Certificates, Notices of
Swingline Advances, requests for the issuance of Letters of Credit and all other
requests, notices, reports, consents, certifications and authorizations on
behalf of Borrowers, or any of them.
"Available Borrowings" shall mean, at any time, and from time to time,
the aggregate amount available to Borrowers for a Borrowing, a Swingline Advance
or issuance of a Letter
-6-
<PAGE>
of Credit not exceeding the amount of the Maximum Availability, as of each date
of determination.
"Bank Facilities" shall mean collective reference to the Credit
Facility, Swingline Facility and L/C Facility.
"Bank Facility Termination" or "Bank Facilities Termination" shall
mean indefeasible payment in full of all sums owing under the Notes and each of
the other Loan Documents, the occurrence of the Stated Expiry Date or other
termination of all outstanding Letters of Credit, and the irrevocable
termination of the obligation to advance Borrowings, to advance Swingline
Advances and to issue Letters of Credit.
"Banking Business Day" means (a) with respect to any Borrowing,
payment or rate determination of LIBOR Loans, a day, other than a Saturday or
Sunday, on which Agent Bank is open for business in San Francisco and on which
dealings in Dollars are carried on in the London interbank market, and (b) for
all other purposes any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the States of California, Nevada and/or New
York, or is a day on which banking institutions located in California, Nevada
and/or New York are required or authorized by law or other governmental action
to close.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, as
amended, 11 U.S.C. Section 101, et seq.
------
"Banks" shall have the meaning set forth in the Preamble to this
Credit Agreement.
"Base Rate" shall mean, as of any date of determination, the rate per
annum equal to the higher of (a) the Prime Rate in effect on such date and (b)
the Federal Funds Rate in effect on such date plus one-half of one percent (1/2
of 1%) (fifty basis points).
"Base Rate Loan" shall mean reference to that portion of the unpaid
principal balance of the Credit Facility bearing interest with reference to the
Base Rate plus the Applicable Margin.
"Borrower Consolidation" shall mean collective reference to Borrowers
and each Restricted Subsidiary on a consolidated basis, without regard to any
Unrestricted Subsidiary or other Affiliate.
-7-
<PAGE>
"Borrowers" shall mean collective reference to EEI, ECHC and ECJC.
"Borrowing(s)" shall mean such amounts as Borrowers may request by
Notice of Borrowing to Agent Bank from time to time to be advanced under the
Credit Facility in accordance with the provisions of Section 2.03 or at the
request of Agent Bank pursuant to Section 2.08 or Section 2.09.
"Breakage Charges" shall have the meaning ascribed to such term in
Section 2.07(c) of the Credit Agreement.
"Capital Expenditures" shall mean, for any period, without
duplication, the aggregate of all expenditures (whether paid in cash or accrued
as liabilities during that period and including Capitalized Lease Liabilities)
by the Borrower Consolidation during such period that, in conformity with GAAP,
are required to be included in or reflected by the property, plant or equipment
or similar fixed or capital asset accounts reflected in the consolidated balance
sheet of the Borrower Consolidation (including equipment which is purchased
simultaneously with the trade-in of existing equipment owned by Borrowers to the
extent of (a) the gross amount of such purchase price less (b) the cash proceeds
----
of trade-in credit of the equipment being traded in at such time), but excluding
capital expenditures made in connection with the replacement or restoration of
assets, to the extent reimbursed or refinanced from insurance proceeds paid on
account of the loss of or damage to the assets being replaced or restored, or
from awards of compensation arising from the taking by condemnation of or the
exercise of the power of eminent domain with respect to such assets being
replaced or restored.
"Capital Proceeds" shall mean the net proceeds (after deducting all
reasonable expenses incurred in connection therewith) available to Borrowers in
excess of Three Million Dollars ($3,000,000.00) in the aggregate during any
Fiscal Year from (i) partial or total condemnation or destruction of any part of
the Collateral, (ii) insurance proceeds (other than rent insurance and business
interruption insurance) received in connection with damage to or destruction of
the Collateral, and (iii) the sale or other disposition of any portion of the
Collateral in accordance with the provisions of this Credit Agreement (not
including, however, any proceeds received by Borrowers, or any of them, from a
sale, condemnation, damage or destruction of FF&E or other personal property if
such FF&E or other personal property is replaced by items of equivalent value or
utility,
-8-
<PAGE>
in each case such exclusion to apply only during any period in which no Default
in the payment of any principal or interest owing under the terms of the Bank
Facilities or an Event of Default has occurred and is continuing).
"Capitalized Lease Liabilities" means all monetary obligations of the
Borrowers, or any of them, under any leasing or similar arrangement which, in
accordance with GAAP, would be classified as capitalized leases, and, for
purposes of this Credit Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP, and the stated
maturity thereof shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Cash" shall mean, when used in connection with any Person, all
monetary and non-monetary items owned by that Person that are treated as cash or
the equivalent of cash in accordance with GAAP, consistently applied.
"Cash Collateral Account" shall mean the restricted depository savings
account to be established by Borrowers or Agent Bank on behalf of Borrowers with
L/C Issuer at its offices located at One East First Street, Reno, Nevada, or at
such other office located in the United States as may be designated from time to
time by L/C Issuer, for the purpose of depositing cash collateral for the
aggregate L/C Exposure upon the occurrence of any Event of Default.
"Cash Collateral Pledge Agreement" shall mean the Pledge and
Assignment of Savings Account Agreement to be executed by Borrowers in favor of
L/C Issuer as of the Closing Date as the same may be amended or modified from
time to time under the terms of which all sums held from time to time in the
Cash Collateral Account are pledged in favor of L/C Issuer to secure repayment
of any funding required under any outstanding Letters of Credit, a copy of which
Cash Collateral Pledge Agreement is marked "Exhibit M", affixed hereto and by
this reference incorporated herein and made a part hereof.
"Cash Equivalents" shall mean, when used in connection with any
Person, that Person's Investments in:
(a) Government Securities maturing within one (1) year after the
date of the making of the Investment;
-9-
<PAGE>
(b) readily marketable direct obligations of any State of the
United States of America given on the date of such Investment a credit
rating of at least Aa by Moody's Investors Service, Inc. or AA by Standard
& Poor's Corporation, in each case maturing within one (1) year from the
making of the Investment;
(c) certificates of deposit issued by, bank deposits in,
eurodollar deposits through, bankers' acceptances of, and repurchase
agreements covering Government Securities executed by, any Lender or, if
not a Lender, any bank incorporated under the laws of the United States of
America or any State thereof and having on the date of such Investment
combined capital, surplus and undivided profits of at least Two Hundred
Fifty Million Dollars ($250,000,000.00), or total assets of at least Five
Billion Dollars ($5,000,000,000.00), in each case maturing within one (1)
year after the date of the making of the Investment;
(d) certificates of deposit issued by, bank deposits in,
eurodollar deposits through, bankers' acceptances of, and repurchase
agreements covering Government Securities executed by, any branch or office
located in the United States of America of a bank incorporated under the
laws of any jurisdiction outside the United States of America having on the
date of such Investment combined capital, surplus and undivided profits of
at least Five Hundred Million Dollars ($500,000,000.00), or total assets of
at least Fifteen Billion Dollars ($15,000,000,000.00) in each case maturing
within one year after the date of the making of the Investment;
(e) repurchase agreements covering Government Securities
executed by a broker or dealer registered under Section 15(b) of the
Securities Exchange Act of 1934 having on the date of the Investment
capital of at least One Hundred Million Dollars ($100,000,000.00), maturing
within thirty (30) days after the date of the making of the Investment;
provided that the maker of the Investment receives written confirmation of
--------
the transfer to it of record ownership of the Government Securities on the
books of a "primary
-10-
<PAGE>
dealer" in such Government Securities on the books of such registered
broker or dealer, as soon as practicable after the making of the
Investment;
(f) readily marketable commercial paper of corporations doing business
in and incorporated under the laws of the United States of America or any
State thereof or of any corporation that is the holding company for a bank
described in clauses (c) or (d) above given on the date of such Investment
a credit rating of at least P-1 by Moody's Investors Service, Inc. or A-1
by Standard & Poor's Corporation, in each case maturing within three
hundred sixty-five (365) days after the date of the making of the
Investment;
(g) "money market preferred stock" issued by a corporation
incorporated under the laws of the United States of America or any State
thereof given on the date of such Investment a credit rating of at least Aa
by Moody's Investors Service, Inc. or AA by Standard & Poor's Corporation,
in each case having an investment period not to exceed fifty (50) days;
provided that (i) the amount of all such Investments issued by the same
--------
issuer does not exceed Five Million Dollars ($5,000,000.00) and (ii) the
aggregate amount of all such Investments does not exceed Fifteen Million
Dollars ($15,000,000.00); and
(h) a readily redeemable "money market mutual fund" advised by a bank
described in clauses (c) or (d) hereof, or an investment advisor registered
under Section 203 of the Investment Advisors Act of 1940, that has and
maintains an investment policy limiting its investments primarily to
instruments of the types described in clauses (a) through (g) hereof and
having on the date of such Investment total assets of at least One Billion
Dollars ($1,000,000,000.00).
"Casino Facility" shall mean individual reference and "Casino Facilities"
shall mean collective reference to the ECJC Casino Facilities and the ECHC
Casino Facilities.
"Change in Control" shall have the meaning ascribed to such term in the New
Indenture as of the Closing Date,
-11-
<PAGE>
without regard to any amendment or modifications thereof made subsequent to the
Closing Date.
"Closing Certificate" shall have the meaning ascribed to such term in
Section 3.05(v).
"Closing Date" shall mean the date upon which: (i) each condition precedent
required under Article IIIA of this Credit Agreement has been satisfied or
waived and (ii) the ECHC Security Documentation has been filed and/or recorded
in accordance with and in the manner required by the ECHC Closing Instructions,
or such other date as to which Agent Bank and Borrowers agree in writing.
"Closing Disbursement" shall mean the Borrowing to be advanced on the
Closing Date for the uses and purposes set forth in Section 2.02(a).
"Collateral" shall mean: (a) a collective reference to the ECJC Collateral
and the ECHC Collateral; (b) the EEI Stock Pledges; and (c) any and all other
property and/or intangible rights, interests or benefits inuring to or in favor
of Borrowers which are in any manner assigned, pledged, encumbered or otherwise
hypothecated in favor of Lenders or Agent Bank on behalf of the Lenders to
secure repayment of the Bank Facilities, but shall not include the Gaming
Permits or the Hammond Lease Documents.
"Collateral Properties" shall mean collective reference to the real
properties, improvements and associated FF&E which are pledged and encumbered as
Collateral securing repayment of the Credit Facility from time to time, which
shall consist of the Hammond Fee Property and the ECJC Property, together with
any other real property or interests therein which may be held by Agent Bank
from time to time to secure repayment of the Bank Facilities.
"Commercial Letter(s) of Credit" shall mean a letter or letters of credit
issued by L/C Issuer pursuant to Section 2.09 of this Credit Agreement for the
purpose of assuring payment for goods or equipment supplied to Borrowers, or any
of them.
"Commitment Fee" shall have the meaning ascribed to such term in Section
2.10(b) of this Credit Agreement.
-12-
<PAGE>
"Commitment Percentage" shall mean the per annum percentage to be used in
the calculation of the Commitment Fee based on the Leverage Ratio of the
Borrower Consolidation, determined as set forth in Table Two of the definition
of Applicable Margin.
"Compliance Certificate" shall mean a compliance certificate as described
in Section 5.08(a)(v) substantially in the form of "Exhibit F", affixed hereto
and by this reference incorporated herein and made a part hereof.
"Contingent Liability(ies)" shall mean, as to any Person, without
duplication among Persons, collectively, any obligation of such Person
guaranteeing or having the economic effect of guaranteeing any Indebtedness,
leases or dividends ("primary obligations") of any other Person (the "primary
obligor") (other than Indebtedness of the Borrower Consolidation, or any of
them) in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (by means of loans,
capital contributions or otherwise) (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or support the solvency
or level of any balance sheet item of the primary obligor or any "keep well,"
"make well" or other arrangement of whatever nature given for the purpose of
assuring or holding harmless an obligee against loss with respect to any
obligation of such primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, (d) to make payment in respect of any net liability arising in
connection with any Interest Rate Hedges, foreign currency exchange agreement,
commodity hedging agreement or any similar agreement or arrangement in any such
case if the purpose or intent of such agreement is to provide assurance that
such primary obligation will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such primary
obligation will be protected (in whole or in part) against loss in respect
thereof or (e) otherwise to assure or hold harmless the holder of such primary
obligation against loss in respect thereof; provided, however, that the term
Contingent Liability shall not include endorsements of instruments for deposit
or collection in the ordinary course of business or
-13-
<PAGE>
<PAGE>
STATE OF Illinois )
) ss
COUNTY OF Cook )
This instrument was acknowledged before me on June 30, 1998, by Joseph L
Brady as Sr Vice President of/for WELLS FARGO BANK, National Association.
/s/ Joanne Bruen [SEAL]
- ----------------------------
Notary Public
-14-
<PAGE>
terms and conditions set forth in this Credit Agreement and the Revolving Credit
Note, up to the Maximum Permitted Balance.
"Default" shall mean the occurrence or non-occurrence, as the case may be,
of any event that with the giving of notice or passage of time, or both, would
become an Event of Default.
"Default Rate" shall have the meaning set forth in Section 2.11(b) with
respect to defaults occurring under the Notes and shall mean the Prime Rate plus
the then Applicable Margin plus two percent (2%) per annum for all other
purposes.
"Defaulting Lender" means any Lender which fails or refuses to perform its
obligations under the Credit Facility within the time period specified for
performance of such obligation or, if no time frame is specified, if such
failure or refusal continues for a period of five (5) Banking Business Days
after notice from Agent Bank.
"Defeased Debt" shall mean the Indebtedness evidenced by the Existing
Senior Notes and Existing Indenture upon the occurrence of the Defeasement
Effective Date.
"Defeasement Effective Date" shall mean the date upon which Borrowers have
deposited all necessary funds and have satisfied all other conditions and
requirements set forth in Section 9.4 of the Existing Indenture necessary to
cause and effect the Covenant Defeasance.
"Deferred Distribution" with respect to any Fiscal Year, shall mean the
amount by which the Permitted Distributions for such Fiscal Year exceed the
amount of Distributions actually made or paid during such Fiscal Year, without
regard to Distributions of prior year(s) Deferred Distributions.
"Deferred Funding Amount" shall mean that portion of the Credit Facility
that shall not be available for Borrowing until the occurrence of the Illinois
Effective Date, which portion is the principal sum of Fifty Million Dollars
($50,000,000.00).
"Designated Deposit Account" shall mean a deposit account to be maintained
by Borrowers with Agent Bank, as from time to time designated in writing by an
Authorized Officer.
-15-
<PAGE>
"Dispute" shall have the meaning set forth in Section 10.14(a).
"Distributions" shall mean and collectively refer to: (i) any and all cash
dividends, loans, management fees, payments, advances or other distributions,
fees or compensation of any kind or character whatsoever, other than within the
Borrower Consolidation, but shall not include consideration paid for tangible
and intangible assets in an arms length exchange for fair value, trade payments
made and other payments for liabilities incurred in the ordinary course of
business or compensation to officers, directors and employees of Borrowers in
the ordinary course of business, and (ii) any and all payments, fees or other
consideration paid in connection with an EEI Stock Redemption by any member of
the Borrower Consolidation.
"Documents" shall have the meaning set forth in Section 10.14(a).
"Dollars" and "$" means the lawful money of the United States of America.
"EBITDA" shall mean with reference to any Person, for any fiscal period
under review, the sum of (i) Net Income for that period (exclusive, however, of
any earnings realized by the Borrower Consolidation on funds on deposit in
connection with the Defeased Debt), plus (ii) any extraordinary loss reflected
in such Net Income, minus (iii) any extraordinary gain reflected in such Net
Income, plus (iv) Interest Expense for that period, plus (v) the aggregate
amount of federal and state taxes on or measured by income for that period
(whether or not payable during that period), plus (vi) depreciation,
amortization and all other non-cash expenses for that period, plus (vii) pre-
opening expenses for that period in each case determined in accordance with GAAP
and, in the case of items (ii), (iv), (v), (vi) and (vii), only to the extent
deducted in the determination of Net Income for that period.
"ECHC Assignment of Permits, Licenses and Contracts" shall mean the
assignment to be executed by ECHC on or before the Closing Date, pursuant to
which ECHC assigns to Agent Bank
-16-
<PAGE>
on behalf of the Lenders, as additional security for the Bank Facilities, all of
its right, title and interest in and to all permits, licenses and contracts
relating to the ECHC Casino Facilities, except those Gaming Permits which are
unassignable and except those permits, lease agreements and license agreements
which are not assignable without obtaining the consent of ECHC's counterparty,
as such assignment may be amended, modified, extended, renewed or restated from
time to time.
"ECHC Assignment of Spaceleases, Contracts, Rents and Revenues" shall mean
the assignment to be executed by ECHC on or before the Closing Date, pursuant to
which ECHC assigns to Agent Bank on behalf of the Lenders, as additional
security for the Bank Facilities: (a) all of its right, title and interest under
all ECHC Equipment Leases and Contracts and ECHC Space Leases relating to the
ECHC Casino Facilities, and (b) all rents, issues, profits, revenues and income
from the Hammond Fee Property and the ECHC Casino Facilities and any other
business activity conducted thereon, together with any future expansions
thereof, related thereto or used in connection therewith, as such assignment may
be amended, modified, extended, renewed or restated from time to time.
"ECHC Casino Facilities" shall mean the riverboat casino business and
related activities conducted by ECHC in and on the Hammond Land Based Facilities
and ECHC Riverboat and all improvements now or hereafter situate thereon.
"ECHC Closing Instructions" shall mean the Closing Instructions (ECHC) to
be given by Agent Bank to the Title Company on or before the Closing Date
setting forth the requirement of Lenders for issuance of the ECHC Title
Insurance Policy and other conditions for the occurrence of the Closing Date, as
may be amended or modified prior to the Closing Date to the reasonable
satisfaction of Agent Bank.
"ECHC Collateral" shall mean collective reference to: (i) all of the
Hammond Fee Property, ECHC Riverboat, ECHC FF&E and the contract rights, leases,
intangibles and other interests of ECHC, which are subject to the liens and
security interests of the ECHC Security Documents; (ii) all rights of ECHC
assigned as additional security pursuant to the terms of the ECHC Security
Documents; and (iii) any and all other property and/or intangible rights,
interest or benefits inuring to or in favor of ECHC, which are in any manner
assigned, pledged, encumbered or otherwise hypothecated in
-17-
<PAGE>
favor of Agent Bank on behalf of Lenders to secure payment of the Bank
Facilities.
"ECHC Equipment Leases and Contracts" shall mean the executed leases and
purchase contracts pertaining to the ECHC FF&E wherein ECHC is the lessee or
vendee, as the case may be, as set forth on that certain scheduled marked
"Schedule 4.16(A)", affixed hereto and by this reference incorporated herein and
made a part hereof.
"ECHC FF&E" shall mean the furniture, fixtures and equipment and all gaming
equipment and devices which have been installed or are to be installed and used
or owned by ECHC in connection with the operation of the ECHC Casino Facilities.
"ECHC Financing Statements" shall mean the Uniform Commercial Code
Financing Statements to be filed in the office of the Secretary of State of the
State of Indiana, and in the office of the County Recorder of Lake County,
Indiana, in order to perfect the security interest granted to Agent Bank on
behalf of the Lenders under the ECHC Security Documents in accordance with the
requirements of the Indiana Uniform Commercial Code, as they may be amended,
modified, extended, renewed or restated from time to time.
"ECHC Mortgage" shall mean the Mortgage to be executed by ECHC on or before
the Closing Date in favor of Agent Bank, on behalf of Lenders, encumbering the
Hammond Fee Property for the purpose of securing the Bank Facilities and
Borrowers' payment and performance under each of the Loan Documents (other than
the Environmental Certificate) as such Mortgage may be amended, modified,
extended, renewed or restated from time to time.
"ECHC Permitted Encumbrances" shall mean, at any particular time, (i) liens
for taxes, assessments or governmental charges not then due and payable or not
then delinquent, (ii) statutory liens for labor and/or materials and liens for
taxes, assessments or governmental charges the validity of which, in either
instance, are being contested in good faith by Borrowers by appropriate
proceedings, and as provided in Sections 5.03 and 5.10 hereof, respectively,
provided that, Borrowers shall have maintained adequate reserves in accordance
with GAAP for payment of same, (iii) liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations,
-18-
<PAGE>
surety and appeal bonds, bids, leases, government contracts, trade contracts,
performance and return-of-money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money); (iv) leases or subleases
granted to others (including, without limitation, any Subsidiary) not
interfering in any material respect with the ordinary conduct of the business of
the ECHC Casino Facilities; (v) liens created or contemplated by the ECHC
Security Documents, (vi) the liens, encumbrances and restrictions on the Hammond
Fee Property, ECHC FF&E and existing improvements which are shown as exceptions
on Schedule B of the ECHC Title Insurance Policy to be issued by the Title
Insurance Company as of the Closing Date, (vii) liens consented to in writing by
Agent Bank upon the approval of Requisite Lenders, (viii) liens of legally valid
capital leases and purchase money security interests for ECHC FF&E to the extent
permitted by Section 6.08(c), (ix) each and every easement, license, restriction
or right-of-way that (A) is hereafter granted to any Governmental Authority or
public utility providing services to the ECHC Casino Facilities and/or Hammond
Fee Property and (B) does not interfere in any material respect with the ECHC
Casino Facilities; and (xii) judgment liens, writs, warrants, levies,
distraints, attachments and other similar process which do not constitute an
Event of Default.
"ECHC Riverboat" shall mean the whole of the vessel named below and
described as follows:
U.S. Coast Guard
Vessel Name Official Number
--------------- -------------------
Empress III 1035267
together with any and all present and future engines, boilers, machinery,
components, masts, boats, anchors, cables, chains, rigging, tackle, apparel,
furniture, capstans, outfit, tools, pumps, gear, furnishings, appliances,
fittings, spare and replacement parts, and any and all other appurtenances
thereto, appertaining or belonging to the ECHC Riverboat, whether now or
hereafter acquired, and whether on board or not on board, together with any and
all present and future additions, improvements, and replacements therefor, made
in or to the ECHC Riverboat, or any part or parts thereof; and all accounts,
earned hire, charter payments, freight, earnings, revenues, income and profit
therefrom and additionally, all log books, manuals, trip records, maintenance
records, inspection reports, seaworthiness certificates, and other historical
records or information relating to the ECHC
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<PAGE>
Riverboat; all of which shall be deemed to be included in any reference herein
to the term "ECHC Riverboat".
"ECHC Security Agreement" shall mean the Security Agreement to be executed
by ECHC on or before the Closing Date in favor of Agent Bank, on behalf of
Lenders, encumbering the ECHC FF&E and other ECHC Collateral therein described
the purpose of securing the Bank Facilities and Borrowers' payment and
performance under each of the Loan Documents (other than the Environmental
Certificate) as such Security Agreement may be amended, modified, extended,
renewed or restated from time to time.
"ECHC Security Documents" shall mean collective reference to the ECHC
Mortgage, ECHC Security Agreement, ECHC Ship Mortgage, ECHC Financing
Statements, ECHC Assignment of Permits, Licenses and Contracts, ECHC Assignment
of Spaceleases, Contracts, Rents and Revenues, and all other documents,
instruments or agreements which are executed or delivered by or on behalf of
ECHC, and accepted by Agent Bank, on behalf of Lenders, as security for payment
of the Bank Facilities.
"ECHC Ship Mortgage" shall mean the First Preferred Ship Mortgage to be
executed by ECHC on or before the Closing Date wherein ECHC, as owner and
mortgagor, grants a first mortgage lien in favor of Agent Bank on behalf of
Lenders in and to the ECHC Riverboat and other ECHC Collateral more particularly
therein described, as such ECHC Ship Mortgage may be amended, supplemented or
otherwise modified from time to time.
"ECHC Spaceleases" shall mean the executed leases and concession agreements
pertaining to the ECHC Casino Facilities, or any portion thereof, wherein ECHC
is the lessor as set forth on the certain schedule marked "Schedule 4.15(A)",
affixed hereto and by this reference incorporated herein and made a part hereof.
"ECHC Title Insurance Policy" shall mean the ALTA Extended Coverage Lenders
Policy of Title Insurance, and the endorsements thereto, which are to be issued
by the Title Insurance Company, as of the Closing Date, in the amount of One
Million Two Hundred Fifty Thousand Dollars ($1,250,000.00), in favor of Agent
Bank, insuring the ECHC Mortgage as first priority mortgage lien encumbering the
Hammond Fee Property subject only to the exceptions shown therein in Schedule B,
Part One, together with such
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endorsements thereto as are required by Agent Bank,all in accordance with the
ECHC Closing Instructions.
"ECJC I Riverboat" shall mean the whole of the vessel named below and
described as follows:
Vessel Name Official Number
--------------- -------------------
Empress 984286
together with any and all present and future engines, boilers, machinery,
components, masts, boats, anchors, cables, chains, rigging, tackle, apparel,
furniture, capstans, outfit, tools, pumps, gear, furnishings, appliances,
fittings, spare and replacement parts, and any and all other appurtenances
thereto, appertaining or belonging to the ECJC I Riverboat, whether now or
hereafter acquired, and whether on board or not on board, together with any and
all present and future additions, improvements, and replacements therefor, made
in or to the ECJC I Riverboat, or any part or parts thereof; and all accounts,
earned hire, charter payments, freight, earnings, revenues, income and profit
therefrom and additionally, all log books, manuals, trip records, maintenance
records, inspection reports, seaworthiness certificates, and other historical
records or information relating to the ECJC I Riverboat; all of which shall be
deemed to be included in any reference herein to the term "ECJC I Riverboat".
"ECJC II Riverboat" shall mean the whole of the vessel named below and
described as follows:
Vessel Name Official Number
--------------- -------------------
Empress II 998517
together with any and all present and future engines, boilers, machinery,
components, masts, boats, anchors, cables, chains, rigging, tackle, apparel,
furniture, capstans, outfit, tools, pumps, gear, furnishings, appliances,
fittings, spare and replacement parts, and any and all other appurtenances
thereto, appertaining or belonging to the ECJC II Riverboat, whether now or
hereafter acquired, and whether on board or not on board, together with any and
all present and future additions, improvements, and replacements therefor, made
in or to the ECJC II Riverboat, or any part or parts thereof; and all accounts,
earned hire, charter payments, freight, earnings, revenues, income and profit
therefrom and additionally, all log books, manuals, trip records, maintenance
records, inspection reports, seaworthiness certificates, and other historical
records or information
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relating to the ECJC II Riverboat; all of which shall be deemed to be included
in any reference herein to the term "ECJC II Riverboat".
"ECJC Airplane" shall mean the Cessna Citation II, FAA No. N38EC, owned by
ECJC.
"ECJC Assignment of Permits, Licenses and Contracts" shall mean the
assignment to be executed by ECJC on or before the Illinois Effective Date,
pursuant to which ECJC assigns to Agent Bank on behalf of the Lenders, as
additional security for the Bank Facilities, all of its right, title and
interest in and to all assignable permits, licenses and contracts relating to
the ECJC Casino Facilities, except those Gaming Permits which are unassignable
and except those permits, licenses and contracts which may not be assigned
without obtaining the consent of ECJC's counterparty, as such assignment may be
amended, modified, extended, renewed or restated from time to time.
"ECJC Assignment of Spaceleases, Contracts, Rents and Revenues" shall mean
the Assignment to be executed by ECJC on or before the Illinois Effective Date,
pursuant to which ECJC assigns to Agent Bank on behalf of the Lenders, as
additional security for the Bank Facilities: (a) all of its right, title and
interest under all ECJC Equipment Leases and Contracts and ECJC Spaceleases
relating to the ECJC Casino Facilities, and (b) all rents, issues, profits,
revenues and income from the ECJC Casino Facilities and any other business
activity conducted at the ECJC Casino Facilities, together with any future
expansions thereof, related thereto or used in connection therewith, as such
assignment may be amended, modified, extended, renewed or restated from time to
time.
"ECJC Casino Facilities" shall mean the riverboat casino business and
related activities conducted by ECJC in and on the ECJC Property and ECJC
Riverboats and all improvements now or hereafter situate thereon.
"ECJC Closing Instructions" shall mean the Closing Instructions (ECJC) to
be given by Agent Bank to the Title Company on or before the Illinois Effective
Date setting forth the requirement of Lenders for issuance of the ECJC Title
Insurance Policy and other conditions for the occurrence of the Illinois
Effective Date, as may be amended or modified prior to the Illinois Effective
Date to the reasonable satisfaction of Agent Bank.
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"ECJC Collateral" shall mean collective reference to: (i) all of the ECJC
Riverboats, ECJC Property, ECJC FF&E and the contract rights, leases,
intangibles and other interests of ECJC, which are subject to the liens and
security interests of the ECJC Security Documents; (ii) all rights of ECJC
assigned as additional security pursuant to the terms of the ECJC Security
Documents; and (iii) any and all other property and/or intangible rights,
interest or benefits inuring to or in favor of ECJC, which are in any manner
assigned, pledged, encumbered or otherwise hypothecated in favor of Agent Bank
on behalf of Lenders to secure payment of the Bank Facilities.
"ECJC Equipment Leases and Contracts" shall mean the executed leases and
purchase contracts pertaining to the ECJC FF&E wherein ECJC is the lessee or
vendee, as the case may be, as set forth on that certain schedule marked
"Schedule 4.16(B)", affixed hereto and by this reference incorporated herein and
made a part hereof.
"ECJC FF&E" shall mean the furniture, fixtures and equipment and all gaming
equipment and devices which have been installed or are to be installed and used
or owned by ECJC in connection with the operation of the ECJC Casino Facilities.
"ECJC Financing Statements" shall mean the Uniform Commercial Code
Financing Statements to be filed in the office of the Secretary of State of the
State of Illinois, and in the office of the County Recorder of Will County,
Illinois, in order to perfect the security interest granted to Agent Bank on
behalf of the Lenders under the ECJC Security Documents in accordance with the
requirements of the Illinois Uniform Commercial Code, as such financing
statements may be amended, modified, extended, renewed or restated from time to
time.
"ECJC Mortgage" shall mean that certain Mortgage, Fixture Filing and
Security Agreement with Assignment of Rents to be executed by ECJC as of the
Illinois Effective Date in favor of Agent Bank, on behalf of Lenders,
encumbering the ECJC Property and other Collateral therein described for the
purpose of securing the Bank Facilities and all other sums which may be owing by
Borrowers to the Banks from time to time under the terms of the Credit
Agreement, as it may be amended, modified, extended, renewed or restated from
time to time.
"ECJC Permitted Encumbrances" shall mean, at any particular time, (i) Liens
for taxes, assessments or governmental charges not then due and payable or not
then
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delinquent, (ii) statutory liens for labor and/or materials and liens for taxes,
assessments or governmental charges the validity of which, in either instance,
are being contested in good faith by Borrowers by appropriate proceedings, and
as provided in Sections 5.03 and 5.10 hereof, respectively, provided that,
Borrowers shall have maintained adequate reserves in accordance with GAAP for
payment of same, (iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money); (iv) leases or subleases granted to others (including, without
limitation, any Subsidiary) not interfering in any material respect with the
ordinary conduct of the business of the ECJC Casino Facilities; (v) Liens
created or contemplated by the ECJC Security Documents, (vi) the liens,
encumbrances and restrictions on the ECJC Property, ECJC FF&E and existing
improvements which are shown as exceptions on Schedule B of the ECJC Title
Insurance Policy to be issued by Title Insurance Company as of the Illinois
Effective Date, (vii) Liens consented to in writing by Agent Bank upon the
approval of Requisite Lenders, (viii) Liens of legally valid capital leases and
purchase money security interests for ECJC FF&E to the extent permitted by
Section 6.08, (ix) each and every easement, license, restriction or right-of-way
that (A) is hereafter granted to any Governmental Authority or public utility
providing services to the ECJC Property or (B) does not interfere in any
material respect with the ECJC Casino Facilities; and (x) judgment liens, writs,
warrants, levies, distraints, attachments and other similar process which do not
constitute an Event of Default.
"ECJC Property" shall mean the real property owned by ECJC which is
described on that certain exhibit marked "Exhibit Q", affixed hereto and by this
reference incorporated herein and made a part hereof.
"ECJC Riverboats" shall mean collective reference to the ECJC I Riverboat
and the ECJC II Riverboat.
"ECJC Security Documents" shall mean collective reference to the ECJC
Mortgage, ECJC Ship Mortgage, ECJC Financing Statements, ECJC Assignment of
Permits, Licenses and Contracts, ECJC Assignment of Spaceleases, Contracts,
Rents
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and Revenues and all other documents, instruments or agreements which are
executed or delivered by or on behalf of ECJC, and accepted by Agent Bank, on
behalf of Lenders, as security for payment of the Bank Facilities.
"ECJC Ship Mortgage" shall mean the First Preferred Ship Mortgage to be
executed by ECJC on or before the Illinois Effective Date wherein ECJC, as owner
and mortgagor, grants a first mortgage lien in favor of Agent Bank on behalf of
Lenders in and to the ECJC I Riverboat, the ECJC II Riverboat and other ECJC
Collateral more particularly therein described, as such ECJC Ship Mortgage may
be amended, supplemented or otherwise modified from time to time.
"ECJC Spaceleases" shall mean the executed leases and concession agreements
pertaining to the ECJC Casino Facilities, or any portion thereof, wherein ECJC
is the lessor as set forth on the certain schedule marked "Schedule 4.15(B)",
affixed hereto and by this reference incorporated herein and made a part hereof.
"ECJC Title Insurance Policy" shall mean the ALTA Extended Coverage Lenders
Policy of Title Insurance, and the endorsements thereto, which are to be issued
by Title Insurance Company, as of the Illinois Effective Date, in the amount of
Thirty Million Dollars ($30,000,000.00) in favor of Agent Bank, insuring the
ECJC Mortgage as first priority mortgage lien, as applicable, encumbering the
ECJC Property subject only to the exceptions shown therein in Schedule B, Part
One together with such endorsements thereto as are required by Agent Bank, all
in accordance with the ECJC Closing Instructions.
"EEI Consolidation" shall mean collective reference to Borrowers and their
respective Subsidiaries on a consolidated basis, including, without limitation,
all New Venture Subsidiaries.
"EEI Dividends" shall mean and collectively refer to any and all Cash
dividends, loans or Distributions to any stockholder of EEI by reason of its
shareholdings in EEI.
"EEI Security Agreement" shall mean the Security Agreement to be executed
by EEI on or before the Closing Date in favor of Agent Bank, on behalf of
Lenders, encumbering the Collateral therin described for the purpose of securing
the Bank Facilities and Barrowers' payment and performance under each of the
Loan Documents (other than the Environmental
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Certificate) as such Security Agreement may be amended, modified, extended,
renewed or restated from time to time.
"EEI Stock Pledge" shall mean individual reference and "EEI Stock Pledges"
shall mean collective reference to: (i) the Security Agreement and Stock Pledge
to be executed and delivered by EEI as of the Closing Date, pursuant to which
the stock of ECHC is pledged to Agent Bank on behalf of Lenders, and (ii) the
Security Agreement and Stock Pledge to be executed and delivered by EEI as of
the Illinois Effective Date, pursuant to which the stock of ECJC is pledged to
Agent Bank on behalf of Lenders as additional security for the Bank Facilities
and all other sums which may be owing by Borrowers to the Banks from time to
time under the terms of the Credit Agreement.
"EEI Stock Redemption" shall mean the purchase, redemption or other
acquisition by any member of the Borrower Consolidation of shares of the common
voting and/or non-voting stock of EEI from its shareholders.
"EEI Stockholders Agreement" shall mean the Amended and Restated
Stockholders Agreement dated April 15, 1998, executed by and among EEI
(formerly LMC Leasing, Ltd., a Delaware corporation) and its stockholders.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eligible Assignee" means (a) another Lender, (b) with respect to any
Lender, any Affiliate of that Lender, (c) any commercial bank having a combined
capital and surplus of Fifty Million Dollars ($50,000,000.00) or more that is
(i) organized under the Laws of the United States of America, any State thereof
or the District of Columbia or (ii) organized under the Laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of such a country, provided that (A)
--------
such bank is acting through a branch or agency located in the United States of
America and (B) such Bank is otherwise exempt from withholding of tax on
interest and delivers Form 1001 or Form 4224 at the time of any assignment, (d)
a financial institution which is an accredited investor as defined by the
Securities Act of 1934 and is otherwise exempt from withholding tax on interest
at the time of any assignment, and (e) with respect to such commercial bank or
financial institution as described in (a) through (d)
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above, no finding of unsuitability has been made or determined by any Gaming
Authority or the gaming authorities of any other States of the United States of
America.
"Empress Finance" shall mean Empress River Casino Finance Corporation, a
Delaware corporation which is a wholly owned subsidiary of EEI.
"Environmental Certificate" shall mean the Certificate and Indemnification
Regarding Hazardous Substances to be executed by EEI and ECHC on or before the
Closing Date and by ECJC on or before the Illinois Effective Date and delivered
to Agent Bank as a further inducement to the Banks to establish the Bank
Facilities, as it may be amended, modified, extended, renewed or restated from
time to time.
"Equipment Leases and Contracts" shall mean collective reference to the
ECHC Equipment Leases and Contracts and the ECJC Equipment Leases and Contracts.
"Equity Offering" shall mean the issuance and sale of shares of common
voting stock by EEI to the public after the Closing Date in exchange for Cash or
Cash Equivalents and/or the issuance and sale of shares of common voting stock
of a Restricted Subsidiary of EEI to the public in exchange for Cash or Cash
Equivalents.
"Event of Default" shall mean any event of default as defined in Section
7.01 hereof.
"Exchange Senior Subordinated Notes" shall have the meaning set forth in
Recital Paragraph F.
"Existing Bank Lender" shall mean Bank of America Illinois, a state
chartered bank.
"Existing Bank Loan" shall mean the Indebtedness evidenced by the Existing
Bank Note.
"Existing Bank Loan Security Documents" shall mean collective reference to
all pledges, security agreements, mortgages, financing statements, ship mortgage
and other documents and instruments securing repayment of the Existing Bank
Loan, including, without limitation, those documents and instruments set forth
on the Schedule of Existing Bank Loan Security Documents marked "Schedule 3.11,
affixed hereto and by this reference incorporated herein and made a part hereof.
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"Existing Bank Note" shall mean that certain Empress Casino Hammond
Corporation Amended and Restated Secured Promissory Note dated June 30, 1997, in
the original principal amount of Sixty Million Dollars ($60,000,000.00),
executed by ECHC, as borrower, payable to the order of Existing Bank Lender.
"Existing Indenture" shall have the meaning set forth in Recital Paragraph
C.
"Existing Senior Notes" shall have the meaning set forth in Recital
Paragraph C.
"FF&E" shall mean reference to the ECHC FF&E and the ECJC FF&E and any
other furniture, fixtures and equipment, including, without limitation, all
gaming devices and associated equipment, inventories and supplies used in
connection with the Casino Facilities.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989.
"Federal Funds Rate" means, as of any date of determination, the rate set
forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (including any
such successor, "H.15(519)") for such date opposite the caption "Federal Funds
(Effective)". If for any relevant date such rate is not yet published in
H.15(519), the rate for such date will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any successor, the "Composite 3:30 p.m.
Quotation") for such date under the caption "Federal Funds Effective Rate". If
on any relevant date the appropriate rate for such date is not yet published in
either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such date
will be the arithmetic mean of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that date by
each of three leading brokers of Federal funds transactions in New York City
selected by the Agent Bank. For purposes of the Credit Agreement, any change in
the Base Rate due to a change in the Federal Funds Rate shall be effective as of
the opening of business on the effective date of such change.
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"Fee Side Letter" shall mean the Confidential Fee Letter dated May 6, 1998
executed by ECJC and ECHC on May 11, 1998, concerning payment of the fees more
particularly therein described.
"Financial Covenants" shall mean collective reference to the financial
covenants set forth in Article VI of this Credit Agreement.
"Financing Statements" shall mean collective reference to the ECHC
Financing Statements and ECJC Financing Statements.
"Fiscal Quarter" shall mean the consecutive three (3) month periods during
each Fiscal Year beginning on January 1, April 1, July 1 and October 1 and
ending on March 31, June 30, September 30 and December 31, respectively.
"Fiscal Year" shall mean the fiscal year period beginning January 1 of each
calendar year and ending on the following December 31.
"Fiscal Year End" shall mean December 31 of each calendar year.
"Fixed Charge Coverage Ratio" as of the end of any Fiscal Quarter shall
mean with reference to the Borrower Consolidation:
The sum of EBITDA during the Fiscal Quarter under review, plus EBITDA
during each of the most recently ended three (3) preceding Fiscal Quarters,
Divided by (/)
The sum of: (i) Interest Expense (expensed and capitalized), plus (ii) the
aggregate of Scheduled Reductions actually paid, plus (iii) principal
payments or reductions (without duplication) required to be made on all
other Indebtedness, plus (v) the current portion of Capitalized Lease
Liabilities to the extent not included in (i) above; in each case of (i)
through (v) determined for the Fiscal Quarter under review together with
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the most recently ended three (3) preceding Fiscal Quarters.
"Franzen Litigation" shall mean the action described in Paragraph 1 of the
Schedule of Significant Litigation.
"Funded Debt" shall mean with reference to the Borrower Consolidation for
any period the daily average of the Aggregate Outstandings for such period, plus
the total as of the last day of such period of both the long-term and current
portions (without duplication) of all other Indebtedness and Capitalized Lease
Liabilities, but excluding the Defeased Debt.
"Funded Outstandings" shall mean the unpaid principal amount outstanding on
the Credit Facility as of any given date of determination, not including
Swingline Outstandings or the amount of any L/C Exposure.
"Funding Date" shall mean each date upon which Lenders fund Borrowings
requested by Borrowers in accordance with the provisions of Section 2.03 or at
the request of Agent Bank pursuant to Section 2.08 or Section 2.09.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and 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 may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination, in each instance consistently applied.
"Gaming Authority(ies)" shall mean any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States federal or foreign government, any state, province or any city
or other political subdivision or otherwise and whether now or hereafter in
existence or any officer or official thereof, including, without limitation,
Indiana Gaming Authorities and Illinois Gaming Authorities, with authority to
regulate any gaming operation (or proposed gaming operation) owned, managed or
operated by the Borrower Consolidation.
"Gaming Devices" shall mean slot machines and other devices which
constitute gaming devices and related equipment.
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"Gaming Laws" means all statutes, rules, regulations, ordinances, codes and
administrative or judicial precedents pursuant to which any Gaming Authority
possesses regulatory, licensing or permit authority over gambling, gaming or
casino activities conducted by any member of the Borrower Consolidation within
its jurisdiction, including the Illinois Riverboat Gambling Act and the Indiana
Riverboat Gambling Act.
"Gaming Permits" shall mean collective reference to every license, permit
or other authorization required to own, operate and otherwise conduct gambling,
gaming and casino activities at the Casino Facilities, including, without
limitation, all licenses granted by any one or more of the Gaming Authorities.
"Government Securities" means readily marketable (a) direct full faith and
credit obligations of the United States of America or obligations guaranteed by
the full faith and credit of the United States of America and (b) obligations of
an agency or instrumentality of, or corporation owned, controlled or sponsored
by, the United States of America that are generally considered in the securities
industry to be implicit obligations of the United States of America.
"Governmental Authority" or "Governmental Authorities" shall mean any
federal, state, regional, county or municipal governmental agency, board,
commission, officer or official whose consent or approval is required or whose
regulations must be followed as a prerequisite to (i) the continued operation
and occupancy of the Casino Facilities or (ii) the performance of any act or
obligation or the observance of any agreement, provision or condition of
whatever nature herein contained.
"Hammond Development Agreement" shall mean that certain Hammond Riverboat
Gaming Project Development Agreement executed under date of June 21, 1996, by
and between the Hammond Redevelopment Commission, the City of Hammond and ECHC
pursuant to which, among other things: (i) various agreements were made
regarding construction and operation of the Hammond Land Based Facilities; and
(ii) ECHC agreed to make various payments including, without limitation,
payments to the City of Hammond based upon receipts generated in operation of
the ECHC Riverboat, payments to the Hammond Port Authority based upon the number
of passengers embarking on the ECHC Riverboat, and contributions for various
community and charitable purposes.
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"Hammond Facilities Property" shall mean those parcels of real property
situate in the vicinity of the Hammond Marina upon which the Hammond Land Based
Facilities are situate, which property is more particularly described by the
Hammond Operating Sublease and the Hammond Water Department License.
"Hammond Fee Property" shall mean that parcel of unimproved real property
consisting of approximately ten (10) acres, which is situate in the City of
Hammond, Indiana, and is located south of Indianapolis Boulevard near the
Hammond Marina access offramp, which parcel is owned by ECHC Riverboat in fee
and is more particularly described on that certain Exhibit marked "Exhibit R",
affixed hereto and by this reference incorporated herein and made a part hereof.
"Hammond Land Based Facilities" shall mean a collective reference to the
docking facilities, guest pavilion, parking garage, surface parking areas,
access roadways, and other improvements which are situate on the Hammond
Facilities Property.
"Hammond Lease Documents" shall mean collective reference to the Hammond
Development Agreement, Hammond Operating Sublease, Hammond Port Authority
License and Hammond Water Department License.
"Hammond Marina" shall mean that marina situate on the shore of Lake
Michigan in the City of Hammond, Indiana, commonly known as the Hammond Marina.
"Hammond Operating Sublease" shall mean that certain Lease under date of
June 19, 1996, by and between the Hammond Redevelopment Commission and ECHC,
pursuant to which, among other things, the Hammond Facilities Property (other
than the property subject to the Hammond Water Department License) is sublet to
ECHC.
"Hammond Port Authority License" shall mean that certain License Agreement
under date of June 21, 1996, by and between the Hammond Port Authority and ECHC,
pursuant to which, among other things, Borrower is granted a non-exclusive
license to utilize portions of the Hammond Marina for operation of the ECHC
Riverboat.
"Hammond Redevelopment Commission" shall mean a collective reference to the
City of Hammond, Department of Redevelopment.
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"Hammond Residential" shall mean Hammond Residential L.L.C., a single
member Indiana limited liability company which is wholly owned by ECHC.
"Hammond Water Department License" shall mean that certain License
Agreement under date of June 19, 1996, by and between the Department of Water
Works of the City of Hammond and ECHC Riverboat, pursuant to which, among other
things, ECHC Riverboat is granted a license to: (i) utilize certain real
property for landscape and signage purposes; (ii) utilize certain parking areas
on a revocable basis; and (iii) make certain improvements in connection with an
existing roadway; all as more particularly set forth therein.
"Hazardous Materials Claims" shall have the meaning set forth in Section
5.21.
"Hazardous Materials Laws" shall have the meaning set forth in Section
5.21.
"IGB" shall mean the Illinois Gaming Board.
"IGB Approval Date" shall mean the date upon which: (i) the IGB has given
all necessary approvals, consents and authorizations to ECJC to establish the
Bank Facilities and execute and deliver the Credit Agreement, the Notes and each
of the Loan Documents to be executed and delivered by ECJC as provided in the
Credit Agreement, and (ii) ECJC has delivered to Agent Bank a copy of the
written order of consent or other written memoranda issued by the IGB or other
evidence reasonably satisfactory to Agent Bank evidencing that the IGB Approval
Date has occurred.
"Illinois Closing Certificate" shall have the meaning set forth in Section
3.30.
"Illinois Effective Date" shall mean the date upon which each of the
conditions set forth in Article III C have occurred and been complied with in
all respects.
"Illinois Gaming Authorities" shall mean, without limitation, the IGB and
any other applicable governmental or administrative state or local agency
involved in the regulation of gaming and gaming activities conducted by any
member of the Borrower Consolidation in the State of Illinois.
"Indebtedness" shall mean, as to any Person, with-out duplication, (a) all
indebtedness (including principal,
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interest, fees and charges) of such Person for borrowed money (excluding,
however the Defeased Debt), (b) the deferred purchase price of property or
services (other than accrued expenses, tax liability, deferred taxes, and trade
accounts payable less than ninety (90) days past due, or if more than ninety
(90) days past due not more than Fifty Thousand Dollars ($50,000.00) in the
aggregate, and other accrued or deferred liabilities incurred in the ordinary
course of business) which in accordance with GAAP would be shown on the
liability side of the balance sheet of such Person, (c) the face amount of all
letters of credit to the extent not secured with Cash, issued for the account of
such Person and all drafts drawn thereunder, (d) all obligations under
conditional sale or other title retention agreements relating to property
purchased by such Person, (e) all liabilities of the type described in clauses
(a) through (d) or (f) of this definition secured by (or for which the holder of
any such liability has an existing right, contingent or otherwise, to be secured
by) any lien or encumbrance on any property owned by such Person, whether or not
such liabilities have been assumed by such Person, (f) all Capitalized Lease
Liabilities of such Person, and (g) all Contingent Liabilities of such Person in
respect of any indebtedness, obligations or liabilities of any other Person of
the type referred to in clauses (a)-(f) of this definition.
"Indiana Gaming Authorities" means, without limitation, the Indiana Gaming
Commission and any other applicable governmental or administrative state or
local agency involved in the regulation of gaming and gaming activities
conducted by any member of the Borrower Consolidation in the State of Indiana.
"Initial Senior Subordinated Notes" shall have the meaning set forth in
Recital E.
"Intangibles" shall mean the aggregate goodwill, trademarks, patents,
organizational expense and other similar intangible items of the Borrower
Consolidation determined on a consolidated basis in accordance with GAAP.
"Interest Expense" shall mean with respect to any Person, as of the last
day of any fiscal period under review, the sum of (i) all interest (without
duplication but including capitalized interest), fees and other charges for that
fiscal period by such Person to a lender in connection with borrowed money
(including any obligations for fees payable to the issuer of any letter of
credit, but excluding, however,
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interest and premium, if any, paid or to be paid on the Defeased Debt) or the
deferred purchase price of assets that are considered "interest expense" under
GAAP, plus (ii) the portion of the up front costs and expenses for Interest Rate
Hedges (to the extent not included in (i)) fairly allocated to such interest
rate hedges as expenses for such period, plus (iii) the portion of Capital Lease
Liabilities that should be treated as interest in accordance with GAAP.
"Interest Period(s)" shall have the meaning set forth in Section 2.05(d).
"Interest Rate Hedges" shall mean, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest rate
cap agreements, basis swap, forward rate agreements and interest collar or floor
agreements and all other agreements or arrangements designed to protect such
Person against fluctuations in interest rates or currency exchange rates.
"Interest Rate Option" shall have the meaning ascribed to such term in
Section 2.05(b) of the Credit Agreement.
"Investment" shall mean, when used in connection with any Person, any
investment by or of that Person, whether by means of purchase or other
acquisition of stock or other securities of any other Person or by means of a
loan, advance creating a debt, capital contribution, payment under a guaranty or
other debt or equity participation or interest in any other Person, including
---------
any partnership and joint venture interests of such Person. The amount of any
Investment shall be the amount actually invested without adjustment for
subsequent increases or decreases in the value of such Investment.
"Joliet Excess Land" shall mean that portion of the ECJC Property that is
not presently used in any manner in connection with the ECJC Casino Facilities
and will not be necessary for the use and operation of the ECJC Casino
Facilities in the future, which Joliet Excess Land is more particularly
described on that certain exhibit marked "Exhibit S", affixed hereto and by this
reference incorporated herein and made a part hereof.
"L/C Agreement(s)" shall mean collective reference to the Application and
Agreement for Standby Letter of Credit and Application for Commercial Letter of
Credit and
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addendum(s) thereto executed by an Authorized Officer of Borrowers in favor of
L/C Issuer in L/C Issuer's standard form, setting forth the terms and conditions
upon which L/C Issuer shall issue a Letter(s) of Credit, as the same may be
amended or modified from time to time.
"L/C Exposure" shall mean the aggregate amount which L/C Issuer may be
required to fund or is contingently liable for disbursement under all issued and
outstanding Letter(s) of Credit, which amount shall be determined by subtracting
from the aggregate of the Stated Amount of each such Letter(s) of Credit (to the
extent such Letter of Credit is not secured by Cash deposited into the Cash
Collateral Account and subject to the Cash Collateral Pledge Agreement), the
principal amount of all L/C Reimbursement Obligations which have accrued and
have been fully satisfied as of each date of determination.
"L/C Facility" shall mean the agreement of L/C Issuer to issue Letters of
Credit subject to the terms and conditions and up to the maximum amounts and
duration as set forth in Section 2.09 of this Credit Agreement.
"L/C Fee" shall have the meaning set forth in Section 2.10(c) of this
Credit Agreement.
"L/C Issuer" shall have the meaning set forth in the Preamble of this
Credit Agreement.
"L/C Reimbursement Obligation(s)" shall mean the obligation of Borrowers to
reimburse L/C Issuer for amounts funded or disbursed under a Letter(s) of
Credit, together with accrued interest thereon.
"LIBO Rate" means, relative to any Interest Period for any LIBOR Loan, the
per annum rate (reserve adjusted as hereinbelow provided) of interest quoted by
Agent Bank, rounded upwards, if necessary, to the nearest one-sixteenth of one
percent (0.0625%) at which Dollar deposits in immediately available funds are
offered to Agent Bank by leading banks in the London interbank market at
approximately 9:00 A.M. San Francisco time two (2) Banking Business Days prior
to the beginning of such Interest Period, for delivery on the first day of such
Interest Period for a period approximately equal to such Interest Period and in
an amount equal or comparable to the LIBOR Loan to which such Interest Period
relates. The foregoing rate of interest shall be reserve adjusted by dividing
the applicable LIBO Rate by a one (1.00) minus the LIBOR Reserve Percentage,
with such quotient to be rounded
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upward to the nearest whole multiple of one-hundredth of one percent (0.01%).
All references in this Credit Agreement or other Loan Documents to a LIBO Rate
include the aforesaid reserve adjustment.
"LIBOR Loan" shall mean each portion of the total unpaid principal under
the Credit Facility which bears interest at a rate determined by reference to
the LIBO Rate plus the Applicable Margin.
"LIBOR Reserve Percentage" means, relative to any Interest Period for LIBOR
Loans made by any Lender, the reserve percentage (expressed as a decimal) equal
to the actual aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transactional adjustments or other scheduled changes in reserve requirements)
announced within Agent Bank as the reserve percentage applicable to Agent Bank
as specified under regulations issued from time to time by the Federal Reserve
Board. The LIBOR Reserve Percentage shall be based on Regulation D of the
Federal Reserve Board or other regulations from time to time in effect
concerning reserves for "Eurocurrency Liabilities" from related institutions as
though Agent Bank were in a net borrowing position.
"Laws" means, collectively, all international, foreign, federal, state and
local statutes, maritime laws, treaties, rules, regulations, ordinances, codes
and administrative or judicial precedents.
"Lender Reply Period" shall have the meaning set forth in Section 9.10(d).
"Lenders" means WFB and any other bank, finance company, insurance or other
financial institution which is or becomes a party to this Credit Agreement by
execution of a counterpart signature page hereto or an Assignment and Assumption
Agreement, as assignee. At all times that there are no Lenders other than WFB,
the terms "Lender" and "Lenders" means WFB in its individual capacity. With
respect to matters requiring the consent to or approval of all Lenders at any
given time, all then existing Defaulting Lenders will be disregarded and
excluded, and, for voting purposes only, "all Lenders" shall be deemed to mean
"all Lenders other than Defaulting Lenders".
"Letter(s) of Credit" shall mean collective reference to the Standby
Letter(s) of Credit and/or Commercial
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Letter(s) of Credit, as the case may be, issued by L/C Issuer on behalf of
Borrowers, or any of them, as the same may be extended, renewed or reissued from
time to time.
"Leverage Ratio" as of the end of any Fiscal Quarter shall mean the ratio
resulting by dividing (a) Funded Debt for the Fiscal Quarter under review by (b)
the sum of EBITDA for the Fiscal Quarter under review plus EBITDA for each of
the most recently ended three (3) preceding Fiscal Quarters.
"Liabilities and Costs" means all claims, judgments, liabilities,
obligations, responsibilities, losses, damages (including lost profits),
punitive or treble damages, costs, disbursements and expenses (including,
without limitation, reasonable attorneys', experts' and consulting fees and
costs of investigation and feasibility studies), fines, penalties and monetary
sanctions, interest, direct or indirect, known or unknown, absolute or
contingent, past, present or future.
"Lien" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"Loan Documents" shall mean the collective reference to this Credit
Agreement, the Revolving Credit Note, the Swingline Note, the Security
Documentation, Environmental Certificate and all other instruments and
agreements required to be executed by or on behalf of Borrowers, or any of them,
or any other Person in connection with the Bank Facilities for the benefit of
Banks or Agent Bank on behalf of the Lenders, the Swingline Lender and the L/C
Issuer.
"Margin Stock" shall have the meaning provided in Regulation U of the Board
of Governors of the Federal Reserve System.
"Material Adverse Effect" shall mean: (i) any set of circumstances or
events which is material and adverse to the Collateral or the condition
(financial or otherwise), business operations or prospects of (a) the Borrower
Consolidation taken as a whole, or (b) the ability of Borrowers to perform their
respective Obligations under the Loan Documents, or (c) the ability of any of
the Lenders to enforce any of their material rights or remedies under any of the
Loan Documents,
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or (ii) any event or change which has or results in a material adverse effect
upon (a) the value of the ECHC Casino Facilities or the ECJC Casino Facilities,
(b) the validity or priority of any of the Loan Documents, or (c) the use,
occupancy or operation of the ECHC Casino Facilities or the ECJC Casino
Facilities.
"Maturity Date" shall mean June 18, 2003, unless the Illinois Effective
Date shall not have occurred on or before July 31, 1998, in which event the
"Maturity Date" shall be September 30, 1998.
"Maximum Availability" shall mean the Maximum Permitted Balance less the
Aggregate Outstandings.
"Maximum Cap Ex Limit" shall have the meaning ascribed to such term in
Section 6.05 of the Credit Agreement.
"Maximum Permitted Balance" shall mean the maximum amount of Aggregate
Outstandings which may be outstanding on the Bank Facilities from time to time
which shall be: (i) the principal sum of Fifty Million Dollars ($50,000,000.00)
until the occurrence of the Illinois Effective Date, and (ii) on and after the
occurrence of the Illinois Effective Date, the lesser of: (a) the Maximum
Scheduled Balance, or (b) the amount to which the Maximum Scheduled Balance is
voluntarily reduced by Borrowers pursuant to Section 2.01(c) or is otherwise
reduced or limited pursuant to Sections 5.01, 5.12 or 8.02 or by Scheduled
Reductions.
"Maximum Scheduled Balance" shall mean the maximum amount of scheduled
principal which may be outstanding on the Credit Facility from time to time as
set forth on the Aggregate Commitment Reduction Schedule.
"Minimum Cap Ex Requirement" shall have the meaning ascribed to such term
in Section 6.05 of the Credit Agreement.
"Mortgages" mean collective reference to the ECHC Mortgage and ECJC
Mortgage.
"Net Income" shall mean with respect to any Person for any fiscal period,
the net income of such Person during such fiscal period determined in accordance
with GAAP, consistently applied.
"New Indenture" shall have the meaning set forth in Recital Paragraph E.
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"New Senior Subordinated Notes" shall mean reference to the Initial Senior
Subordinated Notes or the Exchange Senior Subordinated Notes, as the case may
be, whichever are issued and outstanding as of any date of determination.
"New Senior Subordinated Notes Effective Date" shall have the meaning set
forth in Section 3.17(c).
"New Venture" means a casino, hotel, casino/hotel, resort, casino/resort,
riverboat casino, dock casino, golf course, horse racing business, entertainment
center or similar facility or any business mandated by a Gaming Authority in
order to obtain or retain a Gaming Permit (or any site or proposed site for any
of the foregoing or entity that provides management or other services or goods
to any of the foregoing) owned or to be owned in whole or in part by any New
Venture Subsidiary (or owned or to be owned by a Person in which EEI or a New
Venture Subsidiary is an owner or equity investor).
"New Venture Investment" shall mean any Investment or Distributions made by
EEI in or to any New Venture or New Venture Subsidiary after the Closing Date.
"New Venture Investments" shall mean collective reference to each and every
New Venture Investment.
"New Venture Subsidiary" shall mean a Subsidiary of EEI or any of its
Subsidiaries (other than ECHC or ECJC) that is the direct or indirect owner in
whole or part of a New Venture.
"Non Pro Rata Borrowing" means a Borrowing with respect to which fewer than
all Lenders have funded their respective Pro Rata Shares of such Borrowing and
the failure of the non-funding Lender or Lenders to fund its or their respective
Pro Rata Shares of such Borrowing constitutes a breach of this Credit Agreement.
"Nonusage Fee" shall have the meaning ascribed to such term in Section
2.10(b) of this Credit Agreement.
"Notes" shall mean collective reference to the Revolving Credit Note and
the Swingline Note.
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"Notice of Borrowing" shall have the meaning set forth in Section 2.03.
"Notice of Swingline Advance" shall have the meaning set forth in Section
2.08(b).
"Obligations" means, from time to time, all Indebtedness of Borrowers owing
to Agent Bank, any Lender or any Person entitled to indemnification pursuant to
Section 5.14, or any of their respective successors, transferees or assigns, of
every type and description, whether or not evidenced by any note, guaranty or
other instrument, arising under or in connection with this Credit Agreement or
any other Loan Document, whether or not for the payment of money, whether direct
or indirect (including those acquired by assignment), absolute or contingent,
due or to become due, now existing or hereafter arising and however acquired.
The term includes, without limitation, all interest, charges, expenses, fees,
reasonable attorneys' fees and disbursements, reasonable fees and disbursements
of expert witnesses and other consultants, and any other sum now or hereinafter
chargeable to Borrowers under or in connection with Credit Agreement or any
other Loan Document. Notwithstanding the foregoing definition of "Obligations",
Borrowers' obligations under any environmental indemnity agreement constituting
a Loan Document, or any environmental representation, warranty, covenant,
indemnity or similar provision in this Credit Agreement or any other Loan
Document, shall be secured by the Collateral only to the extent, if any,
specifically provided in the Security Documentation.
"Pension Plan" means any "employee pension benefit plan" that is subject to
Title IV of ERISA and which is maintained for employees of Borrowers, or any of
them, or any of their respective ERISA Affiliates.
"Permitted Distribution(s)" with respect to any Fiscal Year, shall mean the
maximum amount of Distributions which could have been made by the Borrower
Consolidation during such Fiscal Year without violation of: (i) the Adjusted
Fixed Charge Coverage Ratio, and (ii) the New Indenture.
"Permitted Encumbrances" shall mean collective reference to the ECHC
Permitted Encumbrances, the Restricted Subsidiary Permitted Encumbrances and the
ECJC Permitted Encumbrances.
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"Person" means an individual, firm, corporation, limited liability company,
trust, association, partnership, joint venture, tribunal or other entity.
"Policies of Insurance" shall mean the insurance to be obtained and
maintained by Borrowers throughout the term of this Credit Agreement as provided
by Schedule 5.09(a) herein.
"Post Foreclosure Plan" shall have the meaning set forth in Section
9.11(e).
"Pricing Certificate" shall have the meaning set forth in Section
5.08(a)(ii).
"Prime Rate" means at any time, and from time to time, the rate of interest
most recently announced within WFB at its principal office in San Francisco,
California, as its "Prime Rate", with the understanding that WFB's "Prime Rate"
is one of its base rates and serves as the basis upon which effective rates of
interest are calculated for those loans and extensions of credit making
reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as WFB may designate.
Each change in the Prime Rate shall be effective on the day the change is
announced within WFB.
"Principal Prepayments" shall have the meaning set forth in Section 2.07(a)
of this Credit Agreement.
"Pro Rata Share" shall mean with respect to any Lender, a percentage equal
to such Lender's Syndication Interest in the Credit Facility as set forth on the
Schedule of Lenders' Proportions in Credit Facility.
"Protective Advance" means all sums expended as determined by Agent Bank to
be necessary to: (a) protect the priority, validity and enforceability of the
Security Documentation on, and security interests in, any Collateral and the
instruments evidencing or securing the Obligations, or (b) prevent the value of
any Collateral from being materially diminished (assuming the lack of such a
payment within the necessary time frame could potentially cause such Collateral
to lose value), or (c) protect any of the Collateral from being materially
damaged, impaired, mismanaged or taken, including, without limitation, any
amounts expended in accordance with Section 10.21 or post-foreclosure ownership,
maintenance, operation or marketing of any Collateral.
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"Qualified Appraisal" shall mean reference to an appraisal or appraisals of
the Casino Facilities and Collateral, or any portion thereof, acceptable to
Agent Bank, prepared at Borrowers' expense in compliance with FIRREA by an
appraiser acceptable to Agent Bank, with sufficient copies delivered to Agent
Bank for distribution to each of the Lenders.
"Reduction Date(s)" shall mean reference to each date or the dates, as the
context may require upon which the Maximum Scheduled Balance is reduced by a
Scheduled Reduction as set forth on the Aggregate Commitment Reduction Schedule.
"Related Entities" shall mean collective reference to all stockholders,
Affiliates and Subsidiaries of the Borrowers, or any of them, other than another
Borrower.
"Replacement Note(s)" shall have the meaning set forth in Section 2.05(i)
of this Credit Agreement.
"Reportable Event" shall mean a reportable event as defined in Title IV of
ERISA, except actions of general applicability by the Secretary of Labor under
Section 110 of ERISA.
"Requisite Lenders" means, as of any date of determination prior to the
occurrence of an Event of Default, Lenders holding Syndication Interests equal
to or in excess of sixty-six and two-thirds percent (66-2/3%) of the Credit
Facility; and at all times during which an Event of Default has occurred and
remains continuing, Lenders holding a percentage equal to or in excess of sixty-
six and two-thirds percent (66-2/3%) of the Funded Outstandings; provided that,
-------- ----
(i) in determining such percentage at any given time, all then existing
Defaulting Lenders will be disregarded and excluded and the Pro Rata Shares of
Lenders shall be redetermined, for voting purposes only, to exclude the Pro Rata
Shares of such Defaulting Lenders, and (ii) notwithstanding the foregoing, at
all times when two or more Lenders are party to this Credit Agreement, the term
Requisite Lenders shall in no event mean less than two (2) Lenders.
"Restricted Subsidiary" shall mean a Subsidiary of EEI which: (a) has not
incurred any Indebtedness other than in connection with a Subsidiary Guaranty
and accrued expenses, tax liability, deferred taxes and trade accounts payable
less than ninety (90) days past due and other accrued or deferred liabilities
incurred in the ordinary course of business,
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(b) is not subject to any Liens except Restricted Subsidiary Permitted
Encumbrances and in connection with a Stock Pledge of its stock, (c) has
executed and delivered to Agent Bank a Subsidiary Guaranty, (d) all of the stock
or other evidence of ownership thereof has been pledged in favor of Agent Bank
by a Stock Pledge, and (e) has been designated by EEI to be a Restricted
Subsidiary by written notice thereof to Agent Bank, subject to EEI's right to
redesignate such New Venture Subsidiary as an Unrestricted Subsidiary so long
as: (i) no Default or Event of Default has occurred and remains continuing, and
(ii) giving effect to such redesignation as of the end of the most recently
ended Fiscal Quarter on a pro forma basis, no Default or Event of Default would
exist under the Financial Covenants.
"Restricted Subsidiary Permitted Encumbrances" shall mean, at any
particular time with respect to a Restricted Subsidiary, (i) liens for taxes,
assessments or governmental charges not then due, payable and delinquent, (ii)
liens for taxes, assessments or governmental charges not then required to be
paid pursuant to Section 5.10, (iii) liens in favor of Agent Bank or any Lender
created or contemplated by the Security Documentation, (iv) liens in favor of
Agent Bank for the benefit of the Lenders or consented to in writing by Agent
Bank upon the approval of Requisite Lenders, (v) purchase money security
interests for acquired FF&E up to the maximum amount permitted under Section
6.08(c), and only to the extent of the lesser of the purchase money loan or the
fair market value of the acquired FF&E, (vi) liens of legally valid leases for
FF&E, (vii) easements, licenses or rights-of-way, hereafter granted to any
Governmental Authority or public utility providing services to the Restricted
Subsidiary Venture which are first approved in writing by the Agent Bank upon
the approval of Requisite Lenders, (viii) judgment liens which do not constitute
an Event of Default, (ix) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, customs and revenue authorities and materialmen and
other similar liens imposed by law incurred in the ordinary course of business
which could not reasonably be expected to cause a Material Adverse Effect and
which are discharged in accordance with Section 5.04, (x) liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations; (xi) leases or subleases
granted to others not interfering in any material
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respect with the ordinary conduct of the business of such Restricted Subsidiary;
and (xii) minor defects, encroachments or irregularities in title not
interfering in any material respect with the ordinary conduct of the business of
such Restricted Subsidiary.
"Restricted Subsidiary Stock Pledges" shall mean collective reference to
the Stock Pledge (Gaming) and the Stock Pledge (General).
"Restricted Subsidiary Venture" shall mean a New Venture owned in whole or
in part by a Restricted Subsidiary.
"Revolving Credit Note" shall mean the Revolving Credit Promissory Note, a
copy of which is marked "Exhibit A", affixed hereto and by this reference
incorporated herein and made a part hereof, to be executed by Borrowers on the
Closing Date, payable to the order of Agent Bank on behalf of the Lenders,
evidencing the Credit Facility.
"SEC" shall have the meaning set forth in Recital Paragraph E.
"Schedule of Budgeted Capital Expenditures" shall mean the Schedule of
Budgeted Capital Expenditures, a copy of which is set forth as Schedule 6.05
affixed hereto and by this reference incorporated herein and made a part hereof,
setting forth the Capital Expenditures which are budgeted and scheduled to be
made at the Casino Facilities as of the Closing Date.
"Schedule of Hammond Lease Documents Amendments" shall mean the Schedule of
Hammond Lease Documents Amendments, a copy of which is set forth as Schedule
5.03 affixed hereto and by this reference incorporated herein and made a part
hereof, setting forth the amendments and modifications to the Hammond Lease
Documents which are planned and in the process of being negotiated by ECHC as of
the Closing Date.
"Schedule of Lenders' Proportions in Credit Facility" shall mean the
Schedule of Lenders' Proportions in Credit Facility, a copy of which is marked
"Schedule 2.01(a), affixed hereto and by this reference incorporated herein and
made a part hereof, setting forth the respective Syndication Interest and
maximum amount to be funded under the Credit Facility by each Lender as such
schedule may be amended, modified or restated from time to time in connection
with an Assignment and Assumption Agreement.
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"Schedule of Significant Litigation" shall mean the Schedule of Significant
Litigation, a copy of which is set forth as Schedule 3.20, affixed hereto and by
this reference incorporated herein and made a part hereof, setting forth the
information described in Section 3.20 with respect to each Significant
Litigation.
"Schedule of Subsidiaries" shall mean the Schedule of Subsidiaries, a copy
of which is marked "Schedule 4.22", affixed hereto and by this reference
incorporated herein and made a part hereof, setting forth the name of each
Subsidiary of EEI as of the Closing Date, stating whether each such Subsidiary
is a Restricted Subsidiary or an Unrestricted Subsidiary and if the Subsidiary
is a New Venture Subsidiary setting forth a description of the applicable New
Venture.
"Scheduled Reductions" shall mean the amount by which the Aggregate
Commitment is reduced on each Reduction Date as set forth on the Aggregate
Commitment Reduction Schedule.
"Secured Interest Rate Hedge(s)" shall mean any Interest Rate Hedge entered
into between any Borrower and any Lender, or Affiliate of any Lender, which is
secured by the Security Documentation.
"Security Documentation" shall mean a collective reference to the ECHC
Security Documents, the ECJC Security Documents and EEI Stock Pledges,
Subsidiary Guaranties, the Trademark Security Agreement and all other
instruments and agreements to be executed by or on behalf of members of the
Borrower Consolidation or other applicable Persons, in favor of Agent Bank on
behalf of the Lenders securing repayment of the Bank Facilities.
"Significant Litigation" shall mean each action, suit, proceeding,
litigation and controversy involving Borrowers, or any of them, not fully
covered by insurance or that is subject to a reservation of rights and involving
claims in excess of One Million Dollars ($1,000,000.00) or which if determined
adverse to the interests of Borrowers, or any of them, could have a Material
Adverse Effect.
"Spaceleases" shall mean collective reference to the ECHC Spaceleases and
ECJC Spaceleases.
"Standby Letter(s) of Credit" shall mean a letter or letters of credit
issued by L/C Issuer pursuant to
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Section 2.09 of the Credit Agreement for the purpose of securing payment or
performance of a financial obligation of Borrowers, or any of them, other than
in connection with the payment for goods or equipment.
"Stated Amount" shall mean the maximum amount which L/C Issuer may be
required to disburse to the beneficiary(ies) of a Letter(s) of Credit under the
terms thereof.
"Stated Expiry Date(s)" shall mean the date set forth on the face of a
Letter(s) of Credit as the date when all obligations of L/C Issuer to advance
funds thereunder will terminate, as the same may be extended from time to time.
"Stock Pledge (Gaming)" shall mean the Security Agreement and Stock Pledge,
the form of which is marked "Exhibit N", affixed hereto and by this reference
incorporated herein and made a part hereof, pursuant to which the stock of each
Restricted Subsidiary which is a gaming licensee in any jurisdiction within the
United States of America is pledged by EEI to Agent Bank on behalf of Lender as
security for the Note and all other sums which may be owing by Borrowers to the
Banks from time to time under the terms of the Credit Agreement.
"Stock Pledge (General)" shall mean the Security Agreement and Stock
Pledge, the form of which is marked "Exhibit O", affixed hereto and by this
reference incorporated herein and made a part hereof, to be executed by EEI from
time to time for the purpose of pledging the stock of each Restricted Subsidiary
which is not a gaming licensee as security for the Bank Facilities and all other
sums which may be owing by Borrowers to the Banks from time to time under the
terms of the Credit Agreement.
"Subordinated Debt" shall mean: (i) the Indebtedness evidenced by the New
Indenture and New Senior Subordinated Notes, and (ii) all other unsecured
Indebtedness of EEI (not including, however, the Defeased Debt) which is
contractually subordinated to the Bank Facilities and for which (a) there is no
principal or sinking fund payment requirement maturing or otherwise coming due
prior to one (1) year after the Maturity Date; (b) the maturity date of the
Subordinated Debt shall not be earlier than one year subsequent to the Maturity
Date; (c) all material covenants, terms and conditions of the Subordinated Debt
shall be less restrictive on EEI and the Borrower Consolidation than those
applicable under this Credit Agreement; and (d) the covenants, terms,
conditions,
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representations, events of default and other provisions of the Subordinated Debt
shall be acceptable (from the perspective of a senior lender) to Requisite
Lenders, which acceptance shall not be unreasonably withheld or delayed.
"Subsidiary" shall mean, on the date in question, any Person of which an
aggregate of more than 50% of the stock of any class or classes (or equivalent
interests) is owned of record or beneficially, directly or indirectly, by
another Person and/or any of its Subsidiaries, if the holders of the stock of
such class or classes (or equivalent interests) (a) are ordinarily, in the
absence of contingencies, entitled to vote for the election of a majority of
the directors (or individuals performing similar functions) of such Person, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are entitled, as such holders, to vote for the election of a
majority of the directors (or individuals performing similar functions) of such
Person, whether or not the right so to vote exists by reason of the happening of
a contingency.
"Subsidiary Guarantor" shall mean each Restricted Subsidiary which has
executed the Subsidiary Guaranty.
"Subsidiary Guaranty" shall mean the General Continuing Subsidiary Guaranty
to be executed by each Restricted Subsidiary in favor of the Agent Bank on
behalf of Banks in the form of the General Continuing Subsidiary Guaranty marked
"Exhibit P", affixed hereto and by this reference incorporated herein and made a
part hereof, under the terms of which each Restricted Subsidiary irrevocably and
unconditionally guaranties to Agent Bank on behalf of the Banks the full and
prompt payment and performance of all obligations, promises, covenants and
agreements of Borrowers under the Credit Agreement, Notes and other Loan
Documents.
"Swingline Advance" shall mean each advance made by Swingline Lender to
Borrowers under the Swingline Facility.
"Swingline Facility" shall mean the agreement of Swingline Lender to make
Swingline Advances to Borrowers subject to the terms and conditions and up to
the maximum amounts and for the duration as set forth in Section 2.08 of this
Credit Agreement.
"Swingline Lender" shall have the meaning set forth in the Preamble of this
Credit Agreement.
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"Swingline Note" shall mean the Swingline Note, a copy of which is marked
"Exhibit B", affixed hereto and by this reference incorporated herein and made a
part hereof, to be executed by Borrowers on the Closing Date, payable to the
order of Swingline Lender evidencing the Swingline Facility.
"Swingline Outstandings" shall mean the aggregate amount of all outstanding
and unpaid Swingline Advances as of each date of determination.
"Syndication Interest" shall mean the proportionate interest of each Lender
in the Credit Facility as set forth on the Schedule of Lenders' Proportions in
Credit Facility, a copy of which is marked Schedule 2.01(a), affixed hereto and
by this reference incorporated herein and made a part hereof, as the same may be
amended or restated from time to time.
"Tangible Net Worth" shall mean Assets, excluding Intangibles, less Total
Liabilities.
"Tax Distribution" shall mean a Distribution made by EEI to its
shareholders to enable to such shareholders to pay taxes on the Net Income of
the Borrower Consolidation, computed on the net earnings of the Borrower
Consolidation multiplied by the highest individual tax rate prevailing at the
time of determination.
"Taxes" shall have the meaning set forth in Section 2.12.
"Title Company" shall mean Chicago Title Insurance Company, together with
such reinsurers with direct access as are requested by Agent Bank or other title
insurance company or companies as may be reasonably acceptable to Agent Bank.
"Title Insurance Policies" shall mean collective reference to the ECHC
Title Insurance Policy and ECJC Title Insurance Company.
"Total Liabilities" shall mean the total liabilities of the Borrower
Consolidation determined in accordance with GAAP.
"Trademark Security Agreement" shall mean the security agreement to be
executed by EEI and ECHC as of the
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Closing Date and by ECJC as of the Illinois Effective Date, for the purpose of
granting a security interest in favor of Agent Bank on behalf of Lenders in all
trademarks, tradenames, copyrights and servicemarks used in connection with the
Casino Facilities, including, without limitation each registration and
application set forth on Schedule 4.27 or otherwise described on Schedule A to
the Trademark Security Agreement.
"USCG" shall mean the United States Coast Guard.
"Unrestricted Subsidiary" shall mean Empress Finance, Hammond Residential
and each New Venture Subsidiary which is not a Restricted Subsidiary.
"Unrestricted Subsidiary, Investment Basket" shall mean Fifty Million
Dollars ($50,000,000.00) plus the aggregate amount of net proceeds received by
the Borrower Consolidation from the sale of the ECJC Airplane and the Joliet
Excess Land, up to the maximum cumulative aggregate amount of Fifty Eight
Million Dollars ($58,000,000.00).
"Unsuitable Lender" shall have the meaning set forth in Section 10.10(d).
"Vessels" shall mean collective reference to the ECHC Riverboat and the
ECJC Riverboats.
"Voluntary Permanent Reduction" shall have the meaning set forth in Section
2.01(c).
"WFB" shall mean Wells Fargo Bank, National Association.
Section 1.02. Interpretation and Construction. In this Credit Agreement,
-------------------------------
unless the context otherwise requires:
(a) Articles and Sections mentioned by number only are the respective
Articles and Sections of this Credit Agreement as so numbered;
(b) Words importing a particular gender mean and include every other
gender, and words importing the singular number mean and include the plural
number and vice versa;
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(c) All times specified herein, unless otherwise specifically
referred, shall be the time in San Francisco, California;
(d) Any headings preceding the texts of the several Articles and
Sections of this Credit Agreement, and any table of contents or marginal notes
appended to copies hereof, shall be solely for convenience of reference and
shall not constitute a part of this Credit Agreement, nor shall they affect its
meaning, construction or effect;
(e) If any clause, provision or Section of this Credit Agreement shall
be ruled invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any of the remaining
provisions hereof;
(f) The terms "herein", "hereunder", "hereby", "hereto", "hereof" and
any similar terms as used in the Credit Agreement refer to this Credit
Agreement; the term "heretofore" means before the date of the execution of this
Credit Agreement; and the term "hereafter" means after the date of the execution
of this Credit Agreement;
(g) The parties hereto agree that each has contributed to the drafting
of this Credit Agreement and each of the Loan Documents and that the provisions
herein contained shall not be construed against Borrowers or Banks as having
been the person or persons responsible for the preparation thereof;
(h) All accounting terms used herein which are not otherwise
specifically defined shall be used in accordance with GAAP;
(i) Each reference to a Loan Document or the Security Documentation,
or any of them, as used in this Credit Agreement shall be deemed a reference to
such Loan Document or the Security Documentation as the same may be amended,
modified, supplemented, replaced or restated from time to time; and
(j) Every affirmative duty, covenant and obligation of Borrowers
hereunder shall be equally applicable to each of the Borrowers individually and
where the context would result in the best interests or rights of Banks shall be
construed to mean "Borrowers or any of them" or "Borrowers and each of them", as
applicable.
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Section 1.03. Use of Defined Terms. Unless otherwise defined or the
--------------------
context otherwise requires, terms for which meanings are provided in this Credit
Agreement shall have such meanings when used in the Notes and in each Loan
Document and other communication delivered from time to time in connection with
this Credit Agreement or any other Loan Document.
Section 1.04. Cross-References. Unless otherwise specified,
----------------
references in this Credit Agreement and in each other Loan Document to any
Article or Section are references to such Article or Section of this Credit
Agreement or such other Loan Document, as the case may be, and, unless otherwise
specified, references in any Article, Section or definition to any clause are
references to such clause of such Article, Section or definition.
Section 1.05. Exhibits and Schedules. All Exhibits and Schedules to
----------------------
this Credit Agreement, either as originally existing or as the same may from
time to time be supplemented, modified or amended, are incorporated herein by
this reference.
ARTICLE II
AMOUNT, TERMS AND SECURITY OF THE BANK FACILITIES
-------------------------------------------------
Section 2.01. The Credit Facility.
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a. Subject to the conditions and upon the terms hereinafter set
forth and in accordance with the terms and provisions of the Revolving Credit
Note on and after the Closing Date Lenders severally agree in the proportions
set forth on the Schedule of Lenders' Proportions in Credit Facility to lend and
advance Borrowings to Borrowers, up to the Maximum Permitted Balance in the
initial amount of One Hundred Million Dollars ($100,000,000.00), the Closing
Disbursement on the Closing Date and such amounts as Borrowers may request by
Notice of Borrowing duly executed by an Authorized Officer and delivered to
Agent Bank from time to time as provided in Section 2.03; provided, however,
notwithstanding anything herein contained to the contrary, the Deferred Funding
Amount and Letters of Credit shall not be available for advance or issuance by
Lenders or L/C Issuer, respectively, until each condition precedent necessary
for the occurrence of the Illinois Effective Date as set forth in Article III C
shall have occurred and been fully satisfied.
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b. Subject to the uses and purposes set forth in Section 2.02,
on and after the Closing Date Borrowers may borrow, repay and reborrow the
Borrowings up to the Available Borrowings from time to time. Provided, however,
amounts of Funded Outstandings bearing interest with reference to a LIBO Rate
shall be subject to Breakage Charges incident to prepayment. The Credit Facility
shall be for a term commencing on the Closing Date and terminating on the
Maturity Date. In no event shall any Lender be liable to fund any amounts under
the Credit Facility in excess of its respective Syndication Interest in any
Borrowing.
c. Borrowers may voluntarily reduce the Maximum Permitted
Balance from time to time (a "Voluntary Permanent Reduction") on the following
conditions:
(i) that each such Voluntary Permanent Reduction be in
the minimum amount of Five Million Dollars ($5,000,000.00) and in
increments of One Million Dollars ($1,000,000.00) and made in writing
by an Authorized Officer, effective on the fifth (5th) Banking
Business Day following receipt by Agent Bank;
(ii) that each such Voluntary Permanent Reduction shall be
irrevocable and a permanent reduction to the Maximum Permitted
Balance; and
(iii) in the event any Voluntary Permanent Reduction
reduces the Maximum Permitted Balance to less than the sum of the
Aggregate Outstandings, the Borrowers shall immediately cause the
Aggregate Outstandings to be reduced by such amount as may be
necessary to cause the Aggregate Outstandings to be equal to or less
than the Maximum Permitted Balance.
Section 2.02. Use of Proceeds of the Credit Facility. Available
--------------------------------------
Borrowings shall be used for the following purposes:
a. On the Closing Date a Borrowing shall be advanced up to the
maximum amount of Fifty Million Dollars ($50,000,000.00) (the "Closing
Disbursement") for the purposes of:
(i) paying in full all amounts owing under the Existing Bank
Loan as of the Closing Date;
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(ii) financing a portion of the costs and funds to be advanced
by EEI to cause the Covenant Defeasance and Defeasement Effective Date
to occur;
(iii) paying in full the fees due Agent Bank as set forth in the
Fee Side Letter, the costs, fees and expenses of Title Company
incurred in connection with the issuance of the Title Insurance
Policies, the costs, fees and expenses of Henderson & Morgan, LLC,
attorneys for Agent Bank, and associate counsel and insurance
consultants retained by them incurred to the Closing Date; and
(iv) paying other costs, fees and expenses incurred by
Borrowers, including attorneys fees and related costs, incurred in
connection with the Bank Facilities, the New Indenture and causing the
occurrence of the Defeasement Effective Date; and
(v) providing financing for general corporate purposes and
working capital requirements.
b. On and after the Illinois Effective Date up to the Maximum
Permitted Balance for the purpose of:
(i) providing financing for general corporate purposes,
including financing Capital Expenditures, working capital requirements
and New Venture Investments of the Borrower Consolidation subject to
the terms, covenants and limitations hereinafter set forth.
Section 2.03. Notice of Borrowings and Exercise of Interest Rate
--------------------------------------------------
Options.
- -------
a. An Authorized Officer shall give Agent Bank, no later than
11:00 a.m. on a Banking Business Day at Agent Bank's office specified in Section
2.07, three (3) full Banking Business Days prior written notice in the form of
the Notice of Borrowing ("Notice of Borrowing"), a copy of which is marked
"Exhibit C", affixed hereto and by this reference incorporated herein and made a
part hereof, for each proposed Borrowing to be made with reference to a LIBO
Rate and at least one (1) full Banking Business Days prior notice for all other
Borrowings, specifying the date and amount of each proposed Borrowing. Agent
Bank shall give prompt notice of each Notice of Borrowing to Lenders of the
amount to be funded
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and specifying the Funding Date. Not later than 9:00 o'clock a.m. on the Funding
Date specified, each Lender shall disburse to Agent Bank its Pro Rata Share of
the amount to be advanced by each such Lender in lawful money of the United
States of America and in immediately available funds. Agent Bank shall make the
proceeds of such fundings received by it on or before 11:00 o'clock a.m. from
the Lenders available to Borrowers by depositing, prior to 1:00 o'clock p.m. on
the day so received (but not prior to the Funding Date), in the Designated
Deposit Account maintained with Agent Bank the amounts received from the
Lenders. No Borrowing may exceed the Available Borrowings. Each Borrowing shall
be in a minimum amount of Five Hundred Thousand Dollars ($500,000.00) and in
increments of One Hundred Thousand Dollars ($100,000.00). Borrowers shall be
entitled to no more than five (5) Borrowings during each calendar month,
exclusive of Borrowings made for the sole purpose of funding repayment of a
Swingline Advance or L/C Reimbursement Obligation.
b. The failure of any Lender to fund its Pro Rata Share of
any Borrowing on any Funding Date shall neither relieve any other Lender of any
obligation hereunder to fund its Pro Rata Share of such Borrowing on such
Funding Date nor relieve the Lender which has failed to fund its Pro Rata Share
of its obligations to Borrowers hereunder. No Lender shall be responsible for
the failure of any other Lender to fund its Pro Rata Share of such Borrowing on
any Funding Date nor shall any Lender be responsible for the failure of any
other Lender to perform its respective obligations hereunder. The provisions set
forth in Section 10.10(b) shall be applicable to a Defaulting Lender to the same
extent as if such Defaulting Lender was found to be an Unsuitable Lender.
Section 2.04. Conditions of Borrowings. Borrowings, other than
------------------------
Borrowings made at the request of Agent Bank for the purpose of funding
repayment of Swingline Outstandings and/or L/C Reimbursement Obligations as
hereinafter provided, will only be made so long as Borrowers are in full
compliance with each of the requirements and conditions precedent set forth in
Article III B of this Credit Agreement with respect to the Closing Disbursement
and with Article III C with respect to the Deferred Funding Amount. Provided,
however, upon the consent of the Requisite Lenders, Lenders shall advance
Borrowings notwithstanding the existence of less than full compliance with the
requirements of Article III B and/or III C and Borrowings so made shall be
deemed to have been made pursuant to this Credit Agreement.
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Section 2.05. The Revolving Credit Note and Interest Rate Options.
---------------------------------------------------
a. The Credit Facility shall be further evidenced by the
Revolving Credit Note payable to the order of Agent Bank on behalf of the
Lenders. Agent Bank shall record manually or electronically the date and amount
of each Borrowing advanced by the Lenders together with the applicable Interest
Period in the case of portions of the unpaid principal under the Credit Facility
bearing interest with reference to a LIBO Rate, and the amount of each repayment
of principal made thereunder by Borrowers and the entry of such records shall be
conclusive absent manifest or demonstrable error; provided, however, the failure
to make such a record or notation with respect to any Borrowing or repayment
thereof, or an error in making such a record or notation, shall not limit or
otherwise affect the obligations of Borrowers hereunder or under the Revolving
Credit Note.
b. Interest shall accrue on the entire outstanding principal
balance of the Credit Facility at a rate per annum equal to the Base Rate plus
the Applicable Margin, unless Borrowers request a LIBOR Loan pursuant to Section
2.03 or elect pursuant to Section 2.05(c) hereinbelow to have interest accrue on
a portion or portions of the outstanding principal balance of the Credit
Facility at a LIBO Rate ("Interest Rate Option"), in which case interest on such
portion or portions shall accrue at a rate per annum equal to such LIBO Rate
plus the Applicable Margin, as long as: (i) each such LIBOR Loan is in a minimum
amount of Five Million Dollars ($5,000,000.00) and in increments of One Million
Dollars ($1,000,000.00), and (ii) no more than five (5) LIBOR Loans may be
outstanding at any one time. Interest accrued on each Base Rate Loan shall be
due and payable on the first day of the month following the Closing Date, on the
first day of each successive month thereafter, and on the Maturity Date. For
each LIBOR Loan, accrued interest shall be due and payable at the end of each
Interest Period applicable thereto, but in any event no less frequently than at
the end of each three (3) month period during the term of such LIBOR Loan.
Except as qualified above, the outstanding principal balance of the Credit
Facility may be a Base Rate Loan or one or more LIBOR Loans, or any combination
thereof, as Borrowers shall specify.
c. Borrowers may Convert from one Interest Rate Option to
another Interest Rate Option by giving irrevocable notice to Agent Bank of such
Conversion by
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9:00 A.M., on a day which is at least three (3) Banking Business Days prior to
the proposed date of such Conversion to each LIBOR Loan or one (1) Banking
Business Day prior to the proposed date of such Conversion to each Base Rate
Loan. Each such notice shall be made by an Authorized Officer by telephone or
telex and thereafter immediately confirmed in writing by delivery to Agent Bank
of a Continuation/Conversion Notice specifying the date of such Conversion, the
amounts to be so Converted and the initial Interest Period if the Conversion is
to a LIBOR Loan. Upon receipt of such Continuation/Conversion Notice, Agent Bank
shall promptly set the applicable interest rate (which in the case of a LIBOR
Loan shall be the LIBO Rate plus the Applicable Margin as of the second Banking
Business Day prior to the first day of the applicable Interest Period) and the
applicable Interest Period if the Conversion is to a LIBOR Loan and shall
confirm the same in writing to Borrowers and Lenders. Each Conversion shall be
on a Banking Business Day. No LIBOR Loan shall be converted to a Base Rate Loan
or renewed on any day other than the last day of the current Interest Period
relating to such amounts outstanding unless Borrowers pay any applicable
Breakage Charges. All Borrowings advanced at the request of Agent Bank under
Sections 2.08 or 2.09 of the Credit Agreement shall bear interest with reference
to the Base Rate plus the Applicable Margin, subject to Borrowers' right to
Convert such Borrowing to a LIBOR Loan or LIBOR Loans as provided herein. If
Borrowers fail to give a Continuation/Conversion Notice for the continuation of
a LIBOR Loan as a LIBOR Loan for a new Interest Period in accordance with this
Section 2.05(c), such LIBOR Loan shall automatically become a Base Rate Loan at
the end of its then current Interest Period.
d. Each interest period (each individually an "Interest Period"
and collectively the "Interest Periods") for a LIBOR Loan shall commence on the
date such LIBOR Loan is made or the date of Conversion of any amount or amounts
of the outstanding Borrowings hereunder to a LIBOR Loan, as the case may be, and
shall end on the date which is one (1), two (2), three (3) or six (6) months
thereafter, as elected by Borrowers. However, no Interest Period may extend
beyond the Maturity Date. Each Interest Period for a LIBOR Loan shall commence
and end on a Banking Business Day. If any Interest Period commences on a date
for which there is no corresponding date in the month in which it is scheduled
to end, such Interest Period shall end on the last Banking Business Day of such
month. If any Interest Period would otherwise expire on a day which is not a
Banking
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Business Day, the Interest Period shall be extended to expire on the next
succeeding Banking Business Day, unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Banking Business Day.
e. The applicable LIBO Rate and Base Rate shall be determined
by the Agent Bank, and notice thereof shall be given promptly to Borrowers and
Lenders. Each determination of the applicable Base Rate and LIBO Rate shall be
conclusive and binding upon the Borrowers, in the absence of manifest or
demonstrable error. The Agent Bank shall, upon written request of Borrowers or
any Lender, deliver to Borrowers or such Lender, as the case may be, a statement
showing the computations used by the Agent Bank in determining any rate
hereunder.
f. Computation of interest on all Base Rate Loans and LIBOR
Loans shall be calculated on the basis of a year of three hundred sixty (360)
days and the actual number of days elapsed. The applicable Base Rate shall be
effective the same day as a change in the Base Rate is announced by WFB as being
effective.
g. If with respect to any Interest Period, (a) the Agent Bank
reasonably determines (which determination shall be binding and conclusive on
Borrowers absent manifest error) that by reason of circumstances affecting the
inter-bank eurodollar market adequate and reasonable means do not exist for
ascertaining the applicable LIBO Rate, or (b) Requisite Lenders advise Agent
Bank that the LIBO Rate as determined by Agent Bank will not adequately and
fairly reflect the cost to such Lenders of maintaining or funding, for such
Interest Period, a LIBOR Loan under the Credit Facility, then so long as such
circumstances shall continue: (i) Agent Bank shall promptly notify Borrowers
thereof, (ii) the Lenders shall not be under any obligation to make a LIBOR Loan
or Convert a Base Rate Loan into a LIBOR Loan for which such circumstances
exist, and (iii) on the last day of the then current Interest Period, the LIBOR
Loan for which such circumstances exist shall, unless then repaid in full,
automatically Convert to a Base Rate Loan.
h. Notwithstanding any other provisions of the Credit
Agreement, if, after the Closing Date, any law, rule, regulation, treaty,
interpretation or directive (whether having the force of law or not) or any
change therein shall make it unlawful for any Lender to make or maintain LIBOR
Loans, then (i) the commitment and agreement to maintain LIBOR
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Loans as to such Lender shall immediately be suspended, and (ii) unless required
to be terminated earlier, LIBOR Loans as to such Lender, if any, shall be
Converted on the last day of the then current Interest Period applicable thereto
to Base Rate Loans. If it shall become lawful for such Lender to again maintain
LIBOR Loans, then Borrowers may once again as to such Lender request Conversions
to the LIBO Rate. During any period of such suspension, such Lender shall make
Base Rate Loans.
i. The Borrowers agree that upon written notice by: (y) Agent
Bank or (z) any Lender to the Borrowers (with a copy of such notice concurrently
delivered to Agent Bank) to the effect that a promissory note or other evidence
of indebtedness is required for such Lender by a Governmental Authority, banking
regulatory agency or regulatory audit in order for such Lender to evidence
(whether for the purposes of pledge, enforcement or otherwise) the Borrowings
owing to, or to be made by, such Lender:
(i) The Borrowers shall promptly execute and deliver to
each Lender a promissory note payable to the order of each such Lender
(each individually a "Replacement Note" and collectively the
"Replacement Notes") in the form of the Revolving Credit Note in the
amount of each Lender's respective Syndication Interest in the Credit
Facility subject to Scheduled Reductions to be allocated amongst
Lenders in accordance with their respective Syndication Interests;
(ii) The Replacement Notes shall, in the aggregate, fully
replace the Revolving Credit Note and each reference to the Revolving
Credit Note in this Credit Agreement and each of the Loan Documents
shall be deemed to be a collective reference to the Replacement Notes;
(iii) Borrowings, Interest Rate Options,
Continuation/Conversion Notices and all other provisions for the
disbursement of funds, setting of interest rates and collection of
repayments of interest and principal shall continue to be made by
Agent Bank as the administrative and collateral agent for the Lenders
in the same manner and to the same extent as provided in the Revolving
Credit Note and this Credit Agreement as fully applicable to each of
the Replacement Notes;
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(iv) the Agent Bank, upon the consent of Requisite
Lenders, shall cause the Title Insurance Company to issue, at the
expense of Borrowers (up to the maximum amount of Two Thousand Five
Hundred Dollars ($2,500.00)), such endorsements to the Title Insurance
Policies as may be reasonably necessary to assure the aggregate
obligation evidenced by the Replacement Notes is secured by the
Mortgages with the same coverage and priority as the obligation
evidenced by the Revolving Credit Note; and
(v) Concurrently with the delivery of the Replacement
Notes, Agent Bank shall return the original Revolving Credit Note to
Borrowers marked as superseded and replaced by the Replacement Notes.
Section 2.06. Security for the Credit Facility. As security for the
--------------------------------
due and punctual payment and performance of the terms and provisions of this
Credit Agreement, the Notes and all of the other Loan Documents, the Security
Documentation shall be executed and delivered to Agent Bank, as of the Closing
Date, by the respective parties to each of the Security Documentation.
Section 2.07. Place and Manner of Payment.
---------------------------
a. All amounts payable by Borrowers to the Lenders shall be
made to Agent Bank on behalf of Lenders pursuant to the terms of this Credit
Agreement and the Notes and shall be made on a Banking Business Day in lawful
money of the United States of America and in immediately available funds. Other
than in connection with: (i) the Scheduled Reductions of principal, or (ii)
principal payments which may be required to decrease the Aggregate Outstandings
to an amount equal to or less than the Maximum Permitted Balance, Borrowers
shall not make repayments ("Principal Prepayments") of the outstanding balance
of principal owing under the Revolving Credit Note more frequently than five (5)
such Principal Prepayments during each calendar month. Each such Principal
Prepayment shall be in a minimum amount of Five Million Dollars ($5,000,000.00)
and in increments of One Million Dollars ($1,000,000.00).
b. All such amounts payable by Borrowers shall be made to
Agent Bank at its office located at Wells Fargo Bank, Syndications Division, 201
Third Street, Eighth
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Floor, San Francisco, California 94103, or at such other address as may be
directed in writing by Agent Bank from time to time. If such payment is received
by Agent Bank prior to 11:00 o'clock a.m., Agent Bank shall credit Borrowers
with such payment on the day so received and shall disburse to the appropriate
Lenders on the same day the Pro Rata Share of payments relating to the Credit
Facility in immediately available funds. If such payment is received by Agent
Bank after 11:00 o'clock a.m., Agent Bank shall credit Borrowers with such
payment as of the next Banking Business Day and disburse to the appropriate
Lenders on the next Banking Business Day such Pro Rata Share of such payment
relating to the Credit Facility, in immediately available funds. Any payment on
the Credit Facility made by Borrowers to Agent Bank pursuant to the terms of
this Credit Agreement or the Revolving Credit Note for the account of Lenders
shall constitute payment to the appropriate Lenders. If the Revolving Credit
Note or any payment required to be made thereon or hereunder, is or becomes due
and payable on a day other than a Banking Business Day, the due date thereof
shall be extended to the next succeeding Banking Business Day and interest
thereon shall be payable at the then applicable rate during such extension.
c. The outstanding principal owing under the Credit Facility and the
Revolving Credit Note may, subject to Section 2.07(a), be prepaid at any time in
whole or in part without penalty, provided, however, that any portion or
portions of the unpaid principal balance which is accruing interest at a LIBO
Rate may only be prepaid or repaid on the last day of the applicable Interest
Period unless Borrowers give three (3) days prior written notice to Agent Bank
and additionally pay concurrently with such prepayment or repayment such
additional amount or amounts as will compensate Lenders for any losses, costs or
expenses which they may incur as a result of such payment, including, without
limitation, any loss (including loss of anticipated profits), cost or expense
incurred by the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund or maintain such LIBOR Loan ("Breakage Charges"). A
certificate of a Lender as to amounts payable hereunder shall be conclusive and
binding on Borrowers for all purposes, absent manifest or demonstrable error.
Any calculation hereunder shall be made on the assumption that each Lender has
funded or will fund each LIBOR Loan in the London interbank market; provided
--------
that no Lender shall have any obligation to actually fund any LIBOR Loan in such
manner.
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d. Unless the Agent Bank receives notice from an Authorized
Officer prior to the date on which any payment is due to the Lenders that the
Borrowers will not make such payment in full as and when required, the Agent
Bank may assume that the Borrowers have made such payment in full to the Agent
Bank on such date in immediately available funds and the Agent Bank may (but
shall not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the Borrowers have not made such payment in full to the Agent
Bank, each Lender shall repay to the Agent Bank on demand such amount
distributed to such Lender, together with interest thereon at the Federal Funds
Rate for each day from the date such amount is distributed to such Lender until
the date repaid.
e. If, other than as expressly provided elsewhere herein, any
Lender shall obtain any payment with respect to the Bank Facilities (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Syndication Interest, such Lender shall immediately
(a) notify the Agent Bank of such fact, and (b) purchase from the other Lenders
such participations in the Credit Facility as shall be necessary to cause such
purchasing Lender to share the excess payment with each of them in proportion to
their respective Syndication Interests; provided, however, that if all or any
--------
portion of such excess payment is thereafter recovered from the purchasing
Lender, such purchase shall to that extent be rescinded and each other Lender
shall repay to the purchasing Lender the purchase price paid therefor, together
with an amount equal to such paying Lender's ratable share (according to the
proportion of (i) the amount of such paying Lender's required repayment to (ii)
the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. The Borrowers agree that any Lender so purchasing a
participation from another Lender may, to the fullest extent permitted by law,
exercise all its rights of payment with respect to such participation as fully
as if such Lender were the direct creditor of the Borrowers in the amount of
such participation. The Agent Bank will keep records (which shall be conclusive
and binding in the absence of manifest error) of each participation purchased
under this section and will in each case notify the Lenders following any such
purchases or repayments.
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Section 2.08. The Swingline Facility.
----------------------
a. Subject to the conditions and upon the terms hereinafter set
forth and in accordance with the terms and provisions of the Swingline Note,
Exhibit B affixed hereto, Swingline Lender agrees to lend and advance Swingline
Advances to Borrowers in the amounts and at the times provided below.
Notwithstanding anything herein contained to the contrary, however, Borrowers
shall not be entitled to any Swingline Advances on and after ten (10) calendar
days prior to the Maturity Date.
b. With respect to each proposed Swingline Advance, an
Authorized Officer shall give Swingline Lender written notice in the form of the
Notice of Swingline Advance ("Notice of Swingline Advance"), a copy of which is
marked "Exhibit E", affixed hereto and by this reference incorporated herein and
made a part hereof, to be received by Swingline Lender no later than 1:00 p.m.
on the date for each proposed Swingline Advance specifying the requested amount
to be funded. Swingline Lender shall deposit into the Designated Deposit
Account in lawful money of the United States of America in immediately available
funds such amounts as Borrowers may request, provided, that: (i) after giving
effect to such Swingline Advance, the Swingline Outstandings do not exceed Five
Million Dollars ($5,000,000.00), (ii) the amount requested does not exceed the
Available Borrowings, and (iii) no Default or Event of Default has occurred and
is continuing. Within the foregoing limitations, Borrowers may borrow, repay
and reborrow under the Swingline Facility. Each Swingline Advance shall be in
an integral multiple of One Hundred Thousand Dollars ($100,000.00). Promptly
after receipt of each request for a Swingline Advance, Swingline Lender shall
obtain telephonic verification from Agent Bank that, giving effect to such
request, the amount of such request does not exceed the then Available
Borrowings (such verification to be promptly confirmed in writing). Unless
notified to the contrary by the Swingline Lender, each repayment of a Swingline
Advance shall be in an amount which is an integral multiple of One Hundred
Thousand Dollars ($100,000.00), together with the accrued interest thereon. The
Swingline Lender shall promptly notify the Agent Bank of the Swingline
Outstandings each time there is a change therein.
c. Each Swingline Advance shall bear interest at the Base Rate
plus the Applicable Margin and shall be payable at the times and in the manner
set forth below and, in any event, on or before ten (10) days prior to the
Maturity Date. Unless otherwise paid, interest accrued on the unpaid balance of
Swingline Outstandings shall be paid monthly on or before the fifth (5th) day
following receipt by Borrowers of an invoice from Swingline Lender setting forth
the amount of such accrued interest. In the event any Swingline Advance is
outstanding for thirty (30) consecutive Banking Business Days, then on the next
Banking Business Day (unless Borrowers have made other arrangements acceptable
to the Swingline Lender to pay the Swingline Outstanding in full or to continue
such Swingline Outstanding), Borrowers shall request a Borrowing under the
Credit Facility in an amount sufficient to pay the applicable Swingline Advance
in full, together with all interest accrued thereon. Upon receipt of the amount
of the Borrowing from the Lenders, the Agent Bank shall provide such amount to
the Swingline Lender for repayment of the applicable Swingline Advance and the
balance of the Borrowing, if any, shall be deposited in immediately available
funds to the Designated Deposit Account. In the event Borrowers fail to request
a Borrowing within the period specified above, Agent Bank shall, without notice
to the Borrowers and without regard to any other conditions precedent for the
making of Borrowings under the Credit Facility, including, without limitation
the remedies set forth in Section 7.02, promptly (but subject to the notice
periods for Borrowings set forth in Section 2.03) cause a Borrowing to be made
and funded by the Lenders under the Credit Facility in the amount necessary to
pay the applicable Swingline Advance in full, together with all interest accrued
thereon, to the extent of Available Borrowings, and the Borrowers shall be
deemed to have requested such Borrowing and consented to its being made as
provided for herein.
c. Each Swingline Advance shall bear interest at the Base Rate
plus the Applicable Margin and shall be payable at the times and in the manner
set forth below and,
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in any event, on or before ten (10) days prior to the Maturity Date. Unless
otherwise paid, interest accured on the unpaid balance of Swingline Outstandings
shall be paid monthly on or before the fifth (5th) day following receipt by
Borrowers of an invoice from Swingline Lender setting forth the amount of such
accured interest. In the event any Swingline Advance is outstanding for thirty
(30) consecutive Banking Business Days,then on the next Banking BUsiness Day
(unless Borrowers have made other arrangements acceptable to the Swingline
Lender to pay the Swingline Outstanding in full or to continue such Swingline
Outstanding), Borrowers shall request a Borrowing under the Credit Facility in
an amount sufficient to pay the applicable Swingline Advance in full, together
with all interest accured thereon. Upon receipt of the amount of the Borrowing
from the Lenders, the Agent Bank shall provide such amount to the Swingline
Lender for repayment of the applicable Swingline Advance and the balance of the
Borrowing, if any, shall be deposited in immediately available funds to the
Designated Deposit Account. In the event Borrowers fail to request a Borrowing
within the period specified above, Agent Bank shall, without notice to the
Borrowers and without regard to any other conditions precedent for the making of
Borrowings under the Credit Facility, including, without limitation the remedies
set forth in Section 7.02, promptly (but subject to the notice periods for
Borrowings set forth in Section 2.03)cause a Borrowing to be made and funded by
the Lenders under the Credit Facility in the amount necessary to pay the
applicable Swingline Advance in full, together with all interest accured
thereon, to the extent of Available Borrowings, and the Borrowers shall be
deemed to have requested such Borrowing and consented to its being made as
provided for therein.
d. Each Lender's obligation to advance Borrowings in the
proportionate amount of its Syndication Interest in the Credit Facility of any
unreimbursed Swingline Outstandings pursuant hereto is several, and not joint or
joint and several. The failure of any Lender to perform its obligation to
advance a Borrowing in a proportionate amount of such Lender's Syndication
Interest of any unreimbursed Swingline Outstandings shall neither relieve any
other Lender of its obligation hereunder to advance such Borrowing in the amount
of such other Lender's proportionate Syndication Interest of such amount, nor
relieve the Lender which has failed to fund its obligations to Borrowers
hereunder. The Borrowers agree to accept the Borrowings for payment of
Swingline Outstandings as provided hereinabove, whether or not
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such Borrowings could have been made pursuant to the terms of Article III B or
any other section of this Credit Agreement.
Section 2.09. Issuance of Letters of Credit.
-----------------------------
a. Any Authorized Officer of Borrowers may from time to time
request that a Standby Letter of Credit or Commercial Letter of Credit be issued
by delivering to L/C Issuer (with a telecopy to the Agent Bank) on a Banking
Business Day, at least five (5) Banking Business Days prior to the date of such
proposed issuance, an L/C Agreement in L/C Issuer's then standard form
(consistent with the terms of the Credit Agreement), completed to the
satisfaction of L/C Issuer and such other certificates as the L/C Issuer may
reasonably request; provided, however, that no Letter of Credit shall be issued
(a) if any Default or Event of Default has occurred and remains continuing, or
(b) if after giving effect to the issuance thereof, the aggregate Stated Amount
of outstanding Letters of Credit would exceed Three Million Dollars
($3,000,000.00), or (c) the Stated Amount of the requested Letter of Credit
exceeds the Maximum Availability. Each Letter of Credit shall be issued by the
L/C Issuer on the Banking Business Day specified in the Borrowers' application
therefor. Each request for a Letter of Credit and each Letter of Credit shall be
subject to the Uniform Customs and Practice for Documentary Credits,
International Chamber of Commerce Publication New 1994 Revision No. 500, or any
successor publication then in effect. In no event shall any Letter of Credit
have a Stated Expiry Date later than thirty (30) days prior to the Maturity
Date. Promptly after receipt of each request for the issuance of a Letter of
Credit and immediately prior to the issuance thereof, L/C Issuer shall obtain
telephonic verification from Agent Bank that the amount of such request does not
exceed the then Available Borrowings. The L/C Issuer shall promptly notify the
Agent Bank of the aggregate L/C Exposure of outstanding Letters of Credit each
time there is a change therein.
b. Upon presentation of a draft drawn under any Letter of Credit,
L/C Issuer shall promptly notify the Agent Bank and Borrowers of the amount
under such draft and the date upon which such draft is to be funded. On or
before two (2) Banking Business Days following such notice (unless Borrowers
have made other arrangements acceptable to the L/C Issuer to pay the amount of
such draft in full), Borrowers shall request a Borrowing under the Credit
Facility in an amount sufficient to pay the amount of such draft in full. The
Agent Bank, upon receipt of such funds from the Lenders,
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shall automatically provide such amount to the L/C Issuer for payment of the
amount of such draft and the balance of the Borrowing shall be deposited in
immediately available funds to the Designated Deposit Account. In the event
Borrowers fail to request a Borrowing within two (2) Banking Business Days from
receipt of the notice as specified above, on the third (3rd) Banking Business
Day following Agent Bank's receipt of such notice, Agent Bank shall, without
notice to or consent of the Borrowers and without regard to any other conditions
precedent for the making of Borrowings under the Credit Facility, cause a
Borrowing to be made and funded by the Lenders under the Credit Facility in the
amount necessary to pay the amount of such draft in full. Upon the occurrence of
any Event of Default, L/C Issuer shall, without notice or further authorization
or consent of Borrowers whatsoever, be authorized to immediately cause the Cash
Collateral Account to be established and funded by Lenders with a Borrowing
advanced to Agent Bank equal to the aggregate amount of the L/C Exposure then
outstanding. All amounts held by L/C Issuer in the Cash Collateral Account shall
be held as security for the repayment of any L/C Reimbursement Obligation
thereafter arising pursuant to the terms of the L/C Agreement(s) and the Cash
Collateral Pledge Agreement. Borrowings advanced by Lenders to pay drafts drawn
upon or to secure repayment of the L/C Exposure under Letters of Credit pursuant
to this subsection shall: (i) constitute Borrowings under the Credit Facility,
(ii) initially be Base Rate Loans and (iii) be subject to all of the provisions
of this Credit Agreement concerning Borrowings under the Credit Facility, except
that such Borrowings shall be made upon demand of the Agent Bank as set forth
above rather than upon Notice of Borrowing by Borrowers and shall be made,
notwithstanding anything in this Credit Agreement to the contrary, without
regard to any other conditions precedent to the making of Borrowings under the
Credit Facility and notwithstanding any Default or Event of Default thereunder.
All amounts paid by L/C Issuer on a draft drawn under any Letter of Credit which
has not been funded or concurrently reimbursed by Borrowers or through a
Borrowing as provided hereinabove, shall bear interest at the Base Rate plus the
Applicable Margin per annum until repaid or reimbursed to L/C Issuer.
c. Each Lender's obligation to advance Borrowings in the
proportionate amount of its Syndication Interest in the Credit Facility of any
unreimbursed amounts outstanding under any Letter of Credit pursuant hereto is
several, and not joint or joint and several. The failure of any Lender to
perform its obligation to advance a Borrowing in
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a proportionate amount of such Lender's Syndication Interest of any unreimbursed
amounts outstanding under a Letter of Credit will not relieve any other Lender
of its obligation hereunder to advance such Borrowing in the amount of such
other Lender's proportionate Syndication Interest of such amount, nor relieve
the Lender which has failed to fund of its obligation to fund hereunder. The
Borrowers agree to accept the Borrowings for payment of Letters of Credit as
provided hereinabove, whether or not such Borrowings could have been made
pursuant to the terms of Article III B or any other section of this Credit
Agreement.
d. Letters of Credit shall be used and issued for the benefit of
Borrowers for the general corporate purposes of Borrowers, or any of them,
relating to the Casino Facilities or any New Venture.
Section 2.10. Fees.
----
a. On the Closing Date and on each other applicable date,
Borrowers shall pay the fees as required in the Fee Side Letter, each of such
fees to be retained by Agent Bank or distributed to Lenders as agreed between
Agent Bank and each Lender.
b. Borrowers shall pay a quarterly nonusage fee (the "Commitment
Fee") to the Agent Bank for the account of Lenders based on the Leverage Ratio,
calculated as of each Fiscal Quarter end with reference to the Borrower
Consolidation, to determine applicable Commitment Percentage determined as set
forth in Table Two of the definition of Applicable Margin.
The Commitment Fee shall be calculated as the product of (i) the applicable
Commitment Percentage multiplied by (ii) the daily average of the Maximum
Permitted Balance less the daily average of the Funded Outstandings and less the
daily average of the amount of L/C Exposure attributable to all outstanding
Letters of Credit, computed on the basis of a three hundred sixty (360) day year
based on the number of actual days elapsed. Each Commitment Fee shall be
payable in arrears on a quarterly basis on or before the first (1st) day of the
third (3rd) month following each applicable Fiscal Quarter end and upon
termination of this Credit Agreement, whether at maturity, by acceleration or
otherwise. Each Commitment Fee shall be promptly distributed by Agent Bank to
Lenders in proportion to their respective Syndication Interests in the Credit
Facility.
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c. Concurrently with the issuance of each Letter of Credit,
Borrowers shall pay a letter of credit issuance fee to the L/C Issuer ("L/C
Fee") in an amount equal to the Stated Amount of each such Letter of Credit
multiplied by one and one-half percent (1.5%), calculated on a per annum basis
for the number of days elapsing from the issuance date to the Stated Expiry Date
of each such Letter of Credit. From each L/C Fee, one-half of one percent (.50%)
of the Stated Amount of each such Letter of Credit, calculated on a per annum
basis as provided hereinabove, shall be retained by L/C Issuer for its own
account and the balance of each L/C Fee shall be promptly distributed by Agent
Bank to Lenders in proportion to their respective Syndication Interests in the
Credit Facility. All L/C Fees paid by Borrowers are nonrefundable and shall be
deemed fully earned upon issuance of the applicable Letter of Credit.
Section 2.11. Interest on Overdue Amounts and Default Rate.
--------------------------------------------
a. If any payment due under the Revolving Credit Note is not paid
within one (1) Banking Business Day after receipt by Borrowers of written notice
of such nonpayment from Agent Bank, Borrowers promise to pay a late charge in
the amount of three percent (3%) of the amount of such delinquent payment and
Agent Bank need not accept any late payment made unless it is accompanied by
such three percent (3%) late payment charge. Any late charge shall be paid to
Lenders in proportion to their respective Syndication Interests.
b. In the event of the existence of an Event of Default,
commencing on the first (1st) Banking Business Day following the receipt by
Borrowers of written notice of the occurrence of such Event of Default from
Agent Bank, the total of the unpaid balance of the principal and the then
accrued and unpaid interest owing under the Notes shall collectively commence
accruing interest at a rate equal to two percent (2%) over the interest rate
otherwise applicable to such Note (the "Default Rate") until such time as all
payments and additional interest are paid, together with the curing of any
Events of Default which may exist, at which time the interest rate shall revert
to that rate of interest otherwise accruing pursuant to the terms of the Notes.
c. In the event of the occurrence of an Event of Default,
Borrowers agree to pay all reasonable costs
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of collection, including a reasonable attorneys' fees and costs, in addition to
and at the time of the payment of such sum of money and/or the performance of
such acts as may be required to cure such default. In the event legal action is
commenced for the collection of any sums owing hereunder or under the terms of
the Notes the Borrowers agree that any judgment issued as a consequence of such
action against Borrowers and/or any Subsidiary Guarantor shall bear interest at
a rate equal to the Default Rate until fully paid.
Section 2.12. Net Payments. All payments under this Credit
------------
Agreement, the Revolving Credit Note, the Swingline Note and/or a L/C
Reimbursement Obligation shall be made without set-off, counterclaim, recoupment
or defense of any kind and in such amounts as may be necessary in order that all
such payments, after deduction or withholding for or on account of any future
taxes, levies, imposts, duties or other charges of whatsoever nature imposed by
the United States or any Governmental Authority, including, without limitation,
any tax which may be assessed against Lenders, or any of them, or Swingline
Lender under the provisions of the Financial Institutions Tax set forth at
Indiana Code 6-5.5 to the extent applicable to the Banks, but excluding other
franchise taxes or tax on or measured by the gross receipts or overall net
income of any Lender pursuant to the income tax laws of the United States or any
State, or the jurisdiction where each Lender's principal office is located
(collectively "Taxes"), shall not be less than the amounts otherwise specified
to be paid under this Credit Agreement and the Revolving Credit Note. A
certificate as to any additional amounts payable to the Lenders under this
Section 2.12 submitted to the Borrowers by the Lenders shall certify that such
payments were actually incurred by the applicable Lenders and shall show in
reasonable detail an accounting of the amount payable and the calculations used
to determine in good faith such amount and shall be conclusive absent manifest
or demonstrable error. Any amounts payable by the Borrowers under this Section
2.12 with respect to past payments shall be due within ten (10) days following
receipt by the Borrowers of such certificate from the Lenders; any such amounts
payable with respect to future payments shall be due within ten (10) days after
demand for such future payments. With respect to each deduction or withholding
for or on account of any Taxes, the Borrowers shall promptly furnish to the
Lenders such certificates, receipts and other documents as may be required (in
the reasonable judgment of the Lenders) to establish any tax credit to which the
Lenders may be entitled.
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Section 2.13. Increased Costs. Other than with respect to Base Rate
---------------
Loans to the extent such increased costs are reflected in the Prime Rate, if
after the date hereof the adoption of, or any change in, any applicable law,
rule or regulation (including without limitation Regulation D of the Board of
Governors of the Federal Reserve System and any successor thereto), or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender with any future request or
future directive (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency:
a. Shall subject any Lender to any tax, duty or other charge with
respect to the Credit Facility, the Revolving Credit Note, the Swingline Note
and/or a L/C Reimbursement Obligation or such Lender's obligation to make any
funding of the Credit Facility, or shall change the basis of taxation of
payments to such Lender of the principal of, or interest on, the Credit Facility
or any other amounts due under the Revolving Credit Note, the Swingline Note
and/or a L/C Reimbursement Obligation in respect of the Credit Facility or such
Lender's obligation to fund the Credit Facility (except for changes in the rate
of tax on the overall net income of such Lender imposed by the United States or
any Governmental Authority pursuant to the income tax laws of the United States
or any State, or the jurisdiction where each Lender's principal office is
located); or
b. With respect to the Bank Facilities or the obligation of the
Lenders to advance Borrowings under the Credit Facility or to issue or
participate in Letters of Credit under the L/C Facility, shall impose, modify or
deem applicable any reserve imposed by the Board of Governors of the Federal
Reserve System, special deposit, capitalization, capital adequacy or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Lender; or
c. Shall impose on any Lender any other condition affecting the
Credit Facility, the Revolving Credit Note or such Lender's obligation to
advance Borrowings under the Credit Facility;
and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D or reserve requirements referred to above or a successor
thereto, to impose a cost on)
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such Lender of making or maintaining the Credit Facility, or to reduce the
amount of any sum received or receivable by such Lender under the Revolving
Credit Note, in each case in a manner not otherwise given effect on the
calculation of amounts payable by Borrowers hereunder, then within ten (10) days
after demand by such Lender (which demand shall be accompanied by a certificate
setting forth the basis of such demand), the Borrowers shall pay directly to
such Lender such additional amount or amounts as will compensate such Lender for
such increased cost (or in the case of Regulation D or reserve requirements
referred to above or a successor thereto, such costs which may be imposed upon
such Lender) or such reduction of any sum received or receivable under the
Revolving Credit Note. A certificate as to any additional amounts payable to any
Lender under this Section 2.13 submitted to the Borrowers by such Lender shall
certify that such amounts were actually incurred by such Lender and shall show
in reasonable detail an accounting of the amount payable and the calculations
used to determine in good faith such amount and shall be conclusive absent
manifest or demonstrable error. Each Lender agrees to use its reasonable efforts
not materially disadvantageous to it (in its reasonable determination) to
minimize such increased or imposed costs or such reduction.
Section 2.14. Mitigation; Exculpation; Replacement Lender.
-------------------------------------------
a. Each Lender agrees that it will promptly notify the Borrowers in
writing upon its becoming aware that any payments are to become due to it under
this Credit Agreement pursuant to Section 2.12 or 2.13. Each Lender further
agrees that it will use reasonable efforts not materially disadvantageous to it
(in its reasonable determination) in order to avoid or minimize, as the case may
be, the payment by the Borrowers of any additional amounts pursuant to Section
2.12 or 2.13. Each Lender represents, to the best of its knowledge, that as of
the Closing Date no such amounts are payable to it.
b. Borrowers shall not be liable to any Lender for any payments
under Section 2.12 or 2.13 arising to the extent of such Lender's gross
negligence or willful misconduct or breach of any laws (other than as a result
of Borrowers' or any Subsidiary Guarantor's breach), or for amounts which were
incurred more than ninety (90) days prior to the date Borrowers are notified of
the incurrence of such amount. If Borrowers make any payment to any Lender under
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Section 2.12 or 2.13 and such Lender subsequently receives a refund or a credit
from the applicable Governmental Authority as a result of such payment, such
Lender shall promptly pay the amount of such refund or credit to the Borrowers
to the extent such Lender shall have previously received such amounts from the
Borrowers.
c. If the Borrowers become obligated to pay additional amounts to
any Lender described in Section 2.12 or 2.13, the Agent Bank will assist
Borrowers in locating a financial institution to replace such Lender by
purchasing for cash and receiving an assignment of such Lender's Syndication
Interest in the Credit Facility without recourse to or warranty by, or expense
to, such Lender, for a purchase price equal to the outstanding amounts owing to
such Lender, or may remove such Lender by paying to such Lender such purchase
price and reducing the Credit Facility by an amount equal to the product of the
Pro Rata Share of such Lender multiplied by the Aggregate Commitment then in
effect prior to such removal.
Section 2.15. Credit Agreement and Loan Documents Not Enforceable
---------------------------------------------------
Against ECJC until Occurrence of IGB Approval Date. Notwithstanding anything
- --------------------------------------------------
contained in this Credit Agreement, the Notes or any other Loan Document to the
contrary, until the IGB has approved the Bank Facilities and each of the Loan
Documents with respect to ECJC and the ECJC Casino Facilities and the IGB
Approval Date shall have occurred, this Credit Agreement, the Notes and each of
the other Loan Documents shall not be binding upon nor enforceable against ECJC
in any respect.
ARTICLE III
CONDITIONS PRECEDENT TO THE CLOSING DATE
----------------------------------------
A. Closing Conditions. The obligation of each of the Banks hereunder
------------------
is subject to the following conditions precedent, each of which shall be
satisfied prior to July 31, 1998 (unless all of the Banks, in their sole and
absolute discretion, shall agree otherwise). The occurrence of the Closing Date
is subject to and contingent upon Agent Bank having received, in each case in
form and substance reasonably satisfactory to Agent Bank, or in the case of an
occurrence, action or event, the occurrence of, each of the following:
Section 3.01. Credit Agreement. Executed counterparts of this Credit
----------------
Agreement in sufficient duplicate originals for each of the Banks.
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Section 3.02. The Notes.
---------
a. The Revolving Credit Note duly executed by the Borrowers in
favor of Agent Bank.
b. The Swingline Note duly executed by the Borrowers in favor
of Swingline Lender.
Section 3.03. ECHC Security Documents. The ECHC Security Documents
-----------------------
duly executed by ECHC each other applicable party thereto, consisting of the
following:
With respect to the ECHC Casino Facilities
------------------------------------------
a. ECHC Mortgage;
b. ECHC Ship Mortgage;
c. ECHC Security Agreement;
d. ECHC Financing Statements;
e. ECHC Assignment of Permits, Licenses and Contracts;
f. ECHC Assignment of Spaceleases, Contracts, Rents and
Revenues;
g. EEI Stock Pledge of all issued and outstanding stock of
ECHC, together with the delivery to Agent Bank of an executed Irrevocable Stock
power and all stock certificates which are pledged thereunder;
h. EEI Security Agreement executed by EEI;
i. Stock Pledge (Gaming) with regard to the stock of each
Restricted Subsidiary which is a gaming licensee in any jurisdiction in the
United States;
j. Stock Pledge (General) with regard to the stock of each
Restricted Subsidiary which is not a gaming licensee in any jurisdiction in the
United States;
k. Cash Collateral Pledge Agreement executed by EEI and ECHC;
l. Subsidiary Guaranty, executed by each Restricted
Subsidiary;
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m. Trademark Security Agreement executed by EEI and ECHC.
Section 3.04. Other Loan Documents. The following Loan Documents
--------------------
duly executed by ECHC and each other applicable party thereto consisting of the
following:
a. Environmental Certificate executed by EEI and ECHC;
Section 3.05. Articles of Incorporation, Bylaws, Corporate
--------------------------------------------
Resolutions, Certificates of Good Standing and Closing Certificate. On or
- ------------------------------------------------------------------
before the Closing Date, Agent Bank shall have received from each of the
Borrowers: (i) a Certificate of Good Standing issued by the Secretary of State
of the applicable state of incorporation and dated within thirty (30) Banking
Business Days of the Closing Date, (ii) a copy of the articles of incorporation
and by-laws certified to be true and correct by a duly Authorized Officer of
each respective Borrower, (iii) an original Certificate of Corporate Resolution
and Certificate of Incumbency executed by the Secretary of each respective
Borrower and attested to by its President, Vice President, or Treasurer
authorizing Borrowers to enter into all documents and agreements to be executed
by it pursuant to this Credit Agreement and further authorizing and empowering
the officer or officers who will execute such documents and agreements with the
authority and power to execute such documents and agreements on behalf of each
respective Borrower, (iv) designation by corporate certificate ("Authorized
Officer Certificate"), substantially in the form of the Authorized Officer
Certificate marked "Exhibit H", affixed hereto and by this reference
incorporated herein and made a part hereof, of the officers of each respective
Borrower who are authorized to give Notices of Borrowing, Continuation/
Conversion Notices, Pricing Certificates, Compliance Certificates, Notices of
Swingline Advances and all other notices, requests, reports, consents,
certifications and authorizations on behalf of each of the Borrowers and the
Borrower Consolidation, each individually an "Authorized Officer" and
collectively the "Authorized Officers", and (v) an original closing certificate
("Closing Certificate"), substantially in the form of the Closing Certificate
marked "Exhibit I", affixed hereto and by this reference incorporated herein and
made a part hereof, duly executed by an Authorized Officer of each of EEI and
ECHC.
Section 3.06. Opinion of Counsel - Indiana. One or more opinions of
----------------------------
counsel to EEI and ECHC and addressed to
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the Agent Bank on behalf of itself and each of the Banks, together with their
respective successors and assigns, substantially in the form of the legal
opinion marked "Exhibit J", affixed hereto and by this reference incorporated
herein and made a part hereof.
Section 3.07. ECHC Title Insurance Policy. As of the Closing Date,
---------------------------
the ECHC Title Insurance Policy (or proforma commitment for the issuance
thereof) consistent with the requirements of the ECHC Closing Instructions.
Section 3.08. Intentionally omitted.
Section 3.09. Payment of Taxes. Evidence satisfactory to Agent Bank
----------------
that all past and current real and personal property taxes and assessments which
are presently due and payable applicable to the Hammond Fee Property and the
Hammond Facilities Property have been paid in full.
Section 3.10. Indiana Insurance. With respect to the ECHC Casino
-----------------
Facilities, copies of the declaration pages of each of the insurance policies
certified to be true and correct by an Authorized Officer of the Borrowers,
together with original binders evidencing Borrowers as named insured, and
original certificates of insurance, loss payable and mortgagee endorsements
naming Agent Bank as mortgagee, loss payee and additional insured, as required
by the applicable insurance provisions set forth in Section 5.09 of this Credit
Agreement.
Section 3.11. Payment of Fee. Payment by Borrowers to Agent Bank of
--------------
the fees as provided in Section 2.10(a) hereinabove.
Section 3.12. Reimbursement for Expenses and Fees. Reimbursement by
-----------------------------------
Borrowers for all reasonable fees and out-of-pocket expenses incurred by Agent
Bank in connection with the Credit Facility, including, but not limited to,
escrow charges, title insurance premiums, environmental examinations, recording
fees, reasonable attorney's fees of Henderson & Morgan, LLC and co-counsel and
insurance consultants retained by Henderson & Morgan, LLC and all other like
fees and expenses remaining unpaid as of the Closing Date to the extent then due
and payable on the Closing Date, provided that the amount then invoiced shall
not thereafter preclude Borrowers' obligation to pay such costs and expenses
relating to the closing of the Credit Facility following the Closing Date or to
reimburse Agent Bank for the payment thereof.
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Section 3.13. Schedules of Spaceleases and Equipment Leases and
-------------------------------------------------
Contracts. The Schedules of Spaceleases (Schedules 4.15(A) and B) and Equipment
- ---------
Leases and Contracts (Schedule 4.16(A) and B) in each instance setting forth the
name of the other party thereto, a brief description of each spacelease,
equipment lease and contract and the commencement and ending date thereof.
Section 3.14. Environmental Reports.
---------------------
a. A copy of all environmental reports, investigations,
violations and remedial action regarding the ECHC Casino Facilities.
b. Borrowers hereby confirm the representations contained in
Sections 2.1 and 2.2 of the Environmental Certificate are true and correct in
all respects with respect to the ECHC Casino Facilities.
Section 3.15. Evidence of Right to Occupancy of ECHC Casino
---------------------------------------------
Facilities. A copy of the permanent certificate of occupancy issued by each
- ----------
applicable Governmental Authority, evidencing the right of the Borrower
Consolidation to use and hold open for the use and occupancy of the public of
the ECHC Casino Facilities.
Section 3.16. Hammond Leases and Licenses. A true and correct copy
---------------------------
of the Hammond Lease Documents and of all amendments and modifications to any of
such instruments, including the following:
a. Hammond Development Agreement;
b. Hammond Operating Sublease;
c. Hammond Port Authority License; and
d. Hammond Water Department License.
Section 3.17. Payment of Existing Bank Loan, Occurrence of
--------------------------------------------
Defeasement Effective Date and Funding of Initial Senior Subordinated Notes.
- ---------------------------------------------------------------------------
a. Payment in full of the Existing Bank Loan from the Closing
Disbursement under the Credit Facility. As of the Closing Date, all Existing
Bank Loan Security Documents shall be fully released and reconveyed or delivered
into
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escrow for recordation or filing, as applicable, upon receipt of full payment;
b. Borrowers shall have deposited all necessary funds and
shall have satisfied all other conditions and requirements for the occurrence of
Covenant Defeasance and the Defeasement Effective Date and evidence thereof
delivered to Agent Bank; and
c. The New Indenture shall be prepared in a form and content
acceptable to Agent Bank and executed by all applicable parties thereto, the
Initial Senior Subordinated Notes shall have been issued by EEI and EEI shall
have received the proceeds thereof, net of any expenses, discounts and any other
amounts due to the initial purchasers or third parties in connection with
offering and issuance of the Initial Senior Subordinated Notes (the "New Senior
Subordinated Notes Effective Date").
Section 3.18. Regulatory Approvals, Permits, Consents, Etc. Copies
---------------------------------------------
of those material permits, approvals or consents by all Governmental Authorities
permitting the use and operation of the ECHC Casino Facilities, together with
all supporting documents and materials, reasonably requested by Agent Bank.
Copies of those Gaming Permits issued by the Indiana Gaming Authorities
evidencing the right of ECHC to conduct gaming activities and games of chance at
the ECHC Casino Facilities.
Section 3.19. Subsidiary Stock. Original stock certificates of each
----------------
Restricted Subsidiary shall be delivered to Agent Bank on behalf of Lenders.
Section 3.20. Schedule of all Significant Litigation. A Schedule of
--------------------------------------
Significant Litigation (Schedule 3.20) involving any member of the Borrower
Consolidation, in each instance setting forth the names of the other parties
thereto, a brief description of such litigation, whether or not such litigation
is covered by insurance and, if so, whether the defense thereof and liability
therefor has been accepted by the applicable insurance company indicating
whether such acceptance of such defenses with or without a reservation of
rights, the commencement date of such litigation and the amount sought to be
recovered by the adverse parties thereto or the amount which is otherwise in
controversy.
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Section 3.21. Financial Statements. Audited financial statements of
--------------------
EEI on a consolidated and consolidating basis, for the last Fiscal Year for
which such financial statements are available, together with a statement from
the Controller or Treasurer of the EEI to the effect that no Material Adverse
Effect has occurred with respect to the Borrowers since the date of the
financial statements most recently given to Agent Bank.
Section 3.22. No Injunction or Other Litigation. No law or regulation
---------------------------------
shall prohibit, and no order, judgment or decree of any Governmental Authority
shall, and no litigation shall be pending or threatened which in the reasonable
judgment of the Agent Bank would or would reasonably be expected to, enjoin,
prohibit, limit or restrain the execution and delivery of this Credit Agreement
or the making of the Base Rate Loans or the LIBOR Loans or the performance by
the Borrowers of any other material obligations in respect thereof or the
ability of the Borrowers to conduct their business substantially as presently
conducted.
Section 3.23. Additional Documents and Statements. Such additional
-----------------------------------
documents, affidavits, certificates and opinions as Lenders may reasonably
require to insure compliance with this Credit Agreement. The statements set
forth in Section 3.25 shall be true and correct.
B. Conditions Precedent to all Borrowings. The obligation of each
--------------------------------------
Lender and Agent Bank to make any Borrowing requested to be made on any Funding
Date, except Borrowings made upon the demand of Agent Bank for the purpose of
funding repayment of Swingline Outstandings and/or L/C Reimbursement
Obligations, is subject to the occurrence of each of the following conditions
precedent as of such Funding Date:
Section 3.24. Notice of Borrowing. With respect to any Borrowing,
-------------------
the Agent Bank shall have received in accordance with Section 2.03 on or before
such Funding Date an original and duly executed Notice of Borrowing or facsimile
copy thereof, to be promptly followed by an original.
Section 3.25. Certain Statements. On each such Funding Date and as
------------------
of the Closing Date the following statements shall be true and correct:
a. The representations and warranties made by the Borrowers
contained in Article IV hereof or in any of the Loan Documents (other than
representations and warranties
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which expressly speak only as of a different date which shall be true and
correct as of such date) are true and correct on and as of the Funding Date and
as of the Closing Date in all material respects as though made on and as of that
date, except to the extent that such representations and warranties are not true
and correct as a result of a change which is permitted by this Credit Agreement
or by any other Loan Document, or which is otherwise consented to by Agent Bank
upon the approval of Requisite Lenders;
b. Since the date of the most recent financial statements
referred to in Sections 3.21 and 5.08, no Material Adverse Effect shall have
occurred; and
c. No event or condition has occurred or as a result of any
Borrowings contemplated hereby would occur and is continuing, or would result
from the making thereof, which constitutes a Default or Event of Default
hereunder.
Section 3.26. Gaming Permits. The Borrower Consolidation shall have
--------------
all Gaming Permits material to or required for the conduct of its gaming
businesses and the conduct of games of chance at the ECJC Casino Facilities and
the ECHC Casino Facilities and such Gaming Permits shall not then be suspended,
enjoined or prohibited (for any length of time) by any Gaming Authority or any
other Governmental Authority.
C. Conditions Precedent to Illinois Effective Date. In addition to
-----------------------------------------------
the requirements set forth in Articles III A and B, the obligations of Lenders
and Agent Bank to advance Borrowings of the Deferred Funding Amount and L/C
Issuer to issue Letters of Credit are subject to and contingent upon Agent Bank
having received, in each case in form and substance reasonably satisfactory to
Agent Bank, or in the case of an occurrence, action or event, the occurrence of,
each of the following on or before July 31, 1998:
Section 3.27. IGB Approval Date. The IGB shall have approved the
-----------------
Bank Facilities and each of the Loan Documents with respect to ECJC and the ECJC
Casino Facilities and the IGB Approval Date shall have occurred.
Section 3.28. ECJC Security Documents. The Security Documentation
-----------------------
duly executed by each applicable Borrower or other party thereto, consisting of
the following:
With respect to the ECJC Casino Facilities
------------------------------------------
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a. ECJC Mortgage;
b. ECJC Ship Mortgage;
c. ECJC Financing Statements;
d. ECJC Assignment of Permits, Licenses and Contracts; and
e. ECJC Assignment of Spaceleases, Contracts, Rents and
Revenues.
With respect to other Security Documentation
--------------------------------------------
f. EEI Stock Pledge of all issued and outstanding stock of
ECJC, together with the delivery to Agent Bank of an executed Irrevocable Stock
Power and all stock certificates which are pledged thereunder;
g. Cash Collateral Pledge Agreement executed by ECJC;
h. Trademark Security Agreement executed by ECJC.
Section 3.29. Other Loan Documents. The following Loan Documents
--------------------
duly executed by ECJC and any other applicable party thereto consisting of the
following:
a. Environmental Certificate executed by ECJC.
Section 3.30. Closing Certificate. An original closing certificate
-------------------
("Illinois Closing Certificate"), substantially in the form of the Closing
Certificate marked "Exhibit I-1", affixed hereto and by this reference
incorporated herein and made a part hereof, duly executed by an Authorized
Officer of Borrowers.
Section 3.31. Opinion of Counsel - Illinois. One or more opinions of
-----------------------------
counsel to the Borrowers and addressed to the Agent Bank on behalf of itself and
each of the Banks, together with their respective successors and assigns,
substantially in the form of the legal opinion marked "Exhibit K", affixed
hereto and by this reference incorporated herein and made a part hereof.
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Section 3.32. ECJC Title Insurance Policy. As of the Closing Date,
---------------------------
the ECJC Title Insurance Policy (or proforma commitment for the issuance
thereof) consistent with the requirements of the ECJC Closing Instructions.
Section 3.33. Survey. If the Title Insurance Company requires a
------
survey as a condition of issuing the ECJC Title Insurance Policy consistent with
the ECJC Closing Instructions, a current boundary and location survey for the
ECJC Property, which must (i) be certified to Agent Bank and the Title Insurance
Company, (ii) show the ECJC Property to be free of encroachments, overlaps, and
other survey defects, (iii) show the courses and distances of the lot lines for
the ECJC Property, (iv) show that all existing improvements are located within
said lot and building lines, and (v) show the location of all above and below
ground easements, improvements, appurtenances, utilities, rights-of-way, water
rights and ingress and egress, by reference to book and page numbers and/or
filed map reference.
Section 3.34. Payment of Taxes. Evidence satisfactory to Agent Bank
----------------
that all past and current real and personal property taxes and assessments which
are presently due and payable applicable to the ECJC Property have been paid in
full.
Section 3.35. Illinois Insurance. With respect to the ECJC Casino
------------------
Facilities, copies of the declaration pages of each of the insurance policies
certified to be true and correct by an Authorized Officer of the Borrowers,
together with original binders evidencing Borrowers as named insured, and
original certificates of insurance, loss payable and mortgagee endorsements
naming Agent Bank as mortgagee, loss payee and additional insured, as required
by the applicable insurance provisions set forth in Section 5.09 of this Credit
Agreement.
Section 3.36. Reimbursement for Expenses and Fees. Reimbursement by
-----------------------------------
Borrowers for all reasonable fees and out-of-pocket expenses incurred by Agent
Bank in connection with the requirements of Article III C, including, but not
limited to, escrow charges, title insurance premiums, environmental
examinations, recording fees, reasonable attorney's fees of Henderson & Morgan,
LLC and co-counsel and insurance consultants retained by Henderson & Morgan,
LLC and all other like fees and expenses remaining unpaid as of the Illinois
Effective Date, provided that the amount then invoiced shall not thereafter
preclude Borrowers' obligation to pay such
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costs and expenses relating to the closing of the Credit Facility following the
Closing Date and the Illinois Effective Date or to reimburse Agent Bank for the
payment thereof.
Section 3.37. Phase I Environmental Site Assessments.
--------------------------------------
a. A Phase I Environmental Site Assessment or Assessments of
the ECJC Property prepared in conformance with the scope and limitations of ASTM
Standard Designation E1527-93 and approved by Agent Bank. Any recommended
action shall have been completed by Borrowers.
b. Borrowers hereby confirm the representations contained in
Sections 2.1 and 2.2 of the Environmental Certificate are true and correct in
all respects.
Section 3.38. Evidence of Right to Occupancy of ECJC Casino
---------------------------------------------
Facilities. A copy of the permanent certificate of occupancy issued by each
- ----------
applicable Governmental Authority, evidencing the right of the Borrower
Consolidation to use and hold open for the use and occupancy of the public of
the ECJC Casino Facilities.
Section 3.39. Regulatory Approvals, Permits, Consents, Etc. Copies
---------------------------------------------
of those material permits, approvals or consents by all Governmental Authorities
permitting the use and operation of the ECJC Casino Facilities, together with
all supporting documents and materials, reasonably requested by Agent Bank.
Copies of those Gaming Permits issued by the Illinois Gaming Authorities
evidencing the right of ECJC to conduct gaming activities and games of chance at
the ECJC Casino Facilities.
Section 3.40. No Injunction or Other Litigation. No law or regulation
---------------------------------
shall prohibit, and no order, judgment or decree of any Governmental Authority
shall, and no litigation shall be pending or threatened which in the reasonable
judgment of the Agent Bank would or would reasonably be expected to, enjoin,
prohibit, limit or restrain the execution and delivery of this Credit Agreement
or the making of the Base Rate Loans or the LIBOR Loans or the performance by
the Borrowers of any other material obligations in respect thereof or the
ability of the Borrowers to conduct their business substantially as presently
conducted.
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Section 3.41. Additional Documents and Statements. Such additional
-----------------------------------
documents, affidavits, certificates and opinions as Lenders may reasonably
require to insure compliance with this Credit Agreement. The statements set
forth in Section 3.25 shall be true and correct.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Banks to enter into this Credit Agreement, Borrowers make
the following representations and warranties:
Section 4.01. Organization; Power and Authorization.
--------------------------------------
a. EEI is a corporation duly organized and validly existing
under the laws of the State of Delaware. ECHC is a corporation duly organized
and validly existing under the laws of the State of Indiana. ECJC is a
corporation duly organized and validly existing under the laws of the State of
Illinois. Subject to the occurrence of the IGB Approval Date with respect to
ECJC, each Borrower (i) has all requisite corporate power, authority and legal
right to execute and deliver each document, agreement or certificate to which it
is a party or by which it is bound in connection with the Bank Facilities, to
consummate the transactions and perform its obligations hereunder and
thereunder, and to own its properties and assets and to carry on and conduct its
business as presently conducted or proposed to be conducted, and (ii) has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Credit Agreement and the other Loan Documents to which it is
a party or by which it is bound and to consummate the transactions contemplated
hereunder and thereunder.
b. Each Restricted Subsidiary: (i) is a corporation duly
formed, validly existing and in good standing under the laws of its jurisdiction
of organization, is duly qualified to do business as a foreign organization and
is in good standing as such in each jurisdiction in which the conduct of its
business or the ownership or leasing of its properties and assets makes such
qualification necessary where the failure to so qualify would have a Material
Adverse Effect and has all requisite power and authority to conduct its business
and to own and lease its properties and assets, and (ii) has taken all necessary
action to authorize the execution, delivery and performance of the Subsidiary
Guaranty
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executed and delivered by it to Agent Bank as of the date of such execution and
delivery.
Section 4.02. No Conflict With, Violation of or Default Under Laws or
-------------------------------------------------------
Other Agreements. Subject to the occurrence of the IGB Approval Date with
- ----------------
respect to ECJC, neither the execution and delivery of this Credit Agreement,
the Revolving Credit Note, the Swingline Note, or any other Loan Document, or
any other agreement, certificate or instrument to which Borrowers are a party or
by which they, or any of them, are bound in connection with the Bank Facilities,
nor the consummation of the transactions contemplated hereunder or thereunder,
or the compliance with or performance of the terms and conditions herein or
therein, is prevented by, limited by, conflicts in any material respect with, or
will result in a material breach or violation of, or a material default (with
due notice or lapse of time or both) under, or the creation or imposition of any
lien, charge, or encumbrance of any nature whatsoever upon any of their
respective property or assets by virtue of, the terms, conditions or provisions
of (a) the Articles of Incorporation, Bylaws or other documents of organization
or charter of any of the Borrowers, (b) the Existing Indenture, Existing Senior
Notes, New Indenture, New Senior Subordinated Notes or any other indenture,
evidence of Indebtedness, loan or financing agreement, or other agreement or
instrument of whatever nature to which they, or any of them, are a party or by
which they, or any of them, are bound, (c) the Hammond Lease Documents, or (d)
to the best knowledge of Borrowers, any provision of any existing law, rule,
regulation, order, writ, injunction or decree of any court or Governmental
Authority to which they, or any of them, are subject.
Section 4.03. Litigation. Except as disclosed on the Schedule of
----------
Significant Litigation delivered in connection with Section 3.20, to the best
knowledge of Borrowers, after due inquiry and investigation, there is no action,
suit, proceeding, inquiry, hearing or investigation pending or threatened, in
any court of law or in equity, or before any Governmental Authority, which could
reasonably be expected to result in any Material Adverse Effect. To the best
knowledge of Borrowers, after due inquiry and investigation, Borrowers are not
in violation of or default with respect to any material order, writ, injunction,
decree or demand of any such court or Governmental Authority.
Section 4.04. Agreements Legal, Binding, Valid and Enforceable.
------------------------------------------------
Subject to the occurrence of the IGB Approval
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Date with respect to ECJC, this Credit Agreement, the Revolving Credit Note, the
Swingline Note, the Security Documentation and all other Loan Documents, when
executed and delivered by Borrowers in connection with the Bank Facilities will
constitute legal, valid and binding obligations of Borrowers, enforceable
against Borrowers in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium and other laws of
general application relating to or affecting the enforcement of creditors'
rights and the exercise of judicial discretion in accordance with general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
Section 4.05. Information and Financial Data Accurate; Financial
--------------------------------------------------
Statements; No Adverse Event. All information and financial and other data
- ----------------------------
previously furnished in writing by Borrowers in connection with the Bank
Facilities was true, correct and complete in all material respects as of the
date furnished (unless subsequently corrected prior to the date hereof), and
there has been no Material Adverse Effect with respect thereto to the date of
this Credit Agreement since the dates thereof. No information has been omitted
which would make the information previously furnished in such financial
statements to Banks misleading or incorrect in any material respect to the date
of this Credit Agreement. Any and all financial statements heretofore furnished
to Banks by Borrowers: (a) present fairly the financial position of Borrowers as
of their respective dates and the results of operations and changes in financial
position for the periods to which they apply, and (b) have been prepared in
conformity with GAAP applied on a consistent basis throughout the periods
involved. Since the date of the financial statements referred to in this
Section 4.05, there has been no Material Adverse Effect in the financial
condition, assets, liabilities, business or operations of Borrowers.
Section 4.06. Governmental Approvals. Subject to the occurrence of
----------------------
the IGB Approval Date with respect to ECJC, all consents, approvals, orders or
authorizations of, or registrations, declarations, notices or filings with any
Governmental Authority which may be required in connection with the valid
execution and delivery of this Credit Agreement and the other Loan Documents by
Borrowers and the carrying-out or performance of any of the transactions
required or contemplated hereunder, or thereunder, by Borrowers, have been
obtained or accomplished and are in full force and effect, or can be obtained by
Borrowers. All consents, approvals, orders
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or authorizations of, or registrations, declarations, notices or filings with
any Governmental Authority which are required by Borrowers in connection with
the use and operation of the Casino Facilities have been obtained or
accomplished and are in full force and effect.
Section 4.07. Payment of Taxes. Borrowers, and each of them, have
----------------
duly filed or caused to be filed all federal, state and local tax reports and
returns which are required to be filed by them and have paid or made provisions
for the payment of, all material taxes, assessments, fees and other governmental
charges which have or may have become due pursuant to said returns or otherwise
pursuant to any assessment received by Borrowers except such taxes, assessments,
fees or other governmental charges, if any, as are being contested in good faith
by Borrowers by appropriate proceedings and for which Borrowers have maintained
adequate reserves for the payment thereof in accordance with GAAP.
Section 4.08. Title to Properties. Borrowers shall have good and
-------------------
marketable title to the Collateral Properties (other than the Hammond Facilities
Property) as of the Closing Date and at all times during the term of the Credit
Facility. ECHC shall have a valid leasehold or licensee interest, as
applicable, in and the right to possession of the Hammond Facilities Property,
all as of the Closing Date and at all times during the term of the Credit
Facility. Except with respect to the Hammond Facilities Property, each of the
Borrowers has good and marketable title to: (a) all of its properties and
assets reflected in the most recent financial statements referred to in Section
4.05 hereof as owned by them (except those properties and assets disposed of
since the date of said financial statements in the ordinary course of business
or those properties and assets which are no longer used or useful in the conduct
of its businesses), including, but not limited to, Borrowers' interest in
patents, trademarks, tradenames, servicemarks, and licenses relating to or
pertaining to the Collateral Properties or the Casino Facilities, and (b) all
properties and assets acquired by them subsequent to the date of the most recent
financial statements referred to in Section 4.05 hereof. All such properties
and assets are not subject to any liens, encumbrances or restrictions except
Permitted Encumbrances. All roads, easements and rights of way necessary for
the full utilization of the Collateral Properties have been completed and/or
obtained.
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Section 4.09. No Untrue Statements. All statements, representations
--------------------
and warranties made by Borrowers in this Credit Agreement, any other Loan
Document and any other agreement, document, certificate or instrument previously
furnished or to be furnished by Borrowers to Banks pursuant to the provisions of
this Credit Agreement, at the time they were made and on and as of the Closing
Date: (a) are and shall be true, correct and complete in all material respects,
(b) do not and shall not contain any untrue statement of a material fact, and
(c) do not and shall not omit to state a material fact, the absence of which
makes the information contained herein or therein materially misleading or
incomplete. Borrowers understand that all such statements, representations and
warranties shall be deemed to have been relied upon by Banks as a material
inducement to establish the Bank Facilities.
Section 4.10. Brokerage Commissions. No person is entitled to receive
---------------------
any brokerage commission, finder's fee or similar fee or payment in connection
with the extensions of credit contemplated by this Credit Agreement as a result
of any agreement entered into by Borrowers. No brokerage or other fee,
commission or compensation is to be paid by Banks with respect to the extensions
of credit contemplated hereby as a result of any agreement entered into by
Borrowers, and Borrowers agree to indemnify Banks against any such claims for
brokerage fees or commissions and to pay all expenses including, without
limitation, reasonable attorney's fees incurred by Banks in connection with the
defense of any action or proceeding brought to collect any such brokerage fees
or commissions.
Section 4.11. No Defaults. Except as set forth on Schedule 4.15,
-----------
none of the Borrowers is in violation of or in default with respect to any
applicable laws and/or regulations which materially and adversely affect the
Casino Facilities or the business, financial condition, property of Borrowers or
operations of the Borrowers, or any of them, or of the Casino Facilities.
Without limiting the generality of the foregoing, ECHC is not in violation or
default (nor is there any waiver in effect which, if not in effect, would result
in a violation or default) in any material and adverse respect under the Hammond
Lease Documents, and Borrowers are not in violation or default (nor is there any
waiver in effect which, if not in effect, would result in a violation or
default) in any material and adverse respect under the Existing Indenture,
Existing Senior Notes, New Indenture or New Senior Subordinated Notes or under
any other indenture, evidence of
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indebtedness, loan or financing agreement or other agreement or instrument of
whatever nature to which it is a party or by which it is bound (except for any
defaults previously brought to Banks' attention in writing, for which Borrowers
have received a waiver from Requisite Lenders).
Section 4.12. Employee Retirement Income Security Act of 1974. No
-----------------------------------------------
Reportable Event has occurred and is continuing with respect to any Pension Plan
under ERISA, that gives rise to liabilities that materially adversely affect the
financial condition or operations of Borrowers, or any of them.
Section 4.13. Hammond Lease Documents. The copy of the Hammond Lease
-----------------------
Documents and modifications and amendments thereto (if any) which have been
delivered to Agent Bank in accordance with Section 3.16: (a) is a true, correct
and complete copy of the respective original thereof, as in effect on the
Closing Date, and no amendments or modifications have been made to such Hammond
Lease Documents, except as set forth by documents delivered to Agent Bank in
accordance with said Section 3.16 or otherwise reasonably approved in writing by
Requisite Lenders, and (b) have not been terminated and are in full force and
effect. ECHC is not in default in the observance or performance of any of its
material obligations under the Hammond Lease Documents and has done all things
required to be done as of the Closing Date to keep unimpaired its rights
thereunder.
Section 4.14. Availability of Utility Services and Facilities. All
-----------------------------------------------
utility services and facilities necessary for the Casino Facilities including,
without limitation, electrical, water, gas and sewage services and facilities
are available and in use at the Casino Facilities.
Section 4.15. Spaceleases. A schedule of all executed Spaceleases
-----------
pertaining to the Casino Facilities or any portion thereof, in existence as of
the Closing Date hereof, are set forth on Schedules 4.15(A) and 4.15(B) attached
hereto.
Section 4.16. Equipment Leases and Contracts. A schedule of all
------------------------------
executed Equipment Leases and Contracts pertaining to the Casino Facilities or
any portion thereof, in existence on the date hereof, is set forth on Schedules
4.16(A) and 4.16(B) attached hereto.
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Section 4.17. Policies of Insurance. As of the Closing Date with
----------------------
respect to the ECHC Casino Facilities and as of the Illinois Effective Date with
respect to the ECJC Casino Facilities, each of the copies of the declaration
pages, original binders and certificates of insurance evidencing the Policies of
Insurance relating to the Casino Facilities delivered to Agent Bank by Borrowers
(i) is a true, correct and complete copy of the respective original thereof as
in effect on the date hereof, and no amendments or modifications of any of said
documents or instruments not included in such copies have been made, and (ii)
has not been terminated and is in full force and effect. Borrowers, and each of
them, are not in default in the observance or performance of their respective
obligations under said documents and instruments, and Borrowers, and each of
them, have done all things required to be done as of the date of this Credit
Agreement to keep unimpaired their rights thereunder.
Section 4.18. Gaming Permits. All Gaming Permits required to be held
--------------
by Borrowers are current and in good standing and Borrowers presently hold all
Gaming Permits necessary for the continued operation of the Casino Facilities.
Section 4.19. Environmental Certificate. As of the Closing Date, the
-------------------------
representations and certifications contained in the Environmental Certificate
are true and correct in all material respects. As of the Illinois Effective
Date, the representations and certifications contained in the Environmental
Certificate shall be true and correct in all material respects.
Section 4.20. New Venture Subsidiaries. A schedule of each
------------------------
Restricted Subsidiary and Unrestricted Subsidiary existing as of the Closing
Date and a description of the New Venture owned in whole or part by each such
Restricted Subsidiary and Unrestricted Subsidiary is marked "Schedule 4.20",
affixed hereto and by this reference incorporated herein and made a part hereof.
As of the Closing Date, ECHC and ECJC do not have any Subsidiaries other than
Hammond Residential and Empress Finance, respectively.
Section 4.21. Compliance with Statutes, etc. Except for matters
------------------------------
related to the compliance by the Borrowers with Hazardous Materials Laws, which
matters are governed by the Environmental Certificate and the Mortgages, each of
the Borrowers is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions
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imposed by, all Governmental Authorities, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, except such
noncompliance as would not, in the aggregate, have a Material Adverse Effect.
Section 4.22. Investment Company Act. Neither EEI nor any of its
----------------------
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 4.23. Public Utility Holding Company Act. Neither EEI nor
----------------------------------
any of its Subsidiaries is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
Section 4.24. Labor Relations. There is no strike or work stoppage
---------------
in existence, or to the best knowledge of Borrowers threatened, involving any
member of the Borrower Consolidation or any of the Casino Facilities.
Section 4.25. Patents, Licenses, Franchises and Formulas. Except as
------------------------------------------
disclosed in Schedule 4.25, each of EEI and its Subsidiaries owns all the
patents, trademarks, permits, service marks, trade names, copyrights, licenses,
franchises and formulas, or has a valid license or sublicense of rights with
respect to the foregoing, and has obtained assignments of all leases and other
rights of whatever nature, necessary for the present conduct of its business,
without any known conflict with the rights of others which, or the failure to
obtain which, as the case may be, could reasonably be expected to result in a
Material Adverse Effect on the business, operations, property, assets or
condition (financial or otherwise) of EEI and its Subsidiaries taken as a whole.
Each of the patents, trademarks, servicemarks, tradenames and copyrights owned
by Borrowers which is registered with any Governmental Authority is set forth on
Schedule 4.25, attached hereto.
Section 4.26. Contingent Liabilities. As of the Closing Date,
----------------------
Borrowers have incurred no material Contingent Liabilities (any Contingent
Liability in excess of One Million Dollars ($1,000,000.00) being deemed
material) other than those described on Schedule 4.26.
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ARTICLE V
GENERAL COVENANTS OF BORROWERS
------------------------------
To induce the Banks to enter into this Credit Agreement, Borrowers
covenant to Lenders as follows:
Section 5.01. FF&E. The Borrower Consolidation shall furnish,
----
fixture and equip the Casino Facilities with FF&E it reasonably deems
appropriate for the operation of the Casino Facilities. All FF&E that is
purchased and installed in the Casino Facilities shall be purchased free and
clear of any liens, encumbrances or claims, other than Permitted Encumbrances.
If Borrowers should sell, transfer, convey or otherwise dispose of any FF&E and
not replace such FF&E with purchased items of equivalent value and utility or
replace said FF&E with leased FF&E of equivalent value and utility, within the
permissible leasing and purchase agreement limitation set forth herein, to the
extent such non-replaced FF&E exceeds a cumulative aggregate value of Three
Million Dollars ($3,000,000.00) during any Fiscal Year, Borrowers shall be
required to immediately reduce the Funded Outstandings by the amount of the
Capital Proceeds of the FF&E so disposed of in excess of such Three Million
Dollars ($3,000,000.00), subject, however, to the right of Agent Bank to verify
to its reasonable satisfaction the amount of said Capital Proceeds; in the event
Agent Bank and Borrowers do not agree as to the value of the FF&E disposed of
and the amount of the Capital Proceeds, then Borrowers, at their sole cost and
expense, shall obtain a written appraisal of the FF&E disposed of, in excess of
such Three Million Dollars ($3,000,000.00) from an appraiser reasonably
satisfactory to Agent Bank, setting forth said values and amounts, and Lenders
agree to accept the results of said appraisal. The Funded Outstandings shall
immediately be reduced without duplication by the amount of such appraisal.
Notwithstanding anything herein contained to the contrary, the provisions set
forth in this Section 5.01 shall not apply to the proceeds realized by Borrowers
from the sale of the ECJC Airplane or the Joliet Excess Land.
Section 5.02. Permits; Licenses and Legal Requirements. Borrowers
----------------------------------------
shall comply in all material respects with and keep in full force and effect, as
and when required, all Gaming Permits and all material permits, licenses and
approvals obtained from any Governmental Authorities which are required for the
operation and use of the Casino Facilities. Borrowers, and each of them, shall
comply in all material
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respects with all applicable material existing and future laws, rules,
regulations, orders, ordinances and requirements of all Governmental
Authorities, and with all recorded restrictions affecting the Premises where the
failure of such compliance could reasonably be expected to result in a Material
Adverse Effect.
Section 5.03. Hammond Lease Documents. Until Bank Facility
-----------------------
Termination, ECHC shall fully perform and comply with all agreements, covenants,
terms and conditions imposed upon, or assumed by, ECHC as: (i) the developer
under the Hammond Development Agreement, (ii) sublessee under the Hammond
Operating Sublease, (iii) licensee under the Hammond Port Authority License, and
(iv) licensee under the Hammond Water Department License. ECHC shall not amend
or modify, or enter into any agreement to amend or modify the Hammond Lease
Documents without the prior written consent of Agent Bank, which consent shall
not be unreasonably withheld or delayed, or if in the opinion of Agent Bank such
amendment or modification is materially adverse to ECJC, without the prior
written consent of Requisite Lenders.
Section 5.04. Protection Against Lien Claims. Borrowers shall
------------------------------
promptly pay and discharge or cause to be paid and discharged all claims and
liens for labor done and materials and services supplied and furnished in
connection with the Casino Facilities in accordance with this Section 5.04,
except such claims and liens, if any, as: (a) are being contested in good faith
by Borrowers by appropriate proceedings and for which Borrowers have maintained
adequate reserves for the payment thereof in accordance with GAAP, and (b) are
junior in priority to the applicable Mortgage or the Title Company has insured
the applicable Mortgage with priority over such claims and liens. If any
mechanic's lien or materialman's lien shall be recorded, filed or suffered to
exist against the Collateral Properties or any interest therein by reason of
work, labor, services or materials supplied, furnished or claimed to have been
supplied and furnished in connection with the Casino Facilities, upon Borrowers
receipt of written notice from Agent Bank demanding the release and discharge of
such lien, said lien or claim shall be paid, released and discharged of record
within sixty (60) days following its receipt of such notice with respect to the
Casino Facilities.
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Section 5.05. No Change in Character of Primary Business. Until Bank
------------------------------------------
Facility Termination, (i) the Casino Facilities shall be operated by members of
the Borrower Consolidation, and (ii) the Borrower Consolidation shall not effect
a material change in the nature and character of its existing primary business
at the Casino Facilities as presently conducted and as presently contemplated
and disclosed to Banks.
Section 5.06. Preservation and Maintenance of Properties and Assets;
------------------------------------------------------
Acquisition of Additional Property. Until Bank Facility Termination, Borrowers
- ----------------------------------
shall not remove, demolish, materially alter, discontinue the use of, sell,
transfer, assign, hypothecate or otherwise dispose of to any Person, any part of
their respective properties and assets necessary for the continuance of their
respective businesses, as presently conducted and as presently contemplated,
other than in the normal course of Borrowers' business and as provided in
Sections 5.01, 5.07 and 6.11. Furthermore, in the event Borrowers, or any of
them, or any Subsidiary thereof, shall acquire any other real property or rights
to the use of real property or any interest therein which is used in any
material manner in connection with the Casino Facilities, Borrowers shall or
shall cause the Subsidiary, as applicable, concurrently with the acquisition of
such real property or the rights to the use of such real property, to execute or
cause the execution of such documents as may be necessary to add such real
property or rights to the use of real property as Collateral under the Credit
Facility.
Section 5.07. Repair of Properties and Assets. Until Bank Facility
-------------------------------
Termination, Borrowers shall, at their own cost and expense, (i) maintain,
preserve and keep in a manner consistent with gaming casino operating practices
generally applicable to casino operations operating in the jurisdictions in
which such properties are located, their respective assets and properties,
including, but not limited to, the Collateral and all FF&E owned or leased by
Borrowers in good and substantial repair, working order and condition, ordinary
wear and tear excepted, (ii) from time to time, make or cause to be made, all
necessary and proper repairs, replacements, renewals, improvements and
betterments to the Casino Facilities, and (iii) from time to time, make such
substitutions, additions, modifications and improvements as may be necessary and
as shall not materially impair the structural integrity, operating efficiency
and economic value of said assets included within the Casino Facilities. All
alterations, replacements, renewals, or additions made
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pursuant to this Section 5.07 shall become and constitute a part of said assets
and property and subject, inter alia, to the provisions of Section 5.01 and
----------
subject to the lien of the Security Documentation.
Section 5.08. Financial Statements; Reports; Certificates and Books
-----------------------------------------------------
and Records.
- -----------
a. Until Bank Facility Termination, Borrowers shall, unless the
Agent Bank (with the written approval of the Requisite Lenders) otherwise
consents, at Borrowers' sole expense, deliver to the Agent Bank and each of the
Lenders a full and complete copy of each of the following and shall comply with
each of the following financial requirements:
(i) As soon as practicable, and in any event within
forty-five (45) days after the end of each Fiscal Quarter (including
the fourth (4th) Fiscal Quarter in any Fiscal Year), the consolidated
and consolidating balance sheet, income statement, operating statement
and statement of retained earnings and cash flows (in each case
reconciled with year end audited statements and compared to budget and
prior year period) of the Borrower Consolidation as at the end of such
Fiscal Quarter and for the portion of the Fiscal Year ended with such
Fiscal Quarter, all in reasonable detail. Such financial statements
shall be certified by an Authorized Officer of the Borrower
Consolidation as fairly presenting the financial condition, results of
operations and cash flows of the Borrower Consolidation in accordance
with GAAP (other than footnote disclosures) as at such date and for
such periods, subject only to normal year-end accruals and audit
adjustments;
(ii) As soon as practicable, and in any event within
forty-five (45) days after the end of each Fiscal Quarter (including
the fourth (4th) Fiscal Quarter in any Fiscal Year), a pricing
certificate in the form marked "Exhibit G", affixed hereto and by this
reference incorporated herein and made a part hereof (the "Pricing
Certificate") setting forth a preliminary calculation of the Leverage
Ratio as of the last day of such Fiscal Quarter, and providing
reasonable detail as to the calculation thereof, which calculations
shall be
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based on the preliminary unaudited financial statements of the
Borrower Consolidation for such Fiscal Quarter, and as soon as
practicable thereafter, in the event of any material variance in the
actual calculation of the Leverage Ratio from such preliminary
calculation, a revised Pricing Certificate setting forth the actual
calculation thereof; provided, however, that in the event that
Borrowers do not deliver a Pricing Certificate when due, then until
(but only until) such Pricing Certificate is delivered as provided
herein, the Leverage Ratio shall be deemed, for the purpose of
determining the Applicable Margin, to be greater than 3.50 to 1.0 and
the Applicable Margin determined with respect thereto.
(iii) As soon as practicable, and in any event within
ninety (90) days after the end of each Fiscal Year, (i) the
consolidated and consolidating balance sheet, income statement,
statement of retained earnings and cash flows (reconciled with year
end audited statements) of the Borrower Consolidation as at the end of
such Fiscal year, all in reasonable detail. Such financial statements
shall be prepared in accordance with GAAP and shall be accompanied by
a report of independent public accountants of recognized standing
selected by EEI and reasonably satisfactory to the Agent Bank (it
being understood that any "Big 6" accounting firm shall be
automatically deemed satisfactory to the Agent Bank), which report
shall be prepared in accordance with generally accepted auditing
standards as at such date, and shall not be subject to any
qualifications or exceptions as to the scope of the audit nor to any
other qualification or exception determined by the Requisite Lenders
in their good faith business judgment to be materially adverse to the
interests of the Banks. Such accountants' report shall be accompanied
by a certificate stating that, in making the examination pursuant to
generally accepted auditing standards necessary for the certification
of such financial statements and such report, such accountants have
obtained no knowledge of any Default or, if, in the opinion of such
accountants, any such Default shall exist, stating the nature and
status of such Default, and stating that such accountants have
reviewed the
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Financial Covenants as at the end of such Fiscal Year (which shall
accompany such certificate) under Sections 6.01 through 6.05, have
read such Sections (including the definitions of all defined terms
used therein) and that nothing has come to the attention of such
accountants in the course of such examination that would cause them to
believe that the same were not calculated by the Borrower
Consolidation in the manner prescribed by this Credit Agreement. Such
financial statements shall be certified by an Authorized Officer of
the Borrower Consolidation in the same manner as required with respect
to financial statements delivered pursuant to Section 5.08(a)(i);
(iv) As soon as practicable, and in any event no later
than fifteen (15) days prior to the commencement of each Fiscal Year,
a budget (including a Capital Expenditure budget) and projection by
Fiscal Quarter for that Fiscal Year and by Fiscal Year for each
succeeding Fiscal Year through the Fiscal Year ending December 31,
2003, including for the first such Fiscal Year, projected consolidated
---------
and consolidating balance sheets, statements of operations and
statements of cash flow of the Borrower Consolidation, all in
reasonable detail;
(v) Concurrently with the financial statements and
reports required pursuant to Sections 5.08(a)(i) and 5.08(a)(iii),
Compliance Certificate signed by an Authorized Officer; and
(vi) As soon as practicable, and in any event within
forty-five (45) days (or, in the case of the fourth (4th) Fiscal
Quarter in each Fiscal Year, ninety (90) days) after the end of each
Fiscal Quarter, a written report, in form and detail reasonably
acceptable to the Agent Bank, with respect to the status of each New
Venture, including the amounts of New Venture capital expenditures and
New Venture Investments made, and reasonably anticipated to be made,
with respect thereto.
b. Until Bank Facility Termination, Borrowers, and each of
them, shall keep and maintain complete and accurate books and records in
accordance with GAAP,
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consistently applied. Borrowers, and each of them, shall permit Banks and any
authorized representatives of Banks to have reasonable access to and to inspect,
examine and make copies of the books and records, any and all accounts, data and
other documents of Borrowers at all reasonable times upon the giving of
reasonable notice of such intent. In addition: (i) in the event of the
occurrence of any Default or Event of Default, or (ii) in the event any Material
Adverse Effect occurs, Borrowers shall promptly, and in any event within five
(5) Banking Business Days after actual knowledge thereof, notify Agent Bank in
writing of such occurrence.
c. Until Bank Facility Termination, Borrowers, and each of
them, shall furnish to Agent Bank, with sufficient copies for distribution to
each of the Banks, any financial information or other information bearing on the
financial status of the Borrowers, or any of them, which is reasonably requested
by Agent Bank or Requisite Lenders.
Section 5.09. Insurance. Until Bank Facility Termination, Borrowers
---------
shall obtain, or cause to be obtained, and shall maintain or cause to be
maintained with respect to the Collateral, including without limitation, the
Vessels, at their own cost and expense, and shall deposit with Agent Bank on or
before the Closing Date:
a. Property Insurance. Borrowers shall maintain a special
------------------
causes of loss (ISO form or equivalent), perils policy covering the buildings
and improvements, and any other permanent structures for one hundred percent
(100%) of the replacement cost. Borrowers shall maintain a Fifty Million Dollar
($50,000,000.00) limit of coverage for the perils of flood and earthquake
covering the Collateral. Upon the request of Agent Bank, replacement cost for
insurance purposes will be established by an independent appraiser mutually
selected by Borrowers and Agent Bank. The policy will include Agreed Amount
(waiving co-insurance), replacement cost valuation and building ordinance
endorsements. The policy will include a standard mortgagee clause (ISO form or
equivalent, i.e. Borrowers' Acts will not impair Mortgagee's right to recover,
exclusive payment of loss to Mortgagee and automatic notice of cancellation/non-
renewal to Mortgagee) and provide that all losses in excess of Five Hundred
Thousand Dollars ($500,000.00) be adjusted with the Agent Bank. The Borrowers
waive any and all rights of subrogation against Banks resulting from losses to
property.
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b. Personal Property (including machinery, equipment,
--------------------------------------------------
furniture, fixtures, stock). Borrowers shall maintain a special causes of loss
- ---------------------------
perils "All Risk" property coverage for all personal property owned, leased or
for which Borrowers are legally liable. The coverage will include a lenders'
loss payable endorsement in favor of Agent Bank.
The policy providing real property and personal property
coverages, as specified in 5.09(a) and (b) hereinabove, may include a deductible
of no more than One Hundred Thousand Dollars ($100,000.00) for any single
occurrence. Flood and earthquake deductibles can be no more than Five Hundred
Thousand Dollars ($500,000.00), if a separate deductible applies.
c. Intentionally Omitted.
d. Boiler and Machinery. Borrowers shall maintain a Boiler
--------------------
and Machinery policy for the Casino Facilities written on a Comprehensive Form
with a combined direct and indirect limit of no less than Twenty-Five Million
Dollars ($25,000,000.00). The policy shall include extensions for Agreed Amount
(waiving co-insurance) and Replacement Cost Valuation. The policy may contain
deductibles of no greater than Fifty Thousand Dollars ($50,000.00) direct and
forty-eight (48) hours indirect.
e. Crime Insurance. Borrowers shall obtain a comprehensive
---------------
crime policy, including the following coverages:
(i) employee dishonesty - Five Million Dollars ($5,000,000.00);
(ii) money and securities (inside) - One Million Dollars
($1,000,000.00);
(iii) money and securities (outside) - One Million Dollars
($1,000,000.00);
(iv) depositor's forgery - One Million Dollars ($1,000,000.00);
(v) computer fraud - One Million Dollars ($1,000,000.00).
The policy must be amended so that money is defined to include
"tokens and chips". The policy may contain
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deductibles of no greater than Five Hundred Thousand Dollars ($500,000.00) for
employee dishonesty and One Hundred Thousand Dollars ($100,000.00) for all
coverages listed above.
f. Commercial General Liability (1996 Form or Equivalent).
------------------------------------------------------
Borrowers shall maintain a Commercial General Liability policy with a One
Million Dollar ($1,000,000.00) combined single limit for bodily injury and
property damage, including Products Liability, Contractual Liability, and all
standard policy form extensions. The policy must provide a Two Million Dollar
($2,000,000.00) general aggregate (per location, if multi-location risk) and be
written on an "occurrence form". The policy will be extended to provide
watercraft Liability for permanently moored barges while stationary. The policy
will also include extensions for Liquor Legal Liability and Employee Benefits
Legal Liability, Innkeepers Legal and Safe Deposit Box Legal coverages. If the
general liability policy contains a self-insured retention, it shall be no
greater than Twenty-Five Thousand Dollars ($25,000.00) per occurrence, with an
aggregate retention of no more than One Million Dollars ($1,000,000.00)
including expenses.
The policy shall be endorsed to include Agent Bank as an
additional insured on behalf of the Banks. Definition of additional insured
shall include all officers, directors, employees, agents and representatives of
the additional insured. The coverage for additional insured shall apply on a
primary basis irrespective of any other insurance whether collectible or not
(ISO Endorsement Form CG 20261185 Additional Insured - Designated Person or
Organization or Equivalent).
g. Automobile. Borrowers shall maintain a comprehensive
----------
Automobile Liability Insurance Policy written under coverage "symbol 1",
providing a One Million Dollar ($1,000,000.00) combined single limit for bodily
injury and property damage covering all owned, non-owned and hired vehicles of
the Borrowers. If the policy contains a self insured retention it shall be no
greater than Twenty-Five Thousand Dollars ($25,000.00) per occurrence, with an
aggregate retention of no more than One Million Dollars ($1,000,000.00)
including expenses. The following additional coverages must be purchased by
Borrowers:
(i) Garage Liability. A One Million Dollar ($1,000,000.00)
----------------
combined single limit for bodily and property damage for the garage
operation.
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(ii) Garagekeepers Legal Liability. One Million Dollar
-----------------------------
($1,000,000.00) limit for comprehensive and collision coverages for
physical damage to vehicles in the Borrowers' care, custody and
control. The policy can be subject to a deductible of no greater than
Five Thousand Dollars ($5,000.00) for each auto and Twenty-Five
Thousand Dollars ($25,000.00) for each loss.
h. Workers Compensation and Employers Liability Insurance.
------------------------------------------------------
Borrowers shall maintain a standard workers compensation policy covering the
states of Indiana and Illinois and any other state where the company is
operating, including employers liability coverage subject to a limit of no less
than One Million Dollars ($1,000,000.00) each employee, One Million Dollars
($1,000,000.00) each accident, One Million Dollars ($1,000,000.00) policy limit.
The policy shall include endorsements for Voluntary Compensation, Stop Gap
Liability, Long-Shoreman's and Harbors Workmans Compensation Act and Maritime
Coverages (as applicable). If the Borrowers have elected to self-insure Workers
Compensation coverage in the States of Indiana and Illinois (or any other
state), the Agent Bank must be furnished with a copy of the certificate from the
state(s) permitting self-insurance and evidence of a Stop Loss Excess Workers
Compensation policy with a specific retention of no greater than Three Hundred
Thousand Dollars ($300,000.00) per occurrence.
i. Marine Insurance (for all vessels that are owned or leased
----------------------------------------------------------
by any member of the Borrower Consolidation or for which any member of the
- --------------------------------------------------------------------------
Borrower Consolidation is legally liable).
- -----------------------------------------
(i) Hull and Machinery Coverage. This policy will provide the
---------------------------
broadest possible scope of property coverage available including all
Traditional Commercial Hull insuring conditions, American Institute
clauses (including liner negligence and SR&CC clauses) covering the
vessel for physical damage at a value that represents one hundred
percent (100%) of the replacement cost for each Vessel. The policy
will include Agreed Amount (waving co-insurance) and replacement cost
valuation endorsements. The policy shall include appropriate
Mortgagee, Breach of Warranty and Loss Payee endorsements in favor of
Agent Bank. The policy may contain a deductible of no greater than
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Two Hundred Fifty Thousand Dollars ($250,000.00) per occurrence.
(ii) Casino Boat Business Interruption. Borrowers will purchase
---------------------------------
business interruption coverage under a "comprehensive facility form"
indemnifying each vessel operation for loss of net profits and
continuing expenses (including debt service) for loss arising from
casualty to the vessel and any other cause beyond the control of the
Borrowers. The limit purchase must represent no less than seventy-
five percent (75%) of the annual net profit plus continuing expenses.
The policy may have a deductible of no greater than fourteen (14) days
for each vessel. This coverage will be specifically endorsed to
include Agent Bank as "Loss Payee".
(iii) Protection and Indemnity. Protection and Indemnity
------------------------
coverage will be written through a combination of Primary and Excess
coverage with a One Million Dollar ($1,000,000.00) combined single
limit for bodily injury and property damage, including all standard
policy form extensions. The policy shall be written on an occurrence
form. The Agent Bank and Banks will be included as additional insureds
under the policy.
(iv) Comprehensive Pollution Liability. Borrowers shall purchase
---------------------------------
Comprehensive Pollution Liability coverage with a limit of no less
than One Million Dollars ($1,000,000.00) per incident covering any
loss or damage resulting from any discharge, emission, spillage or
leakage on or into water, including governmental mandated clean up.
The limits can be secured through the purchase of primary and excess
policies, as long as all coverages follow form. The Agent Bank and
Banks will be included as additional insureds under the policy.
j. Underground Storage Tank Liability. In the event any
----------------------------------
underground storage tanks are located at any
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of the Casino Facilities, Borrowers shall maintain an underground storage tank
liability policy providing first party (property damage) and third party
(bodily/property damage) coverages for environmental claims resulting from
underground storage tanks at the Casino Facilities. The policy will include
coverage for all governmental and regulatory agency mandated clean ups. The
policy shall provide limits of no less than Five Million Dollars ($5,000,000.00)
each incident, Five Million Dollars ($5,000,000.00) in the aggregate, with a
sublimit of One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00) for
covering defense expenses for first and third party coverages. The policy may
contain a deductible of no greater than Five Hundred Thousand Dollars
($500,000.00) for first and third party coverages.
k. If Borrowers' general liability and automobile policies
include a self-insured retention, it is agreed and fully understood that
Borrowers are solely responsible for payment of all amounts due within said
self-insured retentions. Any Indemnification/Hold Harmless provision is
extended to cover all liabilities associated with said self-insured retentions.
l. Umbrella/Bumbershoot Liability. An Umbrella/Bumbershoot
------------------------------
Liability policy shall be purchased with a limit of not less than One Hundred
Fifty Million Dollars ($150,000,000.00) providing excess coverage over all
limits and coverages indicated in paragraphs (f), (g), (g)(i), (h), (i)(iii) and
(iv) above. The limits can be secured by a combination of Primary and Excess
Umbrella/Bumbershoot policies, provided that all layers follow form with the
underlying policies indicated in (f), (g), (g)(i), (h) and (i)(iii) and (iv) and
are written on an "occurrence" form. This policy shall be endorsed to include
the Agent Bank as an additional insured on behalf of the Banks.
m. All policies indicated above shall be written with
insurance companies licensed and admitted to do business in all states where the
Borrower Consolidation, or any of them, is operating and shall be rated no lower
than "A XII" in the most recent addition of A.M. Best's and "AA" in the most
recent edition of Standard & Poor's, or such other carrier reasonably acceptable
to Agent Bank. All policies discussed above shall be endorsed to provide that
in the event of a cancellation, non-renewal or material modification, Agent Bank
shall receive thirty (30) days prior written notice thereof. The Borrowers
shall furnish Agent Bank with
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Certificates of Insurance executed by an authorized agent evidencing compliance
with all insurance provisions discussed above on an annual basis. Certificates
of Insurance executed by an authorized agent of each carrier providing insurance
evidencing continuation of all coverages will be provided on the Closing Date
and annually on or before ten (10) days prior to the expiration of each policy.
All certificates and other notices related to the insurance program shall be
delivered to Agent Bank concurrently with the delivery of such certificates or
notices to such carrier or to Borrowers, or any of them, as applicable.
n. Any other insurance reasonably requested by Agent Bank or
Requisite Lenders in such amount and covering such risks as may be reasonably
requested.
Section 5.10. Taxes. Throughout the term of the Credit Facility,
-----
Borrowers shall prepare and timely file or cause to be prepared and timely filed
all material federal, state and local tax returns required to be filed by them,
and Borrowers shall pay and discharge prior to delinquency all material taxes,
assessments and other governmental charges or levies imposed upon them, or in
respect of any of their respective properties and assets except such taxes,
assessments and other governmental charges or levies, if any, as are being
contested in good faith by Borrowers in the manner which is set forth for such
contests by Section 4.07 herein.
Section 5.11. Permitted Encumbrances Only. Until Bank Facility
---------------------------
Termination, none of the Borrowers shall create, incur, assume or suffer to
exist any Lien, attachment, levy, distraint, or other judicial process and
burdens of every kind and nature except the Permitted Encumbrances on or with
respect to the Collateral, except (a) with respect to matters described in
Section 5.04 and 5.10, such items as are being discharged, released and/or
contested, as the case may be, in the manner described therein, written notice
of all tax lien contests and all other items involving amounts in excess of One
Million Dollars ($1,000,000.00) in the aggregate having been given to Agent
Bank, and (b) with respect to any other items involving amounts in excess of One
Million Dollars ($1,000,000.00) in the aggregate, if any, as are being contested
in good faith by appropriate proceedings and for which Borrowers have given
written notice thereof to Agent Bank and have maintained adequate reserves in
accordance with GAAP for the payment thereof.
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Section 5.12. Advances. Until Bank Facility Termination, if any
--------
Borrower should fail (i) to perform or observe, or (ii) to cause to be performed
or observed, any covenant or obligation of such Borrower under this Credit
Agreement or any of the other Loan Documents, the failure of which could
reasonably be expected to have a Material Adverse Effect, then Agent Bank, upon
the giving of reasonable notice and the approval of Requisite Lenders, may (but
shall be under no obligation to) take such steps as are necessary to remedy any
such non-performance or non-observance and provide for payment thereof. All
amounts advanced by Agent Bank or Lenders pursuant to this Section 5.12 shall
become an additional obligation of Borrowers to Lenders secured by the Security
Documentation and other Loan Documents, shall reduce the amount of Available
Borrowings and shall become due and payable by Borrowers on the next interest
payment date, together with interest thereon at a rate per annum equal to the
Default Rate (such interest to be calculated from the date of such advancement
to the date of payment thereof by Borrowers).
Section 5.13. Further Assurances. Borrowers, Agent Bank and each of
------------------
the Banks will, at the expense of the Borrowers, do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, such
amendments or supplements hereto or to any of the Loan Documents and such
further documents, instruments and transfers as any such party may reasonably
require for the curing of any defect in the execution or acknowledgement hereof
or in any of the Loan Documents, or in the description of the Collateral
Properties or other Collateral or for the proper evidencing of giving notice of
each lien or security interest securing repayment of the Bank Facilities.
Further, upon the execution and delivery of the Security Documentation and each
of the Loan Documents and thereafter, from time to time, Borrowers shall cause
the Security Documentation and each of the Loan Documents and each amendment and
supplement thereto to be filed, registered and recorded and to be refiled, re-
registered and re-recorded in such manner and in such places as may be
reasonably required by the Agent Bank, in order to publish notice of and fully
protect the liens of the Security Documentation and the Loan Documents and to
protect or continue to perfect the security interests created by the Security
Documentation and Loan Documents in the Collateral Properties and Collateral and
to perform or cause to be performed from time to time any other actions required
by law and execute or cause to be executed any and all instruments of further
assurance that may be
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necessary for such publication, perfection, continuation and protection.
Section 5.14. Indemnification. Borrowers agree to and do hereby
---------------
jointly and severally indemnify, protect, defend and save harmless Agent Bank
and each of the Banks and their respective directors, trustees, officers,
employees, agents, attorneys and shareholders (individually an "Indemnified
Party" and collectively the "Indemnified Parties") from and against any and all
losses, damages, expenses or liabilities of any kind or nature from any
investigations, suits, claims, demands or other proceedings, including
reasonable counsel fees incurred in investigating or defending such claim,
suffered by any of them and caused by, relating to, arising out of, resulting
from, or in any way connected with this Credit Agreement, with any other Loan
Document or with the transactions contemplated herein and thereby; provided,
however, Borrowers shall not be obligated to indemnify, protect, defend or save
harmless an Indemnified Party if, and to the extent, the loss, damage, expense
or liability was caused by (a) the gross negligence or wilful misconduct of such
Indemnified Party, or (b) the breach of this Credit Agreement or any other Loan
Document by such Indemnified Party or the breach of any laws, rules or
regulations by such Indemnified Party (other than those breaches of laws arising
from any Borrower's default). In case any action shall be brought against any
Indemnified Party based upon any of the above and in respect to which indemnity
may be sought against Borrowers, Agent Bank shall promptly notify Borrowers in
writing, and Borrowers shall assume the defense thereof, including the
employment of counsel selected by Borrowers and reasonably satisfactory to Agent
Bank, the payment of all costs and expenses and the right to negotiate and
consent to settlement. Upon reasonable determination made by an Indemnified
Party that such counsel would have a conflict representing such Indemnified
Party and Borrowers, the applicable Indemnified Party shall have the right to
employ, at the expense of Borrowers, separate counsel in any such action and to
participate in the defense thereof. Borrowers shall not be liable for any
settlement of any such action effected without their consent, but if settled
with Borrowers' consent, or if there be a final judgment for the claimant in any
such action, Borrowers agree to indemnify, defend and save harmless such
Indemnified Parties from and against any loss or liability by reason of such
settlement or judgment. In the event that any Person is adjudged by a court of
competent jurisdiction not to have been entitled to indemnification under this
Section 5.14, it shall repay all amounts with
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respect to which it has been so adjudged. If and to the extent that the
indemnification provisions contained in this Section 5.14 are unenforceable for
any reason, the Borrowers hereby agree to make the maximum contribution to the
payment and satisfaction of such obligations that is permissible under
applicable law. The provisions of this Section 5.14 shall survive the
termination of this Credit Agreement and the repayment of the Credit Facility.
Section 5.15. Inspection of the Collateral and Appraisal. At all
------------------------------------------
times during the term of the Credit Facility, Borrowers shall provide or cause
to be provided to Banks and any authorized representatives of Banks, accompanied
by representatives of Borrowers and coordinated with Agent Bank, the reasonable
right of entry and free access to the Collateral Properties to inspect same on
reasonable prior notice to Borrowers. If at any time any Qualified Appraisal of
the Collateral Properties, or any of them, is required to be made by any banking
regulatory authority or determined to be necessary by Agent Bank or Requisite
Lenders after the occurrence of an Event of Default, Borrowers agree to pay all
fees, costs and expenses incurred by Agent Bank in connection with the
preparation of such Qualified Appraisal.
Section 5.16. Compliance With Other Loan Documents, Execution of
--------------------------------------------------
Subsidiary Guaranties and Pledge of Restricted Subsidiary Stock. Borrowers
- ---------------------------------------------------------------
shall comply with each and every term, condition and agreement contained in the
Loan Documents to which they, or any of them, are a party. Borrowers shall
notify Agent Bank in writing on or before ten (10) days following the creation
thereof, of each Restricted Subsidiary and Unrestricted Subsidiary, together
with a description of each New Venture owned or to be acquired by such
Restricted Subsidiary or Unrestricted Subsidiary. Borrowers shall further cause
each Restricted Subsidiary created or otherwise occurring from time to time
following the Closing Date to join in the execution of the Subsidiary Guaranty
in favor of Agent Bank and to deliver the original thereof, or a duly executed
Certificate of Joinder in the form attached to the Subsidiary Guaranty as
Exhibit A, to Agent Bank promptly, but in no event later than thirty (30) days
following the creation or other occurrence of such Restricted Subsidiary. EEI
shall execute or cause to be executed a Stock Pledge (Gaming) or Stock Pledge
(General), as applicable, no later than thirty (30) days following the creation
or other occurrence of each Restricted Subsidiary. In the case of a Stock
Pledge (Gaming), EEI shall use its best efforts to cause all necessary
Governmental Authorities to consent to the delivery
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of the applicable stock certificates, together with a stock power executed in
blank, to Agent Bank as soon as reasonably practical. In the case of a Stock
Pledge (General), the applicable stock certificates, together with a stock power
executed in blank, shall be delivered to Agent Bank concurrently with the
execution of the Stock Pledge (General).
Section 5.17. Suits or Actions Affecting Borrowers. Until Bank
------------------------------------
Facility Termination, Borrowers shall promptly advise Agent Bank in writing
within ten (10) days of Borrowers' knowledge of (a) any claims, litigation,
proceedings or disputes (whether or not purportedly on behalf of Borrowers, or
any of them) against, or to the actual knowledge of Borrowers, threatened or
affecting Borrowers, or any of them, which could reasonably be expected to
result in an award of monetary damages in excess of Five Million Dollars
($5,000,000.00), (b) any material labor controversy resulting in or threatening
to result in a strike against the Casino Facilities, or (c) any proposal by any
Governmental Authority to acquire any of the material assets or business of
Borrowers.
Section 5.18. Occurrence of Senior Subordinated Notes Effective Date,
-------------------------------------------------------
Designation of Senior Debt and Required Payments from Proceeds of Senior
- ------------------------------------------------------------------------
Subordinated Notes. As of the Closing Date, Lenders do hereby consent to the
- ------------------
issuance of the New Senior Subordinated Notes by EEI in accordance with and
pursuant to the New Indenture, in the form of the New Senior Subordinated Notes
and New Indenture (in form and content as reviewed and approved by Agent Bank),
up to the aggregate outstanding amount at any time of One Hundred Fifty Million
Dollars ($150,000,000.00). The New Senior Subordinated Notes Effective Date
shall occur prior to or concurrently with the Closing Date. Within ten (10)
calendars days of the New Senior Subordinated Notes Effective Date, Borrowers
shall cause the Bank Facilities to be designated as senior debt pursuant to an
officers' certificate in accordance with the requirements and procedures set
forth in the New Indenture. Concurrently with the New Senior Subordinated Notes
Effective Date, Borrowers shall cause Covenant Defeasance of the Existing
Indenture and the Defeasement Effective Date to occur.
Section 5.19. Consents of and Notice to Gaming Authorities.
--------------------------------------------
Borrowers shall comply in all material respects with all applicable statutes,
rules and regulations requiring reports and disclosures to all applicable Gaming
Authorities. Provided, however, that disciplinary complaints against any
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member of the Borrower Consolidation not involving the potential loss of a
Gaming Permit shall not be deemed a violation of this Section 5.19.
Section 5.20. Tradenames, Trademarks and Servicemarks. Borrowers
---------------------------------------
shall not assign or in any other manner alienate their interest in any material
tradenames, trademarks or servicemarks relating or pertaining to the Casino
Facilities during the term of the Credit Facility, except pursuant to the
Security Documentation or in the ordinary course of business. Borrowers shall
not change their names without first giving written notice to Agent Bank,
together with evidence reasonably satisfactory to the Agent Bank that all
notices and other documents required to be delivered, recorded or filed in order
to perfect and protect the security interest granted by the Borrowers to the
Banks in such trademarks, tradenames and servicemarks and the other Collateral
have been so delivered, recorded and/or filed.
Section 5.21. Notice of Hazardous Materials. Within ten (10) days
-----------------------------
after an executive officer of the Borrowers obtaining actual knowledge thereof,
Borrowers shall immediately advise Agent Bank in writing and deliver a copy of
(a) any and all enforcement, clean-up, removal or other governmental or
regulatory actions expected to cost in excess of Five Hundred Thousand Dollars
($500,000.00) instituted, completed or threatened pursuant to any applicable
federal, state or local laws, ordinances or regulations relating to any
Hazardous Materials (as defined in the Environmental Certificate) affecting the
Collateral ("Hazardous Materials Laws"); (b) all claims made or threatened by
any third party against Borrowers or the Casino Facilities in excess of Five
Hundred Thousand Dollars ($500,000.00) relating to damage, contribution, cost
recovery compensation, loss or injury resulting from any Hazardous Materials
(the matters set forth in clauses (a) and (b) above are hereinafter referred to
as "Hazardous Materials Claims"); and (c) the discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Casino
Facilities that could cause the Borrowers, or any of them, or any part thereof
to be classified as a "border-zone property" under the provisions of, or to be
otherwise subject to any restrictions on the ownership, occupancy,
transferability or use of the Casino Facilities under, any Hazardous Materials
Laws.
Section 5.22. Compliance with Hammond Lease Documents. Until Bank
---------------------------------------
Facilities Termination, ECHC shall fully perform and comply with or cause to be
performed and
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complied with all of the respective material covenants, material terms and
material conditions imposed or assumed by them, or any of them, as
lessee/licensee under each of the Hammond Lease Documents. ECHC shall not amend,
modify or terminate, or enter into any agreement to amend, modify or terminate
any of the Hammond Lease Documents, or any of them, without the prior written
consent of Agent Bank, which consent shall not be unreasonably withheld or
delayed, or if in the opinion of Agent Bank such amendment, modification or
termination is materially adverse to ECJC, without the prior written consent of
Requisite Lenders.
Section 5.23. Compliance with Access Laws.
---------------------------
a. Borrowers agree that Borrowers, the Casino Facilities and
the Collateral Properties shall at all times strictly comply with the
requirements of the Americans with Disabilities Act of 1990; the Fair Housing
Amendments Act of 1988; and other federal, state or local laws or ordinances
related to disabled access; or any statute, rule, regulation, ordinance, order
of Governmental Authorities, or order or decree of any court adopted or enacted
with respect thereto, as now existing or hereafter amended or adopted
(collectively, the "Access Laws"). At any time, Agent Bank may require a
certificate of compliance with the Access Laws and indemnification agreement in
a form reasonably acceptable to Agent Bank. Agent Bank may also require a
certificate of compliance with the Access Laws from an architect, engineer, or
other third party acceptable to Agent Bank.
b. Notwithstanding any provisions set forth herein or in any
other document, Borrowers shall not alter or permit any tenant or other person
to alter the Casino Facilities or the Collateral Properties in any manner which
would increase Borrowers' responsibilities for compliance with the Access Laws
in any materially adverse respect, without the prior written approval of Agent
Bank. In connection with such approval, Agent Bank may require a certificate of
compliance with the Access Laws from an architect, engineer or other person
acceptable to Agent Bank.
c. Borrowers agree to give prompt written notice to Agent Bank
of the receipt by Borrowers of any material claims of violation of any of the
Access Laws and of
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the commencement of any proceedings or investigations which relate to compliance
with any of the Access Laws.
d. Borrowers shall indemnify, defend and hold harmless
Indemnified Parties from and against any and all claims, demands, damages,
costs, expenses, losses, liabilities, penalties, fines and other proceedings
including, without limitation, reasonable attorneys' fees and expenses arising
directly or indirectly from or out of or in any way connected with any failure
of the Casino Facilities or the Collateral Properties to comply with any of the
Access Laws. The obligations and liabilities of Borrowers under this section
shall survive Bank Facility Termination, any satisfaction, assignment, judicial
or nonjudicial foreclosure proceeding, or delivery of a deed in lieu of
foreclosure.
Section 5.24. Limitation Prepayment or Defeasance of New Senior
-------------------------------------------------
Subordinated Notes or New Indenture. Notwithstanding anything contained in this
- -----------------------------------
Credit Agreement to the contrary, no member of the Borrower Consolidation shall,
except with the prior written consent of the Requisite Lenders, purchase,
redeem, retire or otherwise acquire for value, or set apart any money for a
sinking, defeasance or other analogous fund for, the purchase, redemption,
retirement or other acquisition of, or make any voluntary payment or prepayment
of the principal of or interest on, or any other amount owing in respect of, the
New Senior Subordinated Notes or New Indenture, except for: (a) regularly
scheduled payments of interest in respect of such New Senior Subordinated Notes
required pursuant to the instruments evidencing such New Senior Subordinated
Notes and the New Indenture. Any breach of the covenant set forth in the
preceding sentence shall be deemed to be an Event of Default under the Credit
Agreement, (b) incurrence of new senior subordinated Indebtedness for the
purpose of refinancing the New Senior Subordinated Notes and the New Indenture
so long as (i) no Default or Event of Default has occurred and remains
continuing or after giving pro forma effect to such refinancing no Default or
Event of Default would result by reason thereof, (ii) the terms, covenants and
provisions of such refinancing are no less favorable to the Banks than the
terms, covenants, and provisions of the New Indenture and New Senior
Subordinated Notes, including, without limitation, a rate of interest under no
greater than the rate of interest under the New Senior Subordinated Notes, and
(iii) such refinancing complies with the requirements set forth in Section 6.10
of the Credit Agreement, and (c) purchase of the New Senior Subordinated Notes,
or refinancings thereof, on the open market so long as
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after giving pro forma effect thereof, no Default or Event of Default would
occur hereunder or under the New Indenture.
Section 5.25. Acceleration of Maturity Date. In the event Borrowers
-----------------------------
shall fail to fully satisfy each condition precedent set forth in Article III C
and to cause the Illinois Effective Date to occur on or before July 31, 1998,
the Maturity Date shall be automatically accelerated to September 30, 1998.
ARTICLE VI
FINANCIAL COVENANTS
-------------------
Until payment in full of all sums owing hereunder and under the Notes
and the occurrence of Bank Facilities Termination, the Borrower Consolidation
agrees, as set forth below, to comply or cause compliance with the following
Financial Covenants.
Section 6.01. Leverage Ratio. Commencing as of the first Fiscal
--------------
Quarter ending subsequent to the Closing Date and continuing as of each Fiscal
Quarter end until Bank Facilities Termination, the Borrower Consolidation shall
maintain a Leverage Ratio no greater than the ratios described hereinbelow to be
calculated as of the end of each Fiscal Quarter in accordance with the following
schedule:
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<PAGE>
<TABLE>
<CAPTION>
Maximum
--------
Fiscal Quarter End Leverage Ratio
------------------ --------------
<S> <C>
As of the Closing Date through
the Fiscal Quarter ending
December 31, 1999 3.50 to 1.00
As of the Fiscal Quarter ending
March 31, 2000, through the
Fiscal Quarter ending
December 31, 2000 3.25 to 1.00
As of the Fiscal Quarter ending
March 31, 2001, through the
Fiscal Quarter ending
December 31, 2001 3.00 to 1.00
As of the Fiscal Quarter ending
March 31, 2002, through Bank
Facilities Termination 2.75 to 1.00
</TABLE>
Section 6.02. Fixed Charge Coverage Ratio. Commencing as of the
---------------------------
first Fiscal Quarter ending subsequent to the Closing Date and continuing as of
each Fiscal Quarter end until Bank Facilities Termination, the Borrower
Consolidation shall maintain a Fixed Charge Coverage Ratio no less than 1.50 to
1.00.
Section 6.03. Adjusted Fixed Charge Coverage Ratio. Commencing as
------------------------------------
of the first Fiscal Quarter ending subsequent to the Closing Date and continuing
as of each Fiscal Quarter end until Bank Facilities Termination, the Borrower
Consolidation shall maintain an Adjusted Fixed Charge Coverage Ratio as follows:
a. As of each Fiscal Quarter end at which the Fixed Charge
Ratio for the Borrower Consolidation is less than or equal to 2.0 to 1.0, the
Borrower Consolidation shall maintain an Adjusted Fixed Charge Ratio of not less
than 1.10;
b. As of each Fiscal Quarter end at which the Fixed Charge
Ratio for the Borrower Consolidation is greater than 2.0 to 1.0, the Borrower
Consolidation shall maintain an Adjusted Fixed Charge Ratio of not less than 1.0
to 1.0.
Section 6.04. Minimum Tangible Net Worth. The Borrower
--------------------------
Consolidation shall maintain as of the last day of
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each Fiscal Quarter a Tangible Net Worth equal to or greater than the sum of (a)
Forty-Eight Million Six Hundred Thousand Dollars ($48,600,000.00), plus (b)
ninety percent (90%) of Net Income after taxes realized as of each Fiscal
Quarter end occurring on and after June 30, 1998 (without reduction for any net
losses), less Permitted Distributions actually paid subsequent to the Closing
Date and less amounts actually paid by the Borrower Consolidation for EEI Stock
Redemptions.
Section 6.05. Limitation on Capital Expenditures. During each
----------------------------------
Fiscal Year, commencing with the Fiscal Year commencing January 1, 1999,
Borrowers shall make or cause to be made, Capital Expenditures to the
Casino/Facilities in a minimum aggregate amount equal to or greater than two
percent (2%) of net revenues ("Minimum Cap Ex Requirement") derived from the
Casino/Facilities by the Borrower Consolidation during the immediately preceding
Fiscal Year, but in no event greater than a maximum aggregate amount equal to
six percent (6%) of net revenues ("Maximum Cap Ex Limit") derived from the
Casino Facilities by the Borrower Consolidation during the immediately preceding
Fiscal Year. Notwithstanding the foregoing, however, the Maximum Cap Ex Limit
shall be exclusive of the Capital Expenditures which are scheduled to be
completed as required under the Hammond Lease Documents and at the ECJC
Property, which Capital Expenditures are described on the Schedule of Budgeted
Capital Expenditures marked "Schedule 6.05" affixed hereto and by this reference
incorporated herein and made a part hereof.
Section 6.06. Contingent Liability(ies). Other than as disclosed on
-------------------------
the Schedule of Contingent Liabilities, Schedule 4.26 attached hereto, the
Borrower Consolidation shall not directly or indirectly incur any Contingent
Liability(ies) in excess of the cumulative aggregate amount of Ten Million
Dollars ($10,000,000.00) at any time outstanding without the prior written
consent of Requisite Lenders. In no event shall any Contingent Liabilities be
secured by a Lien on any property or assets of any member of the Borrower
Consolidation.
Section 6.07. Investment Restrictions. Other than Investments
-----------------------
permitted herein or approved in writing by Requisite Lenders, the Borrower
Consolidation shall not make any Investments (whether by way of loan, stock
purchase, capital contribution, or otherwise) other than the following:
(a) Cash, Cash Equivalents and direct obligations of the United
States Government;
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(b) Prime commercial paper (AA rated or better);
(c) Certificates of Deposit or Repurchase Agreement issued by a
commercial bank having capital surplus in excess of One Hundred Million Dollars
($100,000,000.00);
(d) Money market or other funds of nationally recognized
institutions investing solely in obligations described in (a), (b) and (c)
above;
(e) Loans and advances to employees in the ordinary course of
business not exceeding Two Hundred Thousand Dollars ($200,000.00) in the
aggregate at any one time; and
(f) Investments in Unrestricted Subsidiaries at the discretion
of Borrowers up to the maximum cumulative aggregate amount of the Unrestricted
Subsidiary Investment Basket measured by the amount actually invested without
adjustment for subsequent increases or decreases in the value of such
Investment;
(g) Investments in Restricted Subsidiaries, so long as after
giving effect to such Investment no Default or Event of Default would result
from the making of such Investment;
(h) Capital Expenditures for the Casino Facilities during each
Fiscal Year, up to the maximum amounts permitted under Section 6.05;
(i) EEI Stock Redemptions up to the aggregate amount of Ten
Million Dollars ($10,000,000.00) so long as after giving pro forma effect
thereof no Default or Event of Default would occur hereunder or under the New
Indenture.
(j) Loans to officers, directors, stockholders and employees of
any member of the Borrower Consolidation up to the maximum cumulative aggregate
amount of Seven Million Five Hundred Thousand Dollars ($7,500,000.00) so long as
in the case of each such loan (i) the proceeds are used by such officer,
director, stockholder and/or employee solely for the purchase or acquisition of
shares of the common voting and/or non-voting stock of EEI, and (ii) the
repayment of each of such loans is secured by a pledge of such shares of common
voting and/or non-voting stock in favor of EEI as the secured party; and
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(k) Purchase of New Senior Subordinated Notes, or any
refinancing thereof, so long as after giving pro forma effect thereof no Default
or Event of Default would occur hereunder or under the New Indenture.
Section 6.08. Total Liens. The Borrower Consolidation shall not
-----------
directly or indirectly, create, incur, assume or permit to exist any Lien on or
with respect to any of their respective assets or any of the Collateral, whether
now owned or hereafter acquired, or any income or profits therefrom, or file or
permit the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to any of the Collateral under the
Uniform Commercial Code of any State or under any similar recording or notice
statute, except:
(a) Permitted Encumbrances;
(b) Liens granted or permitted pursuant to the Security
Documentation; and
(c) Liens on the FF&E and other goods securing Indebtedness to
finance the purchase price thereof; provided that (i) such Liens shall extend
--------
only to the equipment and other goods so financed and the proceeds thereof, and
(ii) such Liens shall not secure Indebtedness in excess of Seven Million Five
Hundred Thousand Dollars ($7,500,000.00) in the aggregate at any time as to each
of the Casino Facilities or New Ventures.
Section 6.09. Limitation on Indebtedness. The Borrower
--------------------------
Consolidation will not incur any Indebtedness, except as specifically permitted
hereinbelow:
a. Secured Interest Rate Hedges up to the maximum aggregate
notional principal amount of Fifty Million Dollars ($50,000,000.00) at any time
outstanding;
b. Subject to the aggregate limitations set forth in Section
6.09(e) hereinbelow, secured Indebtedness permitted under Section 6.08(c) and
Capital Lease Liabilities up to the maximum aggregate amount of Seven Million
Five Hundred Thousand Dollars ($7,500,000.00) at any time outstanding as to each
of the Casino Facilities and each New Venture owned by a member of the Borrower
Consolidation;
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c. The Defeased Debt so long as the Covenant Defeasance
remains in full force and effect in accordance with Section 5.18 of this Credit
Agreement;
d. The New Senior Subordinated Notes and New Indenture; and
e. Unsecured Indebtedness so long as: (i) all material
covenants, terms and conditions of such unsecured Indebtedness shall be equally
or less restrictive on the Borrower Consolidation than those applicable under
the Credit Agreement, and (ii) the aggregate of the secured Indebtedness and
Capitalized Lease Liabilities permitted under Section 6.09(b) and the unsecured
Indebtedness permitted under this Section 6.09(e) shall at no time exceed the
maximum sum of Twenty-Five Million Dollars ($25,000,000.00).
Section 6.10. Minimum Subordinated Debt. The Borrower Consolidation
-------------------------
shall maintain at all times commending on the Closing Date and continuing until
the occurrence of Bank Facilities Termination, Subordinated Debt in an aggregate
amount no less than One Hundred Million Dollars ($100,000,000.00) nor greater
than One Hundred Fifty Million Dollars ($150,000,000.00).
Section 6.11. Restriction on Distributions.
----------------------------
a. No member of the Borrower Consolidation shall make any
Distributions, other than to other members of the Borrower Consolidation, during
any period in which a Default or Event of Default has occurred and remains
continuing, other than Tax Distributions by EEI.
b. Other than with respect to Tax Distributions, which may be
made at any time as provided in Section 6.11(a) hereinabove, distributions may
be made by EEI to its shareholders so long as: (i) the payment of such
Distributions does not constitute a Default or Event of Default, (ii) such
Distributions, including all Deferred Distributions, are permitted to be made
under the terms of the New Indenture, and (iii) in no event shall the aggregate
of Distribution, including all Deferred Distributions, made during any Fiscal
Year exceed the Net Income of the Borrower Consolidation for such Fiscal Year.
Section 6.12. No Change of Control. Until the occurrence of Bank
--------------------
Facility Termination, no Change of Control shall occur.
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Section 6.13. Consolidation, Merger, Sale of Assets, etc. No member
-------------------------------------------
of the Borrower Consolidation shall wind up, liquidate or dissolve its affairs
or enter into any transaction of merger or consolidation (except a merger or
consolidation with another entity within the Borrower Consolidation), or convey,
sell, lease or otherwise dispose of (or agree to do any of the foregoing at any
future time) all or any material part of its respective property or assets
(except to another entity within the Borrower Consolidation), except that (a)
the Borrowers may make sales of inventory in the ordinary course of business,
(b) the Borrowers may, in the ordinary course of business, sell equipment which
is uneconomic or obsolete as provided in Section 5.01, (c) EEI or any of its
Subsidiaries may sell any Unrestricted Subsidiary in exchange for its fair
value, (d) ECJC may sell the ECJC Airplane, and (e) ECJC may sell the Joliet
Excess Land for its fair value and Agent Bank shall be and is hereby authorized
by each of the Lenders to release such Joliet Excess Land, or applicable portion
thereof, as Collateral under the ECJC Security Documents, so long as: (i) such
Joliet Excess Land, or applicable portion thereof, is sold subject to a
reservation by ECJC of all applicable easements for ingress, egress and
utilities necessary or convenient, for the use and operation of the ECJC Casino
Facility, (ii) such Joliet Excess Land, or application portion thereof, is not
necessary to or used in any manner in connection with the operation of the ECJC
Casino Facility or the requirements of any Governmental Authority with respect
to the ECJC Casino Facility, (iii) no Default or Event of Default has occurred
and remains continuing, and (iv) such sale is first approved in writing by Agent
Bank, which approval shall not be unreasonable withheld or delayed.
Section 6.14. Transactions with Affiliates. Other than: (i) between
----------------------------
and amongst the Borrower Consolidation, or (ii) in connection with Investments
in a New Venture and/or New Venture Subsidiaries, no transactions shall be made
with Affiliates or Subsidiaries other than arms length transactions for fair
market value.
Section 6.15. No Transfer of Ownership. EEI shall not transfer or
------------------------
hypothecate its ownership interests in ECHC, ECJC or any Restricted Subsidiary
except in connection with the Security Documentation. Provided, however,
Borrowers shall have the right to sell any Unrestricted Subsidiary in exchange
for its fair market value.
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Section 6.16. ERISA. No Borrower shall:
-----
a. At any time, permit any Pension Plan which is maintained by
such Borrower or to which such Borrower is obligated to contribute on behalf of
its respective employees, to:
(i) engage in any non-exempt "prohibited transaction", as
such term is defined in Section 4975 of the Code;
(ii) incur any material "accumulated funding deficiency",
as that term is defined in Section 302 of ERISA; or
(iii) suffer a termination event to occur which may
reasonably be expected to result in liability of such Borrower to the
Pension Plan or to the Pension Benefit Guaranty Corporation or the
imposition of a lien on the Collateral pursuant to Section 4068 of
ERISA.
b. Fail, upon such Borrower becoming aware thereof, promptly
to notify the Agent Bank of the occurrence of any "reportable event" (as defined
in Section 4043 of ERISA) or of any non-exempt "prohibited transaction" (as
defined in Section 4975 of the Code) with respect to any Pension Plan which is
maintained by such Borrower or to which such Borrower is obligated to contribute
on behalf of its employees or any trust created thereunder.
c. At any time, permit any Pension Plan which is maintained by
such Borrower or to which such Borrower is obligated to contribute on behalf of
its employees to fail to comply with ERISA or other applicable laws in any
respect that would result in a Material Adverse Effect.
Section 6.17. Margin Regulations. No part of the proceeds of the
------------------
Credit Facility, Swingline Facility or L/C Facility will be used by Borrowers,
or any of them, to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock. Neither the
making of such loans, nor the use of the proceeds of such loans will violate or
be inconsistent with the provisions of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System.
Section 6.18. No Additional ECHC or ECJC Subsidiaries. Other than
---------------------------------------
Empress Finance and Hammond Residential, which are Subsidiaries of EEI and ECHC,
respectively, as of the Closing Date, neither ECHC nor ECJC
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shall create any additional Subsidiaries without the prior written consent of
Requisite Lenders.
Section 6.19. Restriction on Equity Offering. Concurrently with the
------------------------------
issuance and sale of any Equity Offering, the Borrower Consolidation shall cause
a Voluntary Permanent Reduction to be made to the Credit Facility in an amount
equal to fifty percent (50%) of the net proceeds of such Equity Offering.
Section 6.20. Limitation on Consolidated Tax Liability. No Borrower
----------------------------------------
shall be liable for federal income taxes relating to the taxable income of any
Subsidiary or Affiliate of the Borrowers, or any of them, in excess of the
amount of federal income taxes it would pay if reporting as a separate entity,
unless such Borrower is fully reimbursed by such Subsidiary or Affiliate on or
before the payment of such taxes.
Section 6.21. Change in Accounting Principles. Except as otherwise
-------------------------------
provided herein, if any changes in accounting principles from those used in the
preparation of the most recent financial statements delivered to Agent Bank
pursuant to the terms hereof are hereinafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and are adopted by the Borrowers
with the agreement of their independent certified public accountants and such
changes result in a change in the method of calculation of any of the financial
covenants, standards or terms found herein, the parties hereto agree to enter
into negotiations in order to amend such provisions so as to equitably reflect
such changes with the desired result that the criteria for evaluating the
financial condition of Borrowers shall be the same after such changes as if such
changes had not been made; provided, however, that no change in GAAP that would
affect the method of calculation of any of the financial covenants, standards or
terms shall be given effect in such calculations until such provisions are
amended, in a manner satisfactory to Agent Bank and Requisite Lenders, to so
reflect such change in accounting principles.
ARTICLE VII
EVENTS OF DEFAULT
-----------------
Section 7.01. Events of Default. Any of the following events and
-----------------
the passage of any applicable notice and cure periods shall constitute an Event
of Default hereunder:
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(a) Any representation or warranty made by Borrowers pursuant
to or in connection with this Credit Agreement, the Notes, the Environmental
Certificate, or any other Loan Document or in any report, certificate, financial
statement or other writing furnished by Borrowers in connection herewith, shall
prove to be false, incorrect or misleading in any materially adverse aspect as
of the date when made.
(b) Borrowers shall have defaulted in the payment of any
interest on the Revolving Credit Note or Swingline Note for a period of five (5)
days from the date such payment is due or shall have defaulted in the payment of
any principal on the Revolving Credit Note when due;
(c) Any of the Security Documentation or any provision thereof
shall cease to be in full force and effect in any material respect or shall
cease to give the Agent Bank in any material respect the liens, rights, powers
and privileges purported to be created thereby or the Borrowers shall default in
the due performance or observance of any term, covenant or agreement on their
part to be performed or observed pursuant to the Security Documentation for a
period of thirty (30) days after written notice thereof is delivered to
Borrowers by Agent Bank (or such shorter period following such notice as may be
specified in any Loan Document);
(d) Borrowers shall have defaulted in the payment of any fees
required to be paid under the Fee Side Letter, late charge, Commitment Fees,
expenses, indemnities or any other amount owing under any Loan Document for a
period of five (5) days after notice thereof to Borrowers from Agent Bank;
(e) Borrowers or any Restricted Subsidiary shall fail duly and
punctually to perform or comply with: (i) any term, covenant, condition or
promise contained in Sections 5.11, 5.24, 5.25, 6.01, 6.02, 6.03, 6.04, 6.05,
6.06, 6.07, 6.08, 6.09, 6.10, 6.11, 6.12, 6.13, 6.17 or 6.18, or (ii) any other
term, covenant, condition or promise contained in this Credit Agreement, the
Notes, the Security Documentation or any other Loan Document and, in the case of
any term, covenant, condition or promise covered by this clause (ii), such
failure shall continue thirty (30) days after written notice thereof is
delivered to Borrowers by Agent Bank (or such shorter period following such
notice as may be specified in any Loan Document).
(f) Any Borrower or any Restricted Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or other
relief with respect to it
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or its debts under the Bankruptcy Code or any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official, for all or
substantially all of its property, or shall consent to any such relief or to the
appointment or taking possession by any such official in any involuntary case or
other proceeding against it;
(g) An involuntary case or other proceeding shall be commenced
against any Borrower or any Restricted Subsidiary seeking liquidation,
reorganization or other relief with respect to itself or its debts under the
Bankruptcy Code or any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official, for all or substantially all of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of ninety (90) days;
(h) Any Borrower or any Restricted Subsidiary makes an
assignment of all or substantially all of their assets for the benefit of its
creditors;
(i) Borrowers shall fail to make any payment when due (whether
by scheduled maturity, required prepayment, offer to purchase, redemption,
acceleration, demand or otherwise, in each case beyond the grace period provided
with respect to such Indebtedness) on any Indebtedness (other than any
Indebtedness under this Credit Agreement), if the aggregate amount of such
Indebtedness is Five Million Dollars ($5,000,000.00), or more, or any breach,
default or event of default shall occur, or any other event shall occur or
condition shall exist, under any instrument, agreement or indenture pertaining
thereto if the effect thereof is to accelerate, the maturity of any such
Indebtedness; or any such Indebtedness shall be declared to be due and payable
or shall be required to be prepaid, purchased or redeemed (other than by a
regularly scheduled required prepayment) prior to the stated maturity thereof,
or the holder of any lien in any amount, shall commence foreclosure of such lien
upon property of Borrowers having a value in excess of Five Million Dollars
($5,000,000.00) and such foreclosure shall continue against such property to a
date less than thirty (30) days prior to the date of the proposed foreclosure
sale;
(j) The occurrence of any event of default, beyond any
applicable grace period, under the terms of any agreement with any Lender in
connection with a Secured Interest Rate Hedge relating to the Credit Facility;
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(k) The occurrence of any Reportable Event as defined under the
ERISA, which Agent Bank determines in good faith constitutes proper grounds for
the termination of any employee pension benefit plan or pension plan of
Borrowers covered by ERISA by the Pension Benefit Guaranty Corporation or for
the appointment by an appropriate United States District Court of a trustee to
administer any such plan, should occur which has a Material Adverse Effect and
should continue for thirty (30) days after written notice of such determination
shall have been given to Borrowers by Agent Bank;
(l) Any money judgment, writ or warrant of attachment or
similar process involving (i) in any individual case an amount in excess of Five
Million Dollars ($5,000,000.00) or (ii) in the aggregate at any time an amount
in excess of Ten Million Dollars ($10,000,000.00) (in either case not adequately
covered by insurance as to which a solvent and unaffiliated insurance company
has acknowledged coverage) shall be entered or filed against any Borrower or any
of their respective assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of sixty (60) days (or in any event later than five (5)
days prior to the date of any proposed sale thereunder);
(m) The loss, revocation or suspension (for a period in excess
of ten (10) calendar days) of the Gaming Permits issued by the applicable Gaming
Authorities for the Casino Facilities, or either of them, or the failure of
Borrowers to maintain gaming activities at the Casino Facilities, other than on
account of force majeure or periodic drydocking in compliance with USCG
requirements, at least to the same general extent as is presently conducted
thereon for a period in excess of thirty (30) consecutive days;
(n) Any order, judgment or decree shall be entered against any
Borrower or any Restricted Subsidiary decreeing its involuntary dissolution or
split up and such order shall remain undischarged and unstayed for a period in
excess of thirty (30) days, or any Borrower shall otherwise dissolve or cease to
exist, other than as permitted under Section 6.13;
(o) EEI sells, transfers, assigns, hypothecates or otherwise
alienates its interest in all or any portion of the common voting stock of ECHC
or ECJC, other than in connection with the Security Documentation;
(p) The occurrence of any Change in Control;
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(q) The failure of ECHC to timely perform any obligation which
it may have under any of the Hammond Lease Documents;
(r) Any Borrower shall be voluntarily or involuntarily divested
of title or possession of any of the Casino Facilities or shall lease or in any
other manner, voluntarily or involuntarily alienate any of its interest in any
Casino Facility, other than the Permitted Encumbrances, the ECJC Excess Land as
permitted under Section 6.13(v) and as permitted in Section 5.01;
(s) Any Subsidiary Guaranty shall cease to be in full force or
effect in any material respect, or any Subsidiary Guarantor shall deny or
disaffirm such Subsidiary Guarantor's obligations under the Subsidiary Guaranty,
or such Subsidiary Guarantor shall default for a period of thirty (30) days
after notice thereof from Agent Bank in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed pursuant to
the Subsidiary Guaranty; or
(t) The occurrence of a Material Adverse Effect with respect to
the Borrower Consolidation taken as a whole.
Section 7.02. Default Remedies. Upon the occurrence of any Event of
----------------
Default, Agent Bank may and, upon the consent of Requisite Lenders shall declare
the unpaid balance of the Notes, together with the interest thereon, to be fully
due and payable, and, in addition, the applicable Banks, as set forth below,
may, at their option, or shall, as indicated below, exercise any or all of the
following remedies:
(a) Agent Bank may, upon the consent of Requisite Lenders, or
at the direction of the Requisite Lenders shall terminate the obligation of
Lenders to make any advances for Borrowings and/or declare all outstanding
unpaid Indebtedness hereunder and under the Revolving Credit Note and other Loan
Documents together with all accrued interest thereon immediately due and payable
without presentation, demand, protest or notice of any kind. This remedy will be
deemed to have been automatically exercised on the occurrence of any event set
out in Sections 7.01(f), (g) or (h).
(b) The Swingline Lender shall, upon receipt of written notice
of the occurrence of an Event of Default, terminate its obligation to make any
advances under the Swingline Facility and may declare all outstanding unpaid
Indebtedness hereunder and under the Swingline Note, together
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with all accrued interest thereon immediately due and payable without
presentation, demand, protest or notice of any kind. This remedy will be deemed
to have been automatically exercised on the occurrence of any event set out in
Sections 7.01(f), (g) or (h).
(c) The L/C Issuer shall, upon receipt of written notice of the
occurrence of an Event of Default, terminate its obligation to issue Letters of
Credit and/or any Letter of Credit which may be terminated in accordance with
its terms. This remedy will be deemed to have been automatically exercised on
the occurrence of any event set out in Sections 7.01(f), (g) or (h).
(d) Agent Bank and/or L/C Issuer may, or at the direction of
the Requisite Lenders will, direct the Borrowers to pay (and each of the
Borrowers hereby jointly and severally agree upon receipt of such notice to pay)
to the L/C Issuer an amount in Cash equal to the then outstanding L/C Exposure,
such Cash to be held by L/C Issuer in the Cash Collateral Account as security
for the repayment of all L/C Reimbursement Obligations thereafter occurring.
(e) The Banks and/or Agent Bank may exercise any and all
remedies available to Banks or Agent Bank under the Loan Documents.
(f) In the event Borrowers have failed to provide any insurance
required under Section 5.09, Agent Bank may elect at its discretion to, or shall
at the direction of Requisite Lenders, purchase such insurance. All payments
made by Agent Bank for the purpose of providing the insurance coverages required
under Section 5.09 shall be deemed amounts advanced under Section 5.12 of this
Credit Agreement.
(g) The Banks and/or Agent Bank may exercise any other remedies
available to Banks or Agent Bank at law or in equity, including requesting the
appointment of a receiver to perform any acts required of Borrowers, or any of
them, under this Credit Agreement, and Borrowers hereby specifically consent to
any such request by Banks.
For the purpose of carrying out this section and exercising these
rights, powers and privileges, Borrowers hereby irrevocably constitute and
appoint Agent Bank as their true and lawful attorney-in-fact to execute,
acknowledge and deliver any instruments and do and perform any acts such as are
referred to in this paragraph in the name and on behalf of Borrowers. Agent
Bank on behalf of Lenders may exercise one or more of Lenders' remedies
simultaneously and all its remedies are nonexclusive and cumulative. Lenders
shall not
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be required to pursue or exhaust any Collateral or remedy before pursuing any
other Collateral or remedy. Lenders' failure to exercise any remedy for a
particular default shall not be deemed a waiver of (i) such remedy, nor their
rights to exercise any other remedy for that default, nor (ii) their right to
exercise that remedy for any subsequent default.
Section 7.03. Application of Proceeds. All payments and proceeds
-----------------------
received and all amounts held or realized from the sale or other disposition of
the Collateral, which are to be applied hereunder towards satisfaction of
Borrowers' obligations under this Credit Agreement, shall be applied in the
following order of priority:
(a) First, to the payment of all reasonable fees, costs and
expenses (including reasonable attorney's fees and expenses) incurred by Agent
Bank and Banks, their agents or representatives in connection with the
realization upon any of the Collateral;
(b) Next, to the payment in full of any other amounts due under
this Credit Agreement, the Security Documentation, or any other Loan Documents
(other than the Notes and any liability under the Secured Interest Rate Hedges);
(c) Next, to the balance of interest remaining unpaid on the
Notes;
(d) Next, to the balance of principal remaining unpaid on the
Notes and any liability under the Secured Interest Rate Hedges on a pari passu
basis;
(e) Next, the balance, if any, of such payments or proceeds to
whomever may be legally entitled thereto.
Section 7.04. Notices. In order to entitle Agent Bank and/or Banks
-------
to exercise any remedy available hereunder, it shall not be necessary for Agent
Bank and/or Banks to give any notice, other than such notice as may be required
expressly herein or by applicable law.
Section 7.05. Agreement to Pay Attorney's Fees and Expenses.
---------------------------------------------
Subject to the provisions of Section 10.14, upon the occurrence of an Event of
Default, as a result of which Agent Bank and/or Banks shall require and employ
attorneys or incur other expenses for the collection of payments due or to
become due or the enforcement or performance or observance of any obligation or
agreement on the part of Borrowers contained herein, Borrowers shall, on demand,
pay to Agent Bank and Banks the actual and reasonable fees of such attorneys
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(including actual and reasonable allocated costs of in-house legal counsel) and
such other reasonable expenses so incurred by Agent Bank and Banks.
Section 7.06. No Additional Waiver Implied by One Waiver. In the
------------------------------------------
event any agreement contained in this Credit Agreement should be breached by
either party and thereafter waived by the other party, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder.
Section 7.07. Licensing of Agent Bank and Lenders. In the event of
-----------------------------------
the occurrence of an Event of Default hereunder or under any of the Loan
Documents and it shall become necessary, or in the opinion of Requisite Lenders
advisable, for an agent, supervisor, receiver or other representative of Agent
Bank and Banks to become licensed under the provisions of the laws of the States
of Illinois and/or Indiana or rules and regulations adopted pursuant thereto, as
a condition to receiving the benefit of any Collateral encumbered by the
Security Documentation or other Loan Documents for the benefit of Lenders or
otherwise to enforce their rights hereunder, Borrowers do hereby give their
consent to the granting of such license or licenses and agree to execute such
further documents as may be required in connection with the evidencing of such
consent.
Section 7.08. Exercise of Rights Subject to Applicable Law. All
--------------------------------------------
rights, remedies and powers provided by this Article VII may be exercised only
to the extent that the exercise thereof does not violate any applicable
provision of the laws of any Governmental Authority and all of the provisions of
this Article VII are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they will not render this Credit Agreement invalid,
unenforceable or not entitled to be recorded or filed under the provisions of
any applicable law.
Section 7.09. Discontinuance of Proceedings. In case Agent Bank
-----------------------------
and/or Banks shall have proceeded to enforce any right, power or remedy under
this Credit Agreement, the Notes, the Security Documentation or any other Loan
Document by foreclosure, entry or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to Banks, then and in every such case Borrowers, Agent Bank and/or
Banks shall be restored to their former positions and rights hereunder with
respect to the Collateral, and all rights, remedies and powers of Agent Bank and
Banks shall continue as if such proceedings had not
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been taken, subject to any binding rule by the applicable court or other
tribunal in any such proceeding.
ARTICLE VIII
DAMAGE, DESTRUCTION AND CONDEMNATION
------------------------------------
Section 8.01. No Abatement of Payments. If all or any part of the
------------------------
Collateral shall be materially damaged or destroyed, or if title to or the
temporary use of the whole or any part of any of the Collateral shall be taken
or condemned by a competent authority for any public use or purpose or by
exercise of the power of eminent domain, there shall be no abatement or
reduction in the amounts payable by Borrowers hereunder or under the Notes, and
Borrowers shall continue to be obligated to make such payments.
Section 8.02. Distribution of Capital Proceeds Upon Occurrence of
---------------------------------------------------
Fire, Casualty, Other Perils or Condemnation. All monies received from "All
- --------------------------------------------
Risk" including flood and earthquake insurance policies covering any of the
Collateral or from condemnation or similar actions in regard to said Collateral,
shall be paid directly to Agent Bank. In the event the amount paid to Agent Bank
is equal to or less than One Million Dollars ($1,000,000.00), such amount shall
be paid to Borrowers, unless a Default in the payment of any principal or
interest owing under the terms of the Bank Facilities or an Event of Default
shall have occurred hereunder and is continuing. In the event the amount paid
to Agent Bank is greater than One Million Dollars ($1,000,000.00), then, unless
a Default or Event of Default has occurred hereunder and is then continuing, the
entire amount so collected or so much thereof as may be required to repair or
replace the destroyed or condemned property, shall, subject to the conditions
set forth below, be released to Borrowers for repair or replacement of the
property destroyed or condemned or to reimburse Borrowers for the costs of such
repair or replacement incurred prior to the date of such release. If a Default
or Event of Default has occurred hereunder and is then continuing such amount
may, at the option of Requisite Lenders, be applied to pay the outstanding
balance of the Credit Facility. In the event the amount so collected is applied
to pay or reduce the outstanding balance of the Credit Facility, the amount
received by Agent Bank shall be applied in the priority set forth in Section
7.03 and, if such application is made when a Default or Event of Default has
occurred and remains continuing, then Borrowers shall not be entitled to any
further Borrowings. In the event Banks are
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required to release all or a portion of the collected funds to Borrowers for
such repair or replacement of the property destroyed or condemned, such release
of funds shall be made in accordance with the following terms and conditions:
a. The repairs, replacements and rebuilding shall be made in
accordance with plans and specifications to be reasonably approved by Requisite
Lenders and in accordance with all applicable laws, ordinances, rules,
regulations and requirements of Governmental Authorities;
b. Borrowers shall provide Agent Bank with a reasonable
detailed estimate of the costs of such repairs or restorations;
c. Borrowers shall satisfy the Requisite Lenders that after
the reconstruction is completed, the value of the Collateral, as determined by
the Requisite Lenders in their reasonable discretion, will not be less than the
value of the Collateral immediately prior to the damage, destruction,
condemnation or taking, as reasonably determined by the Requisite Lenders
pursuant to this Credit Agreement;
d. In the Requisite Lenders' reasonable opinion, any
undisbursed portion of the Available Borrowings, after deposit of such proceeds,
is insufficient to pay all costs of reconstruction of the Casino Facilities or
other Collateral, Borrowers shall deposit additional funds with the Agent Bank
or raise additional equity capital, sufficient to pay such additional costs of
reconstructing the Collateral;
e. Borrowers have delivered to the Agent Bank a construction
contract for the work of reconstruction in form and content, including insurance
requirements, acceptable to the Requisite Lenders with a contractor reasonably
acceptable to the Requisite Lenders;
f. The Requisite Lenders in their reasonable discretion have
determined that after the work of reconstruction is completed, the Casino
Facilities will produce income sufficient to pay all costs of operations and
maintenance of the Casino Facilities with a reasonable reserve for repairs, and
service all Indebtedness secured by the Collateral;
g. No Default in the payment of any principal or interest
owing under the terms of the Bank Facilities, and no Event of Default, has
occurred and is continuing;
h. Borrowers have deposited with the Agent Bank that amount
reasonably determined by the Requisite
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Lenders (taking into consideration the amount of Credit Facility funds available
for such purpose, and the amount of proceeds, if any, of insurance policies
covering property damage and business interruption in connection with the Casino
Facilities accruing and immediately forthcoming to the Agent Bank) to be
sufficient to service the Indebtedness secured hereby during the period of
reconstruction, as reasonably estimated by the Requisite Lenders;
i. Before commencing any such work, Borrowers shall, at their
own cost and expense, furnish Agent Bank with appropriate endorsements, if
needed, to the "All Risk" insurance policy which Borrowers are then presently
maintaining to cover all of the risks during the course of such work;
j. Such work shall be commenced by Borrowers within one
hundred twenty (120) days after (i) settlement shall have been made with the
insurance companies, and (ii) all the necessary governmental approvals shall
have been obtained, and such work shall be completed within a reasonable time,
free and clear of all liens and encumbrances other than Permitted Encumbrances;
and
k. Disbursements of such insurance or condemnation proceeds
shall be made in the customary manner used by Agent Bank for the disbursement of
construction loans.
ARTICLE IX
AGENCY PROVISIONS
-----------------
Section 9.01. Appointment.
-----------
a. Each Lender hereby (i) designates and appoints WFB as the
Agent Bank of such Lender under this Credit Agreement and the Loan Documents,
(ii) authorizes and directs Agent Bank to enter into the Loan Documents other
than this Credit Agreement for the benefit of Lenders, and (iii) authorizes
Agent Bank to take such action on its behalf under the provisions of this Credit
Agreement and the Loan Documents and to exercise such powers as are set forth
herein or therein, together with such other powers as are reasonably incidental
thereto, subject to the limitations referred to in Sections 9.10(a) and 9.10(b).
Agent Bank agrees to act as such on the express conditions contained in this
Article IX.
b. The provisions of this Article IX are solely for the
benefit of Agent Bank and Lenders, and Borrowers shall not have any rights to
rely on or enforce any of the provisions hereof (other than as set forth in the
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provisions of Sections 9.03, 9.09 and 9.10), provided, however, that the
foregoing shall in no way limit Borrowers' obligations under this Article IX. In
performing its functions and duties under this Credit Agreement, Agent Bank
shall act solely as Agent Bank of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for Borrowers or any other Person.
Section 9.02. Nature of Duties. Agent Bank shall not have any duties
----------------
or responsibilities except those expressly set forth in this Credit Agreement or
in the Loan Documents. The duties of Agent Bank shall be administrative in
nature. Subject to the provisions of Sections 9.05 and 9.07, Agent Bank shall
administer the Bank Facilities in the same manner as it administers its own
loans. Promptly following the effectiveness of this Credit Agreement, Agent
Bank shall send to each Lender a duplicate executed original, to the extent the
same are available in sufficient numbers, of the Credit Agreement and a copy of
each other Loan Document in favor of Lenders and a copy of the filed or recorded
Security Documentation, with the originals of the latter to be held and retained
by Agent Bank for the benefit of all Lenders. Agent Bank shall not have by
reason of this Credit Agreement a fiduciary relationship in respect of any
Lender. Nothing in this Credit Agreement or any of the Loan Documents,
expressed or implied, is intended or shall be construed to impose upon Agent
Bank any obligation in respect of this Credit Agreement or any of the Loan
Documents except as expressly set forth herein or therein. Each Lender shall
make its own independent investigation of the financial condition and affairs of
the Borrowers and the Collateral in connection with the making and the
continuance of the Bank Facilities hereunder and shall make its own appraisal of
the creditworthiness of the Borrowers and the Collateral, and, except as
specifically provided herein, Agent Bank shall not have any duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the Closing Date or at any time or times thereafter.
Section 9.03. Disbursement of Borrowings.
--------------------------
a. Not later than the next Banking Business Day following
receipt of a Notice of Borrowing, Agent Bank shall send a copy thereof by
facsimile to each Lender and shall otherwise notify each Lender of the proposed
Borrowing and the Funding Date. Each Lender shall make available to Agent Bank
(or the funding bank or entity designated by Agent Bank), the amount of such
Lender's Pro Rata Share of such Borrowing in immediately available funds not
later than the
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times designated in Section 9.03(b). Unless Agent Bank shall have been notified
by any Lender not later than the close of business (San Francisco time) on the
Banking Business Day immediately preceding the Funding Date in respect of any
Borrowing that such Lender does not intend to make available to Agent Bank such
Lender's Pro Rata Share of such Borrowing, Agent Bank may assume that such
Lender shall make such amount available to Agent Bank. If any Lender does not
notify Agent Bank of its intention not to make available its Pro Rata Share of
such Borrowing as described above, but does not for any reason make available to
Agent Bank such Lender's Pro Rata Share of such Borrowing, such Lender shall pay
to Agent Bank forthwith on demand such amount, together with interest thereon at
the Federal Funds Rate. In any case where a Lender does not for any reason make
available to Agent Bank such Lender's Pro Rata Share of such Borrowing, Agent
Bank, in its sole discretion, may, but shall not be obligated to, fund to
Borrowers such Lender's Pro Rata Share of such Borrowing. If Agent Bank funds to
Borrowers such Lender's Pro Rata Share of such Borrowing and if such Lender
subsequently pays to Agent Bank such corresponding amount, such amount so paid
shall constitute such Lender's Pro Rata Share of such Borrowing. Nothing in this
Section 9.03(a) shall alter the respective rights and obligations of the parties
hereunder in respect of a Defaulting Lender or a Non-Pro Rata Borrowing.
b. Requests by Agent Bank for funding by Lenders of Borrowings
will be made by telecopy. Each Lender shall make the amount of its Pro Rata
Share of such Borrowing available to Agent Bank in Dollars and in immediately
available funds, to such bank and account, in San Francisco, California as Agent
Bank may designate, not later than 9:00 A.M. (San Francisco time) on the Funding
Date designated in the Notice of Borrowing with respect to such Borrowing, but
in no event later than two (2) Banking Business Days following Lender's receipt
of the applicable Notice of Borrowing.
c. Nothing in this Section 9.03 shall be deemed to relieve any
Lender of its obligation hereunder to make its Pro Rata Share of Borrowings on
any Funding Date, nor shall any Lender be responsible for the failure of any
other Lender to perform its obligations to advance its Pro Rata Share of any
Borrowing hereunder, and the Pro Rata Share of the Aggregate Commitment of any
Lender shall not be increased or decreased as a result of the failure by any
other Lender to
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perform its obligation to advance its Pro Rata Share of any Borrowing.
Section 9.04. Distribution and Apportionment of Payments.
------------------------------------------
a. Subject to Section 9.04(b), payments actually received by
Agent Bank for the account of Lenders shall be paid to them promptly after
receipt thereof by Agent Bank, but in any event within one (1) Banking Business
Day, provided that Agent Bank shall pay to Lenders interest thereon, at the
Federal Funds Rate from the Banking Business Day following receipt of such funds
by Agent Bank until such funds are paid in immediately available funds to
Lenders. Subject to Section 9.04(b), all payments of principal and interest in
respect of Aggregate Outstandings, all payments of the fees described in this
Credit Agreement, and all payments in respect of any other Obligations shall be
allocated among such Lenders as are entitled thereto, in proportion to their
respective Pro Rata Shares or otherwise as provided herein. Agent Bank shall
promptly distribute, but in any event within one (1) Banking Business Day, to
each Lender at its primary address set forth on the appropriate signature page
hereof or on the applicable Assignment and Assumption Agreement, or at such
other address as a Lender may request in writing, such funds as it may be
entitled to receive, provided that Agent Bank shall in any event not be bound to
inquire into or determine the validity, scope or priority of any interest or
entitlement of any Lender and may suspend all payments and seek appropriate
relief (including, without limitation, instructions from Requisite Lenders or
all Lenders, as applicable, or an action in the nature of interpleader) in the
event of any doubt or dispute as to any apportionment or distribution
contemplated hereby. The order of priority herein is set forth solely to
determine the rights and priorities of Lenders as among themselves and may at
any time or from time to time be changed by Lenders as they may elect, in
writing in accordance with Section 10.01, without necessity of notice to or
consent of or approval by Borrowers or any other Person. All payments or other
sums received by Agent Bank for the account of Lenders (including, without
limitation, principal and interest payments, the proceeds of any and all
insurance maintained with respect to any of the Collateral, and any and all
condemnation proceeds with respect to any of the Collateral) shall not
constitute property or assets of the Agent Bank and shall be held by Agent Bank,
solely in its capacity as administrative and collateral agent for itself and the
other Lenders, subject to the Loan Documents.
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b. Notwithstanding any provision hereof to the contrary, until such
time as a Defaulting Lender has funded its Pro Rata Share of Borrowing which was
previously a Non Pro Rata Borrowing, or all other Lenders have received payment
in full (whether by repayment or prepayment) of the principal due in respect of
such Non Pro Rata Borrowing, all principal sums owing to such Defaulting Lender
hereunder shall be subordinated in right of payment to the prior payment in full
of all principal, in respect of all Non Pro Rata Borrowing in which the
Defaulting Lender has not funded its Pro Rata Share. This provision governs only
the relationship among Agent Bank, each Defaulting Lender, and the other
Lenders; nothing hereunder shall limit the obligation of Borrowers to repay all
Borrowings in accordance with the terms of this Credit Agreement. The provisions
of this section shall apply and be effective regardless of whether an Event of
Default occurs and is then continuing, and notwithstanding (i) any other
provision of this Credit Agreement to the contrary, (ii) any instruction of
Borrowers as to their desired application of payments or (iii) the suspension of
such Defaulting Lender's right to vote on matters which are subject to the
consent or approval of Requisite Lenders or all Lenders. No Commitment Fee or
L/C Fees shall accrue in favor of, or be payable to, such Defaulting Lender from
the date of any failure to fund Borrowings or reimburse Agent Bank for any
Liabilities and Costs as herein provided until such failure has been cured, and
Agent Bank shall be entitled to (A) withhold or setoff, and to apply to the
payment of the defaulted amount and any related interest, any amounts to be paid
to such Defaulting Lender under this Credit Agreement, and (B) bring an action
or suit against such Defaulting Lender in a court of competent jurisdiction to
recover the defaulted amount and any related interest. In addition, the
Defaulting Lender shall indemnify, defend and hold Agent Bank and each of the
other Lenders harmless from and against any and all Liabilities and Costs, plus
interest thereon at the Default Rate, which they may sustain or incur by reason
of or as a direct consequence of the Defaulting Lender's failure or refusal to
abide by its obligations under this Credit Agreement.
Section 9.05. Rights, Exculpation, Etc. Neither Agent Bank, any
-------------------------
Affiliate of Agent Bank, nor any of their respective officers, directors,
employees, agents, attorneys or consultants, shall be liable to any Lender for
any action taken or omitted by them hereunder or under any of the Loan
Documents, or in connection herewith or therewith, except that Agent Bank shall
be liable for its gross negligence or willful misconduct. In the absence of
gross negligence or willful misconduct, Agent Bank shall not be liable for any
apportionment or distribution of payments made by it in good
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faith pursuant to Section 9.04, and if any such apportionment or distribution is
subsequently determined to have been made in error the sole recourse of any
Person to whom payment was due, but not made, shall be to recover from the
recipients of such payments any payment in excess of the amount to which they
are determined to have been entitled. Agent Bank shall not be responsible to any
Lender for any recitals, statements, representations or warranties herein or for
the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Credit Agreement, any of the Security
Documentation or any of the other Loan Documents, or any of the transactions
contemplated hereby and thereby; or for the financial condition of the Borrowers
or any of their Affiliates. Agent Bank shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Credit Agreement or any of the Loan Documents or the
financial condition of the Borrowers or any of their Affiliates, or the
existence or possible existence of any Default or Event of Default.
Section 9.06. Reliance. Agent Bank shall be entitled to rely upon
--------
any written notices, statements, certificates, orders or other documents,
telecopies or any telephone message believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person, and with
respect to all matters pertaining to this Credit Agreement or any of the Loan
Documents and its duties hereunder or thereunder, upon advice of legal counsel
(including counsel for Borrowers), independent public accountant and other
experts selected by it.
Section 9.07. Indemnification. To the extent that Agent Bank is not
---------------
reimbursed and indemnified by Borrowers, Lenders will reimburse, within ten (10)
Banking Business Days after notice from Agent Bank, and indemnify and defend
Agent Bank for and against any and all Liabilities and Costs which may be
imposed on, incurred by, or asserted against it in any way relating to or
arising out of this Credit Agreement, the Security Documentation or any of the
other Loan Documents or any action taken or omitted by Agent Bank or under this
Credit Agreement, the Security Documentation or any of the other Loan Documents,
in proportion to each Lender's Pro Rata Share; provided that no Lender shall be
liable for any portion of such Liabilities and Costs resulting from Agent Bank's
gross negligence or willful misconduct. The obligations of Lenders under this
Section 9.07 shall survive the payment in full of all Obligations and the
termination of this Credit Agreement. In the event that after payment and
distribution of any amount by Agent Bank to Lenders, any Lender or third party,
including Borrowers, any creditor of Borrowers or a trustee in
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bankruptcy, recovers from Agent Bank any amount found to have been wrongfully
paid to Agent Bank or disbursed by Agent Bank to any Lender, then such Lender
shall reimburse Agent Bank for all such amounts. Notwithstanding the foregoing,
Agent Bank shall not be obligated to advance Liabilities and Costs and may
require the deposit by each Lender of its Pro Rata Share of any material
Liabilities and Costs anticipated by Agent Bank before they are incurred or made
payable.
Section 9.08. Agent Individually. With respect to its Pro Rata Share
------------------
of the Credit Facility, Agent Bank shall have and may exercise the same rights
and powers hereunder and is subject to the same obligations and liabilities as
and to the extent set forth herein for any other Lender. The terms "Lenders",
"Requisite Lenders" or any similar terms may include Agent Bank in its
individual capacity as a Lender or one of the Requisite Lenders, but Requisite
Lenders shall not include Agent Bank solely in its capacity as Agent Bank and
need not necessarily include Agent Bank in its capacity as a Lender. Agent Bank
and any Lender and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with Borrowers
or any of their Affiliates as if it were not acting as Agent Bank or Lender
pursuant hereto.
Section 9.09. Successor Agent Bank; Resignation of Agent Bank;
------------------------------------------------
Removal of Agent Bank.
- ---------------------
a. Agent Bank may resign from the performance of all its
functions and duties hereunder at any time by giving at least thirty (30)
Banking Business Days' prior written notice to Lenders and Borrowers, and shall
automatically cease to be Agent Bank hereunder in the event a petition in
bankruptcy shall be filed by or against Agent Bank or the Federal Deposit
Insurance Corporation or any other Governmental Authority shall assume control
of Agent Bank or Agent Bank's interests under the Bank Facilities. Further,
Lenders (other than Agent Bank) may unanimously remove Agent Bank at any time
upon the occurrence of gross negligence or wilful misconduct by Agent Bank by
giving at least thirty (30) Banking Business Days' prior written notice to Agent
Bank, Borrowers and all other Lenders. Such resignation or removal shall take
effect upon the acceptance by a successor Agent Bank of appointment pursuant to
clause (b) or (c).
b. Upon any such notice of resignation by or removal of Agent
Bank, Requisite Lenders shall appoint a successor Agent Bank which appointment
shall be subject to Borrowers' consent (other than upon the occurrence and
during the continuance of any Event of Default), which shall not be unreasonably
withheld or delayed. Any successor Agent Bank
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must be a Bank (i) the senior debt obligations of which (or such bank's parent's
senior unsecured debt obligations) are rated not less than Baa-2 by Moody's
Investors Services, Inc. or a comparable rating by a rating agency acceptable to
Requisite Lenders and (ii) which has total assets in excess of Ten Billion
Dollars ($10,000,000,000.00).
c. If a successor Agent Bank shall not have been so appointed
within said thirty (30) Banking Business Day period, the retiring or removed
Agent Bank, with the consent of Borrowers (other than upon the occurrence and
during the continuance of any Event of Default) (which may not be unreasonably
withheld or delayed), shall then appoint a successor Agent Bank who shall meet
the requirements described in subsection (b) above and who shall serve as Agent
Bank until such time, if any, as Requisite Lenders, with the consent of
Borrowers (other than upon the occurrence and during the continuance of any
Event of Default), appoint a successor Agent Bank as provided above.
Section 9.10. Consent and Approvals.
---------------------
a. Each consent, approval, amendment, modification or waiver
specifically enumerated in this Section 9.10(a) shall require the consent of
Requisite Lenders:
(i) Approval of Borrowings with less than full compliance
with requirements of Article IIIB (Section 2.04);
(ii) Consent to modification of the Hammond Lease
Documents (Sections 5.03 and 5.22);
(iii) Consent to modification to or waiver of financial
reporting requirements or production of additional financial or other
information (Section 5.08);
(iv) Approval of defeasance of New Indenture or New Senior
Subordinated Notes (Section 5.24);
(v) Sale of all or any portion of Joliet Excess Land
(Section 6.13(v));
(vi) Consent to creation of ECJC or ECHC Subsidiaries
(Section 6.18);
(vii) Approval of a change in the method of calculation of
any financial covenants,
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standards or terms as a result of a change in accounting principle
(Section 6.19);
(viii) Direct Agent Bank to declare the unpaid balance of
the Credit Facility fully due and payable (Section 7.02);
(ix) Direct the disposition of insurance proceeds or
condemnation awards under certain circumstances (Section 8.02);
(x) Approval of appointment of successor Agent Bank
(Section 9.09);
(xi) Approval of certain Protective Advances (Section
9.11(a));
(xii) Approval of a Post-Foreclosure Plan and related
matters (Section 9.11(e));
(xiii) Consent to action or proceeding against Borrowers or
the Collateral by any Lender (Section 9.12); or
(xiv) Except as referred to in subsection (b) below,
approval of any amendment, modification or termination of this Credit
Agreement, or waiver of any provision herein (Section 10.01).
b. Each consent, approval, amendment, modification or waiver
specifically enumerated in Section 10.01 shall require the consent of all
Lenders.
c. In addition to the required consents or approvals referred
to in subsection (a) above, Agent Bank may at any time request instructions from
Requisite Lenders with respect to any actions or approvals which, by the terms
of this Credit Agreement or of any of the Loan Documents, Agent Bank is
permitted or required to take or to grant without instructions from any Lenders,
and if such instructions are promptly requested, Agent Bank shall be absolutely
entitled to refrain from taking any action or to withhold any approval and shall
not be under any liability whatsoever to any Person for refraining from taking
any action or withholding any approval under any of the Loan Documents until it
shall have received such instructions from Requisite Lenders. Without limiting
the foregoing, no Lender shall have any right of action whatsoever against Agent
Bank as a result of Agent Bank acting or refraining from acting under this
Credit Agreement, the Security Documentation or any of the other Loan Documents
in
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accordance with the instructions of Requisite Lenders or, where applicable, all
Lenders. Agent Bank shall promptly notify each Lender at any time that the
Requisite Lenders have instructed Agent Bank to act or refrain from acting
pursuant hereto.
d. Each Lender agrees that any action taken by Agent Bank at
the direction or with the consent of Requisite Lenders in accordance with the
provisions of this Credit Agreement or any Loan Document, and the exercise by
Agent Bank at the direction or with the consent of Requisite Lenders of the
powers set forth herein or therein, together with such other powers as are
reasonably incidental thereto, shall be authorized and binding upon all Lenders,
except for actions specifically requiring the approval of all Lenders. All
communications from Agent Bank to Lenders requesting Lenders' determination,
consent, approval or disapproval (i) shall be given in the form of a written
notice to each Lender, (ii) shall be accompanied by a description of the matter
or thing as to which such determination, approval, consent or disapproval is
requested, or shall advise each Lender where such matter or thing may be
inspected, or shall otherwise describe the matter or issue to be resolved, (iii)
shall include, if reasonably requested by a Lender and to the extent not
previously provided to such Lender, written materials and a summary of all oral
information provided to Agent Bank by Borrowers in respect of the matter or
issue to be resolved, and (iv) shall include Agent Bank's recommended course of
action or determination in respect thereof. Each Lender shall reply promptly,
but in any event within ten (10) Banking Business Days (the "Lender Reply
Period"). Unless a Lender shall give written notice to Agent Bank that it
objects to the recommendation or determination of Agent Bank (together with a
written explanation of the reasons behind such objection) within the Lender
Reply Period, such Lender shall be deemed to have approved of or consented to
such recommendation or determination. With respect to decisions requiring the
approval of Requisite Lenders or all Lenders, Agent Bank shall submit its
recommendation or determination for approval of or consent to such
recommendation or determination to all Lenders and upon receiving the required
approval or consent shall follow the course of action or determination
recommended to Lenders by Agent Bank or such other course of action recommended
by Requisite Lenders, and each non-responding Lender shall be deemed to have
concurred with such recommended course of action.
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Section 9.11. Agency Provisions Relating to Collateral.
----------------------------------------
a. Agent Bank is hereby authorized on behalf of all Lenders,
without the necessity of any notice to or further consent from any Lender, from
time to time prior to an Event of Default, to take any action with respect to
any Collateral or Loan Document which may be necessary to perfect and maintain
Liens of the Security Documentation upon the Collateral granted pursuant to the
Loan Documents. Agent Bank may make, and shall be reimbursed by Lenders (in
accordance with their Pro Rata Shares), to the extent not reimbursed by
Borrowers, for, Protective Advance(s) during any one (1) calendar year with
respect to the Collateral up to the sum of (i) amounts expended to pay real
estate taxes, assessments and governmental charges or levies imposed upon such
Collateral, (ii) amounts expended to pay insurance premiums for policies of
insurance related to such Collateral, and (iii) One Hundred Thousand Dollars
($100,000.00). Protective Advances in excess of said sum during any calendar
year for any Collateral shall require the consent of Requisite Lenders.
b. Lenders hereby irrevocably authorize Agent Bank, at its
option and in its discretion, to release any Security Documentation granted to
or held by Agent Bank upon any Collateral (i) upon Bank Facility Termination and
repayment and satisfaction of all Borrowings, and all other Obligations and the
termination of this Credit Agreement, or (ii) if approved, authorized or
ratified in writing by Agent Bank at the direction of all Lenders. Agent Bank
shall not be required to execute any document to evidence the release of the
Security Documentation granted to Agent Bank for the benefit of Lenders herein
or pursuant hereto upon any Collateral if, in Agent Bank's opinion, such
document would expose Agent Bank to liability or create any obligation or entail
any consequence other than the release of such Security Documentation without
recourse or warranty, and such release shall not in any manner discharge, affect
or impair the Obligations or any Security Documentation upon (or obligations of
Borrowers in respect of) any property which shall continue to constitute part of
the Collateral.
c. Except as provided in this Credit Agreement, Agent Bank
shall have no obligation whatsoever to any Lender or to any other Person to
assure that the Collateral exists or is owned by Borrowers or is cared for,
protected or insured or has been encumbered or that the Security Documentation
granted to Agent Bank herein or in any of the other Loan Documents or pursuant
hereto or thereto have been properly or sufficiently or lawfully created,
perfected,
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protected or enforced or are entitled to any particular priority.
d. Should Agent Bank (i) employ counsel for advice or other
representation (whether or not any suit has been or shall be filed) with respect
to any Collateral or any part thereof, or any of the Loan Documents, or the
attempt to enforce any security interest or Security Documentation on any of the
Collateral, or (ii) commence any proceeding or in any way seek to enforce its
rights or remedies under the Loan Documents, irrespective of whether as a result
thereof Agent Bank shall acquire title to any Collateral, either through
foreclosure, deed in lieu of foreclosure or otherwise, each Lender, upon demand
therefor from time to time, shall contribute its share (based on its Pro Rata
Share) of the reasonable costs and/or expenses of any such advice or other
representation, enforcement or acquisition, including, but not limited to, fees
of receivers or trustees, court costs, title company charges, filing and
recording fees, appraisers' fees and fees and expenses of attorneys to the
extent not otherwise reimbursed by Borrowers; provided that Agent Bank shall not
be entitled to reimbursement of its attorneys' fees and expenses incurred in
connection with the resolution of disputes between Agent Bank and other Lenders
unless Agent Bank shall be the prevailing party in any such dispute. Any loss
of principal and interest resulting from any Event of Default shall be shared by
Lenders in accordance with their respective Pro Rata Shares. It is understood
and agreed that in the event Agent Bank determines it is necessary to engage
counsel for Lenders from and after the occurrence of an Event of Default, said
counsel shall be selected by Agent Bank.
e. In the event that all or any portion of the Collateral is
acquired by Agent Bank as the result of a foreclosure or the acceptance of a
deed or assignment in lieu of foreclosure, or is retained in satisfaction of all
or any part of Borrowers' obligations, title to any such Collateral or any
portion thereof shall be held in the name of Agent Bank or a nominee or
subsidiary of Agent Bank, as agent, for the ratable benefit of Agent Bank and
Lenders. Agent Bank shall prepare a recommended course of action for such
Collateral (the "Post-Foreclosure Plan"), which shall be subject to the approval
of the Requisite Lenders. In the event that Requisite Lenders do not approve
such Post-Foreclosure Plan, any Lender shall be permitted to submit an
alternative Post-Foreclosure Plan to Agent Bank, and Agent Bank shall submit any
and all such additional Post-Foreclosure Plans to the Lenders for evaluation and
the approval of Requisite Lenders. In accordance with the approved Post-
Foreclosure Plan, Agent Bank shall manage, operate, repair, administer,
complete, construct, restore or otherwise deal with the Collateral
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acquired and administer all transactions relating thereto, including, without
limitation, employing a management agent, leasing agent and other agents,
contractors and employees, including agents of the sale of such Collateral, and
the collecting of rents and other sums from such Collateral and paying the
expenses of such Collateral; actions taken by Agent Bank with respect to the
Collateral, which are not provided for in the approved Post-Foreclosure Plan or
reasonably incidental thereto, shall require the consent of Requisite Lenders by
way of supplement to such Post-Foreclosure Plan. Upon demand therefor from time
to time, each Lender will contribute its share (based on its Pro Rata Share) of
all reasonable costs and expenses incurred by Agent Bank pursuant to the Post-
Foreclosure Plan in connection with the construction, operation, management,
maintenance, leasing and sale of such Collateral. In addition, Agent Bank shall
render or cause to be rendered by the managing agent, to each of the Lenders,
monthly, an income and expense statement for such Collateral, and each of the
Lenders shall promptly contribute its Pro Rata Share of any operating loss for
such Collateral, and such other expenses and operating reserves as Agent Bank
shall deem reasonably necessary pursuant to and in accordance with the Post-
Foreclosure Plan. To the extent there is net operating income from such
Collateral, Agent Bank shall, in accordance with all applicable Gaming Laws and
the Post-Foreclosure Plan, determine the amount and timing of distributions to
Lenders. All such distributions shall be made to Lenders in accordance with
their respective Pro Rata Shares. Lenders acknowledge that if title to any
Collateral is obtained by Agent Bank or its nominee, such Collateral will not be
held as a permanent investment but will be liquidated as soon as practicable.
Agent Bank shall undertake to sell such Collateral, at such price and upon such
terms and conditions as the Requisite Lenders shall reasonably determine to be
most advantageous. Any purchase money mortgage or deed of trust taken in
connection with the disposition of such Collateral in accordance with the
immediately preceding sentence shall name Agent Bank, as agent for Lenders, as
the beneficiary or mortgagee. In such case, Agent Bank and Lenders shall enter
into an agreement with respect to such purchase money mortgage defining the
rights of Lenders in the same Pro Rata Shares as provided hereunder, which
agreement shall be in all material respects similar to this Article IX insofar
as the same is appropriate or applicable.
Section 9.12. Lender Actions Against Collateral and Restriction on
----------------------------------------------------
Exercise of Set-Off. Each Lender agrees that it will not take any action, nor
- -------------------
institute any actions or proceedings, against Borrowers or any other obligor
hereunder, under the Security Documentation or under any other Loan Documents
with respect to exercising claims against or rights
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in any Collateral or exercise any set-off under Section 10.23 or under common
law without the prior consent of Requisite Lenders.
Section 9.13. Ratable Sharing. Subject to Section 9.03 and 9.04,
---------------
upon the occurrence of an Event of Default, Lenders agree among themselves that
(i) with respect to all amounts received by them which are applicable to the
payment of the Obligations, equitable adjustment will be made so that, in
effect, all such amounts will be shared among them ratably in accordance with
their Pro Rata Shares, whether received by voluntary payment, by counterclaim or
cross action or by the enforcement of any or all of the Obligations, or the
Collateral, (ii) if any of them shall by voluntary payment or by the exercise of
any right of counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of the Obligations held by it which is greater than its Pro
Rata Share of the payments on account of the Obligations, the one receiving such
excess payment shall purchase, without recourse or warranty, an undivided
interest and participation (which it shall be deemed to have done simultaneously
upon the receipt of such payment) in such Obligations owed to the others so that
all such recoveries with respect to such Obligations shall be applied ratably in
accordance with their Pro Rata Shares; provided, that if all or part of such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to that party to the extent necessary to adjust
for such recovery, but without interest except to the extent the purchasing
party is required to pay interest in connection with such recovery. Borrowers
agree that any Lender so purchasing a participation from another Lender pursuant
to this Section 9.13 may, to the fullest extent permitted by law, exercise all
its rights of payment with respect to such participation as fully as if such
Lender were the direct creditor of Borrowers in the amount of such
participation. No Lender shall exercise any setoff, banker's lien or other
similar right in respect to any Obligations without the prior written approval
by Agent Bank.
Section 9.14. Delivery of Documents. Agent Bank shall as soon as
---------------------
reasonably practicable distribute to each Lender at its primary address set
forth on the appropriate counterpart signature page hereof, or at such other
address as a Lender may request in writing, (i)copies of all documents to which
such Lender is a party or of which is executed or held by Agent Bank on behalf
of such Lender, (ii) all documents of which Agent Bank receives copies from
Borrowers pursuant to Article VI and Section 10.03, (iii) all other documents or
information which Agent Bank is required to send to Lenders pursuant to the
terms of this Credit Agreement, (iv) other
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information or documents received by Agent Bank at the request of any Lender,
and (v) all notices received by Agent Bank pursuant to Section 5.21. In
addition, within fifteen (15) Banking Business Days after receipt of a request
in writing from a Lender for written information or documents provided by or
prepared by Borrowers, Agent Bank shall deliver such written information or
documents to such requesting Lender if Agent Bank has possession of such written
information or documents in its capacity as Agent Bank or as a Lender.
Section 9.15. Notice of Events of Default. Agent Bank shall not be
---------------------------
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default (other than nonpayment of principal of or interest on the Bank
Facilities) unless Agent Bank has received notice in writing from a Lender or
Borrowers referring to this Credit Agreement or the other Loan Documents,
describing such event or condition and expressly stating that such notice is a
notice of a Default or Event of Default. Should Agent Bank receive such notice
of the occurrence of a Default or Event of Default, or should Agent Bank send
Borrowers a notice of Default or Event of Default, Agent Bank shall promptly
give notice thereof to each Lender.
ARTICLE X
GENERAL TERMS AND CONDITIONS
----------------------------
The following terms and conditions shall be applicable until Bank
Facility Termination:
Section 10.01. Amendments and Waivers. (a) No amendment or
----------------------
modification of any provision of this Credit Agreement shall be effective
without the written agreement of Requisite Lenders (after notice to all Lenders)
and Borrowers (except for rights and priorities of Lenders as amongst themselves
as provided in Section 9.04(a) which do not require the consent of Borrowers),
and (b) no termination or waiver of any provision of this Credit Agreement, or
consent to any departure by Borrowers therefrom shall in any event be effective
without the written concurrence of Requisite Lenders (after notice to all
Lenders), which Requisite Lenders shall have the right to grant or withhold at
their sole discretion, except that the following amendments, modifications or
waivers shall require the consent of all Lenders:
(i) modify any requirement hereunder that any particular action
be taken by all the Lenders or by the Requisite Lenders, modify this Section
10.01 or change the definition of "Requisite Lenders", or remove Agent Bank
under Section 9.09(a), shall be effective unless consented to by all
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of the Lenders, without regard to the vote of Agent Bank as a Lender;
(ii) increase the Aggregate Commitment or modify the respective
Syndication Interests of any Lender, release any material portion of the
Collateral except as specifically provided in the Credit Agreement, extend the
Maturity Date or change any provision expressly requiring the consent of all
Lenders shall be made without the consent of each Lender; or
(iii) reduce any fees described in Section 2.10(b) or (c) or
extend the due date for, or reduce or postpone the amount of, any payments on
the Credit Facility, or reduce the rate of interest or postpone the payment of
interest on the Credit Facility, shall be made without the consent of all of the
Lenders.
No amendment, modification, termination or waiver of any provision of Article IX
or any other provision referring to Agent Bank shall be effective without the
written concurrence of Agent Bank, but only if such amendment, modification,
termination or waiver alters the obligations or rights of Agent Bank. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on Borrowers in
any case shall entitle Borrowers to any other further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 10.01 shall be binding on
each assignee, transferee or recipient of Agent Bank's or any Lender's
respective Syndication Interest in the Credit Facility at the time outstanding.
No modification of Section 2.08 or the Swingline Note shall be made without the
consent of the Swingline Lender. No modification of Section 2.09 shall be made
without the consent of the L/C Issuer.
Section 10.02. Failure to Exercise Rights. Nothing herein contained
--------------------------
shall impose upon Banks or Borrowers any obligation to enforce any terms,
covenants or conditions contained herein. Failure of Banks or Borrowers, in any
one or more instances, to insist upon strict performance by Borrowers or Banks
of any terms, covenants or conditions of this Credit Agreement or the other Loan
Documents, shall not be considered or taken as a waiver or relinquishment by
Banks or Borrowers of their right to insist upon and to enforce in the future,
by injunction or other appropriate legal or equitable remedy, strict compliance
by Borrowers or Banks with all the terms, covenants and conditions of this
Credit Agreement and the other Loan Documents. The consent of Banks
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or Borrowers to any act or omission by Borrowers or Banks shall not be construed
to be a consent to any other or subsequent act or omission or to waive the
requirement for Banks' or Borrowers' consent to be obtained in any future or
other instance.
Section 10.03. Notices and Delivery. Unless otherwise specifically
--------------------
provided herein, any consent, notice or other communication herein required or
permitted to be given shall be in writing and may be personally served,
telecopied or sent by courier service or United States mail and shall be deemed
to have been given when delivered in person or by courier service, upon receipt
of a telecopy (or on the next Banking Business Day if such telecopy is received
on a non-Banking Business Day or after 5:00 p.m. on a Banking Business Day) or
four (4) Banking Business Days after deposit in the United States mail
(registered or certified, with postage prepaid and properly addressed). Notices
to Agent Bank pursuant to Articles II shall not be effective until received by
Agent Bank. For the purposes hereof, the addresses of the parties hereto (until
notice of a change thereof is delivered as provided in this Section 10.03) shall
be as set forth below each party's name on the signature pages hereof, or, as to
each party, at such other address as may be designated by such party in an
Assignment and Assumption Agreement or in a written notice to all of the other
parties. All deliveries to be made to Agent Bank for distribution to the
Lenders shall be made to Agent Bank at the addresses specified for notice on the
signature page hereto and in addition, a sufficient number of copies of each
such delivery shall be delivered to Agent Bank for delivery to each Lender at
the address specified for deliveries on the signature page hereto or such other
address as may be designated by Agent Bank in a written notice.
Section 10.04. Modification in Writing. This Credit Agreement and
-----------------------
the other Loan Documents constitute the entire agreement between the parties and
supersede all prior agreements whether written or oral with respect to the
subject matter hereof, including, but not limited to, the Commitment Letter and
any term sheets furnished by any of the Banks to Borrowers. Neither this Credit
Agreement, nor any other Loan Documents, nor any provision herein, or therein,
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
Section 10.05. Other Agreements. If the terms of any documents,
----------------
certificates or agreements delivered in connection with this Credit Agreement
are inconsistent with the terms of the Loan Documents, Borrowers shall use their
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best efforts to amend such document, certificate or agreement to the
satisfaction of Agent Bank to remove such inconsistency.
Section 10.06. Counterparts. This Credit Agreement may be executed
------------
by the parties hereto in any number of separate counterparts with the same
effect as if the signatures hereto and hereby were upon the same instrument.
All such counterparts shall together constitute but one and the same document.
Section 10.07. Rights, Powers and Remedies are Cumulative. None of
------------------------------------------
the rights, powers and remedies conferred upon or reserved to Agent Bank, Banks
or Borrowers in this Credit Agreement are intended to be exclusive of any other
available right, power or remedy, but each and every such right, power and
remedy shall be cumulative and not alternative, and shall be in addition to
every right, power and remedy herein specifically given or now or hereafter
existing at law, in equity or by statute. Any forbearance, delay or omission by
Agent Bank, Banks or Borrowers in the exercise of any right, power or remedy
shall not impair any such right, power or remedy or be considered or taken as a
waiver or relinquishment of the right to insist upon and to enforce in the
future, by injunction or other appropriate legal or equitable remedy, any of
said rights, powers and remedies given to Agent Bank, Banks or Borrowers herein.
The exercise of any right or partial exercise thereof by Agent Bank, Banks or
Borrowers shall not preclude the further exercise thereof and the same shall
continue in full force and effect until specifically waived by an instrument in
writing executed by Agent Bank or Banks, as the case may be.
Section 10.08. Continuing Representations. All agreements,
--------------------------
representations and warranties made herein shall survive the execution and
delivery of this Credit Agreement, the making of the Bank Facilities hereunder
and the execution and delivery of each other Loan Document until final payment
of all sums owing under the Bank Facilities and Bank Facility Termination has
occurred.
Section 10.09. Successors and Assigns. All of the terms, covenants,
----------------------
warranties and conditions contained in this Credit Agreement shall be binding
upon and inure to the sole and exclusive benefit of the parties hereto and their
respective successors and assigns.
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Section 10.10. Assignment of Loan Documents by Borrowers or
--------------------------------------------
Syndication Interests by Lenders.
- --------------------------------
a. This Credit Agreement and the other Loan Documents to which
Borrowers are a party will be binding upon and inure to the benefit of
Borrowers, the Agent Bank, each of the Banks, and their respective successors
and assigns, except that, Borrowers may not assign their rights hereunder or
------
thereunder or any interest herein or therein without the prior written consent
of all the Lenders. Any attempted assignment or delegation in contravention of
the foregoing shall be null and void. Any Lender may at any time pledge its
Syndication Interest in the Credit Facility, the Credit Agreement and the Loan
Documents to a Federal Reserve Bank, but no such pledge shall release that
Lender from its obligations hereunder or grant to such Federal Reserve Bank the
rights of a Lender hereunder absent foreclosure of such pledge.
b. Each Lender may assign all or any part of its Syndication
Interest in the Credit Facility to any Affiliate of such Lender or to any other
Lender without consent and to one or more financial institutions that are
Eligible Assignees with the prior consent of the Agent Bank and Borrowers (which
consents shall not be unreasonably withheld or delayed); provided, however, that
--------
the minimum amount of each such assignment shall be Five Million Dollars
($5,000,000.00), or such lesser amount as constitutes the remaining amount of a
Lender's Syndication Interest in the Credit Facility (except that there shall be
no minimum assignment among the Lenders or to their Affiliates), and each
assignee Lender (or assignor if so agreed between the assignee Lender and such
assignor) shall pay to the Agent Bank an assignment fee of Three Thousand Five
Hundred Dollars ($3,500.00) with respect to each such assignment. Each such
assignment shall be evidenced by an assignment substantially in the form of an
Assignment and Assumption Agreement or other form reasonably acceptable to Agent
Bank and Borrowers. Upon any such assignment, the assignee financial
institution shall become a Lender for all purposes under the Credit Agreement
and each of the Loan Documents and the assigning Lender shall be released from
its further obligations hereunder to the extent of such assignment.
Notwithstanding the foregoing, the rights of the Lenders to make assignments
shall be subject to the approval by the Gaming Authorities of the assignee or
participant, to the extent required by applicable Gaming Laws, and to applicable
securities laws.
c. Each Lender may sell participations without notice to or
consent of the Borrowers, or any of them, or Agent Bank to any bank or financial
institution which is not a competitor or an Affiliate of any competitor of the
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Casino Facilities in the gaming industry (it being acknowledged that a bank or
financial institution shall not be deemed a competitor or Affiliate of a
competitor merely because it lends money or otherwise extends credit to any such
competitor or Affiliate of a competitor), for all or any part of its Syndication
Interest in the Credit Facility; provided, however, that (i) such Lender shall
--------
remain responsible for its total obligations under the Credit Agreement and each
of the Loan Documents, (ii) the Borrowers and the Agent Bank shall continue to
deal solely with such Lender in connection with such Lender's rights and
obligations under the Credit Agreement and each of the Loan Documents, and (iii)
such Lender shall not sell any participation under which the participant would
have rights to approve any amendment or waiver relating to the Credit Agreement
or any Loan Document except to the extent any such amendment or waiver would (w)
extend the final maturity date or the date for the payment of any installments
of fees, principal or interest due in respect of the Credit Facility, (x) reduce
the interest rates applicable to the Credit Facility or (y) release any material
portion of the Collateral. Notwithstanding the foregoing, the rights of the
Lenders to grant participations shall be subject to the approval by the Gaming
Authorities of the assignee or participant, to the extent required by applicable
Gaming Laws, and to applicable securities laws.
d. In the event any Lender is found unsuitable as a Lender
under the Credit Facility by the Gaming Authorities or the Governmental
Authorities of any State of the United States ("Unsuitable Lender"): (a) Agent
Bank shall use its best efforts to find a replacement Lender, (b) Borrowers
shall have the right to make a Voluntary Reduction in the amount necessary to
reduce the Aggregate Commitment by the amount of the Syndication Interest held
by the Unsuitable Lender (without any penalties, including any Breakage Charges)
until a replacement Lender, if any, commits to acquire the Syndication Interest
of the Unsuitable Lender, at which time the Aggregate Commitment shall be
increased by the amount of the Voluntary Reduction, and (c) upon full payment of
all outstanding amounts of principal and interest owing it, such Unsuitable
Lender shall execute such documents as may be required by Agent Bank, Borrowers
or any applicable gaming authorities to evidence the termination of its
Syndication Interest in the Credit Facility.
Section 10.11. Action by Lenders. Whenever Banks shall have the
-----------------
right to make an election, or to exercise any right, or their consent shall be
required for any action under this Credit Agreement or the Loan Documents, then
such election, exercise or consent shall be given or made for all Banks by Agent
Bank in accordance with the provisions of
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Sections 10.01. Notices, reports and other documents required to be given by
Borrowers to Banks hereunder may be given by Borrowers to Agent Bank on behalf
of Banks, with sufficient copies for distribution to each of the Banks, and the
delivery to Agent Bank shall constitute delivery to Banks. In the event any
payment or payments are received by a Lender other than Agent Bank, Borrowers
consent to such payments being shared and distributed as provided herein.
Section 10.12. Time of Essence. Time shall be of the essence of
---------------
this Credit Agreement.
Section 10.13. Choice of Law and Forum. This Credit Agreement shall
-----------------------
be governed by and construed in accordance with the internal laws of the State
of Nevada without regard to principles of conflicts of law. Borrowers further
agree that a non-exclusive forum for the determination of any action relating
to this Credit Agreement, the Loan Documents, or any other document or
instrument delivered in favor of Banks pursuant to the terms hereof may include
an appropriate Court of the State of Nevada or the United States District Court
or United States Bankruptcy Court for the District of Nevada and the Borrowers
hereby irrevocably submit to the jurisdiction thereof.
Section 10.14. Arbitration.
-----------
a. Upon the request of any party, whether made before or after
the institution of any legal proceeding, any action, dispute, claim or
controversy of any kind (e.g., whether in contract or in tort, statutory or
common law, legal or equitable) ("Dispute") now existing or hereafter arising
between the parties in any way arising out of, pertaining to or in connection
with the Credit Agreement, Loan Documents or any related agreements, documents,
or instruments (collectively the "Documents"), may, by summary proceedings
(e.g., a plea in abatement or motion to stay further proceedings), bring an
action in court to compel arbitration of any Dispute.
b. All Disputes between the parties shall be resolved by
binding arbitration governed by the Commercial Arbitration Rules of the American
Arbitration Association, which shall use the Federal Rules of Civil Procedure
with respect to all discovery matters. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction.
c. No provision of, nor the exercise of any rights under this
arbitration clause shall limit the rights of any party, and the parties shall
have the right during any
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Dispute, to seek, use and employ ancillary or preliminary remedies, judicial or
otherwise, for the purposes of realizing upon, preserving, protecting or
foreclosing upon any property, real or personal, which is involved in a Dispute,
or which is subject to, or described in, the Documents, including, without
limitation, rights and remedies relating to: (i) foreclosing against any real or
personal property collateral or other security by the exercise of a power of
sale under the Security Documentation or other security agreement or instrument,
or applicable law, (ii) exercising self-help remedies (including setoff rights)
or (iii) obtaining provisional or ancillary remedies such as injunctive relief,
sequestration, attachment, garnishment or the appointment of a receiver from a
court having jurisdiction before, during or after the pendency of any
arbitration. The institution and maintenance of an action for judicial relief or
pursuit of provisional or ancillary remedies or exercise of self-help remedies
shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the Dispute to arbitration nor render inapplicable the
compulsory arbitration provision hereof.
Section 10.15. Waiver of Jury Trial. TO THE MAXIMUM EXTENT
--------------------
PERMITTED BY LAW, BORROWERS AND EACH OF THE BANKS EACH MUTUALLY HEREBY EXPRESSLY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND,
OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS CREDIT AGREEMENT, THE NOTES
OR ANY OF THE LOAN DOCUMENTS, OR IN ANY WAY CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE DEALINGS OF BORROWERS AND BANKS WITH RESPECT TO THIS CREDIT
AGREEMENT, THE NOTES OR ANY OF THE LOAN DOCUMENTS, OR THE TRANSACTIONS RELATED
HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE
OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO THE MAXIMUM EXTENT
PERMITTED BY LAW, BORROWERS AND EACH OF THE BANKS EACH MUTUALLY AGREE THAT ANY
SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR PROCEEDINGS SHALL BE DECIDED BY
A COURT TRIAL WITHOUT A JURY AND THAT THE DEFENDING PARTY MAY FILE AN ORIGINAL
COUNTERPART OF THIS SECTION WITH ANY COURT OR OTHER TRIBUNAL AS WRITTEN EVIDENCE
OF THE CONSENT OF THE COMPLAINING PARTY TO THE WAIVER OF ITS RIGHT TO TRIAL BY
JURY.
Section 10.16. Scope of Approval and Review. Any inspection of the
----------------------------
Casino Facilities shall be deemed to be made solely for Banks' internal purposes
and shall not be relied upon by the Borrowers or any third party. In no event
shall Lenders be deemed or construed to be joint venturers or partners of
Borrowers.
Section 10.17. Severability of Provisions. In the event any one or
--------------------------
more of the provisions contained in this Credit Agreement shall be invalid,
illegal or unenforceable in
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any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
Section 10.18. Cumulative Nature of Covenants. All covenants
------------------------------
contained herein are cumulative and not exclusive of each other covenant. Any
action allowed by any covenant shall be allowed only if such action is not
prohibited by any other covenant.
Section 10.19. Costs to Prevailing Party. If any action or
-------------------------
arbitration proceeding is brought by any party against any other party under
this Credit Agreement or any of the Loan Documents, the prevailing party shall
be entitled to recover such costs and attorney's fees as the court in such
action or proceeding may adjudge reasonable.
Section 10.20. Expenses.
--------
a. Generally. Borrowers agree upon demand to pay, or reimburse
---------
Agent Bank for, all of Agent Bank's documented reasonable out-of-pocket costs
and expenses of every type and nature incurred by Agent Bank at any time
(whether prior to, on or after the date of this Credit Agreement) in connection
with (i) any requests for consent, waiver or other modification of any Loan
Document made by Borrowers, other than to correct errors attributable to the
Banks; (ii) the negotiation, preparation and execution of this Credit Agreement
(including, without limitation, the satisfaction or attempted satisfaction of
any of the conditions set forth in Article III), the Security Documentation and
the other Loan Documents and the advance of Borrowings; (iii) the subordination
of any Collateral, including title charges, recording fees and reasonable
attorneys' fees and costs incurred in connection therewith; (iv) any appraisals
performed after the occurrence of an Event of Default; (v) the creation,
perfection or protection of the Security Documentation on the Collateral
(including, without limitation, any fees and expenses for title and lien
searches, local counsel in various jurisdictions, filing and recording fees and
taxes, duplication costs and corporate search fees); and (vi) the protection,
collection or enforcement of any of the Obligations or the Collateral, including
Protective Advances.
b. After Event of Default. Borrowers further agree to pay, or
----------------------
reimburse Agent Bank and Lenders, for all reasonable out-of-pocket costs and
expenses, including without limitation reasonable attorneys' fees and
disbursements incurred by Agent Bank or Lenders after the occurrence of an Event
of Default (i) in enforcing any Obligation or in
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foreclosing against the Collateral or exercising or enforcing any other right or
remedy available by reason of such Event of Default; (ii) in connection with any
refinancing or restructuring of the credit arrangements provided under this
Credit Agreement in the nature of a "work-out" or in any insolvency or
bankruptcy proceeding; (iii) in commencing, defending or intervening in any
litigation or in filing a petition, complaint, answer, motion or other pleadings
in any legal proceeding relating to Borrowers and related to or arising out of
the transactions contemplated hereby; (iv) in taking any other action in or with
respect to any suit or proceeding (whether in bankruptcy or otherwise); (v) in
protecting, preserving, collecting, leasing, selling, taking possession of, or
liquidating any of the Collateral; or (vi) in attempting to enforce or enforcing
any lien in any of the Collateral or any other rights under the Security
Documentation.
Section 10.22. Security and Loan Documentation. The Security
-------------------------------
Documentation and other Loan Documents (other than this Credit Agreement) may be
held in the name of WFB as the Agent Bank of all Banks hereunder pursuant to the
terms of this Credit Agreement.
Section 10.23. Setoff. In addition to any rights and remedies of
------
the Banks provided by law, if any Event of Default exists, Agent Bank is
authorized at any time and from time to time, without prior notice to the
Borrowers, any such notice being waived by the Borrowers to the fullest extent
permitted by law, to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by such Bank to or for
the credit or the account of Borrowers against any and all obligations of
Borrowers under the Bank Facilities, now or hereafter existing, irrespective of
whether or not the Agent Bank or any such Bank shall have made demand under this
Credit Agreement or any Loan Document and although such amounts owed may be
contingent or unmatured. Agent Bank agrees promptly to notify the Borrowers and
the Agent Bank (and Agent Bank shall promptly notify each other Bank) after any
such setoff and application made by Agent Bank; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Bank under this Section 10.23 are in addition
to the other rights and remedies (including other rights of setoff) which each
such Bank may have.
Section 10.24. Borrowers' Waivers and Consents.
-------------------------------
a. Each Borrower shall be jointly and severally liable for the
repayment of all Aggregate Outstandings.
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b. Each Borrower agrees that neither the Agent Bank nor any
Bank shall have any responsibility to inquire into the apportionment, allocation
or disposition of any Borrowings, Swingline Advances and/or Letters of Credit as
among the Borrowers.
c. For the purpose of implementing the joint borrower
provisions of this Credit Agreement and each of the Loan Documents, each
Borrower hereby irrevocably appoints each other Borrower as its agent and
attorney-in-fact for all purposes of this Credit Agreement and each of the Loan
Documents, including without limitation the giving and receiving of notices and
other communications, the making of requests for, or conversions or
continuations of, Borrowings, Swingline Advances and/or Letters of Credit, the
execution and delivery of certificates and the receipt and allocation of
disbursements from the Banks.
d. Each Borrower acknowledges that the handling of the Bank
Facilities on a joint borrowing basis as set forth in this Credit Agreement is
solely an accommodation to Borrowers and is done at their request. Each
Borrower agrees that neither the Agent Bank, nor any Bank, shall incur any
liability to any Borrower as a result thereof. To induce the Agent Bank and the
Banks to enter into this Credit Agreement, and in consideration thereof, in
accordance with the provisions set forth in Section 5.14 of this Credit
Agreement, each Borrower hereby agrees to indemnify the Agent Bank and each Bank
and hold each such entity harmless from and against any and all liabilities,
expenses, losses, damages and/or claims of damage or injury asserted against
such entity by any Borrower or by any other Person arising from or incurred by
reason of the structuring of the Bank Facilities as herein provided, reliance by
the Agent Bank or the Banks on any requests or instructions from any Borrower,
or any other action taken by the Agent Bank or a Bank hereunder. This Section
shall survive Bank Facility Termination.
e. Each Borrower represents and warrants to the Agent Bank and
the Banks that (i) it has established adequate means of obtaining from each
other Borrower on a continuing basis financial and other information pertaining
to the business, operations and condition (financial and otherwise) of each of
the other Borrowers and its respective property, and (ii) each Borrower now is
and hereafter will be completely familiar with the business, operations and
condition (financial and otherwise) of each other Borrower, and its property.
Each Borrower hereby waives and relinquishes any duty on the part of the Agent
Bank or any Bank to disclose to such Borrower any matter, fact or thing relating
to the business, operations or condition (financial
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or otherwise) of any other Borrower, or the property of any other Borrower,
whether now or hereafter known by the Agent Bank or any Bank at any time through
Bank Facility Termination.
f. Each Borrower acknowledges that the Aggregate Outstandings,
or portions thereof, may derive from value provided directly to another Person
and, in full recognition of that fact, each Borrower consents and agrees that
the Agent Bank and any Bank may, at any time and from time to time, without
notice or demand, and without affecting the enforceability or security of the
Loan Documents:
(i) accept partial payments on the Bank Facilities;
(ii) receive and hold additional security or guaranties for the
Bank Facilities or any part thereof;
(iii) release, reconvey, terminate, waive, abandon, subordinate,
exchange, substitute, transfer and enforce any security or guaranties,
and apply any security and direct the order or manner of sale thereof,
as the Agent Bank or such Bank in its sole and absolute discretion may
determine;
(iv) release any party or any guarantor from any personal
liability with respect to the Bank Facilities or any part thereof;
(v) settle, release on terms satisfactory to the Agent Bank or
such Bank or by operation of applicable laws or otherwise liquidate or
enforce any Bank Facilities and any security or guaranty in any
manner, consent to the transfer of any security and bid and purchase
at any sale; and/or
(vi) consent to the merger, change or any other restructuring or
termination of the corporate existence of any other Borrower or any
other Person, and correspondingly restructure the Bank Facilities,
continuing existence of any lien or encumbrance under any other Loan
Document to which any Borrower is a party or the enforceability hereof
or thereof with respect to all or any part of the Bank Facilities.
Each Borrower expressly waives any right to require the Agent
Bank or any Bank to marshal
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assets in favor of any Borrower, any other party or any other Person
or to proceed against any other Borrower or any other party or any
Collateral provided by any other Borrower or any other party, and
agrees that the Agent Bank and any Bank may proceed against Borrowers
and/or the Collateral in such order as they shall determine in their
sole and absolute discretion. The Agent Bank and any Bank may file a
separate action or actions against any Borrower, whether action is
brought or prosecuted with respect to any other security or against
any other Person, or whether any other Person is joined in any such
action or actions. Each Borrower agrees that the Agent Bank or any
Bank and any other Borrower may deal with each other in connection
with the Bank Facilities or otherwise, or alter any contracts or
agreements now or hereafter existing between any of them, in any
manner whatsoever, all without in any way altering or affecting the
obligations of such Borrower under the Loan Documents. Each Borrower
expressly waives any and all defenses now or hereafter arising or
asserted by reason of: (a) any disability or other defense of any
other Borrower or any other party with respect to any Bank Facilities,
(b) the unenforceability or invalidity as to any other Borrower or any
other party of the Bank Facilities, (c) the unenforceability or
invalidity of any security or guaranty for the Bank Facilities or the
lack of perfection or continuing perfection or failure of priority of
any security for the Bank Facilities, (d) the cessation for any cause
whatsoever of the liability of any Borrower or any other party (other
than by reason of the full payment and performance of all Bank
Facilities), (e) any failure of the Agent Bank or any Bank to give
notice of sale or other disposition to any Borrower or any defect in
any notice that may be given in connection with any sale or
disposition, (f) any act or omission of the Agent Bank or any Bank or
others that directly or indirectly results in or aids the discharge or
release of any Borrower or any other Person or the Bank Facilities or
any other security or guaranty therefor by operation of law or
otherwise, (g) any law which provides that the obligation of a surety
or guarantor must neither be larger in amount nor in other respects
more burdensome than that of the principal or which reduces a surety's
or guarantor's obligation in proportion to the principal obligation,
(h) any failure of the Agent Bank or any Bank to file or
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enforce a claim in any bankruptcy or other proceeding with respect to
any Person, (i) the election by the Agent Bank or any Bank, in any
bankruptcy proceeding of any Person, of the application or non-
application of Section 1111(b)(2) of the United States Bankruptcy
Code, (j) any extension of credit or the grant of any lien or
encumbrance under Section 364 of the United States Bankruptcy Code,
(k) any use of cash collateral under Section 363 of the United States
Bankruptcy Code, (l) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any
Person, (m) the avoidance of any lien or encumbrance in favor of the
Agent Bank or any Bank for any reason, (n) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or
dissolution proceeding commenced by or against any Person, including
any discharge of, or bar or stay against collecting, all or any of the
obligations (or any interest thereon) in or as a result of any such
proceeding, or (o) any election of remedies by the Agent Bank or any
Bank, even if the effect thereof is to destroy or impair any
Borrower's right to subrogation, reimbursement, exoneration,
indemnification or contribution.
g. In the event that all or any part of the Bank Facilities at
any time are secured by any one or more deeds of trust or mortgages creating or
granting liens on any interests in real property, each Borrower authorizes the
Agent Bank and any Bank, upon the occurrence of any Default Notice Recording and
the acceleration of the Indebtedness then owing under the Bank Facilities, at
their sole option, without any other notice or demand and without affecting any
of the Bank Facilities or the validity or enforceability of any liens or
encumbrance in favor of the Agent Bank or any Bank on any Collateral, to
foreclose any or all of such deeds of trust or mortgages by judicial or
nonjudicial sale. To the extent permitted by applicable law, each Borrower
expressly waives any defenses to the enforcement of the Loan Documents or any
liens or encumbrances created or granted under the Loan Documents or to the
recovery by the Agent Bank or any Bank against any other Borrower or any
guarantor or any other Person liable therefor of any deficiency after a judicial
or nonjudicial foreclosure or sale, even though such a foreclosure or sale may
impair the subrogation rights of a Borrower and may preclude a Borrower from
obtaining reimbursement or contribution from any Borrower.
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h. Notwithstanding anything to the contrary elsewhere contained
herein or in any other Loan Document to which any Borrower is a party, each
Borrower hereby expressly agrees with respect to the other Borrowers and their
successors and assigns (including any surety) and any other Person which is
directly or indirectly a creditor of the other Borrowers or any surety for any
other Borrower, not to exercise, until Bank Facility Termination has irrevocably
occurred, any rights at law or in equity to subrogation, to reimbursement, to
exoneration, to contribution, to setoff or to any other rights that could accrue
to a surety against a principal, to a guarantor against a maker or obligor, to
an accommodation party against the party accommodated, or to a holder or
transferee against a maker, and which such Borrower may have or hereafter
acquire against the other Borrowers or any other such Person in connection with
or as a result of such Borrower's execution, delivery and/or performance of this
Credit Agreement or any other Loan Document to which such Borrower is a party.
Section 10.25. Confidentiality. Each of the Banks agrees to hold
---------------
any non-public information that it may receive from Borrowers pursuant to this
Credit Agreement (or pursuant to any other Loan Document) in confidence and
consistent with their respective policies for handling material non-public
information, except for disclosure: (a) To the other Banks; (b) To legal counsel
------
and accountants for Borrowers or any of the Banks; (c) To the other
professional advisors to Borrowers or any of the Banks, provided that the
recipient has accepted such information subject to a confidentiality agreement
substantially similar to this Section 10.25; (d) To regulatory officials having
jurisdiction over that Bank; (e) To any Gaming Authority having regulatory
jurisdiction over Borrowers or their respective Subsidiaries, provided that each
of the Banks agrees to endeavor to notify Borrowers of any such disclosure; (f)
As required by law or legal process or in connection with any legal proceeding,
provided that such disclosing Bank uses reasonable efforts to notify Borrowers
prior to any such disclosure; and (g) To another financial institution in
connection with a disposition or proposed disposition to that financial
institution of all or part of that Lender's Syndication Interest hereunder or in
the Revolving Credit Note, provided that the recipient has accepted such
information subject to a confidentiality agreement substantially similar to this
Section 10.25. For purposes of the foregoing, "non-public information" shall
mean any information respecting Borrowers or their respective Subsidiaries
reasonably considered by Borrowers to be material and not available to the
public, other than (i) information previously filed with any governmental agency
----------
and available to the public, (ii) information which is available to the general
-157-
<PAGE>
public at the time of use or disclosure, (iii) information which becomes
available to the general public, other than by manner of unauthorized disclosure
or use, or (iv) information previously published in any public medium from a
source other than, directly or indirectly, that Bank. Nothing in this Section
shall be construed to create or give rise to any fiduciary duty on the part of
the Agent Bank or the Banks to Borrowers.
Section 10.26. Schedules Attached. Schedules are attached hereto
------------------
and incorporated herein and made a part hereof as follows:
Schedule 2.01(a) - Schedule of Lenders' Proportions in Credit
Facility
Schedule 2.01(c) - Aggregate Commitment Reduction Schedule
Schedule 3.11 - Schedule of Existing Bank Loan Security Documents
Schedule 3.20 - Schedule of Significant Litigation
Schedule 4.15 - Schedules of Spaceleases
(A) ECHC Schedule of Spaceleases
(B) ECJC Schedule of Spaceleases
Schedule 4.16 - Schedules of Equipment Leases and Contracts
(A) ECHC Schedule of Equipment Leases and
Contracts
(B) ECJC Schedule of Equipment Leases and
Contracts
Schedule 4.20 - Schedule of Restricted and Unrestricted
Subsidiaries
Schedule 4.25 - Schedule of Trademarks, Patents, Licenses,
Franchises, Formulas and Copyrights
-158-
<PAGE>
Schedule 4.26 - Schedule of Contingent Liabilities
Schedule 6.05 - Schedule of Budgeted Capital Expenditures
Section 10.27. Exhibits Attached. Exhibits are attached hereto and
-----------------
incorporated herein and made a part hereof as follows:
Exhibit A - Revolving Credit Note - Form
Exhibit B - Swingline Note - Form
Exhibit C - Notice of Borrowing - Form
Exhibit D - Continuation/Conversion Notice - Form
Exhibit E - Notice of Swingline Advance - Form
Exhibit F - Compliance Certificate - Form
Exhibit G - Pricing Certificate - Form
Exhibit H - Authorized Officer Certificate - Form
Exhibit I - Closing Certificate - Form
Exhibit I-1 - Illinois Closing Certificate - Form
Exhibit J - Legal Opinion (Indiana) - Form
Exhibit K - Legal Opinion (Illinois) - Form
Exhibit L - Assignment and Assumption Agreement - Form
Exhibit M - Cash Collateral Pledge Agreement - Form
Exhibit N - Stock Pledge (Gaming) - Form
Exhibit O - Stock Pledge (General) - Form
Exhibit P - Subsidiary Guaranty - Form
-159-
<PAGE>
Exhibit Q - ECJC Property - Description
Exhibit R - Hammond Fee Property - Description
Exhibit S - Joliet Excess Land - Description
-160-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed as of the day and year first above written.
BORROWERS:
EMPRESS ENTERTAINMENT, INC.,
a Delaware corporation
By /s/ Peter A. Ferro, Jr.
-------------------------
Peter A. Ferro, Jr.
Chief Executive Officer
EMPRESS CASINO HAMMOND
CORPORATION, an Indiana
corporation
By /s/ Peter A. Ferro, Jr.
-----------------------
Peter A. Ferro, Jr.,
Chief Executive Officer
EMPRESS CASINO JOLIET
CORPORATION, an Illinois
corporation
By /s/ Peter A. Ferro, Jr.
--------------------------
Peter A. Ferro, Jr.
Chief Executive Officer
Address:
Empress Entertainment
2300 Empress Drive
Joliet, Illinois 60436
Attn: Chief Financial Officer
S-1
<PAGE>
BANKS:
WELLS FARGO BANK,
National Association,
Agent Bank, Lender,
Swingline Lender and L/C
Issuer
By /s/ Joseph Brady
------------------
Joseph Brady, Senior Vice
President
Address:
Wells Fargo Bank
One East First Street
Commercial Banking Division
Reno, Nevada 89501
Attn: Casey Potter, V.P.
S-2
<PAGE>
EXHIBIT 4.8(a)
June 17, 1998
Wells Fargo Bank, National Association
Commercial Banking Division
P.O. Box 11007
Reno, Nevada 89520
Attention: Joseph Brady,
Senior Vice President
RE: EMPRESS ENTERTAINMENT, INC.,
EMPRESS CASINO HAMMOND CORPORATION, AND
EMPRESS CASINO JOLIET CORPORATION
SENIOR CREDIT FACILITY
Ladies & Gentlemen:
This letter agreement shall confirm our understanding with respect to
certain matters relating to the closing (the "Closing") of the Credit Agreement
(the "Credit Agreement") among Wells Fargo Bank, National Association (the
"Agent Bank"), Empress Entertainment, Inc. (the "Company"), Empress Casino
Joliet Corporation ("Empress Joliet") and Empress Casino Hammond Corporation
("Empress Hammond," and together with the Company and Empress Joliet, the
"Borrowers") on June 18, 1998, pursuant to which the Agent Bank intends to
provide the Borrowers with a $100.0 million senior secured revolving credit
facility. Terms not otherwise defined in this letter agreement shall have the
meanings assigned to them in the Credit Agreement.
To facilitate the timely recordation of certain of the ECHC Security
Documents, including the ECHC Mortgage, the ECHC Assignment of Permits, Licenses
and Contracts, the ECHC Assignment of Spaceleases, Contracts, Rents and
Revenues, the ECHC Ship Mortgage and the ECHC Financing Statements
(collectively, the "ECHC Recorded Documents"), the Company and Empress Hammond
have delivered to the Agent Bank in advance of the Closing, and the Agent Bank
has recorded, the ECHC Recorded Documents. The Agent Bank and the Borrowers
hereby agree that:
1. All of the Loan Documents have been dated as of June 17, 1998 to
facilitate the filing and recordation of the ECHC Recorded Documents. The
operative provisions of the Loan Documents shall take effect, and the Closing of
the transactions contemplated by the Loan Documents shall be deemed to have
occurred, on June 18, 1998.
<PAGE>
Wells Fargo Bank
2
June 17, 1998
2. In the even the Closing does not occur by 6:00 p.m. Central Standard
Time on June 18, 1998, the Agent Bank shall immediately prepare, execute and
deliver to the Borrowers such termination statements and releases as are
reasonably necessary to release all security interests reflected by the ECHC
Recorded Documents.
Please signify the Agent Bank's agreement with the foregoing by its
authorized signature below.
EMPRESS ENTERTAINMENT, INC.
/s/ John Costello
--------------------------------
John G. Costello, Vice President, Chief
Financial Officer
EMPRESS CASINO HAMMOND CORPORATION
/s/ John Costello
--------------------------------
John G. Costello, Vice President, Chief
Financial Officer
EMPRESS CASINO JOLIET CORPORATION
/s/ John Costello
--------------------------------
John G. Costello, Vice President, Chief
Financial Officer
ACKNOWLEDGED AND AGREED:
- -----------------------
WELLS FARGO BANK, NATIONAL
ASSOCIATION
/s/ Joseph Brady
_________________________________
Joseph Brady, Senior Vice President
<PAGE>
EXHIBIT 4.8(b)
REVOLVING CREDIT PROMISSORY NOTE
--------------------------------
$100,000,000.00 June 17, 1998
FOR VALUE RECEIVED, the undersigned, EMPRESS ENTERTAINMENT, INC., a
Delaware corporation, EMPRESS CASINO JOLIET CORPORATION, an Illinois corporation
and EMPRESS CASINO HAMMOND CORPORATION, an Indiana corporation (collectively the
"Borrowers") jointly and severally promise to pay to the order of WELLS FARGO
BANK, National Association, as Agent Bank on behalf of itself and the other
Lenders as defined and described in the Credit Agreement described hereinbelow
(each, together with their respective successors and assigns, individually being
referred as a "Lender" and collectively as the "Lenders") such sums as Lenders
may hereafter loan or advance or re-loan to the Borrowers from time to time
pursuant to the Credit Facility as described in the Credit Agreement,
hereinafter defined, up to the maximum principal sum of One Hundred Million
Dollars ($100,000,000.00) at any time outstanding, the unpaid balance of which
shall not exceed in the aggregate the Maximum Permitted Balance at any time,
together with interest on the principal balance outstanding from time to time at
the rate or rates set forth in the Credit Agreement.
A. Incorporation of Credit Agreement.
---------------------------------
1. Reference is made to the Credit Agreement dated concurrently
herewith (the "Credit Agreement"), executed by and among the Borrowers and the
Banks therein named, and Wells Fargo Bank, National Association, as
administrative and collateral agent for itself and for the Banks (the "Agent
Bank"). Terms defined in the Credit Agreement and not otherwise defined herein
are used herein with the meanings defined for those terms in the Credit
Agreement. This is the Revolving Credit Note referred to in the Credit
Agreement, and any holder hereof is entitled to all of the rights, remedies,
benefits and privileges provided for in the Credit Agreement as originally
executed or as it may from time to time be supplemented, modified or amended.
The Credit Agreement, among other things, contains provisions for acceleration
of the maturity hereof upon the happening of certain stated events upon the
terms and conditions therein specified.
Page 1 of 4
<PAGE>
2. The outstanding principal indebtedness evidenced by this
Revolving Credit Note shall be payable as provided in the Credit Agreement and
in any event on June 18, 2003, the Maturity Date.
3. Interest shall be payable on the outstanding daily unpaid
principal amount of each Borrowing hereunder from the date thereof until payment
in full and shall accrue and be payable at the rates and on the dates set forth
in the Credit Agreement both before and after Default and before and after
maturity and judgment, with interest on overdue interest to bear interest at the
Default Rate, to the fullest extent permitted by applicable law.
4. The amount of each payment hereunder shall be made to the
Agent Bank at the Agent Bank's office as specified in the Credit Agreement for
the account of the Lenders at the time or times set forth therein, in lawful
money of the United States of America and in immediately available funds.
5. Borrowings hereunder shall be made in accordance with the
terms, provisions and procedures set forth in the Credit Agreement.
B. Default. The "Late Charges and Default Rate" provisions
-------
contained in Section 2.11 and the "Events of Default" provisions contained in
Article VII of the Credit Agreement are hereby incorporated by this reference as
though fully set forth herein. Upon the occurrence of a Default or Event of
Default, Borrowers' right to convert or exercise its Interest Rate Option for a
LIBOR Loan, or the continuation thereof, shall immediately, without notice or
demand, terminate.
C. Waiver. Borrowers waive diligence, demand, presentment for
------
payment, protest and notice of protest.
D. Collection Costs. In the event of the occurrence of an Event of
----------------
Default, the Borrowers agree to pay all reasonable costs of collection,
including a reasonable attorney's fee, in addition to and at the time of the
payment of such sum of money and/or the performance of such acts as may be
required to cure such default. In the event legal action is commenced for the
collection of any sums owing
Page 2 of 4
<PAGE>
hereunder the undersigned agrees that any judgment issued as a consequence of
such action against Borrowers shall bear interest at a rate equal to the Default
Rate until fully paid.
E. Interest Rate Limitation. Notwithstanding any provision herein
------------------------
or in any document or instrument now or hereafter securing this Revolving Credit
Note, the total liability for payments in the nature of interest shall not
exceed the limits now imposed by the applicable laws of the State of Nevada or
the United States of America.
F. Security. This Revolving Credit Note is secured by the Security
--------
Documentation described in the Credit Agreement.
G. Governing Law. This Revolving Credit Note shall be governed by
-------------
and construed in accordance with the laws of the State of Nevada.
H. Partial Invalidity. If any provision of this Revolving Credit
------------------
Note shall be prohibited by or invalid under any applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision of any other provision of
this Revolving Credit Note.
I. No Conflict with Credit Agreement. This Revolving Credit Note is
---------------------------------
issued under, and subject to, the terms, covenants and conditions of the Credit
Agreement, which Credit Agreement is by this reference incorporated herein and
made a part hereof. No reference herein to the Credit Agreement and no
provision of this Revolving Credit Note or the Credit Agreement shall alter or
impair the obligations of Borrowers, which are absolute and unconditional, to
pay the principal of and interest on this Revolving Credit Note at the place, at
the respective times, and in the currency prescribed in the Credit Agreement.
If any provision of this Revolving Credit Note conflicts or is inconsistent with
any provision of the Credit Agreement, the provisions of the Credit Agreement
shall govern.
J. This Revolving Credit Note not Enforceable against ECJC until
-------------------------------------------------------------
Occurrence of IGB approval Date. Notwithstanding anything contained in the
- -------------------------------
Credit Agreement or this Revolving Credit Note to the contrary, until the IGB
has
Page 3 of 4
<PAGE>
approved the Bank Facilities and each of the Loan Documents with respect to ECJC
and the ECJC Casino Facilities and the IGB Approval Date shall have occurred,
this Revolving Credit Note shall not be binding upon nor enforceable against
ECJC in any respect.
IN WITNESS WHEREOF, this Revolving Credit Note has been executed as of
the date first hereinabove written.
EMPRESS ENTERTAINMENT, INC.,
a Delaware corporation
By /s/ Peter A. Ferro, Jr.,
---------------------------------
Peter A. Ferro, Jr.,
Chief Executive Officer
EMPRESS CASINO JOLIET
CORPORATION,
an Illinois corporation
By /s/ Peter A. Ferro, Jr.,
---------------------------------
Peter A. Ferro, Jr.,
Chief Executive Officer
EMPRESS CASINO HAMMOND
CORPORATION,
an Indiana corporation
By /s/ Peter A. Ferro, Jr.,
---------------------------------
Peter A. Ferro, Jr.,
Chief Executive Officer
Page 4 of 4
<PAGE>
EXHIBIT 4.8 (c)
SWINGLINE NOTE
--------------
$5,000,000.00 June 17, 1998
FOR VALUE RECEIVED, the undersigned, EMPRESS ENTERTAINMENT, INC., a
Delaware corporation, EMPRESS CASINO JOLIET CORPORATION, an Illinois corporation
and EMPRESS CASINO HAMMOND CORPORATION, an Indiana corporation (collectively the
"Borrowers") jointly and severally promise to pay to the order of WELLS FARGO
BANK, National Association (the "Swingline Lender") at its principal office at
One East First Street, Reno, Nevada 89501, Attention: Casey Potter, Vice
President, Gaming Division, or at such other location as may be directed from
time to time by Swingline Lender by written notice to Borrowers, the principal
sum of Five Million Dollars ($5,000,000.00) or, if less, the aggregate unpaid
principal amount of all Swingline Advances (as defined in the Credit Agreement,
hereinafter defined) made by the Swingline Lender to or for the benefit of
Borrowers pursuant to the Credit Agreement, in the manner and at the times set
forth in Section 2.08 of the Credit Agreement and, in any event, on or before
ten (10) days prior to the Maturity Date. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Credit
Agreement.
Borrowers also promise to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date of each Swingline Advance
until repaid at the Base Rate plus the Applicable Margin, and on the dates
specified in the Credit Agreement and in any event on or before ten (10) days
prior to the Maturity Date.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds.
This Swingline Note is the Swingline Note described in, and is subject
to the terms and provisions of that certain Credit Agreement of even date
herewith executed by and among Borrowers, Lenders, Swingline Lender, L/C Issuer
and Agent Bank, as described and defined therein (as amended, modified,
supplemented or restated from time to time, the "Credit Agreement") and payment
of this Swingline Note is secured by the Security Documentation. Reference is
hereby made to the Credit Agreement for a statement of the rights and
obligations
PAGE 1 OF 3
<PAGE>
of the Borrowers, a description of the properties mortgaged and assigned, the
nature and extent of the collateral security and the rights of the parties to
the Security Documentation in respect of such collateral security, and for a
statement of the terms and conditions under which the due date of this Swingline
Note may be accelerated. Upon the occurrence of any Event of Default as
specified in the Credit Agreement, the principal balance hereof and the interest
accrued hereon may be declared to be forthwith due and payable.
In addition to and not in limitation of the foregoing and the
provisions of the Credit Agreement, the Borrowers further agree, subject only to
any limitation imposed by applicable law, to pay all expenses, including
reasonable attorneys' fees and legal expenses, incurred by the Swingline Lender
in endeavoring to collect any amounts payable hereunder which are not paid when
due, whether by acceleration or otherwise.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of dishonor.
This Swingline Note is issued under, and subject to, the terms,
covenants and conditions of the Credit Agreement, which Credit Agreement is by
this reference incorporated herein and made a part hereof.
THIS SWINGLINE NOTE NOT ENFORCEABLE AGAINST ECJC UNTIL OCCURRENCE OF
--------------------------------------------------------------------
IGB APPROVAL DATE. Notwithstanding anything contained in the Credit Agreement
- -----------------
or this Swingline Note to the contrary, until the IGB has approved the Bank
Facilities and each of the Loan Documents with respect to ECJC and the ECJC
Casino Facilities and the IGB Approval Date shall have occurred, this Swingline
Note shall not be binding upon nor enforceable against ECJC in any respect.
PAGE 2 OF 3
<PAGE>
THIS SWINGLINE NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEVADA.
EMPRESS ENTERTAINMENT, INC.,
a Delaware corporation
By /s/ Peter A. Ferro
-----------------------
Peter A. Ferro, Jr.,
Chief Executive Officer
EMPRESS CASINO JOLIET
CORPORATION,
an Illinois corporation
By /s/ Peter A. Ferro
-----------------------
Peter A. Ferro, Jr.
Chief Executive Officer
EMPRESS CASINO HAMMOND
CORPORATION,
an Indiana corporation
By /s/ Peter A. Ferro
-----------------------
Peter A. Ferro, Jr.,
Chief Executive Officer
PAGE 3 OF 3
<PAGE>
EXHIBIT 4.8(d)
AFTER RECORDING THIS
INSTRUMENT SHOULD BE
RETURNED TO:
James L. Morgan, Esq.
Henderson & Morgan, LLC
164 Hubbard Way, Suite B
Reno, NV 89502
------------------------------
SENIOR MORTGAGE WITH ABSOLUTE ASSIGNMENT
----------------------------------------
OF LEASES AND RENTS
-------------------
NOTICE: THIS MORTGAGE SECURES CREDIT IN THE INITIAL
MAXIMUM PRINCIPAL AMOUNT OF ONE HUNDRED MILLION DOLLARS
($100,000,000.00), TOGETHER WITH: (i) INTEREST ON THE
OUTSTANDING PORTION OF SAID PRINCIPAL AMOUNT; and (ii)
OTHER AMOUNTS DESCRIBED HEREIN. THE OBLIGATIONS SECURED
HEREBY INCLUDE REVOLVING CREDIT OBLIGATIONS WHICH
PERMIT BORROWING, REPAYMENT AND REBORROWING, ALL
SUBJECT TO THE TERMS AND CONDITIONS OF THE CREDIT
AGREEMENT AND THE NOTES THAT ARE REFERRED TO HEREIN.
INTEREST ON OBLIGATIONS SECURED HEREBY ACCRUES AT RATES
WHICH MAY FLUCTUATE FROM TIME TO TIME.
THE PARTIES TO THIS SENIOR MORTGAGE WITH ABSOLUTE ASSIGNMENT OF LEASES
AND RENTS, made as of June 17, 1998 (this "Mortgage"), are EMPRESS CASINO
HAMMOND CORPORATION, an Indiana corporation ("Mortgagor"), having its chief
executive office at 825 Empress Place, Hammond, Indiana 46320, and WELLS FARGO
BANK, NATIONAL ASSOCIATION, as Agent Bank on behalf of the Lenders, the
Swingline Lender and the L/C Issuer, all of which are defined and described in
the Credit Agreement referred to below ("Mortgagee"), having an office at One
East First Street, Reno, Nevada 89501.
<PAGE>
ARTICLE 1. GRANT
1.1 GRANT. Upon the terms and conditions in this Mortgage, Mortgagor
-----
irrevocably grants, bargains, sells, conveys, assigns, MORTGAGES and WARRANTS to
Mortgagee, its successors and assigns, all of Mortgagor's right, title and
interest in all of the real property located in the City of Hammond, County of
Lake, State of Indiana described on Exhibit A attached hereto and made a part
---------
hereof (the "Land"), together with and including, without limitation:
(a) all right, title and interest of Mortgagor whether now owned
or hereafter acquired, in or to any real property lying within the
right of way of any street, open or proposed, which adjoins any of
said Land and any and all sidewalks, bridges, elevated walkways,
tunnels, alleys, strips and gores of real property adjacent to,
connecting or used in connection with any of said Land (collectively,
the "Adjacent Property");
(b) all buildings, structures and all other improvements and
fixtures that are, or that may be hereafter erected or placed on, or
in, the Land and all right, title and interest of Mortgagor which is
now owned or hereafter acquired, in or to, all buildings, structures
and all other improvements and fixtures that are, or that may be
hereafter, erected or placed on, or in, any of the Adjacent Property
(collectively, the "Improvements");
(c) all water rights and conditional water rights that are now,
or may hereafter be, appurtenant to, used in connection with or
intended for use in connection with the Land, the Adjacent Property
and/or the Improvements including, without limitation: (i) ditch,
well, pipeline, spring and reservoir rights, whether or not
adjudicated or evidenced by any well or other permit; (ii) all rights
with respect to groundwater underlying the Land or the Adjacent
Property; (iii) any permit to construct any water well, water from
which is intended to be used in connection with the Land, the Adjacent
Property; and (iv) all of Mortgagor's right, title and interest under
any decreed or pending plan of augmentation or water exchange plan
(collectively, the "Water Rights", and together with the Land, the
Adjacent Property and the Improvements, the "Real Estate");
(d) all right, title and interest of Mortgagor in, and under, all
leases, subleases, licenses, concessions, franchises and other use or
occupancy agreements now or
2
<PAGE>
hereafter relating to any of the Real Estate and all renewals,
extensions, amendments, restatements and other modifications thereof
(collectively, the "Leases") subject, however, to the absolute
assignment given to Mortgagee in Article 3 hereof entitled Assignment
of Leases and Rents, and to which Article this grant to Mortgagee is
subject and subordinate;
(e) all present and future rents, issues, products, earnings,
revenues, payments, profits, royalties and other proceeds and income
of the Real Estate, and of any activities conducted thereon or in
connection therewith, regardless of whether such proceeds or income
accrue by virtue of the Leases, or otherwise (collectively, the
"Rents") subject, however, to the absolute assignment given to
Mortgagee in Article 3 hereof entitled Assignment of Leases and Rents,
and to which Article this grant to Mortgagor is subject and
subordinate; and
(f) all and singular the tenements, easements, hereditaments and
appurtenances now, or hereafter, belonging to or in any wise
appertaining to the Real Estate and/or the Rents and the reversion and
reversions, remainder and remainders thereof and all the estate,
right, title, interest or other claim which Mortgagor now has or
hereafter may acquire of, in and to the Real Estate, the Leases, the
Rents and/or any part thereof, with the appurtenances thereto
(collectively, the "Other Interests").
The Real Estate, the Leases, the Rents and the Other Interests are hereinafter
collectively referred to as the "Property".
TO HAVE AND TO HOLD the Property, properties, rights and
privileges hereby granted or assigned, or intended so to be, unto Mortgagee, and
its successors and assigns, forever for the uses and purposes herein set forth
subject only to the ECHC Permitted Encumbrances (as defined in the Credit
Agreement).
1.2 EXCLUSIONS FROM GRANT. The terms of Section 1.1 above,
---------------------
notwithstanding, it is specifically provided that no interest in any of the
following is granted to Mortgagee hereunder:
(a) That certain Hammond Riverboat Gaming Project Development
Agreement (the "Development Agreement") which is executed under date of June 21,
1996 by and among the City of Hammond, Indiana, the City of Hammond Department
of Redevelopment and Mortgagor;
(b) That certain License Agreement which is executed under date
of June 21, 1996 by and between the Hammond Port Authority and Mortgagor, record
notice of which is granted pursuant to that certain Memorandum of License
Agreement that is recorded in the Official Records of Lake County, Indiana on
March 5, 1997 as Instrument No. 97014037;
(c) That certain Lease (the "Redevelopment Lease") which is
executed under date of June 19, 1996 by and between the City of Hammond
Department of Redevelopment and Mortgagor, record notice of which is granted
pursuant to that certain Memorandum of Lease that is recorded in the Official
Records of Lake County, Indiana on February 25, 1997 as Instrument No. 97011160;
and
(d) That certain License Agreement which is executed under date
of June 19, 1996 by and among the Department of Water Works of the City of
Hammond and Mortgagor, record notice of which is granted pursuant to that
certain Memorandum of License Agreement that is recorded in the Official Records
of Lake County, Indiana on March 5, 1997 as Instrument No. 97014038.
(e) All of Assignor's right, title and interest in and to the
Gaming License issued to Assignor by the Indiana Gaming Commission.
(f) Any Deposit Accounts established by Assignor pursuant to the
Agreement respecting the S/S Milwaukee Clipper by and between Lake Michigan
Charters, Ltd. and the Hammond Port Authority dated March 20, 1996, and/or the
Memorandum of Understanding and Consent by and between the Hammond Port
3
<PAGE>
Authority and H. Joseph Vaughn, President, DMS of Hammond, Inc. dated September
20, 1995.
(g) Any interest of Assignor in sewer capacity reservation set
forth in Quitclaim Deed, Bill of Sale and Sewer Capacity Reservation Agreement
between Assignor, Hammond Bridge and Roadworks, LLC and the Sanitary District of
the City of Hammond, Indiana, recorded February 21, 1997, in the office of the
Recorder of Lake County, Indiana as Instrument No. 97010865;
(h) Temporary Permit to Enter Upon Property dated March 8, 1996,
granted by the Elgin, Joliet and Eastern Railway Company ("EJE") to Hammond
Bridge and Roadworks, LLC, as assigned to assignor and as amended, and any
agreement entered into or to be entered into with EJE for the acquisition of
property to fulfill Assignor's commitments under the Development Agreement.
(i) Any portion of the parking garage situated on property
subject to the Redevelopment Lease, which portion is owned by Mortgagor and
which portion Mortgagor is required to convey to the City of Hammond, and/or any
of its political subdivisions.
(j) Any investment or deposits made by Assignor pursuant to an
agreement to be entered into by and between the City of Hammond and Assignor
regarding guidelines for the investment by Assignor of Three Million Five
Hundred Thousand Dollars (3,500,000.00) of the residential housing investment in
fulfillment of Assignor's obligations under Section 5.07 of the Development
Agreement.
(k) Any interest of Assignor in Hammond Residential, LLC or in
any loans made by or security interests granted to Hammond Residential, LLC in
connection with a Loan Agreement to be entered into between Hammond Residential,
LLC in connection with a Loan Agreement to be entered into between Hammond
Residential, LLC and Hammond Enterprise Development Corporation for a One
Million Five Hundred Thousand Dollar ($1,500,000.00) loan pursuant to Assignor's
obligations under Section 5.07 of the Development Agreement.
1.3 ADDRESS. The address of the Property is: Indianapolis
-------
Boulevard, east of Fifth Avenue and northwest of 112th Street, Hammond, Indiana.
However, neither the failure to designate an address nor any inaccuracy in the
address designated shall affect the validity or priority of the lien of this
Mortgage on the Property.
1.4 NON-AGRICULTURAL USE. Mortgagor represents and warrants to
--------------------
Mortgagee that the Property is not used principally for agricultural or farming
purposes.
1.5 ACKNOWLEDGEMENT BY PARTIES. The parties intend for this Mortgage
--------------------------
to create a lien on the Property, and, as provided in Article 3 hereof entitled
Assignment of Leases and Rents, an absolute assignment of the Leases and Rents,
all in favor of Mortgagee. To the extent any of said Property, Leases and Rents
are not encumbered by a perfected lien created above, and are not absolutely
assigned by the assignment set forth in Article 3 below, it is the intention of
the parties that such Property, Leases and/or Rents shall constitute "proceeds,
product, offspring, rents or profits" (as defined in and for the purposes of
Section 552(b) of the United States Bankruptcy Code, as such section may be
modified or supplemented) of the Property and/or "fees, charges, accounts, or
other payments for the use or occupancy of rooms and other public facilities in
. . . lodging properties," as applicable (as such terms are defined in and for
the purpose of Section 552(b) of the United States Bankruptcy Code, as such
Section may be modified or supplemented).
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Mortgagor makes this Mortgage for the
-------------------
purpose of securing the following obligations (collectively, the "Secured
Obligations"):
(a) Payment when due, whether at stated maturity (which is June
18, 2003), by required prepayment, declaration, acceleration, demand or
otherwise (including payment of amounts that would become due but for the
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operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. (S) 362(a)), of: (i) the principal sum which is, at any time, advanced
and unpaid under the Credit Facility (as defined in the Credit Agreement), not
to exceed One Hundred Million Dollars ($100,000,000.00) at any one time, all on
a reducing revolving line of credit basis; (ii) interest and other charges
accrued on said principal sum, or accrued on interest and other charges then
outstanding under the Credit Facility (all including, without limitation,
interest and other charges that would accrue on such obligations, but for the
filing of a petition in bankruptcy with respect to Empress Entertainment, Inc.,
a Delaware corporation, Empress Casino Joliet Corporation, an Illinois
corporation, Mortgagor (collectively, "Borrowers"), or any of them; and (iii)
any other obligations of Borrowers, or any of them, under the RLC Note referred
to below; all according to the terms of a Revolving Credit Promissory Note
executed concurrently, or substantially concurrent, herewith which is made by
Borrowers and is payable to the order of Mortgagee according to the tenor and
effect of said Revolving Credit Promissory Note, and all renewals, extensions,
amendments, restatements, replacements, substitutions and other modifications
thereof (hereinafter collectively referred to as the "RLC Note").
(b) Payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)), of: (i) the
principal sum which is, at any time, advanced and unpaid under the Swingline
Facility (as defined in the Credit Agreement), not to exceed Five Million
Dollars ($5,000,000.00) at any one time, all on a revolving line of credit
basis; (ii) interest and other charges accrued on said principal sum, or accrued
on interest and other charges then outstanding under the Swingline Facility (all
including, without limitation, interest and other charges that would accrue on
such obligations, but for the filing of a petition in bankruptcy with respect to
Borrowers, or any of them); and (iii) any other obligations of Borrowers, or any
of them, under the S/L Note referred to below; all according to the terms of a
Swingline Note executed concurrently, or substantially concurrent, herewith
which is made by Borrowers and is payable to the order of Mortgagee according to
the tenor and effect of said Swingline Note, and all renewals, extensions,
amendments, restatements, replacements, substitutions and other modifications
thereof (hereinafter referred to as the "S/L Note", and together with the RLC
Note, collectively referred to as the "Notes").
(c) Payment and performance of every obligation, warranty,
representation, covenant, promise and agreement of Borrowers, or any of them,
contained in that certain Certificate and Indemnification Regarding Hazardous
Substances, together with all extensions, renewals, amendments, restatements and
other modifications thereof, which is executed by Empress Entertainment, Inc.
and Mortgagor concurrently, or substantially concurrent, herewith and which is
to be executed by Empress Casino Joliet Corporation on or before July 31, 1998.
(d) Payment and performance of every obligation, covenant,
promise and agreement of Mortgagor herein contained or incorporated herein by
reference, including any sums paid or advanced by Mortgagee or any of the Banks
(which are defined below) pursuant to the terms hereof.
(e) Payment of the expenses and costs incurred or paid by
Mortgagee or any of the Banks in the preservation and enforcement of the rights
and remedies of Mortgagee and the duties and liabilities of Mortgagor hereunder,
including, but not by way of limitation, reasonable attorney's fees, court
costs, witness fees, expert witness fees, collection costs, and reasonable costs
and expenses paid by Mortgagee or any of the Banks in performing for Mortgagor's
account any obligation of said Mortgagor.
(f) Payment of any sums which may hereafter be owing by
Borrowers, or any of them, to any of the Banks or any of their affiliates, under
the terms of any interest rate swap agreement, interest rate cap agreement,
basis swap agreement, forward rate agreement, interest collar agreement or
interest floor agreement to which Borrowers, or any of them, may be a party, or
under any other agreement or arrangement to which Borrowers, or any of them, may
be a party, which in each case is designed to protect
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Borrowers, or any of them, against fluctuations in interest rates or currency
exchange rates with respect to any indebtedness secured by the Mortgage.
(g) Payment of additional sums and interest thereon which may
hereafter be loaned to Borrowers, or any of them, pursuant to the Credit
Agreement when evidenced by a promissory note or notes which recite that this
Mortgage is security therefor.
(h) Performance and payment of every obligation, warranty,
representation, covenant, agreement and promise of Borrowers, or any of them,
contained in that certain Credit Agreement (the "Original Credit Agreement")
executed concurrently, or substantially concurrent, herewith by Borrowers, the
Lenders therein named (each, together with their respective successors and
assigns, individually referred to herein as a "Lender" and collectively referred
to herein as the "Lenders"), the Swingline Lender therein named (together with
its successors and assigns, referred to herein as the "Swingline Lender"), the
L/C Issuer therein named (together with its successors and assigns, referred to
herein as the "L/C Issuer"), and Wells Fargo Bank, National Association, as
administrative and collateral agent for the Lenders, the Swingline Lender and
the L/C Issuer (referred to herein, in such capacity, together with its
successors and assigns, as the "Agent Bank" and together with the Lenders, the
Swingline Lender and the L/C Issuer, collectively referred to herein as the
"Banks"), as well as performance and payment of every obligation, warranty,
representation, covenant, agreement and promise of Borrowers, or any of them,
contained in all extensions, renewals, amendments, restatements and other
modifications of the Original Credit Agreement (with the Original Credit
Agreement, as so extended, renewed, amended, restated, substituted and/or
otherwise modified being collectively referred to herein as the "Credit
Agreement").
Pursuant to I.C. (S)32-8-11-9 this instrument secures: (i) future obligations
and advances up to the maximum amount stated herein (whether made as an
obligation, made at the option of Lenders, made after a reduction to a zero or
other balance, or made otherwise) to the same extent as if the future
obligations and advances were made on the date of execution of this mortgage;
and (ii) future modifications, extensions and renewals of any indebtedness or
obligations secured by this instrument.
2.2 OBLIGATIONS. The term "obligations" is used herein in its
-----------
broadest and most comprehensive sense and shall be deemed to include, without
limitation, all protective advances and all sums advanced to protect the
Property or the lien of this Mortgage or otherwise disbursed or incurred under
the terms of the Loan Documents (as defined in the Credit Agreement), all
interest and charges, prepayment charges (if any), late charges and loan fees at
any time accruing or assessed on any of the Secured Obligations. All of the
Secured Obligations shall be payable without relief from valuation and
appraisement laws.
2.3 INCORPORATION. All terms of the Secured Obligations and the
-------------
documents evidencing such obligations are incorporated herein by this reference.
All persons who may have or acquire an interest in the Property, or any portion
thereof, shall be deemed to have notice of the terms of the Secured Obligations,
which terms include without limitation, provisions which: (i) provide that the
rate of interest on one or more Secured Obligations may vary from time to time;
and (ii) permit borrowing, repayment and reborrowing.
ARTICLE 3. ASSIGNMENT OF LEASES AND RENTS
3.1 ASSIGNMENT. Mortgagor hereby irrevocably assigns to Mortgagee
----------
all of Mortgagor's right, title and interest in, to and under: (a) the Leases;
and (b) the Rents. This is a present and absolute assignment, not an assignment
for security purposes only, and Mortgagee's right to the Leases and Rents is not
contingent upon, and may be exercised without possession of, the Property and
without the commencement of a foreclosure action or the appointment of a
receiver or the institution of any legal proceeding of any kind whatsoever.
Furthermore, upon any Default (as defined by Article 5 below), Mortgagee shall
be entitled to receive pursuant to the foregoing assignment, and Mortgagor shall
be obligated to deliver to Mortgagee or its designee (including any receiver),
any and all Rents collected by Mortgagor which remain in the
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possession or control of Mortgagor, whether or not commingled with other funds
of Mortgagor, and whether collected by Mortgagor before or after the occurrence
of the Default.
3.2 GRANT OF LICENSE. Mortgagee confers upon Mortgagor a license
----------------
("License") to collect and retain the Rents as they become due and payable,
until the occurrence of a Default (as hereinafter defined). Upon a Default, the
License shall be automatically revoked and Mortgagee may collect and apply the
Rents pursuant to Article 5 below, without notice and without taking possession
of the Property. Mortgagor hereby irrevocably authorizes and directs the lessees
under the Leases to rely upon and comply with any notice or demand by Mortgagee
for the payment to Mortgagee of any rental or other sums which may at any time
become due under the Leases, or for the performance of any of the lessees'
undertakings under the Leases, and the lessees shall have no right or duty to
inquire as to whether any Default has actually occurred or is then existing
hereunder. Mortgagor hereby relieves the lessees from any liability to Mortgagor
by reason of relying upon and complying with any such notice or demand by
Mortgagee.
3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable assignment shall
--------------------
not cause Mortgagee to be: (a) a mortgagee in possession; (b) responsible or
liable for the control, care, management or repair of the Property, or for
performing any of the terms, agreements, undertakings, obligations,
representations, warranties, covenants and conditions of the Leases; (c)
responsible or liable for any waste committed on the Property by the lessees
under any of the Leases or any other parties; (d) responsible or liable for any
dangerous or defective condition of the Property; or (e) responsible or liable
for any negligence in the management, upkeep, repair or control of the Property
resulting in loss or injury or death to any lessee, licensee, employee, invitee
or other person. Mortgagee shall not directly or indirectly be liable to
Mortgagor or any other person as a consequence of: (i) the exercise or failure
to exercise any of the rights, remedies or powers granted to Mortgagee
hereunder; or (ii) the failure or refusal of Mortgagee to perform or discharge
any obligation, duty or liability of Mortgagor arising under any of the Leases.
3.4 REPRESENTATIONS AND WARRANTIES. Mortgagor represents and
------------------------------
warrants that: (a) to Mortgagor's knowledge, all existing Leases are in full
force and effect and are enforceable in accordance with their respective terms,
and no breach, default or event which would constitute a breach or default after
notice or the passage of time, or both, exists under any existing Leases on the
part of any party; (b) no rent or other payment under any existing Lease has
been paid by any lessee for more than one (1) month in advance; and (c) none of
the Mortgagor's interests under any of the Leases has been transferred or
assigned.
3.5 COVENANTS. Mortgagor covenants and agrees at Mortgagor's sole
---------
cost and expense to: (a) perform the lessor's obligations contained in the
Leases and enforce by all available remedies performance by the lessees of the
obligations of the lessees contained in the Leases; and (b) execute and record
(or cause to be executed and recorded) such additional assignments of any Lease
or specific subordinations of any Lease to this Mortgage, in form and substance
acceptable to Mortgagee, as Mortgagee may reasonably request. Mortgagor shall
not, without Mortgagee's prior written consent or as otherwise permitted by any
provision of the Credit Agreement: (i) execute any other assignment relating to
any of the Leases; or (ii) subordinate or agree to subordinate any of the Leases
to pay other mortgage or encumbrance. Any such action in violation of this
Section 3.5 shall be null and void.
ARTICLE 4. RIGHTS AND DUTIES OF THE PARTIES
4.1 LIEN AND PRIORITY. Mortgagor represents, warrants and covenants
-----------------
that this Mortgage creates a first priority mortgage lien on the Land and all of
the Property which is in addition to the Land, subject only to ECHC Permitted
Encumbrances (as defined in the Credit Agreement).
4.2 PAYMENT OF SECURED OBLIGATIONS. Mortgagor shall pay when due, or
------------------------------
cause to be paid when due: (i) the principal of, and interest on, the
indebtedness evidenced by the Notes; (ii) all charges, fees and other sums as
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provided in the Loan Documents (as defined in the Credit Agreement) including,
without limitation, all reasonable costs, fees and expenses of this mortgage
incurred by Mortgagee in connection with any Default; (iii) the principal of,
and interest on, any future advances secured by this Mortgage; and (iv) the
principal of, and interest on, any other indebtedness secured by this Mortgage.
4.3 COMPLIANCE WITH LAWS. Mortgagor shall comply in all material
--------------------
respects with all applicable material existing and future laws, rules,
regulations, orders, ordinances and requirements of all Governmental Authorities
(as defined in the Credit Agreement), and with all recorded covenants and
restrictions affecting the Property.
4.4 MAINTENANCE OF PROPERTY. Except to the extent that any of the
-----------------------
following would be prohibited under, or would constitute a violation of, the
terms and conditions of the Credit Agreement, Mortgagor agrees: (a) to properly
care for and keep said Property in good condition and repair; (b) not to remove,
demolish or substantially alter any material building on the Property, except
upon the prior written consent of Mortgagee; (c) to complete promptly and in a
good and workmanlike manner any building or other improvement which may be
constructed on the Property, and to pay when due all claims for labor performed
and materials furnished therefor (subject to Mortgagor's right to contest the
validity or amount of mechanic's and/or materialman's liens in accordance with
Section 5.04 of the Credit Agreement); (d) not to commit or permit any waste or
deterioration of the Property (ordinary wear and tear, casualty and condemnation
excepted); (e) not to commit, suffer or permit any act to be done, or condition
to exist, in or upon said Property in material violation of any law, covenant,
condition or restriction now, or hereafter, affecting said Property (including
any which require alteration or improvement thereof); (f) to keep and maintain
all grounds, sidewalks, roads, parking and landscaped areas situate on the
Property in good and neat order and repair; (g) not to drill or extract or enter
into any lease for the drilling for or extraction of oil, gas or other
hydrocarbon substances or any mineral of any kind or character on or from the
Property or any part thereof; (h) not to apply for, willingly suffer or permit
any subdivision, change in land use regulation, or inclusion within a general
improvement district or similar assessment mechanism, with regard to any portion
of the Property without the prior written consent of Mortgagee; and (i) except
as otherwise permitted in the Credit Agreement, to do all other acts, in a
timely and proper manner, which, from the character or use of the Property, may
be reasonably necessary to maintain and preserve its value, the specific
enumerations herein not excluding the general.
4.5 INSURANCE. During the continuance of this mortgage, Mortgagor
---------
shall obtain, or cause to be obtained, and shall maintain or cause to be
maintained, at all times throughout the term of the Bank Facilities, at its own
cost and expense, and shall deposit with Mortgagee, Certificates of Insurance,
each in a form and substance, and at such times, as is required under Section
5.09 of the Credit Agreement. All monies received from "All Risk" insurance
policies (including flood and earthquake policies) covering any of the Property
shall be: (i) paid directly to Mortgagee and retained by Mortgagee or released
to Mortgagor by Mortgagee; or (ii) paid directly to Mortgagor; all in accordance
with Section 8.02 of the Credit Agreement. Nothing in this Mortgage shall be
deemed to excuse Mortgagor from restoring, repairing and maintaining the
Property, as herein provided, regardless of whether or not insurance proceeds
are available for restoration, whether or not any such proceeds are sufficient
in amount, or whether or not the Property can be restored to the same condition
and character as existed prior to such damage or destruction.
4.6 TAXES AND ASSESSMENTS. Mortgagor shall pay all taxes,
---------------------
assessments and other governmental charges or levies affecting said Property, or
any part thereof, in the manner required by the Credit Agreement except such
taxes, assessments and other governmental levies as are being contested in good
faith in the manner provided by Section 4.07 or Section 5.10 of the Credit
Agreement.
4.7 LIEN CLAIMS. If any mechanic's lien or materialman's lien shall
-----------
be recorded, filed or suffered to exist against the Property or any interest
therein by reason of any work, labor, services or materials supplied, furnished
or claimed to have been supplied and furnished in connection with any work of
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<PAGE>
improvement upon the Property, said lien or claim shall be paid, released or
otherwise discharged of record to the extent required by, and in accordance
with, Section 5.04 of the Credit Agreement.
4.8 EASEMENTS. If an easement or other incorporeal right
---------
(collectively, an "Easement") constitutes any portion of the Property, Mortgagor
shall not amend, change, terminate or modify such Easement, or any right thereto
or interest therein, without the prior written consent of Mortgagee, which
consent may be withheld in Mortgagee's sole discretion, and any such amendment,
change, termination or modification without such prior written consent shall be
deemed void and of no force or effect. Mortgagor agrees to perform all
obligations and agreements with respect to said Easement and shall not take any
action or omit to take any action which would effect or permit the termination
thereof. Upon receipt of notice, or otherwise becoming aware, of any default or
purported default under any Easement, by any party thereto, Mortgagor shall
promptly notify Mortgagee in writing of such default or purported default and
shall deliver to Mortgagee copies of all notices, demands, complaints or other
communications received or given by Mortgagor with respect to any such default
or purported default.
4.9 PERFORMANCE BY MORTGAGEE. Should Mortgagor fail to make any
------------------------
payment or perform any act which it is obligated to make or perform hereunder or
under the Credit Agreement, then Mortgagee, at its election, without giving
notice to Mortgagor, or any successor in interest of Mortgagor, and without
releasing Mortgagor from any obligation hereunder, may make such payment or
perform such act and incur any liability, or expend whatever amounts, in its
discretion, it may deem necessary therefor. All sums incurred or expended by
Mortgagee, under the terms hereof, shall become due and payable by Mortgagor to
Mortgagee, on the next interest or instalment payment date under any of the
promissory notes secured hereby and shall bear interest until paid at an annual
percentage rate equal to the Default Rate expressed in the Credit Agreement. In
no event shall such payment or performance of any such act by Mortgagee be
construed as a waiver of the default occasioned by Mortgagor's failure to make
such payment(s) or perform such act(s).
4.10 ACTIONS AFFECTING PROPERTY. Mortgagor promises and agrees that
--------------------------
if, during the existence of this Mortgage, there shall be commenced or pending
any suit or action affecting said Property, or any part thereof, or the title
thereto, or if any adverse claim for or against said Property, or any part
thereof, be made or asserted, it will appear in and defend any such matter
purporting to affect the security of this Mortgage and will pay all costs and
damages arising because of such action.
4.11 EMINENT DOMAIN. Any award of damages in connection with any
--------------
condemnation or similar actions in regard to said Property, or any part thereof,
shall be: (i) paid directly to Mortgagee and shall be retained by Mortgagee or
released to Mortgagor by Mortgagee; or (ii) paid directly to Mortgagor; all in
accordance with Section 8.02 of the Credit Agreement.
4.12 SUBROGATION. To the extent that any sums advanced by Mortgagee
-----------
are used to pay any outstanding lien, charge or prior encumbrance against the
Property, such sums shall be deemed to have been advanced by Mortgagee at the
request of Mortgagor and Mortgagee shall be subrogated to any and all rights and
liens held by any owner or holder of such outstanding liens, charges and prior
encumbrances, regardless of whether said liens, charges or encumbrances are
released.
4.13 DUE ON SALE. If Mortgagor shall be voluntarily, or
-----------
involuntarily, divested of title or possession of any Property, by merger or
otherwise, or shall lease, sell, convey, further encumber or in any other manner
voluntarily or involuntarily alienate any of its interest in any of the
Property, (other than utility easements granted in the ordinary course of
business) or shall enter into an agreement to do any of the foregoing, other
than as permitted in the Credit Agreement, any indebtedness or obligation
secured hereby, irrespective of the maturity dates expressed in any notes
evidencing the same, shall at the option of Mortgagee, and upon the giving of
any notice which may be required under the Credit Agreement, immediately become
due and payable.
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4.14 PARTIAL OR LATE PAYMENT. By accepting payment of any sum
-----------------------
secured hereby after its due date, Mortgagee does not waive its right either to
require prompt payment, when due, of all other sums so secured or to declare
default, as herein provided, for failure to so pay.
4.15 RIGHT OF MORTGAGEE TO APPEAR. If, during the existence of this
----------------------------
Mortgage, there be commenced or pending any suit or action affecting the
Property, or any part thereof, or the title thereto, or if any adverse claim for
or against the Property, or any part thereof, be made or asserted, Mortgagee
(unless such suit, action or claim is being contested in good faith by Mortgagor
and Mortgagor shall have established and maintained adequate reserves in
accordance with generally accepted accounting principles for the full payment
and satisfaction of such suit or action if determined adversely to Mortgagor),
may appear or intervene in the suit or action and retain counsel therein and
defend same, or otherwise take such action therein as they may be advised, and
may settle or compromise same or the adverse claim; and in that behalf and for
any of the purposes may pay and expend such sums of money as the Mortgagee may
deem to be necessary and Mortgagor shall reimburse Mortgagee for such sums
expended, together with accrued interest thereon, at the Default Rate which is
defined in the Credit Agreement.
4.16 EXCULPATION; INDEMNIFICATION.
----------------------------
(a) Mortgagee shall not directly or indirectly be liable to
Mortgagor or any other person as a consequence of (i) the exercise of the
rights, remedies or powers granted to Mortgagee in this Mortgage (unless the
loss is caused by the gross negligence or willful misconduct of Mortgagee); (ii)
the failure or refusal of Mortgagee to perform or discharge any obligation or
liability of Mortgagor under any agreement related to the Property or under this
Mortgage; or (iii) any loss sustained by Mortgagor or any third party resulting
from Mortgagee's failure to lease the Property, or any portion thereof, after a
Default or from any other act or omission of Mortgagee in managing the Property
after a Default (unless the loss is caused by the gross negligence or willful
misconduct of Mortgagee) and no such liability shall be asserted against or
imposed upon Mortgagee, and all such liability is hereby expressly waived and
released by Mortgagor. It is agreed by Mortgagor that the liability waived and
released by Mortgagor pursuant to the preceding sentence shall include any
liability arising from or caused by the sole, joint, active, or passive,
concurrent or contributing, negligence or fault of Mortgagee or its agents, and
even though such liability is based upon the strict liability of Mortgagee or
its agents.
(b) Mortgagor agrees to and does hereby jointly and severally
indemnify, protect, defend and save harmless Mortgagee and each of the Banks and
their respective directors, trustees, officers, employees, agents, attorneys and
shareholders (individually an "Indemnified Party" and collectively the
"Indemnified Parties") from and against any and all losses, damages, expenses or
liabilities of any kind or nature from any investigations, suits, claims,
demands or other proceedings, including reasonable counsel fees incurred in
investigating or defending such claim, suffered by any of them and caused by,
relating to, arising out of, resulting from, or in any way connected with this
Mortgage, any of the Property, or Mortgagee's exercise or enforcement of any
rights or remedies which it may have hereunder; provided, however, Mortgagor
shall not be obligated to indemnify, protect, defend or save harmless an
Indemnified Party if, and to the extent, the loss, damage, expense or liability
was caused by (a) the gross negligence or wilful misconduct of such Indemnified
Party, or (b) the breach of this Mortgage or any other Loan Document by such
Indemnified Party or the breach of any laws, rules or regulations by such
Indemnified Party (other than those breaches of laws arising from any Borrower's
default). In case any action shall be brought against any Indemnified Party
based upon any of the above and in respect to which indemnity may be sought
against Mortgagor, Mortgagee shall promptly notify Mortgagor in writing, and
Mortgagor shall assume the defense thereof, including the employment of counsel
selected by Mortgagor and reasonably satisfactory to Mortgagee, the payment of
all costs and expenses and the right to negotiate and consent to settlement.
Upon reasonable determination made by an Indemnified Party that such counsel
would have a conflict representing such Indemnified Party and Mortgagor, the
applicable Indemnified Party shall have the right to employ, at the expense of
Mortgagor, separate counsel in any such
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action and to participate in the defense thereof. Mortgagor shall not be liable
for any settlement of any such action effected without their consent, but if
settled with Mortgagor's consent, or if there be a final judgment for the
claimant in any such action, Mortgagor agrees to indemnify, defend and save
harmless such Indemnified Parties from and against any loss or liability by
reason of such settlement or judgment. In the event that any Person is adjudged
by a court of competent jurisdiction not to have been entitled to
indemnification under this Section 4.16, it shall repay all amounts with respect
to which it has been so adjudged. If and to the extent that the indemnification
provisions contained in this Section 4.16 are unenforceable for any reason, the
Mortgagor hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations that is permissible under applicable law. The
provisions of this Section 4.16 shall survive the termination of this Mortgage
and the repayment of the Secured Obligations.
4.17 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY.
-----------------------------------------------------------
Without notice to or the consent, approval or agreement of any persons or
entities having any interest at any time in the Property or in any manner
obligated under the Secured Obligations ("Interested Parties"), Mortgagee may,
from time to time, release any person or entity from liability for the payment
or performance of any Secured Obligation, take any action or make any agreement
extending the maturity or otherwise altering the terms or increasing the amount
of any Secured Obligation, or accept additional security or release all or a
portion of the Property and other security for the Secured Obligations. None of
the foregoing actions shall release or reduce the personal liability of any of
said Interested Parties, or release or impair the priority of the lien of this
Mortgage upon the Property.
4.18 RIGHT OF INSPECTION. Mortgagee, its agents and employees, may
-------------------
enter the Property at any reasonable time, upon reasonable advance notice, for
the purpose of inspecting the Property and ascertaining Mortgagor's compliance
with the terms hereof.
ARTICLE 5. DEFAULT PROVISIONS
5.1 DEFAULT. For all purposes hereof, the term "Default" shall mean
-------
the existence of any Event of Default as defined by Section 7.01 of the Credit
Agreement.
5.2 RIGHTS AND REMEDIES. At any time after Default, Mortgagee shall
-------------------
have all the following rights and remedies (in addition to (and without
limiting) any rights and remedies that are available hereunder, or under
applicable law):
(a) With or without notice, to declare all Secured Obligations
immediately due and payable;
(b) With or without notice, and without releasing Mortgagor
from any Secured Obligation, and without becoming a mortgagee in possession, to
cure any breach or Default of Mortgagor and, in connection therewith, to enter
upon the Property and do such acts and things as Mortgagee deems necessary or
desirable to protect the security hereof, including, without limitation: (i) to
appear in and defend any action or proceeding purporting to affect the security
of this Mortgage or the rights or powers of Mortgagee; (ii) to pay, purchase,
contest or compromise any encumbrance, charge, lien or claim of lien which, in
the sole judgment of Mortgagee, is or may be senior in priority to this
Mortgage, the judgment of Mortgagee being conclusive as between the parties
hereto; (iii) to obtain insurance; (iv) to pay any premiums or charges with
respect to insurance required to be carried under the Loan Documents; and (v) to
employ counsel, accountants, contractors and other appropriate persons;
(c) To commence and maintain an action or actions in any court
of competent jurisdiction to foreclose this Mortgage or to obtain specific
enforcement of the covenants of Mortgagor hereunder, and Mortgagor agrees that
such covenants shall be specifically enforceable by injunction or any other
appropriate equitable remedy and that for the purposes of any suit brought under
this subparagraph, Mortgagor waives the defense of laches and any applicable
statute of limitations;
11
<PAGE>
(d) To apply to a court of competent jurisdiction for and obtain
appointment of a receiver of the Property as a matter of strict right and
without regard to the adequacy of the security for the repayment of the Secured
Obligations, the existence of a declaration that the Secured Obligations are
immediately due and payable, or the filing of a notice of default, and Mortgagor
hereby consents to such appointment;
(e) To enter upon, possess, manage and operate the Property or
any part thereof, to take and possess all documents, books, records, papers and
accounts of Mortgagor or the then owner of the Property, to make, terminate,
enforce or modify Leases of the Property upon such terms and conditions as
Mortgagee deems proper, to make repairs, alterations and improvements to the
Property as necessary, in Mortgagee's sole judgment, all to protect or enhance
the security hereof, and all to the extent permitted by applicable law;
(f) To execute a written notice of such Default and of its
election to cause the Property to be sold to satisfy the Secured Obligations (to
the extent permitted by applicable law). As a condition precedent to any such
sale, Mortgagee shall give, post and record such notices as Indiana law then
requires. When the minimum period of time required after such notices has
elapsed, Mortgagee, without notice to or demand upon Mortgagor except as
required by law, shall sell the Property at the time and place of sale fixed by
it in the notice of sale, at one or several sales, either as a whole or in
separate parcels and in such manner and order, all as Mortgagee in its sole
discretion may determine, at public auction to the highest bidder for cash, in
lawful money of the United States, payable at time of sale. Neither Mortgagor
nor any other person or entity other than Mortgagee shall have the right to
direct the order in which the Property is sold. Subject to requirements and
limits imposed by law, Mortgagee may from time to time postpone sale of all or
any portion of the Property by public announcement at such time and place of
sale. Mortgagee shall deliver to the purchaser at such sale a deed conveying the
Property or portion thereof so sold, but without any covenant or warranty,
express or implied. The recitals in the deed of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any person, including Mortgagee or
Mortgagor may purchase at the sale;
(g) To resort to and realize upon the security hereunder and any
other security now or later held by Mortgagee concurrently or successively and
in one or several consolidated or independent judicial actions or lawfully taken
non-judicial proceedings, or both, and to apply the proceeds received upon the
Secured Obligations all in such order and manner as Mortgagee determines in its
sole discretion;
(h) Upon sale of the Property pursuant to the power of sale
granted herein or at any judicial or non-judicial foreclosure, Mortgagee may
credit bid (as determined by Mortgagee in its sole and absolute discretion) all
or any portion of the Secured Obligations. In determining such credit bid,
Mortgagee may, but is not obligated to, take into account all or any of the
following: (i) appraisals of the Property as such appraisals may be discounted
or adjusted by Mortgagee in its sole and absolute underwriting discretion; (ii)
expenses and costs incurred by Mortgagee with respect to the Property prior to
foreclosure; (iii) expenses and costs which Mortgagee anticipates will be
incurred with respect to the Property after foreclosure, but prior to resale,
including, without limitation, costs of structural reports and other due
diligence, costs to carry the Property prior to resale, costs of resale (e.g.
commissions, attorneys' and paralegals' fees, and taxes), costs of any hazardous
materials clean-up and monitoring, costs of deferred maintenance, repair,
refurbishment and retrofit, costs of defending or settling litigation affecting
the Property, and lost opportunity costs (if any), including the time value of
money during any anticipated holding period by Mortgagee; (iv) declining trends
in real property values generally and with respect to properties similar to the
Property; (v) anticipated discounts upon resale of the Property as a distressed
or foreclosed property; (vi) the fact of additional collateral (if any), for the
Secured Obligations; and (vii) such other factors or matters that Mortgagee (in
its sole and absolute discretion) deems appropriate. In regard to the above,
Mortgagor acknowledges and agrees that: (w) Mortgagee is not required to use any
or all of the foregoing factors to determine the amount of its credit bid; (x)
this Section does not impose upon Mortgagee any additional obligations that are
not imposed by law at the
12
<PAGE>
time the credit bid is made; (y) the amount of Mortgagee's credit bid need not
have any relation to any loan-to-value ratios specified in the Loan Documents or
previously discussed between Mortgagor and Mortgagee; and (z) Mortgagee's credit
bid may be (at Mortgagee's sole and absolute discretion) higher or lower than
any appraised value of the Property.
(i) The rights and remedies of Mortgagee upon the occurrence of
one or more Defaults (whether such rights and remedies are conferred by statute,
by rule of law, by this Mortgage, by any Loan Document, as defined in the Credit
Agreement, or otherwise) may be exercised by Mortgagee, in the sole discretion
of Mortgagee, either alternatively, concurrently, or consecutively in any order.
The exercise by Mortgagee of any one or more of such rights and remedies shall
not be construed to be an election of remedies nor a waiver of any other rights
and remedies Mortgagee might have unless, and limited to the extent that,
Mortgagee shall so elect or so waive by an instrument in writing delivered to
Mortgagor.
5.3 APPLICATION OF PROCEEDS. All sums received by Mortgagee under
-----------------------
Section 5.2 shall be applied in payment of the Secured Obligations in the order
- -----------
set forth by Section 7.03 of the Credit Agreement; provided, however, Mortgagee
-------- -------
shall have no liability for funds not actually received by Mortgagee.
5.4 NO CURE OR WAIVER. Neither Mortgagee's nor any receiver's entry
-----------------
upon and taking possession of all or any part of the Property, nor any
collection of rents, issues, profits, insurance proceeds, condemnation proceeds
or damages, other security or proceeds of other security, or other sums, nor the
application of any collected sum to any Secured Obligation, nor the exercise or
failure to exercise of any other right or remedy by Mortgagee or any receiver
shall cure or waive any breach, Default or notice of default under this
Mortgage, or nullify the effect of any notice of default or sale (unless all
Secured Obligations then due have been paid and performed and Mortgagor has
cured all other defaults), or impair the status of the security, or prejudice
Mortgagee in the exercise of any right or remedy, or be construed as an
affirmation by Mortgagee of any tenancy, lease or option or a subordination of
the lien of this Mortgage.
5.5 PAYMENT OF COSTS, EXPENSES AND ATTORNEY'S AND PARALEGALS' FEES.
--------------------------------------------------------------
Mortgagor agrees to pay to Mortgagee immediately and upon demand all reasonable
costs and expenses incurred by Mortgagee in connection with the exercise of the
rights and remedies provided for herein and/or in any of the other Loan
Documents (including, without limitation, court costs, appraisal fees and
reasonable attorneys' and paralegals' fees, whether incurred in litigation or
not, and all whether internal costs, external costs or both) with interest from
the date such amounts are demanded hereunder until said sums have been paid, at
the Default Rate set forth by the Credit Agreement.
5.6 POWER TO FILE NOTICES AND CURE DEFAULTS. Mortgagor hereby
---------------------------------------
irrevocably appoints Mortgagee and its successors and assigns, as its attorney-
in-fact, which agency is coupled with an interest, (a) to execute and/or record
any notices of completion, cessation of labor, or any other notices that
Mortgagee deems appropriate to protect Mortgagee's interest, (b) upon the
issuance of a deed pursuant to the foreclosure of this Mortgage or power of sale
granted herein, or the delivery of a deed in lieu of foreclosure, to execute all
instruments of assignment or further assurance with respect to the Leases and
Rents in favor of the grantee of any such deed, as may be necessary or desirable
for such purpose, and (c) upon the occurrence of an event, act or omission
which, with notice or passage of time or both, would constitute a Default,
Mortgagee may perform any obligation of Mortgagor hereunder; provided, however,
-------- -------
that: (i) Mortgagee as such attorney-in-fact shall only be accountable for such
funds as are actually received by Mortgagee; and (ii) Mortgagee shall not be
liable to Mortgagor or any other person or entity for any failure to act under
this Section.
ARTICLE 6. MISCELLANEOUS PROVISIONS
6.1 ADDITIONAL PROVISIONS. The Loan Documents contain or incorporate
---------------------
by reference the entire agreement of the parties with respect to matters
contemplated herein and supersede all prior negotiations. The Loan Documents
13
<PAGE>
grant further rights to Mortgagee and contain further agreements and affirmative
and negative covenants by Mortgagor which apply to this Mortgage and to the
Property and such further rights and agreements are incorporated herein by this
reference.
6.2 MERGER. No merger shall occur as a result of Mortgagee's
------
acquiring any other estate in, or any other lien on, the Property unless
Mortgagee consents to a merger in writing.
6.3 WAIVER OF MARSHALLING RIGHTS. Mortgagor, for itself and for all
----------------------------
parties claiming through or under Mortgagor, and for all parties who may acquire
a lien on or interest in the Property, hereby waives all rights to have the
Property and/or any other property which is now or later may be security for any
Secured Obligation ("Other Property") marshaled upon any foreclosure of this
Mortgage or on a foreclosure of any Other Property. Mortgagee shall have the
right to sell, and any court in which foreclosure proceedings may be brought
shall have the right to order a sale of, the Property and any or all of the
Other Property as a whole or in separate parcels, in any order that Mortgagee
may designate.
6.4 WAIVER OF RIGHTS OF REDEMPTION AND REINSTATEMENT. Mortgagor, for
------------------------------------------------
itself and for all parties claiming through or under Mortgagor, and for all
parties who may acquire a lien on or interest in the Property, hereby waives any
and all rights of redemption and reinstatement under law and under any order or
decree of foreclosure of this Mortgage, and all such rights of redemption and
reinstatement of Mortgagor and of all other persons, are and shall be deemed to
be hereby waived to the full extent permitted by the provisions of the
applicable law.
6.5 EXERCISE OF REMEDIES. Notwithstanding any of the terms or
--------------------
provisions contained in this Mortgage (or in any of the other Loan Documents),
if at any time after the occurrence of a Default under any of the Loan Documents
(but prior to the time (if any) that said Default has been cured to the
satisfaction of Mortgagee), Mortgagee has commenced to exercise one or more of
its remedies provided for herein (or provided in any of the other Loan Documents
or available at law or in equity), Mortgagee will not be precluded from
continuing to exercise all of its rights and remedies upon said Default
(notwithstanding the fact that Mortgagor may have cured, attempted to cure or be
in the process of curing said Default). It is the intention of the parties
hereto that (to the extent permitted by law) once Mortgagee has commenced to
exercise one or more of its rights or remedies (upon a Default), said Default
cannot be cured, unless Mortgagee expressly agrees in writing to accept said
cure and to cease the exercise of said rights and remedies.
6.6 RULES OF CONSTRUCTION. The term "Property" means all and any
---------------------
part of the Property and any interest in the Property.
6.7 SUCCESSORS IN INTEREST. The terms, covenants, and conditions
----------------------
herein contained shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto; provided, however, that this
-------- -------
section does not waive or modify any restrictions on transfer contained herein
or in any of the other Loan Documents.
6.8 GOVERNING LAW. MORTGAGOR AGREES THAT THIS MORTGAGE, THE CREDIT
-------------
AGREEMENT, THE NOTES AND ALL OTHER RELATED DOCUMENTS ARE TO BE CONSTRUED,
GOVERNED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
INDIANA WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
6.9 INCORPORATION. Exhibit A is incorporated into this Mortgage by
------------- ---------
this reference.
6.10 NOTICES. All notices, reports, demands, requests and other
-------
communications authorized or required under this Mortgage to be given to
Mortgagor or Mortgagee, shall be given in the manner and to the addresses
specified in the Credit Agreement for the giving of notices. Mortgagor shall
forward to Mortgagee, without delay, any notices, letters or other
communications delivered to the Property or to Mortgagor naming Mortgagee,
"Lender" or any similar designation as addressee, or which could reasonably be
14
<PAGE>
deemed to affect the ability of Mortgagor to perform its obligations to
Mortgagee under the Notes, the Credit Agreement or any other Loan Documents.
6.11 MAXIMUM INDEBTEDNESS; FUTURE ADVANCES. This Mortgage shall
-------------------------------------
secure not only existing indebtedness but also such future advances, whether
such advances are obligatory or to be made at the option of Mortgagee, or
otherwise, to the same extent as if such future advances were made on the date
of the execution of this Mortgage.
6.12 SEVERABILITY. If any provision or obligation under this
------------
Mortgage shall be determined by a court of competent jurisdiction to be invalid,
illegal or unenforceable, that provision shall be deemed severed from the
Mortgage and the validity, legality and enforceability of the remaining
provisions or obligations shall remain in full force as though the invalid,
illegal or unenforceable provision had never been a part of the Mortgage.
6.13 TIME. Time is of the essence of each and every term of this
----
Mortgage.
6.14 NO INTEREST IN GAMING LICENSE. The terms of this Mortgage
-----------------------------
notwithstanding, it is specifically provided that no interest is granted
hereunder in, or to, the Gaming License which was granted to Mortgagor by the
Indiana Gaming Commission (the "Gaming License") and that the Gaming License is
specifically excluded from the Property, as defined herein.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day
and year set forth above.
MORTGAGOR HEREBY DECLARES AND ACKNOWLEDGES THAT IT HAS RECEIVED,
WITHOUT CHARGE, A TRUE COPY OF THIS MORTGAGE.
"MORTGAGOR"
EMPRESS CASINO HAMMOND
CORPORATION, an
Indiana corporation
By__________________________
Name________________________
Title_______________________
15
<PAGE>
STATE OF ___________)
) ss
COUNTY OF __________)
Before me a Notary Public in and for the State of
________________________, personally appeared ___________________, the
_____________________ of EMPRESS CASINO HAMMOND CORPORATION, an Indiana
corporation, who being first duly sworn, acknowledged the execution of the
foregoing instrument for and on behalf of said corporation.
Witness my hand and Notarial Seal this ___ day of ________, 1998.
____________________________
Notary Public
____________________________
Printed Name
I am a resident of _____________________ County, __________. Mu
commission expires: _________________________________________.
This Instrument was prepared by
James L. Morgan, Esq.
Henderson & Morgan, LLC
164 Hubbard Way, Suite B
Reno, Nevada 89502;
(702) 825-7000
16
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
-----------------
<PAGE>
EXHIBIT 4.8(e)
=======================
FIRST PREFERRED SHIP MORTGAGE
ON THE WHOLE OF THE
EMPRESS III OFFICIAL NUMBER 1035754
$100,000,000.00
=======================
EMPRESS CASINO HAMMOND CORPORATION
[address]
OWNER AND MORTGAGOR
In Favor of
WELLS FARGO BANK, NATIONAL ASSOCIATION, AGENT BANK
ONE EAST FIRST STREET
RENO, NEVADA 89501
MORTGAGEE
=======================
Dated as of June ___, 1998
=======================
Discharge Amount: $100,000,000.00 Together
With Interest and Performance
of Mortgage Covenants
<PAGE>
INDEX
-----
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PARTIES................................................................. 1
WHEREAS CLAUSES......................................................... 1
GRANTING CLAUSE......................................................... 2
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.01. Definition of Terms..................................... 4
Section 1.02. Rules of Construction................................... 5
ARTICLE II
GENERAL MORTGAGE PROVISIONS
Section 2.01. General................................................. 5
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MORTGAGOR
Section 3.01. Corporate Status of Mortgagor........................... 6
Section 3.02. Outstanding Liens....................................... 6
Section 3.03. Compliance With Law..................................... 6
Section 3.04. Operation of Vessel..................................... 6
Section 3.05. Payment of Taxes, etc................................... 7
Section 3.06. Notice of Mortgage...................................... 7
Section 3.07. Release From Arrest..................................... 7
Section 3.08. Maintenance of Vessel................................... 7
Section 3.09. Access to Vessel........................................ 7
Section 3.10. Documentation of Vessel................................. 8
Section 3.11. Sale, Charter or Mortgage of Vessel..................... 8
Section 3.12. Insurance............................................... 8
Section 3.13. Requisition of Title to Vessel.......................... 8
Section 3.14. Requisition of Vessel but not Title..................... 9
Section 3.15. Execution of Additional Documents....................... 9
</TABLE>
<PAGE>
INDEX
-----
(Continued)
PAGE
----
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
Section 4.01.......................................................... 9
A. Events of Default................................................. 9
B. Remedies.......................................................... 10
Section 4.02. Sale of Vessel by Mortgagee............................ 12
Section 4.03. Mortgagee to Sign for Mortgagor........................ 12
Section 4.04. Mortgagee to Collect Hire, etc......................... 12
Section 4.05. Mortgagee's Right to Possession........................ 13
Section 4.06. Appearance by Mortgagee on Behalf of Mortgagor......... 13
Section 4.07. Acceleration of Indebtedness Secured Hereby............ 13
Section 4.08. Right of Mortgagee..................................... 13
Section 4.09. Cure of Defaults....................................... 14
Section 4.10. Restoration of Position................................ 14
Section 4.11. Proceeds of Sale....................................... 14
Section 4.12. Repairs to Vessel and Sale of Equipment................ 15
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Addresses.............................................. 15
Section 5.02. Counterparts........................................... 16
Section 5.03. Interest of Mortgagor................................. 16
Section 5.04. Survivorship of Covenants.............................. 16
Section 5.05. Amendments............................................. 17
Section 5.06. Discharge of Lien...................................... 17
Section 5.07. Incorporation into Mortgage............................ 17
Section 5.08. Governing Law.......................................... 15
SIGNATURE PAGE........................................................ 16
ACKNOWLEDGMENT........................................................ 17
ii
<PAGE>
FIRST PREFERRED SHIP MORTGAGE
THIS FIRST PREFERRED SHIP MORTGAGE dated as of June _____, 1998 is
granted by:
EMPRESS CASINO HAMMOND CORPORATION
[address]
a corporation organized and existing under and by virtue of the laws of the
State of Indiana (the "Mortgagor") in favor of:
WELLS FARGO BANK, NATIONAL ASSOCIATION, AGENT BANK
One East First Street
Reno, Nevada 89501
a national banking association organized and existing under and by virtue of the
laws of the United States (the "Mortgagee"), as administrative and collateral
agent for the Lenders, the Swingline Lender and the L/C Issuer.
WHEREAS:
A. The Mortgagor is the sole owner of the whole of the Vessel (the
"Vessel") identified and described in the Granting Clause of this First
Preferred Ship Mortgage (the "Mortgage").
B. Under the terms of that certain Credit Agreement (the "Credit
Agreement") executed concurrently herewith by and among Mortgagor, Empress
Entertainment, Inc., a Delaware corporation ("EEI"), and Empress Casino Joliet
Corporation, an Illinois corporation ("ECJC" and together with Mortgagor and
EEI collectively referred to as the "Borrowers"), each of the Lenders, as
therein defined, Wells Fargo Bank, National Association, as the swingline
lender (therein in such capacity, together with its successors and assigns, the
"Swingline Lender"), and Wells Fargo Bank, National Association, as
administrative and collateral agent for the Lenders, Swingline Lender and L/C
Issuer (therein, in such capacity, called the "Agent Bank' and, together with
the Lenders, Swingline Lender and L/C Issuer collectively referred to as the
"Banks"), have agreed to establish a Credit Facility, a Swingline Facility and
L/C facility (collectively the "Bank Facilities") in favor of Mortgagor and the
Borrowers in the aggregate principal amount of One Hundred Million Dollars
($100,000,000) in accordance with the terms and conditions set forth in the
Credit Agreement and evidenced by that certain Revolving Credit Note (the
"Note") dated June _________, 1998
1
<PAGE>
payable to the order of Agent Bank in the principal sum of One Hundred Million
Dollars ($100,000,000.00), including the Swingline Note as a subfacility thereof
in the principal sum of Five Million dollars ($5,000,000.00) (together with the
Revolving Credit Note, collectively referred to as the "Notes"). Mortgagor is
thus or will be truly and justly indebted unto the Mortgagee in an amount up to
the full and true principal sum of $100,000,000.00, plus interest and the
performance of mortgage covenants.
C. In order to secure the due and punctual payment of the principal of and
interest on the Notes, together with the payment of all other sums and the
performance of all other obligations now or hereafter owing by the Mortgagor to
the Mortgagee as described in the Granting Clause below, the Mortgagor has
agreed to execute and deliver this Mortgage to Mortgagee, individually and as
administrative and collateral agent for the Lenders, Swingline Lender and L/C
Issuer:
GRANTING CLAUSE
---------------
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
THAT, in consideration of the premises and of the additional covenants
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and for the purpose of securing as a
first priority lien in favor of the Mortgagee (1) the due and punctual payment
of the indebtedness evidenced by the Notes, (2) the performance of each covenant
and agreement of the Mortgagor contained herein, in the Credit Agreement and in
the Loan Documents (as hereinafter defined), (3) the satisfaction of those terms
and conditions contained herein applicable to the Mortgagor or within the
Mortgagor's control, (4) the payment of such additional loans or advances as
hereafter may be made to the Mortgagor or its successors or assigns, when
evidenced by a note or notes reciting that they are secured by this Mortgage,
provided, however, that any and all future advances to or on behalf of the
Mortgagor made for the improvement, protection or preservation of the Vessel,
together with interest at the Default Rate (as hereinafter defined), shall be
automatically secured hereby unless such a note or instrument evidencing such
advances specifically recites that it is not intended to be secured hereby, and
(5) the payment of all sums expended or advanced by the Mortgagee under or
pursuant to the terms hereof or to protect the security hereof, together with
interest thereon as herein provided, whether any of the foregoing obligations
now exist or are hereafter created or incurred, and whether they are or may be
direct or indirect, due or to become due, absolute or contingent, primary or
secondary, liquidated or unliquidated, or sole, joint, several or joint and
several (collectively, the "Obligations"), THE MORTGAGOR HAS, granted,
mortgaged, pledged, hypothecated, set over and confirmed AND THE MORTGAGOR DOES
BY THESE PRESENTS grant, mortgage, pledge, hypothecate, set over and confirm
UNTO AND IN FAVOR OF THE MORTGAGEE the whole of the following named and
described Vessel to wit:
2
<PAGE>
================================================================================
NAME OFFICIAL NO. HOME PORT
---- ------------ ---------
- --------------------------------------------------------------------------------
EMPRESS III 1035754 National Vessel
Documentation Center
================================================================================
TOGETHER WITH all of its boilers, engines, machinery, masts, spars, boats,
cables, motors, tools, anchors, chains, boorns, cranes, rigs, pumps, pipe,
tanks, tackle, apparel, furniture, fixtures, rigging, supplies, fittings and
gaming machinery, equipment and accessories relating to the gaming operations,
including but not limited to communication systems, visual and electronic
surveillance systems and transportation systems, tools, utensils, food and
beverage, liquor, uniforms, linens, housekeeping and maintenance supplies, fuel,
all gaming equipment and devices, gaming and financial equipment, computer
equipment, calculators, adding machines, video game and slot machines, and any
other electronic equipment of every nature used in connection with the operation
of the Vessel, all machinery, equipment, engines, appliances and fixtures for
generating or distributing air, water, heat, electricity, light, fuel or
refrigeration, or for ventilating or sanitary purposes, or for the exclusion of
vermin or insects, or for the removal of dust, refuse or garbage, all wall-beds,
wall-safes, built-in furniture and installations, shelving, lockers, partitions,
doorstops, vaults, motors, elevators, dumb-waiters, awnings, window shades,
venetian blinds, light fixtures, fire hoses and brackets and boxes for the same,
fire sprinklers, alarm, surveillance and security systems, computers, drapes,
drapery rods and brackets, mirrors, mantels, screens, linoleum, carpets and
carpeting, plumbing, bathtubs, sinks, basins, pipes, faucets, water closets,
laundry equipment, washers, dryers, ice-boxes and heating units, all kitchen and
restaurant equipment, including but not limited to silverware, dishes, menus,
cooking utensils, stoves, refrigerators, ovens, ranges, dishwashers, disposals,
water heaters, incinerators, furniture, fixtures and furnishings, all cocktail
lounge supplies, including but not limited to bars, glassware, bottles and
tables used in connection with the Vessel, all chaise lounges, hot tubs,
swimming pool heaters and equipment, and all other recreational equipment
(computerized and otherwise), beauty and barber equipment, and maintenance
supplies used in connection with the Vessel, all specifically designed
installations and furnishings, and all furniture, furnishings and personal
property of every nature whatsoever now or hereafter owned or leased by
Mortgagor, to the extent of Mortgagor's interest in such personal property, or
in which Mortgagor has any rights or interest and located in or on, or attached
to, or used or intended to be used or which are now or may hereafter be
appropriated for use on or in connection with the operation of the Vessel, or in
connection with any construction being conducted or which may be conducted
thereon, and all extensions, additions, accessions, improvements, betterments,
renewals, substitutions, and replacements to any of the foregoing, all of which
(to the fullest extent permitted by law) shall be conclusively deemed
appurtenances of the Vessel, and all other appurtenances to the Vessel
appertaining or belonging, whether now owned or hereafter acquired, whether on
board or not, and all additions, improvements and replacements hereafter made in
or to the Vessel. Mortgagor and Mortgagee acknowledge that significant
structures, improvements, additions, equipment and other appurtenances may be
added to the Vessel after the
3
<PAGE>
execution of this Mortgage, and the Mortgagor specifically affirms and agrees
that all such appurtenances to the Vessel shall be subject to this Mortgage.
TO HAVE AND HOLD the same unto Mortgagee, its successors and assigns,
forever upon the terms herein set forth to secure the performance and observance
of and compliance with the covenants, terms and conditions in the Notes and the
Credit Agreement.
PROVIDED, only, and the condition of these presents is such, that if the
Mortgagor, its successors or assigns, shall pay or cause to be paid to the
holder of the Notes and shall perform, observe and comply with the covenants,
terms and conditions in the Notes, the Credit Agreement and the other Loan
Documents contained, expressed or implied, to be performed, observed or complied
with by and on the part of the Mortgagor, then these presents and the rights
hereunder shall cease, terminate and be void; otherwise to be and remain in full
force and effect.
AND NOW, THE PARTIES HEREBY FURTHER AGREE, COVENANT AND DECLARE that the
Vessel is to be held subject to the following covenants, conditions, provisions,
terms and uses:
ARTICLE I
---------
DEFINITIONS AND RULES OF CONSTRUCTION
-------------------------------------
For all purposes of this Mortgage, unless the context otherwise requires:
SECTION 1.01. DEFINITION OF TERMS.
--------------------
(a) Act shall mean Chapter 313 of Title 46 of the United States Code.
(b) Office of the Documentation Officer shall mean the Office of the
Documentation Officer of the United States Coast Guard at New Orleans, Louisiana
or the National Vessel Documentation Center, or such other documentation office
at which the Certificate of Documentation of the Vessel may hereinafter be kept.
(c) Loan Documents shall have the meanings as set forth in Section 1.01 of
the Credit Agreement, and any and all pledges, security agreements, guaranties,
financing statements, filings, instruments, documents, or other agreements or
assignments executed by the Mortgagor or any other party in order to evidence,
secure or perfect the Notes and/or any other Loan Document.
(d) Default Rate shall have the meaning as set forth in Section 2.11(b) of
the Credit Agreement.
4
<PAGE>
SECTION 1.02. RULES OF CONSTRUCTION. Unless the context otherwise
---------------------
requires:
(a) A term has the meaning assigned to it;
(b) "Or" is not exclusive;
(c) Words in the singular include the plural, and in the plural include
the singular;
(d) All references herein to particular articles or sections, unless
otherwise provided, are references to articles or sections of this Mortgage.
(e) The headings herein are solely for convenience of reference and shall
not constitute a part of this Mortgage nor shall they affect its meaning,
construction or effect.
(f) References to the Notes, Credit Agreement and other instruments shall
be deemed to refer to such Notes, Credit Agreement or other instruments as the
same may from time to time be amended, supplemented or modified by the parties
hereto in accordance with the terms thereof.
(g) Unless defined herein, capitalized terms have the meaning given to
them in the Credit Agreement.
ARTICLE II
----------
GENERAL MORTGAGE PROVISIONS
---------------------------
SECTION 2.01. GENERAL. For purposes of this Mortgage and in order to
-------
comply with Title 46, Section 31321(b)(3), of the United States Code, the
parties to this Mortgage hereby declare that the indebtedness which is now or
will in the future be owed under the Notes and the Credit Agreement is an amount
up to the sum of $100,000,000.00, as the total of all possible advances that may
be made, together with interest and performance of the covenants of the
Mortgage, the Notes and the Credit Agreement. The discharge amount is the same
as the total amount, together with interest and performance of the covenants of
the Mortgage, the Notes and the Credit Agreement. The Bank Facilities secured by
this Mortgage consist of a revolving line of credit ("Revolving Credit
Facility") in the aggregate principal amount of One Hundred Million Dollars
($100,000,000.00), including the Swingline Note as subfacility thereof in the
principal sum of Five Million Dollars ($5,000,000.00).
5
<PAGE>
ARTICLE III
-----------
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MORTGAGOR
----------------------------------------------------------
The Mortgagor represents, warrants, covenants and agrees with
Mortgagee as follows:
SECTION 3.01. CORPORATE STATUS OF MORTGAGOR. The Mortgagor is a
-----------------------------
corporation organized and existing under and by virtue of the laws of the State
of Indiana and is and will remain a citizen of the United States of America
within the meaning of Title 46, Section 802, of the United States Code, entitled
to own and document the Vessel and to operate it in the trade in which it is
then engaged.
SECTION 3.02 OUTSTANDING LIENS. The Mortgagor lawfully owns and is
-----------------
lawfully possessed of the vessel free and clear of all liens, mortgages, taxes
and encumbrances, and the Mortgagor will and does hereby warrant and defend the
title and possession thereto and to every part thereof for the benefit of
Mortgagee against the claims and demands of all persons whomsoever.
SECTION 3.03. COMPLIANCE WITH LAW. The Mortgagor will comply with and
-------------------
satisfy all applicable formalities and provisions of the laws, rules and
regulations of the United States of America in order to perfect, establish and
maintain this Mortgage, any supplement or amendment thereto and any assignment
thereof by the Mortgagee as a first preferred mortgage upon the Vessel and upon
all additions, improvements and replacements made in or to the same. Mortgagor
does not warrant that any such laws, rules and regulations apply to the Vessel
as a matter of law, but does warrant that it will not render such laws, rules
and regulations inapplicable by its own acts or failure to act. The Mortgagor
shall furnish to Mortgagee, from time to time, such proofs as Mortgagee may
reasonably request with respect to the Mortgagor's compliance with the foregoing
covenant. The Mortgagor shall promptly pay and discharge all United States Coast
Guard fees and expenses in connection with the recordation of this Mortgage, any
supplement or amendment thereto and any assignment thereof by the Mortgagee. In
the event that the Notes or the other Loan Documents secured hereby, or any
provisions hereto or thereof, shall be deemed invalidated in whole or in part by
reason of any present or future law or any decision of any court, the Mortgagor
will execute, on its behalf, such other and further assurances and documents as
in the opinion of Mortgagee may be required to more effectually subject the
Vessel to the payment and performance of the terms and provisions of the Notes
and the other Loan Documents. In addition, the Mortgagor will furnish to
Mortgagee such additional information as Mortgagee may reasonably require.
SECTION 3.04. OPERATION OF VESSEL. The Mortgagor will not cause or
-------------------
permit the Vessel to be operated in any manner contrary to law and the Mortgagor
will not engage in any unlawful trade or violate any law or expose the Vessel to
penalty or forfeiture, and will not do, or suffer or permit to be done, anything
which can or may injuriously affect the registration or flag of
6
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the Vessel under the laws and regulations of the United States of America.
Mortgagor will never operate the Vessel outside the navigation limits of the
insurance carried pursuant to Section 3.12 of Article III of this Mortgage.
SECTION 3.05. PAYMENT OF TAXES, ETC. The Mortgagor will pay or cause
---------------------
to be paid prior to delinquency, all taxes, assessments, governmental levies,
fines and penalties lawfully imposed on the Mortgagor or on the Vessel;
provided, however that the Mortgagor shall not be required to pay or discharge
any such tax, assessment, charge, fine or penalty so long as the legality
thereof shall be contested in good faith and by appropriate proceedings and the
failure to pay would not have a material adverse effect on the Mortgagor or this
Mortgage unless and until foreclosure, distraint, sale or other similar
proceedings shall have been commenced with respect to the property which is
subject to any such tax, assessment, charge, fine or penalty.
SECTION 3.06. NOTICE OF MORTGAGE. The Mortgagor will place, and at
------------------
all times will retain, properly certified copies of this Mortgage and a Notice
of this Mortgage with the Certificate of Documentation of the Vessel on board
the Vessel, in substantially the following form:
Neither Mortgagor nor the Master nor any employee or member
of the crew of this vessel has any right, power or authority
to create, incur or permit to be imposed upon this vessel
any liens whatsoever, except for crew wages and salvage.
SECTION 3.07. RELEASE FROM ARREST. If a complaint be filed against
-------------------
the Vessel, or if the Vessel is otherwise attached, arrested, levied upon or
taken into custody by virtue of any legal proceeding in any court, the Mortgagor
will promptly notify Mortgagee thereof by telephone facsimile, confirmed by
letter, and within three (3) Banking Business Days will cause the Vessel to be
released by posting security in the form of a Letter of Undertaking or a Release
Bond, and will promptly notify Mortgagee thereof in the manner aforesaid.
SECTION 3.08. MAINTENANCE OF VESSEL. The Mortgagor will at its own
---------------------
expenses at all times maintain, preserve and keep the Vessel in good condition,
working order and repair and will from time to time make all needed and proper
repairs, renewals, replacements, betterments and improvements, including without
limitation those replacements required by Section 4.12 of Article IV. The Vessel
shall, and the Mortgagor covenants that it will, at all times comply with all
applicable laws, treaties and covenants and rules and regulations issued
thereunder.
SECTION 3.09. ACCESS TO VESSEL. The Mortgagor at all reasonable times
----------------
will afford Mortgagee or its authorized representatives full and complete access
to the Vessel for the purpose of inspecting the same and its papers and records.
7
<PAGE>
SECTION 3.10. DOCUMENTATION OF VESSEL. The Mortgagor will keep the
-----------------------
Vessel duly documented as a Vessel of the United States of America, under the
flag of the United States of America, entitled to engage in the operations
conducted by the Mortgagor and eligible for the trade in which the Vessel is
operating.
SECTION 3.11. SALE, CHARTER OR MORTGAGE OF VESSEL. The Mortgagor
-----------------------------------
will not mortgage, transfer, or demise charter the Vessel without the written
consent of Mortgagee first had and obtained. Any such written consent to any one
mortgage, transfer, or demise charter shall not be construed to be a waiver of
this provision in respect of any subsequent proposed mortgage, transfer, or
demise charter. Any such mortgage, transfer, or demise charter of the Vessel
shall be subject to the provisions of this Mortgage and the lien it creates,
unless released therefrom by the Mortgagee.
SECTION 3.12. INSURANCE. Mortgagor shall at its own expense keep the
---------
Vessel insured to its full replacement value and shall maintain at a minimum
those insurance coverages and limits required of it in Section 5.09 of the
Credit Agreement. Mortgagor agrees, nonetheless, that it will adjust the amounts
and nature of coverages if so advised in writing by its insurance broker that
such increased amounts are necessary or advisable, and such increased amount is
reasonable, in light of the nature of business conducted thereon. If Mortgagor
shall at any time fail to comply with the foregoing, Mortgagee may, but shall
not be obligated to, procure such insurance and pay any unpaid premiums or
calls, the costs and expenses of said procurement and payment, together with
interest at the Default Rate from the date of such expenditure, shall become an
additional indebtedness due from Mortgagor to Mortgagee and part of the
Obligations secured by this Mortgage and which shall be paid by Mortgagor on
demand. In the case of an insured loss, all insurance monies, awards or other
payments shall be paid over to the Mortgagee and the Mortgagee shall pay such
amounts over to the Mortgagor subject to any applicable conditions set forth in
the Credit Agreement, provided, however, that if at the time of such proposed
payment an Event of Default shall then exist, the Mortgagee shall apply all such
amounts in the manner provided in Section 4.11 hereof.
SECTION 3.13. REQUISITION OF TITLE TO VESSEL. In the event that the
------------------------------
title or ownership of the Vessel shall requisitioned, purchased or taken by the
Unites States of America or any government of any State of the United States or
any other country or any department, agency or representative thereof, pursuant
to any present or future law, proclamation, decree, order or otherwise, the lien
of this Mortgage shall be deemed to attach to the claim for compensation, and
the compensation, purchase price, reimbursement or award for such requisition,
purchase or other taking of such title or ownership is hereby declared payable
to Mortgagee, who shall be entitled to receive the same and shall apply all such
amounts in the manner provided in Section 4.11 hereof. In the event of any such
requisition, purchase or taking, the Mortgagor shall promptly execute and
deliver to Mortgagee such documents, if any, as in the opinion of counsel for
Mortgagee may be necessary
8
<PAGE>
or useful to facilitate or expedite the collection by Mortgagee of such
compensation, purchase price, reimbursement or award.
SECTION 3.14. REQUISITION OF VESSEL BUT NOT TITLE. In the event that
-----------------------------------
the United States of America or any government of any other country or any
department, agency or representative thereof shall not take the title or
ownership of the Vessel but shall requisition, charter, or in any manner take
over the use of the Vessel pursuant to any present or future law, proclamation,
decree, order or otherwise, and in the event Mortgagor is in default of the
terms of this Mortgage, all charter hire and compensation resulting therefrom
shall be payable to Mortgagee, and if, as a result of such requisitioning,
chartering or taking of the use of the Vessel such government, department,
agency or representative thereof shall pay or become liable to pay any sum by
reason of the loss of or injury to or depreciation of the Vessel any such sum is
hereby made payable to Mortgagee, who shall be entitled to receive the same and
shall apply any such sums referred to in this Section as provided in Section
4.11 hereof. In the event of any such requisitioning, chartering or taking of
the use of the Vessel, the Mortgagor shall promptly execute and deliver to
Mortgagee such documents, if any, and shall promptly do and perform such acts,
if any, as in the opinion of counsel for Mortgagee may be necessary or useful to
facilitate or expedite the collection by Mortgagee of such claims arising out of
the requisitioning, chartering or taking of the use of the Vessel.
SECTION 3.15. EXECUTION OF ADDITIONAL DOCUMENTS. Mortgagor agrees to
---------------------------------
execute all additional documents, instruments, UCC Financing Statements and
other agreements that Mortgagee may deem necessary and appropriate, within its
sole discretion, in form and substance satisfactory to Mortgagee, to keep this
Mortgage in effect, to better reflect the true intent of this Mortgage, and to
consummate fully all of the transactions contemplated by the Notes and the other
Loan Documents.
ARTICLE IV
----------
EVENTS OF DEFAULT AND REMEDIES
------------------------------
SECTION 4.01.
A. EVENTS OF DEFAULT. The term "Event of Default", wherever used in
-----------------
this Mortgage, shall mean any one or more of the following events (whether any
such event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulations of any administrative or
governmental body):
9
<PAGE>
i. The occurrence of an Event of Default as defined in Section 7.01
of the Credit Agreement; or
ii. Default in the due observance or performance of any of the
covenants and conditions herein required to be kept and performed and
continuance of such default for sixty (60) days after notice by Mortgagee,
provided, however, that the Mortgagor shall not be deemed to be in default for
failure to keep the Vessel in good condition, working order and repair pursuant
to Section 3.08 of Article III if the Mortgagor shall be diligently taking steps
to comply with the requirements of said Section; or
iii. Any representations and warranties made in this Mortgage are
untrue in any material respect as of the time when the same shall have been
made; or
iv. The Mortgagor shall (i) abandon the Vessel without due cause; or
(ii) cease to be a citizen of the United States of America within the meaning of
Title 46, Section 802 of the United States Code entitled to engage in the trade
in which the Vessel is operating; or
v. The title or ownership of the Vessel shall be requisitioned,
purchased or taken by the government of any country or by any department, agency
or representative thereof and there shall not have been paid to Mortgagee an
amount in cash in United States dollars equal to the fair value of the Vessel
within ninety (90) days after such event occurs.
B. REMEDIES. Then and in each and every such case Mortgagee
--------
shall have the right to:
(1) Declare all the then unpaid principal sum of the Notes,
or either of them, with the interest accrued thereon, and all other indebtedness
or sums secured hereby, to be due and payable immediately, and upon such
declaration such principal and with interest and other sums shall immediately
become due and payable without demand, presentment, notice or other requirements
of any kind (all of which the Mortgagor waives) notwithstanding anything in this
Mortgage or any Loan Document or applicable law to the contrary;
(2) Exercise all the rights and remedies in foreclosure and
otherwise given to Mortgagee by the laws and regulations of the United States of
America or of the country wherein the Vessel shall then be found or of any
country or state of the United States wherein the Vessel may thereafter be found
or of any other applicable jurisdiction;
10
<PAGE>
(3) Bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for any and all amounts due under the Notes, the
Credit Agreement, the other Loan Documents and this Mortgage, and collect the
same from the Mortgagor and/or out of any and all property of the Mortgagor
whether covered by this Mortgage or otherwise;
(4) Take the Vessel without legal process, but in a commercially
reasonable manner, wherever the same may be, and the Mortgagor or other person
in possession, forthwith upon demand of Mortgagee shall surrender to Mortgagee
possession of the Vessel and Mortgagee may, without being responsible for loss
or damage, hold, lay up, lease, charter, operate or otherwise use the Vessel for
such time and upon such terms as it may deem to be for its best advantage,
accounting only for the net profits, if any, arising from such use of the Vessel
and charging upon all receipts from the use of the Vessel or from the sale
thereof by court proceedings or pursuant to Subsection (5) of Section 4.01 next
following, all costs, expenses, charges, damages or losses by reason of such
use; and if at any time Mortgagee shall avail itself of the right herein given
it to take the Vessel, Mortgagee shall have the right to dock the Vessel for a
reasonable time at any dock, pier, or other premises of the Mortgagor or leased
by the Mortgagor without charge, or to dock it at any other place at the
reasonable cost and expense of the Mortgagor;
(5) Without being responsible for loss or damage, except in the
event of Mortgagee's willful misconduct or gross negligence, sell the Vessel at
any place and at such time as Mortgagee may specify and in such manner as
Mortgagee may deem advisable free from any claim by the Mortgagor in admiralty,
in equity, at law or by statute, after first giving notice of the time and place
of sale with a general description of the property in the following manner:
(a) By publishing such notice for three (3) times a week
for two consecutive weeks, with the last date of publication not more than
twenty (20) nor less than five (5) days immediately preceding the sale, in a
daily newspaper of general circulation published in the place where the Vessel
is then located and in the Journal of Commerce;
(b) By mailing a similar notice to the Mortgagor on the day
of first publication.
Mortgagee may adjourn any such sale from time to time by
announcement at the time and place appointed for such sale or for such adjourned
sale, and without further notice or publication Mortgagee may make any such sale
at the time and place to which the same shall be so adjourned. Any such sale may
be conducted without bringing the Vessel to be sold to the place designated for
such sale and in such manner as Mortgagee may deem to be for its best advantage,
provided such sale is conducted in a commercially reasonable manner.
11
<PAGE>
(6) Mortgagor hereby consents to the appointment of a consent
keeper or substitute custodian by Mortgagee with the costs thereof to be a cost
of the sale to be paid from the proceeds of the sale or by Mortgagor.
SECTION 4.02. SALE OF VESSEL BY MORTGAGEE. Any sale of the Vessel
---------------------------
made in pursuance of this Mortgage, whether under the power of sale hereby
granted or any judicial proceedings, shall operate to divest all right, title
and interest of any nature whatsoever of the Mortgagor therein and thereto, and
shall bar the Mortgagor, its successors and assigns, and all persons claiming
by, through or under them. At any such sale Mortgagee or any other holder of the
Notes (the "Holder") may bid for and purchase the Vessel and upon compliance
with the terms of sale may hold, retain and dispose of such property without
further accountability therefor. In case of any such sale the Holder shall be
entitled, for the purpose of making settlement or payment for the property
purchased, to use and apply the Notes or any portion thereof in order that there
may be credited against the amount remaining due and unpaid thereon the sums
payable to the Holder out of the net proceeds of such sale after allowing for
the costs and expense of sale and other charges; and thereupon the Mortgagor
shall be credited, on account of such purchase price, with the net proceeds that
shall have been so credited upon the Notes. No purchaser shall be bound to
inquire whether notice has been given, or whether any default has occurred, or
as to the propriety of the sale or as to the application of the proceeds
thereof.
SECTION 4.03. MORTGAGEE TO SIGN FOR MORTGAGOR. For purposes of any
-------------------------------
sale of the Vessel made in pursuance of this Mortgage, whether under the power
of sale hereby granted or any judicial proceedings, Mortgagee is hereby
appointed attorney-in-fact of the Mortgagor to execute and deliver to any
purchaser aforesaid and is hereby vested with full power and authority to make,
in the name and in behalf of the Mortgagor, a good conveyance of the title to
the Vessel so sold. In the event of any sale of the Vessel, under any power
herein contained, the Mortgagor will, if and when required by Mortgagee, execute
such form of conveyance of the Vessel as Mortgagee may direct or approve.
SECTION 4.04. MORTGAGEE TO COLLECT HIRE, ETC. Mortgagee is hereby
------------------------------
appointed attorney-in-fact of the Mortgagor upon the happening of any Event of
Default, in the name of the Mortgagor to demand, collect, receive, compromise
and sue for, so far as may be permitted by law, all earnings, tolls, rents,
issues, revenues, income and profits of the Vessel and all amounts due from
underwriters under any insurance thereon as payment of losses or as return
premiums or otherwise, and all other sums, due or to become due at the time of
the happening of any Event of Default in respect of the Vessel, or in respect of
any insurance thereof from any person whomsoever, and to make, give and execute
in the name of the Mortgagor acquittances, receipts, releases, or other
discharges for the same, whether under seal or otherwise, and to endorse and
accept in the name of the Mortgagor all checks, Notes, drafts, warrants,
agreements and all other instruments in writing with respect to the foregoing.
All amounts so received shall first be applied to operating expenses and then to
unpaid Obligations under the Notes and the other Loan Documents.
12
<PAGE>
SECTION 4.05. MORTGAGEE'S RIGHT TO POSSESSION. Whenever any right to enter
-------------------------------
and take possession of the Vessel accrues to Mortgagee, it may require the
Mortgagor to deliver, and the Mortgagor shall on demand, at its own cost and
expense, deliver the Vessel to Mortgagee as demanded. If any legal proceedings
shall be taken to enforce any right under this Mortgage, Mortgagee shall be
entitled as a matter of right to the appointment of a receiver of the Vessel and
the earnings, tolls, rents, issues, revenues, income and profits due or to
become due and arising from the operation thereof
SECTION 4.06. APPEARANCE BY MORTGAGEE ON BEHALF OF MORTGAGOR. The
----------------------------------------------
Mortgagor authorizes and empowers Mortgagee or its appointees or any of them to
appear in the name of the Mortgagor, its successors and assigns, in any court
where a suit is pending against the Vessel because of or on account of any
alleged lien against the Vessel from which the Vessel has not been released and
to take such proceedings as it or any of them may deem proper towards the
defense of such suit and the discharge of such lien, in the event that the
Mortgagor shall not be taking proceedings reasonably satisfactory to Mortgagee,
and in such case all reasonable expenditures made or incurred by Mortgagee or
his appointees for the purpose of such defense or discharge shall be a debt due
from the Mortgagor, its successors and assigns, to Mortgagee, and shall be
secured by the lien of this Mortgage in like manner and extent as if the amount
and description thereof were written herein.
SECTION 4.07. ACCELERATION OF INDEBTEDNESS SECURED HEREBY. The Mortgagor
-------------------------------------------
covenants that upon the happening of any one or more of the Events of Default,
then upon written demand of Mortgagee, the Mortgagor will pay to Mortgagee the
whole of the sum due under the Notes and perform its obligations to Mortgagee
under the other Loan Documents and this Mortgage, and in case the Mortgagor
shall fail to pay the same forthwith upon such demand, Mortgagee shall be
entitled to recover judgment for the whole amount so due and unpaid, together
with such further amounts as shall be sufficient to cover the reasonable costs
and expenses of collection, including a reasonable compensation to Mortgagee's
agents, attorneys and counsel and any necessary advances, expenses and
liabilities made or incurred by them hereunder. All moneys collected by
Mortgagee under this Section shall be applied by Mortgagee in accordance with
the provisions of Section 4.11 of this Article.
SECTION 4.08. RIGHTS OF MORTGAGEE. Each and every power and remedy herein
-------------------
given to Mortgagee shall be cumulative and shall be in addition to every other
power and remedy herein given or now or hereafter existing at law, in equity, in
admiralty or by statute, and each and every power and remedy whether herein
given or otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by Mortgagee, and the exercise or the
beginning of the exercise of any power to remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other power
or remedy. No delay or omission by Mortgagee in the exercise of any right or
power or in the pursuance of any remedy
13
<PAGE>
accruing upon any default as above defined shall impair any such right, power or
remedy or be construed to be a waiver of any such Event of Default or to be any
acquiescence therein; nor shall the acceptance by Mortgagee of any security or
of any payment of or on account of the Notes after any Event of Default or of
any payment on account of any past default be construed to be a waiver of any
right to take advantage of any future Event of Default or of any past Event of
Default not completely cured thereby.
SECTION 4.09. CURE OF DEFAULTS. If at any time after an Event of Default
----------------
and prior to the actual sale of the Vessel by Mortgagee or prior to any
foreclosure proceedings or prior to the acceleration of the Notes (and provided
that such acceleration has not been rescinded), the Mortgagor completely cures
all Events of Default and pays all expenses, advances and damages to Mortgagee
consequent on such Events of Default, with interest at the Default Rate, then
Mortgagee shall restore the Mortgagor to its former position, but such action,
if any, shall not affect any subsequent Event of Default or impair any rights
consequent thereon.
SECTION 4.10. RESTORATION OF POSITION. In case Mortgagee shall have
-----------------------
proceeded to enforce any right, power or remedy under this Mortgage by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to Mortgagee, then and in every such case the Mortgagor and Mortgagee shall be
restored to their former positions and rights hereunder with respect to the
property subject or intended to be subject to this Mortgage, and all rights,
remedies and powers of Mortgagee shall continue as if no such proceedings had
been taken.
SECTION 4.11. PROCEEDS OF SALE. The proceeds of any sale of the Vessel and
----------------
the net earnings from the hire or from any operation or use of the Vessel by
Mortgagee under any of the powers herein specified and any and all other money
received by Mortgagee pursuant to or under the terms of this Mortgage or in any
proceedings hereunder, the application of which has not elsewhere herein been
specifically provided, shall be applied at the discretion of Mortgagee with
Mortgagee having the right to impute payments as it may desire among the
following:
FIRST: To the payment of all reasonable expenses and charges,
including the expenses of any sale, and expenses of any retaking, reasonable
attorneys' fees, court costs, Keepers' fees, necessary repairs and any other
expenses or advances made or incurred by Mortgagee in the protection of its
rights or the pursuance of its remedies hereunder, and to provide adequate
indemnity against liens claiming priority over or equality with the lien of this
Mortgage;
SECOND: To the payment in full of any amounts then due and unpaid
under the Credit Agreement and any other Loan Documents (other than the Notes).
THIRD: To the payment of the balance of interest remaining unpaid
under the Notes.
14
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FOURTH: To the balance, if any, of principal remaining under the
Notes; and
FIFTH: The balance, if any, of such payment on proceeds to any
party who may be legally entitled thereto.
SECTION 4.12. REPAIRS TO VESSEL AND SALE OF EQUIPMENT. Until one or more of
---------------------------------------
the Events of Default hereinabove described shall happen, the Mortgagor (a)
shall be suffered and permitted to retain actual possession and use of the
Vessel; (b) may at any time alter, repair, change or re-equip the Vessel,
subject, however, to the provisions of Section 3.08 of Article III; and (c)
shall have the right, from time to time in its discretion and without obtaining
a release thereof by Mortgagee, to dispose of, free from the lien hereof,
equipment or other appurtenances, including any gaming machinery, any equipment
and accessories relating to the gaming operations, of the Vessel that may become
worn out or obsolete or otherwise are no longer useful, necessary, profitable or
advantageous in the operation of the Vessel, provided that such does not
materially affect the value of the Vessel. Either prior to or promptly following
such removal any such property shall be replaced with serviceable equipment or
other appurtenances of substantially equal utility and of a value at least
substantially equal to that of the replaced property when first acquired and
free of any security interest of any other person, which shall forthwith become
subject to the lien of this Mortgage as a preferred mortgage thereon.
ARTICLE V
---------
MISCELLANEOUS PROVISIONS
------------------------
SECTION 5.01. ADDRESSES. Any notice to be given under this Mortgage shall,
---------
except as otherwise expressly provided herein, be served by registered or
certified mail or hand delivered, addressed as follows:
15
<PAGE>
(a) To Mortgagor:
EMPRESS CASINO HAMMOND CORPORATION
[address]
with a copy to:
(b) To Mortgagee:
WELLS FARGO BANK, NATIONAL ASSOCIATION
Gaming Division
One East First Street
Reno, Nevada 89501
Attention: Casey Potter, Vice President
with copies to:
Timothy J. Henderson, Esq.
Henderson & Morgan, L.L.C.
164 Hubbard Way, Suite B
Reno, Nevada 89502
unless another address shall be furnished in writing by the party to receive
such notice to the party giving such notice, and any such notice shall be deemed
made as of the date of mailing or hand delivery.
SECTION 5.02. COUNTERPARTS. This Mortgage may be executed in any number of
------------
counterparts and all such counterparts executed and delivered each as an
original shall constitute but one and the same instrument.
SECTION 5.03. INTEREST OF MORTGAGOR. The interest of the Mortgagor in the
---------------------
Vessel and the interest mortgaged by this Mortgage is that of one hundred
percent (100%) absolute and sole ownership.
SECTION 5.04. SURVIVORSHIP OF COVENANTS. All the covenants, promises,
-------------------------
stipulations and agreements of the Mortgagor secured hereby shall bind the
Mortgagor and its successors and assigns and shall inure to the benefit of
Mortgagee and its successors and assigns.
16
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SECTION 5.05. AMENDMENTS. The Notes, the Loan Documents and this Mortgagee
----------
may not be modified, supplemented or amended in any respect, or any waiver given
in regard to any of the provisions hereof, in any case which might affect the
rights of Mortgagee hereunder, except with the written consent of Mortgagee, and
so long as Mortgagor shall do all acts and things necessary to maintain the
preferred status of this Mortgage.
SECTION 5.06. DISCHARGE OF LIEN. When the Notes have been paid in full,
-----------------
and the Mortgagor's obligations to the Mortgagee arising under the other Loan
Documents have been satisfied in full, Mortgagee shall, at the Mortgagor's
expense, execute and deliver to the Mortgagor such documents as the Mortgagor
shall reasonably request to evidence the surrender and discharge of the lien
hereof upon the Vessel.
SECTION 5.07. INCORPORATION INTO MORTGAGE. The Whereas Clauses and the
---------------------------
Granting Clause of this Mortgage are incorporated in and are made a part of this
Mortgage.
SECTION 5.08. GOVERNING LAW. This Mortgage shall be governed by and
-------------
construed according to the provisions of the Act, and where silent, by the
General Maritime Law of the United States.
IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage in multiple
original counterparts effective as of the day and year first above written.
EMPRESS CASINO HAMMOND CORPORATION
BY:/s/ Peter A. Ferro, Jr.
---------------------------
NAME: Peter A. Ferro, Jr.
TITLE: Chief Executive Officer
17
<PAGE>
ACKNOWLEDGMENT
EMPRESS CASINO HAMMOND CORPORATION
STATE OF__________ )
) SS:
COUNTY OF_______________ )
On the ___ day of June 1998, before me personally came __________________,
to me known, who, being by me duly sworn, did depose and say that he resides at
_________________________________; that he is the _________________________ of
EMPRESS CASINO HAMMOND CORPORATION, the corporation described in and on whose
behalf he executed the above instrument; and that he has been duly authorized
and instructed by the Board of Directors of said corporation to execute the
foregoing First Preferred Ship Mortgage for the uses and purposes set forth
therein.
__________________________
Notary Public
My Commission expires:
____________________________
18
<PAGE>
EXHIBIT 4.8(f)
SECURITY AGREEMENT
------------------
(EEI)
THIS SECURITY AGREEMENT (EEI) ("Agreement") is made and entered into
as of June 17, 1998, by and between EMPRESS ENTERTAINMENT, INC., a Delaware
corporation, party of the first part (hereinafter referred to as "Debtor") and
WELLS FARGO BANK, National Association, as administrative and collateral agent
for the Lenders, the Swingline Lender and the L/C Issuer, all of which are
defined in the Credit Agreement, referred to below, party of the second part
(hereinafter referred to, in such capacity, as "Secured Party").
R E C I T A L S:
- - - - - - - -
A. Reference is made to that certain Credit Agreement (as it may
be hereafter renewed, extended, amended, restated or otherwise modified, the
"Credit Agreement") executed concurrently, or substantially concurrent, herewith
by and among Debtor, Empress Casino Hammond Corporation, an Indiana corporation,
and Empress Casino Joliet Corporation, an Illinois corporation (collectively,
"Borrowers"), the Lenders therein named (each, together with their respective
successors and assigns, individually being referred to herein as a "Lender" and
collectively as the "Lenders"), the Swingline Lender therein named (referred to
herein, together with its successors and assigns, as the "Swingline Lender"),
the L/C Issuer therein named (referred to herein, together with its successors
and assigns, as the "L/C Issuer"), and Agent Bank. Agent Bank, the Lenders, the
Swingline Lender and the L/C Issuer are collectively referred to herein as the
"Banks".
B. Pursuant to the Credit Agreement, and subject to the terms and
conditions specified therein, the Lenders have agreed to provide a reducing
revolving credit facility to Borrowers with an initial maximum principal amount
of One Hundred Million Dollars ($100,000,000.00) available for Borrowings
thereunder (together with all extensions, renewals, amendments, substitutions
and other modifications thereof, the "Credit Facility"), which Credit Facility
includes: (i) a subfacility for funding of Swingline Advances by the Swingline
Lender on shorter notice and in lesser amounts than would otherwise be required
for Borrowings under the Credit Facility (together with all extensions,
renewals, amendments, substitutions, and other modifications thereof, the
"Swingline Facility"); and (ii) a subfacility for the issuance of Letters of
Credit by the L/C Issuer (together with all extensions,
<PAGE>
renewals, amendments, substitutions and other modifications thereof, the "L/C
Facility" and, together with the Credit Facility and the Swingline Facility, the
"Bank Facilities"); all as more particularly set forth by the Credit Agreement.
C. In this Agreement all capitalized words and terms not otherwise
defined herein shall have the respective meanings and be construed herein as
provided in Section 1.01 of the Credit Agreement and any reference to a
provision of the Credit Agreement shall be deemed to incorporate that provision
as a part hereof in the same manner and with the same effect as if the same were
fully set forth herein.
D. The provisions of Section 1.02 of the Credit Agreement shall be
applied to this Agreement in the same manner as applied therein to the Credit
Agreement.
E. As a condition of their entry into the Credit Agreement, and
their commitment to provide the Bank Facilities for the benefit of Borrowers
(subject to the terms of the Credit Agreement and the other Loan Documents), the
Banks have required, among other things, that Debtor grant the security
interests, and undertake the obligations, contemplated by this Agreement.
NOW, THEREFORE, in order to induce the Banks to enter into the Credit
Agreement, and to provide the Bank Facilities, and for other good and valuable
consideration, the receipt and adequacy of which hereby is acknowledged, Debtor
and Secured Party hereby agree as follows:
ARTICLE I
SECURITY INTEREST AND COLLATERAL
--------------------------------
Section 1.01. Creation of Security Interest.
-----------------------------
(a) For valuable consideration, Debtor hereby assigns,
pledges and grants to Secured Party a continuing security interest in, and lien
upon, all presently existing and hereafter acquired Collateral (as defined
below), as security for the timely payment and performance of each and every
Secured Obligation (as also defined below). This Agreement is a continuing and
irrevocable agreement and all the rights, powers, privileges and remedies
hereunder shall apply to any and all Secured Obligations, including those
arising under successive transactions which shall either continue the Secured
Obligations, increase or decrease them, or from time to time create new Secured
Obligations after all
2
<PAGE>
or any prior Secured Obligations have been satisfied, and notwithstanding the
bankruptcy of Borrower, Debtor or any other Person or any other event or
proceeding affecting any Person.
(b) The security interest which is granted hereunder is
subject to the following:
(i) the right of Debtor to sell or otherwise dispose of
Personal Property in the ordinary course of business, free and clear of the lien
hereof, provided, and to the extent, that such sale or other disposition is
permitted under the terms of the Credit Agreement; and
(ii) as to the fixtures and equipment covered hereby,
the leases and/or purchase money security interests pursuant to which Debtor has
acquired an interest in such fixtures and equipment provided, and to the extent,
that such leases and/or purchase money security interests are permitted under
the terms of the Credit Agreement.
Section 1.02. Description of Collateral. All references herein to
-------------------------
the "Collateral" shall be to all right, title and interest of Debtor, whether
now owned or existing, or hereafter acquired or arising, in, to and under any of
the following:
(a) All present and future chattels, furniture, furnishings,
equipment and fixtures, all of every kind and nature, and other tangible
personal property in which Debtor now has or hereafter acquires an interest; all
including, without limitation: (aa) all office and administrative furniture,
equipment and supplies including, without limitation, office appliances, filing
cabinets, computers, peripheral computer equipment and other data processing and
storage equipment, stationery and other office supply items, and other office
and administrative furniture, equipment and supplies; (bb) all tools and other
maintenance and repair equipment; and (cc) all equipment and supplies utilized
in connection with any activity engaged in by Debtor;
(b) All present and future supplies, inventory and merchandise
which is used in connection with, or in the conduct of, the business of Debtor
or in which Debtor has or acquires an interest, including, without limitation:
(i) all present and future goods held for sale or lease or to be furnished under
a contract of service, all raw materials, work in process and finished goods,
all packing materials, supplies
3
<PAGE>
and containers relating to or used in connection with any of the foregoing, and
all bills of lading, warehouse receipts or documents of title relating to any of
the foregoing; (ii) all food stuffs, beverages, prepared food and other similar
items; and (iii) all cleaning supplies, office supplies, consumables and similar
items;
(c) All present and future goods, which are not otherwise set
forth herein, and which are used in connection with, or in the conduct of, the
business of Debtor or in which Debtor has or acquires an interest;
(d) All present and future accounts, accounts receivable,
rentals, deposits, rights to payment, instruments, documents, chattel paper,
security agreements, guaranties, undertakings, surety bonds, insurance policies
and notes and drafts which are owned, or used in connection with, or in the
conduct of, the business of Debtor, or in which Debtor has or acquires an
interest, however created or arising;
(e) All present and future contracts, or agreements and all other
present and future general intangibles which are owned, or used in connection
with, or in the conduct of, the business of Debtor, or in which Debtor has or
acquires an interest, including, without limitation: (aa) all leases and
purchase contracts for equipment, furniture and/or fixtures of any kind and
character; and (bb) all goodwill, choses in action, trade secrets, customer
lists, trademarks, trade names and service marks, patents, copyrights,
technology, processes, and proprietary information which are owned, or used in
connection with, or in the conduct of, the business of Debtor, or in which
Debtor has or acquires an interest (including, without limitation, the trade
names of "Empress", "Empress Casino", "Empress River Casino" and/or any
derivation thereof including any and all state and federal registrations
thereof);
(f) All present and future deposit accounts which are owned, or
used in connection with, or in the conduct of, the business of Debtor, or in
which Debtor has or acquires an interest including, without limitation, any
demand, time, savings, passbook or like account maintained with any bank,
savings and loan association, credit union or like organization, and all money,
cash and cash equivalents of Debtor, whether or not deposited in any such
deposit account;
(g) All present and future revenues, receipts, payments and
income of any nature whatsoever, in which Debtor
4
<PAGE>
now owns or hereafter acquires an interest, regardless of the source of such
items;
(h) All present and future books and records which are owned, or
used in connection with, or in the conduct of, the business of Debtor, or in
which Debtor, has or acquires an interest including, without limitation, books
of account and ledgers of every kind and nature, all electronically recorded
data relating to the business of Debtor, all receptacles and containers for such
records, and all files and correspondence;
(i) Other than with respect to Unrestricted Subsidiaries, All
present and future investment property, stocks, bonds, debentures, securities,
subscription rights, options, warrants, puts, calls, certificates, partnership
interests, joint venture interests, investments and/or brokerage accounts which
are owned, or used in connection with, or in the conduct of, the business of
Debtor, or in which Debtor has or acquires an interest and all rights,
preferences, privileges, dividends, distributions, redemption payments, or
liquidation payments with respect thereto;
(j) All right, title and interest of Debtor in and to all leases,
licenses, concessions, or similar agreements whether or not specifically herein
described and all amendments to the same, including, but not limited to the
following: (aa) all payments due and to become due under such agreements,
whether as rent, damages, insurance payments, condemnation awards, or otherwise;
(bb) all claims, rights, powers, privileges and remedies under such agreements;
and (cc) all rights of the Debtor under such leases to exercise any election or
option, or to give or receive any notice, consent, waiver or approval, or to
accept any surrender of the premises or any part thereof, together with full
power and authority in the name of Debtor or otherwise, to demand and receive,
enforce, collect, or receipt for any or all of the foregoing, to endorse or
execute any checks or any instruments or orders, to file any claims or to take
any action which Secured Party may deem necessary or advisable in connection
therewith;
(k) All plans, specifications, soil reports, engineering reports,
land planning maps and surveys together with all amendments and modifications
thereof;
(l) All present and future accessions, appurtenances, components,
repairs, repair parts, spare parts,
5
<PAGE>
replacements, substitutions, additions, issue and/or improvements to or of or
with respect to any of the foregoing;
(m) All rights, remedies, powers and/or privileges of Debtor with
respect to any of the foregoing; and
(n) Any and all proceeds and products of any of the foregoing,
including, without limitation, all money, accounts, general intangibles, deposit
accounts, documents, instruments, chattel paper, goods, insurance proceeds, and
any other tangible or intangible property received upon the sale or disposition
of any of the foregoing.
Section 1.03. Secured Obligations. This Agreement secures, and the
-------------------
Collateral is security for, the following (collectively, the "Secured
Obligations"):
(a) Payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)), of: (i) the
principal sum which is, at any time, advanced and unpaid under the Credit
Facility not to exceed One Hundred Million Dollars ($100,000,000.00) at any one
time, all on a reducing revolving line of credit basis; (ii) interest and other
charges accrued on said principal sum, or accrued on interest and other charges
then outstanding under the Credit Facility (all including, without limitation,
interest and other charges that would accrue on such obligations, but for the
filing of a petition in bankruptcy with respect to Borrowers, or any of them);
and (iii) any other obligations of Borrowers, or any of them, under the RLC Note
referred to below; all according to the terms of a Revolving Credit Note dated
concurrently, or substantially concurrent, herewith which is made by Borrowers
and is payable to the order of Secured Party according to the tenor and effect
of said Revolving Credit Note, and all renewals, extensions, amendments,
restatements, replacements, substitutions and other modifications thereof
(hereinafter collectively referred to as the "RLC Note").
(b) Payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)), of: (i) the
principal sum which is, at any time, advanced and
6
<PAGE>
unpaid under the Swingline Facility not to exceed Five Million Dollars
($5,000,000.00) at any one time, all on a revolving line of credit basis; (ii)
interest and other charges accrued on said principal sum, or accrued on interest
and other charges then outstanding under the Swingline Facility (all including,
without limitation, interest and other charges that would accrue on such
obligations, but for the filing of a petition in bankruptcy with respect to
Borrowers, or any of them); and (iii) any other obligations of Borrowers, or any
of them, under the S/L Note referred to below; all according to the terms of a
Swingline Note dated concurrently, or substantially concurrent, herewith which
is made by Borrowers and is payable to the order of Secured Party according to
the tenor and effect of said Swingline Note, and all renewals, extensions,
amendments, restatements, replacements, substitutions and other modifications
thereof (hereinafter referred to as the "S/L Note", and together with the RLC
Note, collectively referred to as the "Notes").
(c) Payment and performance of every obligation, warranty,
representation, covenant, promise and agreement of Borrowers, or any of them,
contained in that certain Certificate and Indemnification Regarding Hazardous
Substances, together with all extensions, renewals, amendments, restatements and
other modifications thereof, which is executed by Empress Casino Hammond
Corporation and Debtor concurrently, or substantially concurrent, herewith and
which is to be executed by Empress Casino Joliet Corporation on or before
July 31, 1998.
(d) Payment and performance of every obliga tion, covenant,
promise and agreement of Debtor herein contained or incorporated herein by
reference, including any sums paid or advanced by Secured Party or any of the
Banks pursuant to the terms hereof.
(e) Payment of the expenses and costs incurred or paid by Secured
Party or any of the Banks in the preservation and enforcement of the rights and
remedies of Secured Party and the duties and liabilities of Debtor hereunder,
including, but not by way of limitation, reasonable attorney's fees, court
costs, witness fees, expert witness fees, collection costs, and reasonable costs
and expenses paid by Secured Party or any of the Banks in performing for
Debtor's account any obligation of said Debtor.
(f) Payment of any sums which may hereafter be owing by
Borrowers, or any of them, to any of the Banks or any
7
<PAGE>
of their affiliates, under the terms of any interest rate swap agreement,
interest rate cap agreement, basis swap agreement, forward rate agreement,
interest collar agreement or interest floor agreement to which Borrowers, or any
of them, may be a party, or under any other agreement or arrangement to which
Borrowers, or any of them, may be a party, which in each case is designed to
protect Borrowers, or any of them, against fluctuations in interest rates or
currency exchange rates with respect to any indebtedness secured by this
Agreement.
(g) Payment of additional sums and interest thereon which may
hereafter be loaned to Borrowers, or any of them, pursuant to the Credit
Agreement when evidenced by a promissory note or notes which recite that this
Agreement is security therefor.
(h) Performance and payment of every obligation, warranty,
representation, covenant, agreement and promise of Borrowers, or any of them,
which are contained in the Credit Agreement.
Section 1.04. For Security Purposes Only. The assignment, pledge,
--------------------------
and grant of a security interest in Debtor's interest(s) in the Collateral,
hereunder, is for security purposes only and shall not make Secured Party
responsible for, or otherwise affect or modify, any duty, obligation or
liability of Debtor under any of the Collateral, or under any transaction
related thereto.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
Section 2.01. Certain Representations and Warranties. The Debtor
--------------------------------------
represents and warrants to Secured Party as follows:
(a) The Debtor is and will be the lawful owner of good and
marketable title to all of the Collateral, free of all liens and claims
whatsoever, other than the security interest hereunder, and no presently
effective Uniform Commercial Code Financing Statement (as defined by the
Commercial Code referred to below) covering any of the Collateral is on file in
any public office.
(b) The execution and delivery of this Agreement and the
performance by the Debtor of its obligations hereunder have been duly authorized
by all necessary corporate action, and do not and will not contravene or
conflict with
8
<PAGE>
any provision of law or of the charter or bylaws of the Debtor or of any
agreement binding upon the Debtor, and this Agreement is a legal, valid and
binding obligation of the Debtor, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency and other
laws of general application relating to or affecting the enforcement of
creditors' rights.
(c) This Agreement creates a first priority security interest in
the Collateral subject only to Permitted Encumbrances (as defined in the Credit
Agreement).
Section 2.02. Maintenance of Collateral. Except to the extent that
-------------------------
any of the following would be prohibited under, or would constitute a violation
of, the terms and conditions of the Credit Agreement, Debtor agrees: (i) to
properly care for and keep the Collateral in good condition and repair; (ii) not
to remove, demolish or substantially alter the Vessels, except upon the prior
written consent of Secured Party; (iii) not to commit or permit any waste or
deterioration of the Collateral (ordinary wear and tear, casualty and
condemnation excepted); (iv) not to commit, suffer or permit any act to be done,
or condition to exist, in connection with any of said Collateral in material
violation of any law, covenant, condition or restriction now, or hereafter,
affecting said Collateral (v) to perform all obligations which it may have under
the Collateral; and (vi) except as otherwise permitted in the Credit Agreement,
to do all other acts, in a timely and proper manner, which, from the character
or use of the Collateral, may be reasonably necessary to maintain and preserve
its value, the specific enumerations herein not excluding the general.
Section 2.03. Insurance. During the continuance of this Agreement,
---------
Debtor shall obtain, or cause to be obtained, and shall maintain or cause to be
maintained, at all times throughout the term of the Bank Facilities, at its own
cost and expense, and shall deposit with Secured Party, Certificates of
Insurance, each in a form and substance, and at such times, as is required under
Section 5.09 of the Credit Agreement. All monies received from "All Risk"
insurance policies (including flood and earthquake policies) covering any of the
Collateral shall be: (i) paid directly to Secured Party and retained by Secured
Party or released to Debtor by Secured Party; or (ii) paid directly to Debtor;
all in accordance with Section 8.02 of the Credit Agreement. Nothing contained
in this Agreement shall be deemed to excuse Debtor from restoring, repairing and
maintaining the Collateral, as
9
<PAGE>
herein provided, regardless of whether or not insurance proceeds are available
for restoration, whether or not any such proceeds are sufficient in amount, or
whether or not the Collateral can be restored to the same condition and
character as existed prior to such damage or destruction.
Section 2.04. Taxes and Assessments. Debtor shall pay all taxes,
---------------------
assessments and other governmental charges levies affecting the Collateral, or
any part thereof, in the manner required by the Credit Agreement except such
taxes, assessments and other governmental levies as are being contested in good
faith in the manner provided by Section 4.07 or Section 5.10 of the Credit
Agreement.
Section 2.05. Eminent Domain. Any award of damages in connection
--------------
with any condemnation or similar actions in regard to the Collateral, or any
part thereof, shall be: (i) paid directly to Secured Party and shall be retained
by Secured Party or released to Debtor by Secured Party; or (ii) paid directly
to Debtor; all in accordance with Section 8.02 of the Credit Agreement.
Section 2.06. Due on Sale. If Debtor shall be voluntarily, or
-----------
involuntarily, divested of title or possession of any Collateral, by merger or
otherwise, or shall lease, sell, convey, further encumber or in any other manner
voluntarily or involuntarily alienate any of its interest in any of the
Collateral, or shall enter into an agreement to do any of the foregoing, other
than as permitted in the Credit Agreement, any indebtedness or obligation
secured hereby, irrespective of the maturity dates expressed in any notes
evidencing the same, shall at the option of Secured Party, and upon the giving
of any notice which may be required under the Credit Agreement, immediately
become due and payable.
Section 2.07. Preservation of Rights. Debtor shall, at its own
----------------------
expense, protect, warrant and defend forever its rights in the Collateral, as
represented in Section 2.01 (and the rights of the Secured Party therein),
against the claims and demands of all persons whomsoever.
Section 2.08. Other Assurances. Debtor shall execute and deliver to
----------------
Secured Party all such financing statements and other instruments and documents,
each in a form and substance which is satisfactory to Secured Party, and shall
do and accomplish such other acts as Secured Party may, from time to time, deem
necessary or advisable to provide further assurances of, and where applicable,
to fully perfect,
10
<PAGE>
the rights and security interests that are granted hereunder or to carry out or
facilitate the intended purpose of this Agreement. With respect to any
Collateral consisting of certificated securities, instruments, documents,
investment property, certificates of title or the like, as to which Secured
Party's security interest need be perfected by, or the priority thereof need be
assured by, possession or control of such Collateral, Debtor will upon demand of
Secured Party deliver possession of same in pledge to Secured Party (except to
the extent that such Collateral is not capable of being reduced to possession,
in which case Debtor shall enter into a control agreement with the custodian of
such collateral containing sufficient provisions, for the benefit of Secured
Party, in order to provide for perfection and first priority of a security
interest in favor of Secured Party with respect to such Collateral).
Section 2.09. Maintenance of Name, etc. Debtor will not change its
-------------------------
name, identity or structure (collectively an "Identity Change") in any manner
which might make any financing or continuation statement filed in respect of the
Collateral seriously misleading within the meaning of Section 9-402(7) (or any
other then applicable provision) of the Uniform Commercial Code-Secured
Transactions, as enacted in the State of Illinois pursuant to 810 ILCS 5/9-101
et. seq. as it may hereafter be amended or recodified, the "Commercial Code")
unless: (i) such Identity Change is permissible under the Credit Agreement; and
(ii) Debtor shall have given the Secured Party at least thirty (30) days' prior
written notice thereof.
Section 2.10. Maintenance of Office. Debtor shall at all times
---------------------
maintain its chief executive office within the State of Illinois.
Section 2.11. Records. At its own cost and expense, Debtor shall:
-------
(i) keep and maintain satisfactory and complete records pertaining to the
Collateral in such detail, form and scope as Secured Party shall require,
consistent with Secured Party's interests hereunder; and (ii) at any time, and
from time to time, at Secured Party's request, mark the Collateral and/or
Debtor's ledger cards, books of account and other records relating to the
Collateral with appropriate notations satisfactory to Secured Party disclosing
that they are subject to Secured Party's security interests hereunder. For the
Secured Party's further security, Debtor agrees that Secured Party shall have a
special property interest in all of Debtor's books and records which pertain to
the Collateral (including books and records which are maintained in a form
11
<PAGE>
for use by computers or data processing machines). Upon the occurrence and
during the continuation of any Event of Default (as defined by the Credit
Agreement), Debtor shall deliver and turn over any such books and records to
Secured Party or its representative at any time upon demand of Secured Party.
At any time and from time to time, whether or not any Event of Default has
occurred, but upon reasonable notice from Secured party, Debtor shall permit any
representative of Secured Party to inspect such books and records and shall
provide photocopies thereof to Secured Party.
Section 2.12. No Negotiable Documents. Debtor shall not deposit any
-----------------------
Collateral in exchange for a negotiable Document of Title.
ARTICLE III
SECURED PARTY'S RIGHTS
----------------------
REGARDING COLLATERAL
--------------------
Section 3.01. General Rights. At any time, and from time to time,
--------------
without notice or demand (except as otherwise set forth herein), and whether or
not an Event of Default has occurred, Secured Party may take any of the
following actions to the extent that such actions may be necessary or desirable
to protect the security hereunder:
(a) Enter upon any premises on which Collateral is situated and
examine the same.
(b) At the expense of Debtor, perform any obligation of Debtor
under this Agreement or under any of the Collateral.
(c) Where applicable: (i) notify obligors on the Collateral that
the Collateral has been pledged and assigned to Secured Party; (ii) request from
obligors under the Collateral, in the name of Debtor or in the name of Secured
Party, information concerning the Collateral and the amounts owing thereof; and
(iii) cause the Collateral to be registered in the name of Secured Party, as
legal holder.
(d) Secured Party shall at all reasonable times, and on
reasonable notice, have full access to and the right to audit any and all of
Debtor's books and records pertaining to the Collateral, and to confirm and
verify the value of the Collateral and to do whatever else Secured Party
reasonably may deem necessary or desirable to protect its interests.
12
<PAGE>
Any of the foregoing actions which are undertaken by Secured Party shall be at
the expense of Debtor. However, Secured Party shall be under no duty or
obligation whatsoever to take any of such actions or to take any other action to
preserve, maintain or protect, the Collateral or any of it, or to preserve any
rights of or against any prior or other parties in connection with the
Collateral, to exercise any voting rights or managerial rights with respect to
any Collateral, whether or not an Event of Default shall have occurred, or to
make or give any presentments, demands for performance, notices of non-
performance, protests, notices of protests, notices of dishonor or notices of
any other nature whatsoever in connection with the Collateral or the Secured
Obligations.
Section 3.02. Collections on the Collateral.
-----------------------------
(a) Notwithstanding the security interest in the Collateral which
is granted pursuant to Section 1.01 hereof, and except as otherwise provided
hereunder or in any Loan Document, Debtor shall have the right to use and to
continue to make collections on and receive any payments which may be made to,
or for the benefit of, Debtor under any of the Collateral so long as no Event of
Default shall have occurred and be continuing.
(b) Upon the occurrence and during the continuance of an Event of
Default, at the option of Secured Party, and except as prohibited by applicable
law, Debtor's right to make collections on and receive dividends and other
proceeds of the Collateral and to use or dispose of such collections and
proceeds shall terminate, and any and all dividends, proceeds and collections,
including all partial or total prepayments, then held or thereafter received on
or on account of the Collateral will be held or received by Debtor in trust for
Secured Party and immediately delivered in kind to Secured Party.
(c) Any remittance received by Debtor from any Person shall be
presumed to relate to the Collateral and to be subject to the security interests
which are granted to Secured Party hereunder.
(d) Upon the occurrence and during the continuance of an Event of
Default, Secured Party shall have the right at all times to receive, issue
receipt for, endorse, assign, deposit and deliver, in the name of Secured Party
or in the name of Debtor, any and all checks, notes, drafts and other
instruments for the payment of money constituting
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<PAGE>
proceeds of or otherwise relating to the Collateral; and Debtor hereby
authorizes Secured Party to affix, by facsimile signature or otherwise, the
general or special endorsement of Debtor, in such manner as Secured Party shall
deem advisable, to any such instrument in the event the same has been delivered
to or obtained by Secured Party without appropriate endorsement, and Secured
Party and any collection bank are hereby authorized to consider such endorsement
to be a sufficient, valid and effective endorsement by Debtor, to the same
extent as though it were manually executed by the duly authorized officer of
Debtor, regardless of by whom or under what circumstances or by what authority
such facsimile signature or other endorsement actually is affixed, without duty
of inquiry or responsibility as to such matters, and Debtor hereby expressly
waives demand, presentment, protest and notice of protest or dishonor and all
other notices of every kind and nature with respect to any such instrument.
Section 3.03. Possession of Collateral by Secured Party.
-----------------------------------------
(a) All the Collateral now, heretofore or hereafter delivered to
Secured Party shall be held by Secured Party in its possession, custody and
control. Any or all of the Collateral delivered to Secured Party, which is held
in an account, may be held in an interest bearing or non-interest bearing
account, in Secured Party's sole and absolute discretion, and Secured Party may,
in its discretion, apply any such interest to payment of the Secured
Obligations. Nothing herein shall obligate Secured Party to invest any
Collateral or obtain any particular return thereon.
(b) Upon the occurrence and during the continuance of an Event of
Default, whenever any of the Collateral is in Secured Party's possession,
custody or control, Secured Party may use, operate and consume the Collateral,
whether for the purpose of preserving and/or protecting the Collateral, or for
the purpose of performing any of Debtor's obligations with respect thereto, or
otherwise. Secured Party may at any time deliver or redeliver the Collateral or
any part thereof to Debtor, and the receipt of any of the same by Debtor shall
be complete and full acquittance for the Collateral so delivered, and Secured
Party thereafter shall be discharged from any liability or responsibility
therefor.
(c) So long as Secured Party exercises reasonable care with
respect to any Collateral in its
14
<PAGE>
possession, custody or control, Secured Party shall have no liability for any
loss of or damage to such Collateral, and in no event shall Secured Party have
liability for any diminution in value of Collateral occasioned by economic or
market conditions or events. Secured Party shall be deemed to have exercised
reasonable care within the meaning of the preceding sentence if the Collateral
in the possession, custody or control of Secured Party is accorded treatment
substantially equal to that which Secured Party accords its own property, it
being understood that Secured Party shall not have any responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Collateral, whether or not
Secured Party has or is deemed to have knowledge of such matters, or (b) taking
any necessary steps to preserve rights against any Person with respect to any
Collateral.
ARTICLE IV
DEFAULT
-------
Section 4.01. Remedies. Upon the occurrence and during the
--------
continuance of an Event of Default (as defined in the Credit Agreement), Secured
Party shall have, in any jurisdiction where enforcement hereof is sought: (i)
in addition to all other rights and remedies that Secured Party may have under
applicable law, in equity, under this Agreement or under any other Loan
Document; and (ii) in addition to all rights and remedies of a Secured Party
under the Commercial Code; the following rights and remedies, all of which may
be exercised with or without notice to Debtor and without affecting the
obligations of Debtor hereunder or under any other Loan Document, or the
enforceability of the liens and security interests created hereby:
(a) To foreclose the liens and security interests created
hereunder or under any other agreement relating to any Collateral by any
available judicial procedure or without judicial process;
(b) To enter any premises where any Collateral may be located for
the purpose of securing, protecting, inventorying, appraising, inspecting,
repairing, preserving, storing, preparing, processing, taking possession of or
removing the same;
(c) To sell, assign, lease or otherwise dispose of any Collateral
or any part thereof either at public or private sale or at any broker's board,
in lot or in bulk,
15
<PAGE>
for cash, on credit or otherwise, with or without representation or warranties
and upon such terms as shall be acceptable to Secured Party;
(d) To notify obligors on the Collateral that the Collateral has
been assigned to Secured Party and that all payments thereon are to be made
directly and exclusively to Secured Party;
(e) To collect by legal proceedings or otherwise all dividends,
distributions, interest, principal or other sums now or hereafter payable upon
or on account of the Collateral;
(f) To enter into any extension, reorganization, deposit, merger
or consolidation agreement, or any other agreement relating to or affecting the
Collateral, and in connection therewith Secured Party may deposit or surrender
control of the Collateral and/or accept other property in exchange for the
Collateral;
(g) To settle, compromise or release, on terms acceptable to
Secured Party, in whole or in part, any amounts owing on the Collateral and/or
disputes with respect thereto;
(h) To amend the terms of, extend the time of payment, make
allowances and adjustments to, and issue credits in connection with, the
Collateral in the name of Secured Party or in the name of Debtor;
(i) To enforce payment and prosecute any action or proceeding
with respect to any or all of the Collateral and take or bring, in the name of
Secured Party or in the name of Debtor, any and all steps, actions, suits or
proceedings deemed by Secured Party necessary or desirable to effect collection
of or to realize upon the Collateral, including any judicial or nonjudicial
foreclosure thereof or thereon, and Debtor specifically consents to any
nonjudicial foreclosure of any or all of the Collateral or any other action
taken by Secured Party which may release any obligor from personal liability on
any of the Collateral, and Debtor waives any right not expressly provided for in
this Agreement to receive notice of any public or private judicial or
nonjudicial sale or foreclosure of any security or any of the Collateral; and
any money or other property received by Secured Party in exchange for or on
account of the Collateral, whether representing collections or proceeds of
Collateral (and whether resulting from voluntary payments or foreclosure
16
<PAGE>
proceedings or other legal action taken by Secured Party or Debtor) may be
applied to the Secured Obligations by Secured Party (without notice to Debtor)
in such order and manner as Secured Party in its sole discretion shall
determine, unless otherwise provided by the Credit Agreement or by any other
Loan Documents;
(j) To insure, process and preserve the Collateral;
(k) To exercise all rights, remedies, powers or privileges
provided under any of the Loan Documents or the Collateral;
(l) To remove, from any premises where the same may be
located,the Collateral and any and all documents, instruments, files and
records, and any receptacles and cabinets containing the same, relating to the
Collateral, and Secured Party may, at the cost and expense of Debtor, use such
of Debtor's supplies, equipment, facilities and space at Debtor's places of
business as may be necessary or appropriate to properly administer, process,
store,control, prepare for sale or disposition and/or sell or dispose of the
Collateral or to properly administer and control the handling of collections and
realizations thereon, and Secured Party shall be deemed to have a rent-free
tenancy of any premises of Debtor for such purposes and for such periods of time
as reasonably required by Secured Party;
(m) To receive, open and dispose of all mail addressed to Debtor
and notify postal authorities to change the address for delivery thereof to such
address as Secured Party may designate; provided that Secured Party agrees that
it will promptly deliver over to Debtor such opened mail as does not relate to
the Collateral; and
(n) To exercise all other rights, powers, privileges and remedies
of an owner of the Collateral; all at Secured Party's sole option and as Secured
Party in its sole discretion may deem advisable. Debtor will, at Secured Party's
request, assemble the Collateral and make it available to Secured Party at
places which Secured Party may designate, whether at the premises of Debtor or
elsewhere, and will make available to Secured Party, free of cost, all premises,
equipment and facilities of Debtor for the purpose of Secured Party's taking
possession of the Collateral or storing same or removing or putting the
Collateral in salable form or selling or disposing of same.
17
<PAGE>
Section 4.02. Possession. Upon the occurrence and during the
----------
continuance of an Event of Default, Secured Party also shall have the right,
without notice or demand, either in person, by agent or by a receiver to be
appointed by a court of competent jurisdiction (and Debtor hereby expressly
consents upon the occurrence and during the continuance of an Event of Default
to the appointment of such a receiver), and without regard to the adequacy of
any security for the Secured Obligations, to take possession of the Collateral
or any part thereof and to collect and receive the rents, issues, profits,
income and proceeds thereof. Secured Party's taking posses sion of the
Collateral shall not cure or waive any Event of Default or notice thereof or
invalidate any act done pursuant to such notice. The rights, remedies and
powers of any receiver appointed by a court shall be as ordered by said court.
Section 4.03. Conduct of Sale.
---------------
(a) Any public or private sale or other disposition of the
Collateral may be held at any office of Secured Party, or at Debtor's place of
business, or at any other place permitted by applicable law, and without the
necessity of the Collateral being within the view of the prospective purchasers.
Secured Party may direct the order and manner of sale of the Collateral, or
portions thereof, as it in its sole and absolute discretion may determine, and
Debtor expressly waives any right to direct the order and manner of sale of any
Collateral. Secured Party or any Person on Secured Party's behalf may bid and
purchase at any such sale or other disposition. The net cash proceeds resulting
from the collection, liquidation, sale, lease or other disposition of the
Collateral shall be applied, first, to the expenses (including reasonable
attorneys' fees and disburse ments) of retaking, holding, storing, processing
and preparing for sale or lease,selling, leasing, collecting, liquidating and
the like, and then to the satisfaction of the Secured Obligations in such order
as shall be determined by Secured Party in its sole and absolute discretion, all
unless otherwise provided by the Credit Agreement or any other Loan Documents.
Debtor and any other Person then obligated therefor shall pay to Secured Party
on demand any deficiency with regard thereto which may remain after such sale,
disposition, collection or liquidation of the Collateral.
(b) Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Secured Party will
18
<PAGE>
send or otherwise make available to Debtor reasonable notice of the time and
place of any public sale thereof or of the time at, or after, which any private
sale thereof is to be made. The requirement of sending reasonable notice
conclusively shall be met if such notice is mailed, first class mail, postage
prepaid, to Debtor at its address set forth in the Credit Agreement, or
delivered or otherwise sent to Debtor, at least five (5) days before the date of
the sale. Debtor expressly waives any right to receive notice of any public or
private sale of any Collateral or other security for the Secured Obligations
except as expressly provided for in this paragraph.
(c) With respect to any Collateral consisting of securities,
partnership interests, joint venture interests, other investments or the like,
and whether or not any of such Collateral has been effectively registered under
the Securities Act of 1933 or other applicable laws, Secured Party may, in its
sole and absolute discretion, sell all or any part of such Collateral at private
sale in such manner and under such circumstances as Secured Party may deem
necessary or advisable in order that the sale may be lawfully conducted. Without
limiting the foregoing, Secured Party may (i) approach and negotiate with a
limited number of potential purchasers; and (ii) restrict the prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing such Collateral for their own account for investment and not with a
view to the distribution or resale thereof. In the event that any such
Collateral is sold at private sale, Debtor agrees that if such Collateral is
sold for a price which Secured Party in good faith believes to be reasonable
under the circumstances then existing, then: (aa) the sale shall be deemed to
be commercially reasonable in all respects; (bb) the credit against the Secured
Obligations, to which Debtor may be entitled, shall not exceed the purchase
price; and (cc) Secured Party shall not incur any liability or responsibility to
Debtor in connection therewith, notwithstanding the possibility that a
substantially higher price might have been realized at a public sale. Debtor
recognizes that a ready market may not exist for such Collateral if it is not
regularly traded on a recognized securities exchange, and that a sale by Secured
Party of any such Collateral for an amount substantially less than a pro rata
share of the fair market value of the issuer's assets minus liabilities may be
commercially reasonable in view of the difficulties that may be encountered in
attempting to sell a large amount of such Collateral or Collateral that is
privately traded.
19
<PAGE>
(d) Upon consummation of any sale of Collateral hereunder,
Secured Party shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the Collateral so sold absolutely free from any claim
or right upon the part of Debtor or any other Person except a third party
lienholder permitted under the Loan Documents, and Debtor hereby waives (to the
extent permitted by applicable laws) all rights of redemption, stay and
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. If the sale of all or any
part of the Collateral is made on credit or for future delivery, Secured Party
shall not be required to apply any portion of the sales price to the Secured
Obligations until such amount actually is received by Secured Party, and any
Collateral so sold may be retained by Secured Party until the sale price is paid
in full by the purchaser or purchasers thereof. Secured Party shall not incur
any liability in case any such purchaser or purchasers shall fail to pay for the
Collateral so sold, and, in case of any such failure, the Collateral may be sold
again.
ARTICLE V
MISCELLANEOUS
-------------
Section 5.01. Attorney-in-Fact. Debtor hereby irrevocably nominates
----------------
and appoints Secured Party as its attorney-in-fact for the following purposes:
(a) to do all acts and things which Secured Party may deem necessary or
advisable to perfect, and continue perfected, the security interests created by
this Agreement and, upon the occurrence and during the continuance of an Event
of Default, to preserve, process, develop, maintain and protect the Collateral;
(b) upon the occurrence and during the continuance of an Event of Default, to do
any and every act which Debtor is obligated to do under this Agreement, at the
expense of the Debtor, and without any obligation to do so; (c) to prepare,
sign, file and/or record, for Debtor, in the name of the Debtor, any financing
statement, application for registration, or like paper, and to take any other
action deemed by Secured Party necessary or desirable in order to perfect or
maintain perfected the security interests granted hereby; and (d) upon the
occurrence and during the continuance of an Event of Default, to execute any and
all papers and instruments and do all other things necessary or desirable to
preserve and protect the Collateral and to protect Secured Party's security
interests therein; provided, however, that Secured Party shall be under no
obligation whatsoever to take any of the foregoing
20
<PAGE>
actions, and, absent bad faith or actual malice, Secured Party shall have no
liability or responsibility for any act taken or omission with respect thereto.
Debtor hereby consents and agrees that, where applicable, the issuers of, the
obligors on, or the parties to any of the Collateral, shall be entitled to
accept the provisions of this Agreement as conclusive evidence of the right of
Secured Party to effect any transfer or exercise any right hereunder or with
respect to any such Collateral, notwithstanding any other notice or direction to
the contrary heretofore or hereafter given by Debtor or any other Person to such
issuers, obligors or parties.
Section 5.02. Costs and Expenses. Debtor agrees to pay to Secured
------------------
Party all costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred by Secured Party in the enforcement
or attempted enforcement of this Agreement, whether or not an action is filed in
connection therewith, and in connection with any waiver or amendment of any term
or provision hereof. All advances, charges, costs and expenses, including
reasonable attorneys' fees and disbursements, incurred or paid by Secured Party
in exercising any right, privilege, power or remedy conferred by this Agreement
(including, without limitation, the right to perform any Secured Obligation of
Debtor under the Loan Documents), or in the enforcement or attempted enforcement
thereof, shall be secured hereby and shall become a part of the Secured
Obligation and shall be paid to the Secured Party by Debtor, immediately upon
demand, together with interest thereon at the rate(s) provided for under the
Credit Agreement.
Section 5.03. Statute of Limitations and Other Laws. Until the
-------------------------------------
Secured Obligations shall have been paid and performed in full, and all
obligations of the Banks, or any of them, to advance funds under the Bank
Facilities, have been unconditionally and indefeasibly terminated and Bank
Facility Termination shall have occurred, the power of sale and all other
rights, remedies, and privileges which are granted hereunder shall continue to
exist and may be exercised by Secured Party at any time and from time to time
irrespective of the fact that any of the Secured Obligations may have become
barred by any statute of limitations. Debtor expressly waives the benefit of
any and all statutes of limitation, and any and all laws providing for exemption
of property from execution or for valuation and appraisal upon foreclosure, to
the maximum extent permitted by applicable law.
21
<PAGE>
Section 5.04. Other Agreements. The rights and remedies of Secured
----------------
Party upon the occurrence and continuance of an Event of Default (whether such
rights and remedies are conferred by statute, by rule of law, by this Agreement,
the Loan Documents or otherwise) may be exercised by Secured Party, in the sole
discretion of Secured Party, either alternatively, concurrently, or
consecutively in any order. The exercise by Secured Party of any one or more of
such rights and remedies shall not be construed to be an election of remedies
nor a waiver of any other rights and remedies which may be available to Secured
Party.
Section 5.05. Understandings With Respect to Waivers and Consents.
---------------------------------------------------
Debtor warrants and agrees that each of the waivers and consents set forth
herein are made after consultation with legal counsel and with full knowledge of
their significance and consequences, with the understanding that events giving
rise to any defense or right waived may diminish, destroy or otherwise adversely
affect rights which Debtor otherwise may have against Secured Party or others,
or with respect to the Collateral, and that, under the circumstances, the
waivers and consents herein given are reasonable and not contrary to public
policy or law. If any of the waivers or consents herein are determined to be
contrary to any applicable law or public policy, such waivers and consents shall
be effective to the maximum extent permitted by law.
Section 5.06. Release of Debtor. This Agreement and all Secured
-----------------
Obligations of Debtor hereunder shall be released when all Secured Obligations
have been paid in full in cash or otherwise performed in full and when all
obligations which the Banks, or any of them, may have to advance funds under the
Bank Facilities, have been unconditionally and indefeasibly terminated and Bank
Facility Termination shall have occurred. Upon such release of Debtor's Secured
Obligations hereunder, Secured Party shall return any pledged Collateral to
Debtor, or to the Person or Persons legally entitled thereto, and shall endorse,
execute, deliver, record and file all instruments and documents, and do all
other acts and things, reasonably required for the return of the Collateral to
Debtor, or to the Person or Persons legally entitled thereto, and to evidence or
document the release of Secured Party's interests arising under this Agreement,
all as reasonably requested by, and at the sole expense of, Debtor.
22
<PAGE>
Section 5.07. Indemnity. Neither Secured Party nor any of the Banks
---------
shall be obligated to perform or discharge any obligation or duty to be
performed or discharged by Debtor with respect to the Collateral or hereunder.
Debtor hereby agrees to indemnify Secured Party and each of the Banks
(collectively, the "Indemnified Parties") for, and to save them harmless from,
any and all liability arising from the Collateral or this Agreement. This
Agreement shall not place responsibility for the control, care, management,
operation or repair of the Collateral upon any of the Indemnified Parties; nor
shall this Agreement cause any of the Indemnified Parties to be responsible or
liable for any negligence in the management, operation, upkeep, repair or
control of the Collateral which results in loss, injury or death to any tenant,
guest, licensee, employee or stranger (provided that this Section 5.07 shall not
act to relieve any Indemnified Party from liability which results from such
Indemnified Party's own gross negligence or willful misconduct).
Section 5.08 Governing Law. This Agreement shall be governed by,
-------------
and shall be construed and enforced in accordance with, the internal laws of the
State of Illinois without regard to conflict of law principles.
Section 5.09. Counterparts. This Agreement may be executed in any
------------
number of separate counterparts with the same effect as if the signatures hereto
and hereby were upon the same instrument. All such counterparts shall together
constitute one and the same document.
23
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
DEBTOR: SECURED PARTY:
EMPRESS ENTERTAINMENT, INC., WELLS FARGO BANK, National Association
a Delaware corporation
By /s/ John Costello By /s/ Joseph L. Brady
-------------------------- -------------------------
Name John Costello Name Joseph L. Brady
------------------------ ------------------------
Title V.P. ; CFO Title SVP
----------------------- -----------------------
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
The foregoing instrument was acknowledged before me on June 17, 1998,
by John Costello as Vice President - CFO of EMPRESS ENTERTAINMENT, INC.
Joanne Bruen [SEAL]
- ----------------------
Notary Public
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
The foregoing instrument was acknowledged before me on June 17, 1998,
by Joseph L. Brady as Senior Vice President of WELLS FARGO BANK, National
Association.
Joanne Bruen
- ----------------------
Notary Public
[SEAL]
24
<PAGE>
EXHIBIT 4.8(g)
SECURITY AGREEMENT
------------------
(ECHC)
THIS SECURITY AGREEMENT (ECHC) ("Agreement") is made and entered into
as of June 17, 1998, by and between EMPRESS CASINO HAMMOND CORPORATION, an
Indiana corporation, party of the first part (hereinafter referred to as
"Debtor") and WELLS FARGO BANK, National Association, as administrative and
collateral agent for the Lenders, the Swingline Lender and the L/C Issuer, all
of which are defined in the Credit Agreement, referred to below, party of the
second part (hereinafter referred to, in such capacity, as "Secured Party").
R E C I T A L S:
- - - - - - -
A. Reference is made to that certain Credit Agreement (as it may
be hereafter renewed, extended, amended, restated or otherwise modified, the
"Credit Agreement") executed concurrently, or substantially concurrent, herewith
by and among Debtor, Empress Entertainment, Inc., a Delaware corporation, and
Empress Casino Joliet Corporation, an Illinois corporation (collectively,
"Borrowers"), the Lenders therein named (each, together with their respective
successors and assigns, individually being referred to herein as a "Lender" and
collectively as the "Lenders"), the Swingline Lender therein named (referred to
herein, together with its successors and assigns, as the "Swingline Lender"),
the L/C Issuer therein named (referred to herein, together with its successors
and assigns, as the "L/C Issuer"), and Agent Bank. Agent Bank, the Lenders, the
Swingline Lender and the L/C Issuer are collectively referred to herein as the
"Banks".
B. Pursuant to the Credit Agreement, and subject to the terms and
conditions specified therein, the Lenders have agreed to provide a reducing
revolving credit facility to Borrowers with an initial maximum principal amount
of One Hundred Million Dollars ($100,000,000.00) available for Borrowings
thereunder (together with all extensions, renewals, amendments, substitutions
and other modifications thereof, the "Credit Facility"), which Credit Facility
includes: (i) a subfacility for funding of Swingline Advances by the Swingline
Lender on shorter notice and in lesser amounts than would otherwise be required
for Borrowings under the Credit Facility (together with all extensions,
renewals, amendments, substitutions, and other modifications thereof, the
"Swingline Facility"); and (ii) a subfacility for the issuance of Letters of
Credit by the L/C Issuer (together with all extensions,
<PAGE>
renewals, amendments, substitutions and other modifications thereof, the "L/C
Facility" and, together with the Credit Facility and the Swingline Facility, the
"Bank Facilities"); all as more particularly set forth by the Credit Agreement.
C. In this Agreement all capitalized words and terms not otherwise
defined herein shall have the respective meanings and be construed herein as
provided in Section 1.01 of the Credit Agreement and any reference to a
provision of the Credit Agreement shall be deemed to incorporate that provision
as a part hereof in the same manner and with the same effect as if the same were
fully set forth herein.
D. The provisions of Section 1.02 of the Credit Agreement shall be
applied to this Agreement in the same manner as applied therein to the Credit
Agreement.
E. As a condition of their entry into the Credit Agreement, and
their commitment to provide the Bank Facilities for the benefit of Borrowers
(subject to the terms of the Credit Agreement and the other Loan Documents), the
Banks have required, among other things, that Debtor grant the security
interests, and undertake the obligations, contemplated by this Agreement.
NOW, THEREFORE, in order to induce the Banks to enter into the Credit
Agreement, and to provide the Bank Facilities, and for other good and valuable
consideration, the receipt and adequacy of which hereby is acknowledged, Debtor
and Secured Party hereby agree as follows:
ARTICLE I
SECURITY INTEREST AND COLLATERAL
--------------------------------
Section 1.01. Creation of Security Interest.
-----------------------------
(a) For valuable consideration, Debtor hereby assigns,
pledges and grants to Secured Party a continuing security interest in, and lien
upon, all presently existing and hereafter acquired Collateral (as defined
below), as security for the timely payment and performance of each and every
Secured Obligation (as also defined below). This Agreement is a continuing and
irrevocable agreement and all the rights, powers, privileges and remedies
hereunder shall apply to any and all Secured Obligations, including those
arising under successive transactions which shall either continue the Secured
Obligations, increase or decrease them, or from time to time create new Secured
Obligations after all or
2
<PAGE>
any prior Secured Obligations have been satisfied, and notwithstanding the
bankruptcy of Borrower, Debtor or any other Person or any other event or
proceeding affecting any Person.
(b) The security interest which is granted hereunder is
subject to the following:
(i) the right of Debtor to sell or otherwise dispose of
Personal Property in the ordinary course of business, free and clear of the lien
hereof, provided, and to the extent, that such sale or other disposition is
permitted under the terms of the Credit Agreement; and
(ii) as to the fixtures and equipment covered hereby,
the leases and/or purchase money security interests pursuant to which Debtor has
acquired an interest in such fixtures and equipment provided, and to the extent,
that such leases and/or purchase money security interests are permitted under
the terms of the Credit Agreement.
Section 1.02. Description of Collateral. All references herein to
-------------------------
the "Collateral" shall be to all right, title and interest of Debtor, whether
now owned or existing, or hereafter acquired or arising, in, to and under any of
the following (subject to the exclusions set forth by subsection (p) below):
(a) All present and future chattels, furniture, furnishings, equipment
and fixtures, all of every kind and nature, and other tangible personal
property: (i) which is used in connection with, situate in or on, or affixed
to, any portion of the real property which is particularly described by "Exhibit
A" attached hereto and incorporated by reference herein (the "Real Property");
(ii) which is used in connection with, placed on, or incorporated into any of
the Vessels which are referred to below; and/or (iv) in which Debtor otherwise
has or acquires an interest; all including, without limitation: (aa) all
furniture, furnishings, wall coverings, floor coverings, window coverings,
artwork and decorative items including, without limitation, casino, guest room,
bathroom, lobby, bar, restaurant, storage, retail, meeting, convention, leisure,
recreation, office, administrative and other furniture, furnishings, wall
coverings, floor coverings, window coverings, artwork and decorative items; (bb)
all bar and restaurant equipment and supplies, including, without limitation,
kitchen and bar appliances, pots, pans, plates, dishes, cups, glasses, serving
utensils, cooking utensils and all other equipment and supplies used in the
operation of bars and/or restaurants;
3
<PAGE>
(cc) all casino equipment and supplies including, without limitation, slot
machines, gaming tables, cards, dice, gaming chips, player tracking systems,
Gaming Devices and Related Equipment as defined in applicable Indiana gaming law
and all other equipment and supplies utilized in operation of a casino; (dd) all
cabaret, stage and entertainment equipment and supplies including, without
limitation, stage equipment, sets, spotlights, sound equipment, musical
instruments and other equipment and supplies utilized in the operation of stage
and cabaret shows and other entertainment productions; (ee) all office and
administrative equipment and supplies including, without limitation, office
appliances, filing cabinets, computers, peripheral computer equipment and other
data processing and storage equipment, stationery and other office supply items,
and other office and administrative equipment and supplies; (ff) all tools and
other maintenance and repair equipment; and (gg) all equipment and supplies
utilized in connection with any other activity engaged in by Debtor;
(b) The following vessels (collectively, the "Vessels"): (i) that
certain casino vessel named "Empress III" which is designated by U.S. Coast
Guard Official Number 1035267 and which is currently afloat on Lake Michigan at
Hammond, Indiana ("Empress III"); and (ii) any vessels which are hereafter
substituted for Empress III; and all other boats, barges and other vessels which
are now owned or hereafter acquired, regardless of whether afloat or placed on
dry land together with any and all present and future engines, boilers,
machinery, components, masts, boats, anchors, cables, chains, rigging, tackle,
apparel, furniture, capstans, outfit, tools, pumps, gear, furnishings,
appliances, fittings, spare and replacement parts, and any and all other
appurtenances to any of the Vessels whether now or hereafter acquired, and
whether on board or not on board, all accounts, earned hire, charter payments,
freight, earnings, revenues, income and profit from any of the Vessels; and all
log books, manuals, trip records, maintenance records, inspection reports,
seaworthiness certificates, and other historical records or information relating
to any of the Vessels;
(c) All present and future supplies, inventory and merchandise which
is used in connection with, or in the conduct of, the business of Debtor or in
which Debtor has or acquires an interest, including, without limitation: (i)
all present and future goods held for sale or lease or to be furnished under a
contract of service, all raw materials, work in process and finished goods, all
packing materials, supplies and containers
4
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relating to or used in connection with any of the foregoing, and all bills of
lading, warehouse receipts or documents of title relating to any of the
foregoing; (ii) all food stuffs, beverages, prepared food and other similar
items; and (iii) all cleaning supplies, office supplies, consumables and similar
items;
(d) All present and future goods, which are not otherwise set forth
herein, and which are used in connection with, or in the conduct of, the
business of Debtor or in which Debtor has or acquires an interest;
(e) All present and future accounts, accounts receivable, rentals,
deposits, rights to payment, instruments, documents, chattel paper, security
agreements, guaranties, undertakings, surety bonds, insurance policies and notes
and drafts which are owned, or used in connection with, or in the conduct of,
the business of Debtor, or in which Debtor has or acquires an interest, however
created or arising;
(f) All present and future contracts, or agreements and all other
present and future general intangibles which are owned, or used in connection
with, or in the conduct of, the business of Debtor, or in which Debtor has or
acquires an interest, including, without limitation: (aa) all leases and
purchase contracts for equipment, furniture and/or fixtures of any kind and
character relating to the Real Property, the Vessels and/or the businesses
conducted thereon; (bb) all goodwill, choses in action, trade secrets, customer
lists, trademarks, trade names and service marks, patents, copyrights,
technology, processes, and proprietary information which are owned, or used in
connection with, or in the conduct of, the business of Debtor, or in which
Debtor has or acquires an interest (including, without limitation, the trade
names of "Empress", "Empress Casino", "Empress River Casino" and/or any
derivation thereof including any and all state and federal registrations
thereof); and (cc) all licenses, liquor licenses and other entitlements to the
extent that a security interest may be granted therein;
(g) All present and future deposit accounts which are owned, or used
in connection with, or in the conduct of, the business of Debtor, or in which
Debtor has or acquires an interest including, without limitation, any demand,
time, savings, passbook or like account maintained with any bank, savings and
loan association, credit union or like organization, and all money, cash and
cash equivalents of Debtor, whether or not deposited in any such deposit
account;
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(h) All present and future revenues, receipts, payments and income of
any nature whatsoever, in which Debtor now owns or hereafter acquires an
interest, regardless of whether such items are derived from or received with
respect to hotel rooms, banquet facilities, convention facilities, retail
premises, bars, restaurants, casinos or any other facilities on the Real
Property and/or the Vessels and regardless of whether such items are derived
from any other source;
(i) All present and future books and records which are owned, or used
in connection with, or in the conduct of, the business of Debtor, or in which
Debtor, has or acquires an interest including, without limitation, books of
account and ledgers of every kind and nature, all electronically recorded data
relating to the business of Debtor, all receptacles and containers for such
records, and all files and correspondence;
(j) Other than with respect to Unrestricted Subsidiaries, all present
and future investment property, stocks, bonds, debentures, securities,
subscription rights, options, warrants, puts, calls, certificates, partnership
interests, joint venture interests, investments and/or brokerage accounts which
are owned, or used in connection with, or in the conduct of, the business of
Debtor, or in which Debtor has or acquires an interest and all rights,
preferences, privileges, dividends, distributions, redemption payments, or
liquidation payments with respect thereto;
(k) All right, title and interest of Debtor in and to all leases,
licenses, concessions, or similar agreements whether or not specifically herein
described which now or may hereafter pertain to the Real Property and/or the
Vessels and all amendments to the same, including, but not limited to the
following: (aa) all payments due and to become due under such agreements,
whether as rent, damages, insurance payments, condemnation awards, or otherwise;
(bb) all claims, rights, powers, privileges and remedies under such agreements;
and (cc) all rights of the Debtor under such leases to exercise any election or
option, or to give or receive any notice, consent, waiver or approval, or to
accept any surrender of the premises or any part thereof, together with full
power and authority in the name of Debtor or otherwise, to demand and receive,
enforce, collect, or receipt for any or all of the foregoing, to endorse or
execute any checks or any instruments or orders, to file any claims or to take
any action which Secured Party may deem necessary or advisable in connection
therewith;
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(l) All plans, specifications, soil reports, engineering reports,
land planning maps, surveys, and any other reports, exhibits or plans used or to
be used in connection with the construction, planning, operation or maintenance
of the Real Property and/or the Vessels, together with all amendments and
modifications thereof;
(m) All present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions, additions,
issue and/or improvements to or of or with respect to any of the foregoing;
(n) All rights, remedies, powers and/or privileges of Debtor with
respect to any of the foregoing;
(o) Any and all proceeds and products of any of the foregoing,
including, without limitation, all money, accounts, general intangibles, deposit
accounts, documents, instruments, chattel paper, goods, insurance proceeds, and
any other tangible or intangible property received upon the sale or disposition
of any of the foregoing; and
(p) It is specifically provided that the following (collectively, the
"Excluded Property") is excluded from the Collateral, and that no security
interest in the Excluded Property is granted hereunder:
(i) all of Debtor's right, title and interest in, and to, that
certain Hammond Riverboat Gaming Project Development Agreement (the "Development
Agreement") which is executed under date of June 21, 1996 by and among the City
of Hammond, Indiana, the City of Hammond Department of Redevelopment and Debtor;
(ii) all of Debtor's right, title and interest in, and to: (aa)
that certain License Agreement (the "Port Authority License") which is executed
under date of June 21, 1996 by and between the Hammond Port Authority and
Debtor, record notice of which is granted pursuant to that certain Memorandum of
License Agreement that is recorded in the Official Records of Lake County,
Indiana on March 5, 1997 as Instrument No. 97014037; and (bb) the Improvements
which are defined by Article I of the Port Authority License;
(iii) all of Debtor's right, title and interest in, and to: (aa)
that certain Lease (the "Redevelopment Lease")
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which is executed under date of June 19, 1996 by and between the City of Hammond
Department of Redevelopment and Debtor, record notice of which is granted
pursuant to that certain Memorandum of Lease that is recorded in the Official
Records of Lake County, Indiana on February 25, 1997 as Instrument No. 9701160;
and (bb) the Redevelopment Parcel and Improvements which are defined by Article
I of the Redevelopment Lease;
(iv) all of Debtor's right, title and interest in, and to, that
certain License Agreement which is executed under date of June 19, 1996 by and
among the Department of Water Works of the City of Hammond and Debtor, record
notice of which is granted pursuant to that certain Memorandum of License
Agreement that is recorded in the Official Records of Lake County, Indiana on
March 5, 1997 as Instrument No. 97014038;
(v) all of Debtor's right, title and interest in, and to, the
Gaming License issued to Debtor by the Indiana Gaming Commission;
(vi) any Deposit Accounts established by Debtor pursuant to the
Agreement Respecting the S/S Milwaukee Clipper by and between Lake Michigan
Charters, Ltd. and the Hammond Port Authority dated March 20, 1996, and/or the
Memorandum of Understanding and Consent by and between the Hammond Port
Authority and H. Joseph Vaughn, President, DMS of Hammond, Inc. dated September
20, 1995;
(vii) any interest of Debtor in sewer capacity reservation set
forth in Quitclaim Deed, Bill of Sale and Sewer Capacity Reservation Agreement
between Debtor, Hammond Bridge and Roadworks, LLC and the Sanitary District of
the City of Hammond, Indiana, recorded February 21, 1997, in the office of the
Recorder of Lake County, Indiana as Instrument No. 97010865;
(viii) Temporary Permit to Enter Upon Property dated March 8, 1996,
granted by the Elgin, Joliet and Eastern Railway Company ("EJE") to Hammond
Bridge and Roadworks, LLC, as assigned to Debtor and as amended, and any
agreement entered into or to be entered into with EJE for the acquisition of
property to fulfill Debtor's commitments under the Development Agreement;
(ix) any portion of the parking garage which is situated on
property subject to the Redevelopment Lease, which portion is owned by Assignor
and which portion Assignor is required
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to convey to the City of Hammond and/or any of its political subdivisions;
(x) any investment or deposits made by Debtor pursuant to an
agreement to be entered into by and between the City of Hammond and Debtor
regarding guidelines for the investment by Debtor of Three Million Five Hundred
Thousand Dollars ($3,500,000.00) of the residential housing investment in
fulfillment of Debtor's obligations under Section 5.07 of the Development
Agreement; and
(xi) any interest of Debtor in Hammond Residential, LLC or
in any loans made by or security interests granted to Hammond Residential, LLC
in connection with a Loan Agreement to be entered into between Hammond
Residential, LLC and Hammond Enterprise Development Corporation for a One
Million Five Hundred Thousand Dollar ($1,500,000.00) loan pursuant to Debtor's
obligations under Section 5.07 of the Development Agreement.
Section 1.03. Secured Obligations. This Agreement secures, and the
-------------------
Collateral is security for, the following (collectively, the "Secured
Obligations"):
(a) Payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)), of: (i) the
principal sum which is, at any time, advanced and unpaid under the Credit
Facility not to exceed One Hundred Million Dollars ($100,000,000.00) at any one
time, all on a reducing revolving line of credit basis; (ii) interest and other
charges accrued on said principal sum, or accrued on interest and other charges
then outstanding under the Credit Facility (all including, without limitation,
interest and other charges that would accrue on such obligations, but for the
filing of a petition in bankruptcy with respect to Borrowers, or any of them);
and (iii) any other obligations of Borrowers, or any of them, under the RLC Note
referred to below; all according to the terms of a Revolving Credit Note dated
concurrently, or substantially concurrent, herewith which is made by Borrowers
and is payable to the order of Secured Party according to the tenor and effect
of said Revolving Credit Note, and all renewals, extensions, amendments,
restatements, replacements, substitutions and other modifications thereof
(hereinafter collectively referred to as the "RLC Note").
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(b) Payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)), of: (i) the
principal sum which is, at any time, advanced and unpaid under the Swingline
Facility not to exceed Five Million Dollars ($5,000,000.00) at any one time, all
on a revolving line of credit basis; (ii) interest and other charges accrued on
said principal sum, or accrued on interest and other charges then outstanding
under the Swingline Facility (all including, without limitation, interest and
other charges that would accrue on such obligations, but for the filing of a
petition in bankruptcy with respect to Borrowers, or any of them); and (iii) any
other obligations of Borrowers, or any of them, under the S/L Note referred to
below; all according to the terms of a Swingline Note dated concurrently, or
substantially concurrent, herewith which is made by Borrowers and is payable to
the order of Secured Party according to the tenor and effect of said Swingline
Note, and all renewals, extensions, amendments, restatements, replacements,
substitutions and other modifications thereof (hereinafter referred to as the
"S/L Note", and together with the RLC Note, collectively referred to as the
"Notes").
(c) Payment and performance of every obligation, warranty,
representation, covenant, promise and agreement of Borrowers, or any of them,
contained in that certain Certificate and Indemnification Regarding Hazardous
Substances, together with all extensions, renewals, amendments, restatements and
other modifications thereof, which is executed by Empress Entertainment, Inc.
and Debtor concurrently, or substantially concurrent, herewith and which is to
be executed by Empress Casino Joliet Corporation prior to July 31, 1998.
(d) Payment and performance of every obligation, covenant,
promise and agreement of Debtor herein contained or incorporated herein by
reference, including any sums paid or advanced by Secured Party or any of the
Banks pursuant to the terms hereof.
(e) Payment of the expenses and costs incurred or paid by Secured
Party or any of the Banks in the preservation and enforcement of the rights and
remedies of Secured Party and the duties and liabilities of Debtor hereunder,
including, but not by way of limitation, reasonable attorney's fees, court
costs, witness fees, expert witness fees, collection costs, and reasonable costs
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and expenses paid by Secured Party or any of the Banks in performing for
Debtor's account any obligation of said Debtor.
(f) Payment of any sums which may hereafter be owing by Borrowers, or
any of them, to any of the Banks or any of their affiliates, under the terms of
any interest rate swap agreement, interest rate cap agreement, basis swap
agreement, forward rate agreement, interest collar agreement or interest floor
agreement to which Borrowers, or any of them, may be a party, or under any other
agreement or arrangement to which Borrowers, or any of them, may be a party,
which in each case is designed to protect Borrowers, or any of them, against
fluctuations in interest rates or currency exchange rates with respect to any
indebtedness secured by this Agreement.
(g) Payment of additional sums and interest thereon which may
hereafter be loaned to Borrowers, or any of them, pursuant to the Credit
Agreement when evidenced by a promissory note or notes which recite that this
Agreement is security therefor.
(h) Performance and payment of every obligation, warranty,
representation, covenant, agreement and promise of Borrowers, or any of them,
which are contained in the Credit Agreement.
Section 1.04. For Security Purposes Only. The assignment, pledge,
--------------------------
and grant of a security interest in Debtor's interest(s) in the Collateral,
hereunder, is for security purposes only and shall not make Secured Party
responsible for, or otherwise affect or modify, any duty, obligation or
liability of Debtor under any of the Collateral, or under any transaction
related thereto.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
Section 2.01. Certain Representations and Warranties. The Debtor
--------------------------------------
represents and warrants to Secured Party as follows:
(a) The Debtor is and will be the lawful owner of good and
marketable title to all of the Collateral, free of all liens and claims
whatsoever, other than the security interest hereunder, and no presently
effective Uniform Commercial Code Financing Statement (as defined by the
Commercial Code referred to below) covering any of the Collateral is on file in
any public office.
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(b) The execution and delivery of this Agreement and the
performance by the Debtor of its obligations hereunder have been duly authorized
by all necessary corporate action, and do not and will not contravene or
conflict with any provision of law or of the charter or bylaws of the Debtor or
of any agreement binding upon the Debtor, and this Agreement is a legal, valid
and binding obligation of the Debtor, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency and other
laws of general application relating to or affecting the enforcement of
creditors' rights.
(c) This Agreement creates a first priority security interest in
the Collateral subject only to ECHC Permitted Encumbrances (as defined in the
Credit Agreement).
Section 2.02. Maintenance of Collateral. Except to the extent that
-------------------------
any of the following would be prohibited under, or would constitute a violation
of, the terms and conditions of the Credit Agreement, Debtor agrees: (i) to
properly care for and keep the Collateral in good condition and repair; (ii) not
to remove, demolish or substantially alter the Vessels, except upon the prior
written consent of Secured Party; (iii) not to commit or permit any waste or
deterioration of the Collateral (ordinary wear and tear, casualty and
condemnation excepted); (iv) not to commit, suffer or permit any act to be done,
or condition to exist, in connection with any of said Collateral in material
violation of any law, covenant, condition or restriction now, or hereafter,
affecting said Collateral (v) to perform all obligations which it may have under
the Collateral; and (vi) except as otherwise permitted in the Credit Agreement,
to do all other acts, in a timely and proper manner, which, from the character
or use of the Collateral, may be reasonably necessary to maintain and preserve
its value, the specific enumerations herein not excluding the general.
Section 2.03. Insurance. During the continuance of this Agreement,
---------
Debtor shall obtain, or cause to be obtained, and shall maintain or cause to be
maintained, at all times throughout the term of the Bank Facilities, at its own
cost and expense, and shall deposit with Secured Party, Certificates of
Insurance, each in a form and substance, and at such times, as is required under
Section 5.09 of the Credit Agreement. All monies received from "All Risk"
insurance policies (including flood and earthquake policies) covering any of the
Collateral shall be: (i) paid directly to Secured Party and retained by Secured
Party or released to Debtor by Secured Party; or (ii) paid directly to Debtor;
all in accordance with Section 8.02 of the Credit Agreement. Nothing
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<PAGE>
contained in this Agreement shall be deemed to excuse Debtor from restoring,
repairing and maintaining the Collateral, as herein provided, regardless of
whether or not insurance proceeds are available for restoration, whether or not
any such proceeds are sufficient in amount, or whether or not the Collateral can
be restored to the same condition and character as existed prior to such damage
or destruction.
Section 2.04. Taxes and Assessments. Debtor shall pay all taxes,
---------------------
assessments and other governmental charges levies affecting the Collateral, or
any part thereof, in the manner required by the Credit Agreement except such
taxes, assessments and other governmental levies as are being contested in good
faith in the manner provided by Section 4.07 or Section 5.10 of the Credit
Agreement.
Section 2.05. Eminent Domain. Any award of damages in connection
--------------
with any condemnation or similar actions in regard to the Collateral, or any
part thereof, shall be: (i) paid directly to Secured Party and shall be
retained by Secured Party or released to Debtor by Secured Party; or (ii) paid
directly to Debtor; all in accordance with Section 8.02 of the Credit Agreement.
Section 2.06. Due on Sale. If Debtor shall be voluntarily, or
-----------
involuntarily, divested of title or possession of any Collateral, by merger or
otherwise, or shall lease, sell, convey, further encumber or in any other manner
voluntarily or involuntarily alienate any of its interest in any of the
Collateral, or shall enter into an agreement to do any of the foregoing, other
than as permitted in the Credit Agreement, any indebtedness or obligation
secured hereby, irrespective of the maturity dates expressed in any notes
evidencing the same, shall at the option of Secured Party, and upon the giving
of any notice which may be required under the Credit Agreement, immediately
become due and payable.
Section 2.07. Preservation of Rights. Debtor shall, at its own
----------------------
expense, protect, warrant and defend forever its rights in the Collateral, as
represented in Section 2.01 (and the rights of the Secured Party therein),
against the claims and demands of all persons whomsoever.
Section 2.08. Other Assurances. Debtor shall execute and deliver to
----------------
Secured Party all such financing statements and
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other instruments and documents, each in a form and substance which is
satisfactory to Secured Party, and shall do and accomplish such other acts as
Secured Party may, from time to time, deem necessary or advisable to provide
further assurances of, and where applicable, to fully perfect, the rights and
security interests that are granted hereunder or to carry out or facilitate the
intended purpose of this Agreement. With respect to any Collateral consisting of
certificated securities, instruments, documents, investment property,
certificates of title or the like, as to which Secured Party's security interest
need be perfected by, or the priority thereof need be assured by, possession or
control of such Collateral, Debtor will upon demand of Secured Party deliver
possession of same in pledge to Secured Party (except to the extent that such
Collateral is not capable of being reduced to possession, in which case Debtor
shall enter into a control agreement with the custodian of such collateral
containing sufficient provisions, for the benefit of Secured Party, in order to
provide for perfection and first priority of a security interest in favor of
Secured Party with respect to such Collateral).
Section 2.09. Maintenance of Name, etc. Debtor will not change its
-------------------------
name, identity or structure (collectively an "Identity Change") in any manner
which might make any financing or continuation statement filed in respect of the
Collateral seriously misleading within the meaning of Section 9-402(7) (or any
other then applicable provision) of the Uniform Commercial Code-Secured
Transactions, as enacted in the State of Indiana pursuant to IC 26-1-9 (as it
may hereafter be amended or recodified, the "Commercial Code") unless: (i) such
Identity Change is permissible under the Credit Agreement; and (ii) Debtor shall
have given the Secured Party at least thirty (30) days' prior written notice
thereof.
Section 2.10. Maintenance of Office. Debtor shall at all times
---------------------
maintain its chief executive office within the State of Indiana.
Section 2.11. Records. At its own cost and expense, Debtor shall:
-------
(i) keep and maintain satisfactory and complete records pertaining to the
Collateral in such detail, form and scope as Secured Party shall require,
consistent with Secured Party's interests hereunder; and (ii) at any time, and
from time to time, at Secured Party's request, mark the Collateral and/or
Debtor's ledger cards, books of account and other records relating to the
Collateral with appropriate notations satisfactory to Secured Party disclosing
that they are subject to Secured Party's security interests hereunder. For the
Secured Party's further security,
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Debtor agrees that Secured Party shall have a special property interest in all
of Debtor's books and records which pertain to the Collateral (including books
and records which are maintained in a form for use by computers or data
processing machines). Upon the occurrence and during the continuation of any
Event of Default (as defined by the Credit Agreement), Debtor shall deliver and
turn over any such books and records to Secured Party or its representative at
any time upon demand of Secured Party. At any time and from time to time,
whether or not any Event of Default has occurred, but upon reasonable notice
from Secured party, Debtor shall permit any representative of Secured Party to
inspect such books and records and shall provide photocopies thereof to Secured
Party.
Section 2.12. No Negotiable Documents. Debtor shall not deposit any
-----------------------
Collateral in exchange for a negotiable Document of Title.
ARTICLE III
SECURED PARTY'S RIGHTS
----------------------
REGARDING COLLATERAL
--------------------
Section 3.01. General Rights. At any time, and from time to time,
--------------
without notice or demand (except as otherwise set forth herein), and whether or
not an Event of Default has occurred, Secured Party may take any of the
following actions to the extent that such actions may be necessary or desirable
to protect the security hereunder:
(a) Enter upon any premises on which Collateral is situated and
examine the same.
(b) At the expense of Debtor, perform any obligation of Debtor
under this Agreement or under any of the Collateral.
(c) Where applicable: (i) notify obligors on the Collateral
that the Collateral has been pledged and assigned to Secured Party; (ii) request
from obligors under the Collateral, in the name of Debtor or in the name of
Secured Party, information concerning the Collateral and the amounts owing
thereof; and (iii) cause the Collateral to be registered in the name of Secured
Party, as legal holder.
(d) Secured Party shall at all reasonable times, and on
reasonable notice, have full access to and the right to
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<PAGE>
audit any and all of Debtor's books and records pertaining to the Collateral,
and to confirm and verify the value of the Collateral and to do whatever else
Secured Party reasonably may deem necessary or desirable to protect its
interests.
Any of the foregoing actions which are undertaken by Secured Party shall be at
the expense of Debtor. However, Secured Party shall be under no duty or
obligation whatsoever to take any of such actions or to take any other action to
preserve, maintain or protect, the Collateral or any of it, or to preserve any
rights of or against any prior or other parties in connection with the
Collateral, to exercise any voting rights or managerial rights with respect to
any Collateral, whether or not an Event of Default shall have occurred, or to
make or give any presentments, demands for performance, notices of non-
performance, protests, notices of protests, notices of dishonor or notices of
any other nature whatsoever in connection with the Collateral or the Secured
Obligations.
Section 3.02. Collections on the Collateral.
-----------------------------
(a) Notwithstanding the security interest in the Collateral
which is granted pursuant to Section 1.01 hereof, and except as otherwise
provided hereunder or in any Loan Document, Debtor shall have the right to use
and to continue to make collections on and receive any payments which may be
made to, or for the benefit of, Debtor under any of the Collateral so long as no
Event of Default shall have occurred and be continuing.
(b) Upon the occurrence and during the continuance of an Event
of Default, at the option of Secured Party, and except as prohibited by
applicable law, Debtor's right to make collections on and receive dividends and
other proceeds of the Collateral and to use or dispose of such collections and
proceeds shall terminate, and any and all dividends, proceeds and collections,
including all partial or total prepayments, then held or thereafter received on
or on account of the Collateral will be held or received by Debtor in trust for
Secured Party and immediately delivered in kind to Secured Party.
(c) Any remittance received by Debtor from any Person shall be
presumed to relate to the Collateral and to be subject to the security interests
which are granted to Secured Party hereunder.
(d) Upon the occurrence and during the continuance of an Event
of Default, Secured Party shall have the right at all
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times to receive, issue receipt for, endorse, assign, deposit and deliver, in
the name of Secured Party or in the name of Debtor, any and all checks, notes,
drafts and other instruments for the payment of money constituting proceeds of
or otherwise relating to the Collateral; and Debtor hereby authorizes Secured
Party to affix, by facsimile signature or otherwise, the general or special
endorsement of Debtor, in such manner as Secured Party shall deem advisable, to
any such instrument in the event the same has been delivered to or obtained by
Secured Party without appropriate endorsement, and Secured Party and any
collection bank are hereby authorized to consider such endorsement to be a
sufficient, valid and effective endorsement by Debtor, to the same extent as
though it were manually executed by the duly authorized officer of Debtor,
regardless of by whom or under what circumstances or by what authority such
facsimile signature or other endorsement actually is affixed, without duty of
inquiry or responsibility as to such matters, and Debtor hereby expressly waives
demand, presentment, protest and notice of protest or dishonor and all other
notices of every kind and nature with respect to any such instrument.
Section 3.03. Possession of Collateral by Secured Party.
-----------------------------------------
(a) All the Collateral now, heretofore or hereafter delivered to
Secured Party shall be held by Secured Party in its possession, custody and
control. Any or all of the Collateral delivered to Secured Party, which is held
in an account, may be held in an interest bearing or non-interest bearing
account, in Secured Party's sole and absolute discretion, and Secured Party may,
in its discretion, apply any such interest to payment of the Secured
Obligations. Nothing herein shall obligate Secured Party to invest any
Collateral or obtain any particular return thereon.
(b) Upon the occurrence and during the continuance of an Event
of Default, whenever any of the Collateral is in Secured Party's possession,
custody or control, Secured Party may use, operate and consume the Collateral,
whether for the purpose of preserving and/or protecting the Collateral, or for
the purpose of performing any of Debtor's obligations with respect thereto, or
otherwise. Secured Party may at any time deliver or redeliver the Collateral or
any part thereof to Debtor, and the receipt of any of the same by Debtor shall
be complete and full acquittance for the Collateral so delivered, and Secured
Party thereafter shall be discharged from any liability or responsibility
therefor.
(c) So long as Secured Party exercises reasonable care with
respect to any Collateral in its possession, custody or
17
<PAGE>
control, Secured Party shall have no liability for any loss of or damage to such
Collateral, and in no event shall Secured Party have liability for any
diminution in value of Collateral occasioned by economic or market conditions or
events. Secured Party shall be deemed to have exercised reasonable care within
the meaning of the preceding sentence if the Collateral in the possession,
custody or control of Secured Party is accorded treatment substantially equal to
that which Secured Party accords its own property, it being understood that
Secured Party shall not have any responsibility for (a) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Collateral, whether or not Secured Party has or is
deemed to have knowledge of such matters, or (b) taking any necessary steps to
preserve rights against any Person with respect to any Collateral.
Section 3.04. Unilateral Filings. In addition to any other actions
------------------
which Secured Party may be entitled to take hereunder, or under the Commercial
Code, Secured Party is expressly authorized to execute and file such financing
statements and continuation statements as it may deem necessary or appropriate
to evidence, maintain, perfect and/or continue the security interest(s) granted
hereunder, all without notice to, or the signature of, Debtor.
ARTICLE IV
DEFAULT
-------
Section 4.01. Remedies. Upon the occurrence and during the
--------
continuance of an Event of Default (as defined in the Credit Agreement), Secured
Party shall have, in any jurisdiction where enforcement hereof is sought: (i) in
addition to all other rights and remedies that Secured Party may have under
applicable law, in equity, under this Agreement or under any other Loan
Document; and (ii) in addition to all rights and remedies of a Secured Party
under the Commercial Code; the following rights and remedies, all of which may
be exercised with or without notice to Debtor and without affecting the
obligations of Debtor hereunder or under any other Loan Document, or the
enforceability of the liens and security interests created hereby:
(a) To foreclose the liens and security interests created
hereunder or under any other agreement relating to any Collateral by any
available judicial procedure or without judicial process;
18
<PAGE>
(b) To enter any premises where any Collateral may be located
for the purpose of securing, protecting, inventorying, appraising, inspecting,
repairing, preserving, storing, preparing, processing, taking possession of or
removing the same;
(c) To sell, assign, lease or otherwise dispose of any
Collateral or any part thereof either at public or private sale or at any
broker's board, in lot or in bulk, for cash, on credit or otherwise, with or
without representation or warranties and upon such terms as shall be acceptable
to Secured Party;
(d) To notify obligors on the Collateral that the Collateral has
been assigned to Secured Party and that all payments thereon are to be made
directly and exclusively to Secured Party;
(e) To collect by legal proceedings or otherwise all dividends,
distributions, interest, principal or other sums now or hereafter payable upon
or on account of the Collateral;
(f) To enter into any extension, reorganization, deposit, merger
or consolidation agreement, or any other agreement relating to or affecting the
Collateral, and in connection therewith Secured Party may deposit or surrender
control of the Collateral and/or accept other property in exchange for the
Collateral;
(g) To settle, compromise or release, on terms acceptable to
Secured Party, in whole or in part, any amounts owing on the Collateral and/or
disputes with respect thereto;
(h) To amend the terms of, extend the time of payment, make
allowances and adjustments to, and issue credits in connection with, the
Collateral in the name of Secured Party or in the name of Debtor;
(i) To enforce payment and prosecute any action or proceeding
with respect to any or all of the Collateral and take or bring, in the name of
Secured Party or in the name of Debtor, any and all steps, actions, suits or
proceedings deemed by Secured Party necessary or desirable to effect collection
of or to realize upon the Collateral, including any judicial or nonjudicial
foreclosure thereof or thereon, and Debtor specifically consents to any
nonjudicial foreclosure of any or all of the Collateral or any other action
taken by Secured Party which may release any obligor from personal liability on
any of the Collateral, and Debtor waives any right not expressly provided for in
this Agreement to receive
19
<PAGE>
notice of any public or private judicial or nonjudicial sale or foreclosure of
any security or any of the Collateral; and any money or other property received
by Secured Party in exchange for or on account of the Collateral, whether
representing collections or proceeds of Collateral (and whether resulting from
voluntary payments or foreclosure proceedings or other legal action taken by
Secured Party or Debtor) may be applied to the Secured Obligations by Secured
Party (without notice to Debtor) in such order and manner as Secured Party in
its sole discretion shall determine, unless otherwise provided by the Credit
Agreement or by any other Loan Documents;
(j) To insure, process and preserve the Collateral;
(k) To exercise all rights, remedies, powers or privileges
provided under any of the Loan Documents or the Collateral;
(l) To remove, from any premises where the same may be
located,the Collateral and any and all documents, instruments, files and
records, and any receptacles and cabinets containing the same, relating to the
Collateral, and Secured Party may, at the cost and expense of Debtor, use such
of Debtor's supplies, equipment, facilities and space at Debtor's places of
business as may be necessary or appropriate to properly administer, process,
store,control, prepare for sale or disposition and/or sell or dispose of the
Collateral or to properly administer and control the handling of collections and
realizations thereon, and Secured Party shall be deemed to have a rent-free
tenancy of any premises of Debtor for such purposes and for such periods of time
as reasonably required by Secured Party;
(m) To receive, open and dispose of all mail addressed to Debtor
and notify postal authorities to change the address for delivery thereof to such
address as Secured Party may designate; provided that Secured Party agrees that
it will promptly deliver over to Debtor such opened mail as does not relate to
the Collateral; and
(n) To exercise all other rights, powers, privileges and
remedies of an owner of the Collateral; all at Secured Party's sole option and
as Secured Party in its sole discretion may deem advisable. Debtor will, at
Secured Party's request, assemble the Collateral and make it available to
Secured Party at places which Secured Party may designate, whether at the
premises of Debtor or elsewhere, and will make available to Secured
20
<PAGE>
Party, free of cost, all premises, equipment and facilities of Debtor for the
purpose of Secured Party's taking possession of the Collateral or storing same
or removing or putting the Collateral in salable form or selling or disposing of
same.
Section 4.02. Possession. Upon the occurrence and during the
----------
continuance of an Event of Default, Secured Party also shall have the right,
without notice or demand, either in person, by agent or by a receiver to be
appointed by a court of competent jurisdiction (and Debtor hereby expressly
consents upon the occurrence and during the continuance of an Event of Default
to the appointment of such a receiver), and without regard to the adequacy of
any security for the Secured Obligations, to take possession of the Collateral
or any part thereof and to collect and receive the rents, issues, profits,
income and proceeds thereof. Secured Party's taking possession of the
Collateral shall not cure or waive any Event of Default or notice thereof or
invalidate any act done pursuant to such notice. The rights, remedies and
powers of any receiver appointed by a court shall be as ordered by said court.
Section 4.03. Conduct of Sale.
---------------
(a) Any public or private sale or other disposition of the
Collateral may be held at any office of Secured Party, or at Debtor's place of
business, or at any other place permitted by applicable law, and without the
necessity of the Collateral being within the view of the prospective purchasers.
Secured Party may direct the order and manner of sale of the Collateral, or
portions thereof, as it in its sole and absolute discretion may determine, and
Debtor expressly waives any right to direct the order and manner of sale of any
Collateral. Secured Party or any Person on Secured Party's behalf may bid and
purchase at any such sale or other disposition. The net cash proceeds resulting
from the collection, liquidation, sale, lease or other disposition of the
Collateral shall be applied, first, to the expenses (including reasonable
attorneys' fees and disbursements) of retaking, holding, storing, processing and
preparing for sale or lease,selling, leasing, collecting, liquidating and the
like, and then to the satisfaction of the Secured Obligations in such order as
shall be determined by Secured Party in its sole and absolute discretion, all
unless otherwise provided by the Credit Agreement or any other Loan Documents.
Debtor and any other Person then obligated therefor shall pay to Secured Party
on demand any deficiency with regard thereto which may remain after such sale,
disposition, collection or liquidation of the Collateral.
21
<PAGE>
(b) Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Secured Party will send or otherwise make available to Debtor reasonable notice
of the time and place of any public sale thereof or of the time at, or after,
which any private sale thereof is to be made. The requirement of sending
reasonable notice conclusively shall be met if such notice is mailed, first
class mail, postage prepaid, to Debtor at its address set forth in the Credit
Agreement, or delivered or otherwise sent to Debtor, at least five (5) days
before the date of the sale. Debtor expressly waives any right to receive notice
of any public or private sale of any Collateral or other security for the
Secured Obligations except as expressly provided for in this paragraph.
(c) With respect to any Collateral consisting of securities,
partnership interests, joint venture interests, other investments or the like,
and whether or not any of such Collateral has been effectively registered under
the Securities Act of 1933 or other applicable laws, Secured Party may, in its
sole and absolute discretion, sell all or any part of such Collateral at private
sale in such manner and under such circumstances as Secured Party may deem
necessary or advisable in order that the sale may be lawfully conducted.
Without limiting the foregoing, Secured Party may (i) approach and negotiate
with a limited number of potential purchasers; and (ii) restrict the prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing such Collateral for their own account for investment and not with a
view to the distribution or resale thereof. In the event that any such
Collateral is sold at private sale, Debtor agrees that if such Collateral is
sold for a price which Secured Party in good faith believes to be reasonable
under the circumstances then existing, then: (aa) the sale shall be deemed to
be commercially reasonable in all respects; (bb) the credit against the Secured
Obligations, to which Debtor may be entitled, shall not exceed the purchase
price; and (cc) Secured Party shall not incur any liability or responsibility to
Debtor in connection therewith, notwithstanding the possibility that a
substantially higher price might have been realized at a public sale. Debtor
recognizes that a ready market may not exist for such Collateral if it is not
regularly traded on a recognized securities exchange, and that a sale by Secured
Party of any such Collateral for an amount substantially less than a pro rata
share of the fair market value of the issuer's assets minus liabilities may be
commercially reasonable in view of the difficulties that may be encountered in
attempting to sell a large amount of such Collateral or Collateral that is
privately traded.
22
<PAGE>
(d) Upon consummation of any sale of Collateral hereunder,
Secured Party shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each such purchaser at
any such sale shall hold the Collateral so sold absolutely free from any claim
or right upon the part of Debtor or any other Person except a third party
lienholder permitted under the Loan Documents, and Debtor hereby waives (to the
extent permitted by applicable laws) all rights of redemption, stay and
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. If the sale of all or any
part of the Collateral is made on credit or for future delivery, Secured Party
shall not be required to apply any portion of the sales price to the Secured
Obligations until such amount actually is received by Secured Party, and any
Collateral so sold may be retained by Secured Party until the sale price is paid
in full by the purchaser or purchasers thereof. Secured Party shall not incur
any liability in case any such purchaser or purchasers shall fail to pay for the
Collateral so sold, and, in case of any such failure, the Collateral may be sold
again.
ARTICLE V
MISCELLANEOUS
-------------
Section 5.01. Attorney-in-Fact. Debtor hereby irrevocably nominates
----------------
and appoints Secured Party as its attorney-in-fact for the following purposes:
(a) to do all acts and things which Secured Party may deem necessary or
advisable to perfect, and continue perfected, the security interests created by
this Agreement and, upon the occurrence and during the continuance of an Event
of Default, to preserve, process, develop, maintain and protect the Collateral;
(b) upon the occurrence and during the continuance of an Event of Default, to do
any and every act which Debtor is obligated to do under this Agreement, at the
expense of the Debtor, and without any obligation to do so; (c) to prepare,
sign, file and/or record, for Debtor, in the name of the Debtor, any financing
statement, application for registration, or like paper, and to take any other
action deemed by Secured Party necessary or desirable in order to perfect or
maintain perfected the security interests granted hereby; and (d) upon the
occurrence and during the continuance of an Event of Default, to execute any and
all papers and instruments and do all other things necessary or desirable to
preserve and protect the Collateral and to protect Secured Party's security
interests therein; provided, however, that Secured Party shall be under no
obligation whatsoever to take any of the foregoing actions, and, absent bad
faith or actual malice,
23
<PAGE>
Secured Party shall have no liability or responsibility for any act taken or
omission with respect thereto. Debtor hereby consents and agrees that, where
applicable, the issuers of, the obligors on, or the parties to any of the
Collateral, shall be entitled to accept the provisions of this Agreement as
conclusive evidence of the right of Secured Party to effect any transfer or
exercise any right hereunder or with respect to any such Collateral,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by Debtor or any other Person to such issuers, obligors or
parties.
Section 5.02. Costs and Expenses. Debtor agrees to pay to Secured
------------------
Party all costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred by Secured Party in the enforcement
or attempted enforcement of this Agreement, whether or not an action is filed in
connection therewith, and in connection with any waiver or amendment of any term
or provision hereof. All advances, charges, costs and expenses, including
reasonable attorneys' fees and disbursements, incurred or paid by Secured Party
in exercising any right, privilege, power or remedy conferred by this Agreement
(including, without limitation, the right to perform any Secured Obligation of
Debtor under the Loan Documents), or in the enforcement or attempted enforcement
thereof, shall be secured hereby and shall become a part of the Secured
Obligation and shall be paid to the Secured Party by Debtor, immediately upon
demand, together with interest thereon at the rate(s) provided for under the
Credit Agreement.
Section 5.03. Statute of Limitations and Other Laws. Until the
-------------------------------------
Secured Obligations shall have been paid and performed in full, and all
obligations of the Banks, or any of them, to advance funds under the Bank
Facilities, have been unconditionally and indefeasibly terminated and Bank
Facility Termination shall have occurred, the power of sale and all other
rights, remedies, and privileges which are granted hereunder shall continue to
exist and may be exercised by Secured Party at any time and from time to time
irrespective of the fact that any of the Secured Obligations may have become
barred by any statute of limitations. Debtor expressly waives the benefit of
any and all statutes of limitation, and any and all laws providing for exemption
of property from execution or for valuation and appraisal upon foreclosure, to
the maximum extent permitted by applicable law.
Section 5.04. Other Agreements. The rights and remedies of Secured
----------------
Party upon the occurrence and continuance of an Event of
24
<PAGE>
Default (whether such rights and remedies are conferred by statute, by rule of
law, by this Agreement, the Loan Documents or otherwise) may be exercised by
Secured Party, in the sole discretion of Secured Party, either alternatively,
concurrently, or consecutively in any order. The exercise by Secured Party of
any one or more of such rights and remedies shall not be construed to be an
election of remedies nor a waiver of any other rights and remedies which may be
available to Secured Party.
Section 5.05. Understandings With Respect to Waivers and Consents.
---------------------------------------------------
Debtor warrants and agrees that each of the waivers and consents set forth
herein are made after consultation with legal counsel and with full knowledge of
their significance and consequences, with the understanding that events giving
rise to any defense or right waived may diminish, destroy or otherwise adversely
affect rights which Debtor otherwise may have against Secured Party or others,
or with respect to the Collateral, and that, under the circumstances, the
waivers and consents herein given are reasonable and not contrary to public
policy or law. If any of the waivers or consents herein are determined to be
contrary to any applicable law or public policy, such waivers and consents shall
be effective to the maximum extent permitted by law.
Section 5.06. Release of Debtor. This Agreement and all Secured
-----------------
Obligations of Debtor hereunder shall be released when all Secured Obligations
have been paid in full in cash or otherwise performed in full and when all
obligations which the Banks, or any of them, may have to advance funds under the
Bank Facilities, have been unconditionally and indefeasibly terminated and Bank
Facility Termination shall have occurred. Upon such release of Debtor's Secured
Obligations hereunder, Secured Party shall return any pledged Collateral to
Debtor, or to the Person or Persons legally entitled thereto, and shall endorse,
execute, deliver, record and file all instruments and documents, and do all
other acts and things, reasonably required for the return of the Collateral to
Debtor, or to the Person or Persons legally entitled thereto, and to evidence or
document the release of Secured Party's interests arising under this Agreement,
all as reasonably requested by, and at the sole expense of, Debtor.
Section 5.07. Indemnity. Neither Secured Party nor any of the Banks
---------
shall be obligated to perform or discharge any obligation or duty to be
performed or discharged by Debtor with respect to the Collateral or hereunder.
Debtor hereby agrees to indemnify Secured Party and each of the Banks
(collectively, the "Indemnified Parties") for, and to save them harmless from,
any and
25
<PAGE>
all liability arising from the Collateral or this Agreement. This Agreement
shall not place responsibility for the control, care, management, operation or
repair of the Collateral upon any of the Indemnified Parties; nor shall this
Agreement cause any of the Indemnified Parties to be responsible or liable for
any negligence in the management, operation, upkeep, repair or control of the
Collateral which results in loss, injury or death to any tenant, guest,
licensee, employee or stranger (provided that this Section 5.07 shall not act to
relieve any Indemnified Party from liability which results from such Indemnified
Party's own gross negligence or willful misconduct).
Section 5.08 Governing Law. This Agreement shall be governed by,
-------------
and shall be construed and enforced in accordance with, the internal laws of the
State of Indiana without regard to conflict of law principles.
Section 5.09. Counterparts. This Agreement may be executed in any
------------
number of separate counterparts with the same effect as if the signatures hereto
and hereby were upon the same instrument. All such counterparts shall together
constitute one and the same document.
26
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
DEBTOR: SECURED PARTY:
EMPRESS CASINO HAMMOND WELLS FARGO BANK, National Association
CORPORATION, an Indiana
corporation
By /s/ Joseph L. Brady,
-------------------------
Joseph L. Brady,
By /s/ Peter A. Ferro, Jr. Senior Vice President
-----------------------------
Name Peter A. Ferro, Jr.
----------------------------
Title Chief Executive Officer
---------------------------
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that Peter A. Ferro, Jr., whose name as Chief Executive
Officer of EMPRESS CASINO HAMMOND CORPORATION, an Indiana corporation, is signed
to the foregoing instrument, and who is known to me, acknowledged before me on
this day that, being informed of the contents of the instrument, he/she, as such
officer and with full authority, executed the same voluntarily for and as the
act of said corporation.
Given under my hand and Official Seal this 17th day of June, 1998.
/s/ Gina A. Bilotto
-------------------------------
[Seal] Notary Public
My commission expires: April 24, 1999
[Notary Seal of
Gina Bilotto] GINA BILOTTO
--------------------------------
(Printed Name)
Notary Public in and for the
State of Illinois
27
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that JOSEPH L. BRADY, whose name as Senior Vice President
of WELLS FARGO BANK, National Association, a national banking association, is
signed to the foregoing instrument, and who is known to me, acknowledged before
me on this day that, being informed of the contents of the instrument, he, as
such officer and with full authority, executed the same voluntarily for and as
the act of said national banking association.
Given under my hand and Official Seal this 17th day of June, 1998 .
/s/ Joanne Bruen
--------------------------------
[Seal] Notary Public
My commission expires: 10/14/00
JOANNE BRUEN
--------------------------------
(Printed Name)
Notary Public in and for the
State of Illinois
28
<PAGE>
PARCEL 1
--------
A PART OF THE NORTHEAST QUARTER OF SECTION 1, TOWNSHIP 37 NORTH, RANGE 10 WEST
OF THE SECOND PRINCIPAL MERIDIAN LOCATED IN NORTH TOWNSHIP, LAKE COUNTY,
INDIANA, BEING BOUNDED AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF THE SOUTHEAST QUARTER OF SECTION 1,
TOWNSHIP 37 NORTH, RANGE 10 WEST OF THE SECOND PRINCIPAL MERIDIAN; THENCE NORTH
00 DEGREES 00 MINUTES 00 SECONDS (ASSUMED BEARING);
2,180.44 FEET ALONG THE EAST LINE OF SAID SECTION 1 TO ITS POINTS OF
INTERSECTION WITH THE ORIGINAL CENTERLINE OF THE 80-FOOT-WIDE RIGHT-OF-WAY OF
INDIANAPOLIS BOULEVARD; THENCE NORTH 39 DEGREES 07 MINUTES 01 SECOND WEST
2,689.03 FEET ALONG SAID ORIGINAL CENTERLINE OF THE 80-FOOT-WIDE RIGHT-OF-WAY OF
INDIANAPOLIS BOULEVARD TO ITS POINT OF INTERSECTION WITH THE CENTERLINE OF 112TH
STREET (80-FOOT-WIDE RIGHT-OF-WAY); THENCE SOUTH 50 DEGREES 52 MINUTES 59
SECONDS WEST 190.00 FEET ALONG THE CENTERLINE OF 112TH STREET; THENCE SOUTH 34
DEGREES 15 MINUTES 02 SECONDS WEST 497.85 FEET ALONG THE CENTERLINE OF 112TH
STREET; THENCE NORTH 55 DEGREES 44 MINUTES 58 SECONDS WEST 40.00 FEET
PERPENDICULAR TO THE CENTERLINE OF 112TH STREET TO THE SOUTHEASTERN CORNER OF
THE 1.419 ACRE TRACT OF LAND DESCRIBED IN THE WARRANTY DEED RECORDED AS
INSTRUMENT NO. 507068 ON DECEMBER 14, 1978, IN THE OFFICE OF THE RECORDER OF
LAKE COUNTY, INDIANA, TO A POINT ON THE BOUNDARY (TERMINUS OF THE THIRD COURSE)
OF THE 4.793 ACRE TRACT OF LAND DESCRIBED IN THE SPECIAL WARRANTY DEED RECORDED
AS INSTRUMENT NO.94021860 ON MARCH 23, 1994 IN SAID RECORDER'S OFFICE, AND TO
THE POINT OF BEGINNING OF THIS DESCRIPTION; THENCE SOUTH 34 DEGREES 15 MINUTES
02 SECONDS WEST 205.33 FEET ALONG THE NORTHWESTERN RIGHT-OF-WAY LINE OF 112TH
STREET; THENCE NORTH 89 DEGREES 51 MINUTES 46 SECONDS WEST 336.05 FEET ALONG THE
NORTHERN RIGHT-OF-WAY LINE OF 112TH STREET TO THE EASTERN RIGHT-OF-WAY LINE OF
5TH AVENUE (66-FOOT-WIDE RIGHT-OF-WAY); THENCE NORTH 00 DEGREES 04 MINUTES 19
SECONDS EAST 1,127.57 FEET ALONG THE EASTERN RIGHT-OF-WAY LINE OF 5TH AVENUE TO
A POINT BEING SOUTH 00 DEGREES 04 MINUTES 19 SECONDS WEST 120.00 FEET FROM THE
SOUTHEASTERN CORNER OF THE INTERSECTION OF 5TH AVENUE AND 110TH STREET (66-FOOT-
WIDE RIGHT-OF-WAY); THENCE SOUTH 89 DEGREES 37 MINUTES 25 SECONDS EAST 172.00
FEET; THENCE NORTH 00 DEGREES 04 MINUTES 19 SECONDS EAST 72.00 FEET; THENCE
SOUTH 89 DEGREES 37 MINUTES 25 SECONDS EAST 218.00 FEET; THENCE NORTH 00 DEGREES
04 MINUTES 19 SECONDS EAST 57.74 FEET TO THE SOUTHWESTERN RIGHT-OF-WAY LINE OF
INDIANAPOLIS BOULEVARD; THENCE SOUTH 39 DEGREES 07 MINUTES 01 SECOND EAST 180.04
FEET ALONG THE SOUTHWESTERN RIGHT-OF-WAY LINE OF INDIANAPOLIS BOULEVARD TO THE
NORTHWESTERN BOUNDARY OF SAID 4.793 ACRE TRACT OF LAND, THE NEXT SIX (6) COURSES
ARE ALONG THE BOUNDARY OF SAID 4.793 ACRE TRACT OF LAND;
1) THENCE SOUTH 50 DEGREES 43 MINUTES 23 SECONDS WEST 135.68 FEET (MEASURED,
155.27 FEET DEEDED);
EXHIBIT A, PAGE 1 OF 14
<PAGE>
2) THENCE SOUTH 36 DEGREES 14 MINUTES 30 SECONDS WEST 136.32 FEET;
3) THENCE SOUTH 11 DEGREES 49 MINUTES 05 SECONDS WEST 132.22 FEET;
4) THENCE SOUTH 04 DEGREES 06 MINUTES 03 SECONDS EAST 125.93 FEET;
5) THENCE SOUTH 24 DEGREES 13 MINUTES 40 SECONDS EAST 122.46 FEET TO A POINT
ON A NON-TANGENT CURVE CONCAVE TO THE NORTHEAST, SAID POINT BEING SOUTH 60
DEGREES 23 MINUTES 05 SECONDS WEST 346.48 FEET FROM THE RADIUS POINT OF SAID
CURVE;
6) THENCE SOUTHEASTERLY 308.59 FEET ALONG SAID CURVE TO A POINT BEING SOUTH 09
DEGREES 21 MINUTES 21 SECONDS WEST 346.48 FEET FROM THE RADIUS POINT OF SAID
CURVE;
7) THENCE SOUTH 34 DEGREES 15 MINUTES 02 SECONDS WEST 257.63 FEET TO THE POINT
OF BEGINNING.
EXHIBIT A, PAGE 2 OF 14
<PAGE>
LAND DESCRIPTION
Redevelopment Commission Sublease
Parcel 1A
version 1
15 MAY 96
A part of the Northwest Quarter of Section 6, Township 37 North, Range 9 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,209.68 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West; thence South
41 degrees 13 minutes 34 seconds East 61.96 feet; thence South 41 degrees 13
minutes 34 seconds East 90.30 feet to the point of curvature of a curve to the
left, said point of curvature being South 48 degrees 46 minutes 26 seconds West
2,814.93 feet from the radius point of said curve; thence southeasterly 229.77
feet along said curve to a point being South 44 degrees 05 minutes 50 seconds
West 2,814.93 feet from the radius point of said curve; thence North 35 degrees
17 minutes 10 seconds East 17.84 feet to the POINT OF BEGINNING of this
description; thence North 35 degrees 17 minutes 10 seconds East 813.45 feet,
thence North 79 degrees 22 minutes 58 seconds East 71.38 feet thence South 54
degrees 36 minutes 55 seconds East 100.48 feet; thence South 35 degrees 23
minutes 05 seconds West 90.00 feet; thence North 54 degrees 36 minutes 55
seconds West 110.00 feet; thence South 35 degrees 17 minutes 10 seconds West
780.38 feet; thence North 46 degrees 40 minutes 28 seconds West 40.40 feet to
the POINT OF BEGINNING containing 0.995 acres, more or less.
EXHIBIT A, PAGE 3 OF 14
<PAGE>
LAND DESCRIPTION
Redevelopment Commission Sublease
Parcel 2
version 1
29 AUG 94
A part of the Northwest Quarter of Section 6, Township 37 North, Range 9 West,
located in North Township, Lake County, Indiana, being bounded as follows:
Commencing at he Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,209.68 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West; thence South
41 degrees 13 minutes 34 seconds East 61.96 feet; thence South 41 degrees 13
minutes 34 seconds East 90.30 feet to the point of curvature of a curve to the
left, said point of curvature being South 48 degrees 46 minutes 26 seconds West
2,814.93 feet from the radius point of said curve; thence southeasterly 229.76
feet along said curve to a point being South 44 degrees 05 minutes 50 seconds
West 2,814.93 feet from the radius point of said curve; thence North 35 degrees
17 minutes 10 seconds East 831.29 feet; thence North 79 degrees 22 minutes 58
seconds East 71.38 feet; thence South 54 degrees 36 minutes 55 seconds East
100.48 feet to the POINT OF BEGINNING of this description; thence continuing
South 54 degrees 36 minutes 55 seconds East 146.67 feet; thence South 35 degrees
16 minutes 41 seconds West 523.46 feet; thence North 54 degrees 35 minutes 11
seconds West 236.35 feet; thence South 35 degrees 15 minutes 53 seconds West
349.92 feet; thence North 46 degrees 40 minutes 28 seconds West 20.88 feet;
thence North 35 degrees 17 minutes 10 seconds East 780.38 feet; thence South 54
degrees 36 minutes 55 seconds East 110.00 feet; thence North 35 degrees 23
minutes 05 seconds East 90.00 feet to the POINT OF BEGINNING, containing 3.024
acres, more or less.
EXHIBIT A, PAGE 4 OF 14
<PAGE>
LAND DESCRIPTION
Redevelopment Commission Sublease
Parcel 4
version 2
28 MAY 96
A part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West
and a part of Section 36, Township 38 North, Range 10 West located in North
Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way); thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 15 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right, said
point of curvature being North 36 degrees 00 minutes 00 seconds West 326.48 feet
from the radius point of said curve; thence northeasterly and easterly 118.22
feet along said curve to the southwestern boundary of the 21.255 acre tract of
land described in the QUITCLAIM DEED recorded as instrument #910181 on April 17,
1991 in the office of the Recorder of Lake County, Indiana, said point being
North 15 degrees 15 minutes 10 seconds West 326.48 feet from the radius point of
said curve, the next seven (7) courses are along the boundary of said 21.255
acre tract of land; 1) thence North 41 degrees 15 minutes 08 seconds West
1,700.29 feet to the POINT OF BEGINNING of this description; 2) thence North 41
degrees 15 minutes 08 seconds West 1,539.62 feet to the point of curvature of a
curve to the right, said point of curvature being South 48 degrees 44 minutes 52
seconds West 24,828.52 feet from the radius point of said curve; 3) thence
northwesterly 281.79 feet along said curve to its point of tangency, said point
of tangency being South 49 degrees 23 minutes 53 seconds West 24,828.52 feet
from the radius point of said curve; 4) thence North 40 degrees 36 minutes 07
seconds West 1,474.75 feet to the Indiana/Illinois State Line; 5) thence North
00 degrees 52 minutes 04 seconds West 138.52 feet along the Indiana/Illinois
State Line; 6) thence South 48 degrees 50 minutes 29 seconds East 279.19 feet;
7) thence South 41 degrees 14 minutes 04 seconds East 2,051.13 feet to the
northwestern corner of the tract of land described in the QUITCLAIM DEED
recorded in Deed Record 1219, page 31 on November 5, 1962 in said Recorder's
office, said corner being on "Eggers' Fence Line"; thence South 87 degrees 40
minutes 04 seconds East 11.27 feet along the northern boundary of said tract of
land which is also along "Eggers' Fence Line"; thence South 41 degrees 12
minutes 09 seconds East 139.21 feet; thence
EXHIBIT A, PAGE 5 OF 14
<PAGE>
South 40 degrees 14 minutes 07 seconds East 154.35 feet to a point on a
non-tangent curve concave to the southwest, said point being North 51 degrees 42
minutes 18 seconds East 1,514.88 feet from the radius point of said curve;
thence southeasterly 141.95 feet along said curve to a point being North 57
degrees 04 minutes 25 seconds East 1,514.88 feet from the radius point of said
curve; thence South 30 degrees 59 minutes 10 seconds East 154.35 feet; thence
South 30 degrees 01 minute 09 seconds East 186.88 feet; thence South 30 degrees
59 minutes 24 seconds East 155.62 feet to a point on a non-tangent curve concave
to the northeast, said point being South 57 degrees 04 minutes 25 seconds West
1,539.88 feet from the radius point of said curve; thence southeasterly 143.63
feet to a point being South 51 degrees 43 minutes 47 seconds West 1,539.88 feet
from the radius point of said curve; thence South 48 degrees 44 minutes 52
seconds West 29.89 feet to the POINT OF BEGINNING containing 9.760 acres, more
or less.
ALSO, a part of the Northeast Quarter of Section 1, Township 37 North, Range 10
West and a part of Section 36, Township 38 North, Range 10 West located in North
Township, Lake County Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way); thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right (said
curve hereinafter referred to as "Curve #1), said point of curvature being North
36 degrees 00 minutes 00 seconds West 326.48 feet from the radius point of Curve
#1; thence northeasterly and easterly 176.71 feet along Curve #1 to a point
being North 04 degrees 59 minutes 19 seconds West 326.48 feet from the radius
point of Curve #1 and to the POINT OF BEGINNING of this description; thence
North 41 degrees 10 minutes 39 seconds West 1,372.17 feet to the point of
curvature of a curve to the right, said point of curvature being South 48
degrees 49 minutes 21 seconds West 474.78 feet from the radius point of said
curve; thence northwesterly 58.94 feet along said curve to its point of
tangency, said point of tangency being South 55 degrees 56 minutes 06 seconds
West 474.78 feet from the radius point of said curve; thence North 34 degrees 03
minutes 54 seconds West 45.58 feet to point of curvature of curve to the left,
said point of curvature being North 55 degrees 56 minutes 06 seconds East 729.28
feet from the radius point of said curve; thence northwesterly 90.62 feet along
said curve to its point of tangency, said point of tangency being North 48
degrees 48 minutes 55 seconds East 729.28 feet from the radius point of said
curve; thence North 41 degrees 11 minutes 05 seconds West 8.90 feet; thence
North 40 degrees 12 minutes 29 seconds West 154.34 feet to a point on a non-
EXHIBIT A, PAGE 6 OF 14
<PAGE>
tangent curve concave to the northeast, said point being South 51 degrees 45
minutes 03 seconds West 1,500.05 feet from the radius point of said curve;
thence northwesterly 138.44 feet along said curve to a point being South 57
degrees 02 minutes 18 seconds West 1,500.05 from the radius point of said curve;
thence North 31 degrees 00 minutes 10 seconds West 154.34 feet; thence North 30
degrees 01 minute 34 seconds West 170.82 feet to the point of curvature of curve
to the right, said point of curvature being South 59 degrees 58 minutes 26
seconds West 1,420.19 feet from the radius point of said curve; thence
northwesterly and northerly 273.83 feet along said curve to its point of
tangency, said point of tangency being South 71 degrees 01 minute 16 seconds
West 1,420.19 feet from the radius point of said curve; thence North 18 degrees
58 minutes 44 seconds West 56.31 feet to a point on the northwesterly extension
of the southwestern boundary of the 16.039 acre tract of land describe in the
WARRANTY DEED recorded in Deed Record 1218, page 592 on November 9,1962 in the
office of the Recorder of Lake County, Indiana; thence South 41 degrees 14
minutes 04 seconds East 2,501.08 feet along the northwesterly extension of the
southwestern boundary of said 16.039 acre tract of land and along the
southwestern boundary of said 16.039 acre tract of land to a point being North
48 degrees 49 minutes 21 seconds East of the point of beginning; thence South 48
degrees 49 minutes 21 seconds West 193.47 feet to the POINT OF BEGINNING
containing 9.452 acres, more or less.
EXCEPTING AND EXCLUDING THE FOLLOWING FROM THE ABOVE-DESCRIBED PARCELS:
A PARCEL OF REAL ESTATE THAT IS TWO HUNDRED (200) FEET WIDE (MEASURED FROM EAST
TO WEST) AND FIFTY (50) FEET IN DEPTH (MEASURED FROM NORTH TO SOUTH) AND LOCATED
IN THE NORTHEASTERNMOST CORNER OF THE ABOVE-DESCRIBED PARCELS.
EXHIBIT A, PAGE 7 OF 14
<PAGE>
LAND DESCRIPTION
Redevelopment Commission Sublease
Ingress & Egress Access to Parking
version 1
28 MAY 96
A part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way); thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right, said
point of curvature being North 36 degrees 00 minutes 00 seconds West 326.48 feet
from the radius point of said curve; thence northeasterly and easterly 176.71
feet along said curve to a point being North 04 degrees 59 minutes 19 seconds
West 326.48 feet from the radius point of said curve and to the POINT OF
BEGINNING of this description; thence North 48 degrees 49 minutes 21 seconds
East 35.00 feet; thence South 41 degrees 10 minutes 39 seconds East 625.56 feet;
thence South 41 degrees 14 minutes 09 seconds East 34.87 feet to a point on a
non-tangent curve concave to the northeast (said curve hereinafter referred to
as "Curve #1"), said point of curvature being South 48 degrees 38 minutes 51
seconds West 5,682.15 feet from the radius point of said curve; thence
southeasterly 150.03 feet along Curve #1 to a point being South 47 degrees 08
minutes 05 seconds West 5,682.15 feet from the radius point of Curve #1; thence
North 48 degrees 45 minutes 56 seconds East 96.78 feet; thence South 41 degrees
14 minutes 04 seconds East 100.00 feet; thence South 48 degrees 45 minutes 56
seconds West 128.09 feet to a point on a non-tangent curve concave to the
northeast (said curve is concentric with Curve #1), said point being South 46
degrees 08 minutes 30 seconds West 5,717.15 feet from the radius point of said
curve; thence northwesterly 250.02 feet along said curve to a point being South
48 degrees 38 minutes 51 seconds West 5,717.15 feet from the radius point of
said curve; thence North 41 degrees 14 minutes 09 seconds West 34.96 feet,
thence North 41 degrees 10 minutes 39 seconds West 625.58 feet to the POINT OF
BEGINNING containing 0.950 acres, more or less.
EXHIBIT A, PAGE 8 OF 14
<PAGE>
LAND DESCRIPTION
REDEVELOPMENT Commission Sublease
Water Department Perimeter Road
version 2
24 MAY 96
A 32.00 foot-wide strip of land being a part of the Northwest Quarter of Section
?, Township 37 North, Range 9 West located in North Township, Lake County,
?????? the centerline of which is described as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West: thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,091,?3 feet along the East Line of said section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West to a point on
a non-Tangent curve concave to the northeast, said point being South 38 degrees
59 minutes 01 second West 1,837,02 feet from the radius point of said curve;
thence southeasterly 62.23 feet along said curve to its point of Tangency, said
point of Tangency being South ?? degrees ?? minutes 21 seconds West 1,637.02
feet from the radius point of said curve; thence South 53 degrees 11 minutes 39
seconds East 650.47 feet to the right of curvature of curve to the left, said
point of curvature being South 36 degrees 48 minutes 21 seconds West 2,864,79
feet from the radius point of said curvature; thence southeasterly 84.09 said
curve to its point of Tangency, said point of Tangency being 35 degrees 07
minutes 27 seconds West 2.884,79 feet from the radius point of said curvature;
thence South ?? degrees 52 minutes 33 seconds East ???.80 feet to the point of
curvature of a curve to the left, said point of curvature being South 35 degrees
07 minutes 27 seconds West 35.00 feet from the radius point of said curve;
thence southeasterly, easterly, northeasterly, northerly, northwesterly 142.07
feet along said curve to its Tangency, said point of Tangency being North 67
degrees 07 minutes 27 East 55.00 feet from the radius point of the curve; thence
North 22 degrees 52 minutes 33 seconds West 53.74 feet to the point of curvature
of a curve to the right, said point of curvature being South ?7 degrees 07
minutes 27 seconds West 55.00 feet from the radius point of said curve : thence
northwesterly, northerly, northeasterly 5?.62 feet along said curve to its point
of Tangency, said point of Tangency 53 degrees 53 minutes 40 seconds West 55.00
feet from the radius point of said curve; thence North 36 degrees 06 minutes 20
seconds East 15.67 feet to the POINT OF BEGINNING of this centerline
description; thence North 38 degrees 06 minutes 20 seconds East 254.84 feet to
the point of curvature of a curve left, said point of curvature being South 53
degrees 53 minutes 40 seconds East 40.00 feet from the radius point of said
curve, thence northeasterly, northerly, and northwesterly, 63.49 feet along said
curve to its point of Tangency, said point of Tangency being North 35 degrees 0?
minutes 56 seconds East 40.00 feet from the radius point of said curve, thence
North 54 degrees 50 minutes 04 seconds West 117.95 feet to the point of
curvature of a curve to the right, said point of curvature being South 35
degrees 0? minutes 56 seconds West 40.00 feet from the radius point of said
curve, thence northwesterly, northerly, and northeasterly, ?0.84 feet along said
curve to its point of Tangency, point of Tangency being North ?7 degrees 40
minutes 52 seconds West 40.00 feet from the radius point of said curve, thence
North 32 degrees 1? minutes 08 seconds East 330.?? feet to the point of
curvature of a curve to the left, said point of curvature being South 57 degrees
40 minutes 52 East 40.00 feet from the radius point of said curve: thence
northeasterly, northerly, and northwesterly, ?0.76 feet along said curve to its
point of Tangency, said point of Tangency being North 35 degrees 17 minutes 10
seconds East 40.00 feet from the radius point of said curve: thence North 54
degrees 42 minutes 50 Seconds West 227.88 feet to the TERMINUS centerline
description. Containing 0,820 acres, more or less.
CURVE ?? CURVE ?2 CURVE ??
-------- -------- --------
. - 02'10'41' . - 01'40'?4' . - 148"0000"
R - 1?37.02' R - 2864.79 R - 55.00'
T - 31.12' T - 42.05' T - 191.81'
L - 62 23' L - 84.09' L - 142.07'
C - S52'06'19'E- 62.22' C - S54'02'0?'E- 84.08' C - N51'07'27'E-105.74
CURVE ?4 CURVE ?5 CURVE ??
- --------- -------- --------
. - 58'58'33' . - ?0'??'23' . - ?7'0?'12'
R - 55 R - 40,00' R - 40.00'
T - 31.11' T - 40,??' T - 38.06'
L - 56.62' L - ?3,49' L - ?0.84'
C - N0?'3?'S3'E-54.1S' C - N09'21'52'W-57.03' C - N1?'15'28'W-S?.1S'
CURVE ?7
--------
. - 87'01'58'
R - 40.00'
T - 37.?8'
L - 60.7?'
C - N11'11'?1'W-??.0?'
EXHIBIT A, Page 9 of 14
<PAGE>
Licensed Acess LAND DESCRIPTION
- -------------- Redemtption Commission Sublease
Premises water Department Parmeter Road
-------- version 3
05 JUN 96
A 3200 feet-wide acre of land being a part of the
Northwest Quarter of Section6.Township 37 Northg, Range
9 West located in North Twonship, Lake County, Indiana
the centerline of which is described as follows:
Commencing at the Southeast Corner of the Southeast
Quarter of Section 1, Township 37 North, Range 10 West;
thence North 01 degree 01 minute or 03 seconds West
(assumed bearing) 4,091.63 feet along East Line of said
Section 1 and along the West Line of Section 6,
Township 37 North, Range 9 West to a point on a non-
tangent curve concave to the northeast, said point
being South 38 degrees 59 minutes 01 second West
1,637.02 from the routine point of said curve thence
southeasterly 62.23 feet along said curve to its point
of tangency, said point of tangency being being South
38 degrees 45 miuntes 21 seconds West 1,637.02 feet
from the radius point of said curves; thence South 53
degree 11 minutes 39 seconds East 650.47 feet to one
point of curvature of a curve to the left, said point
of curvature being South 36 degrees 46 minutes 21
seconds West 2,864,79 feet from the radius point of
said curve; thence southeasterly 84.09 feet along said
curve to its point of tangency, said point of tangency
being South 35 degrees 07 minutes 27 seconds West
2,864.79 feet from the radius point of said curve;
thence South 54 degrees 52 minutes 33 seconds East
325.80 feet to the point of curvature of a curve to the
left and to the POINT OF BEGINNING of true description,
said point of curvature of a curve to its point of said
curves, in each southeasterly, easterly, northeasterly,
northerly, and northwesterly 142.07 feet along said
curve to its point of tangency, said point of tangency
being North 07 degrees 07 minutes 27 seconds East 15.00
feet from the radius point of said curve, thence
northeasterly, northerly, and northeasterly 53.82 feet
along said curve to its point of tangency, said point
of tangency being North 53 degrees 40 seconds West
55.00 feet from the radius point of said curve; thence
North 34 degrees 04 minutes 20 seconds East 270.31 feet
to the point of curvature of a curve left, said point
of curvature being South 53 thence northeasterly,
northerly, and northwesterly 43.49 feet along said
curve to its point of tangency, said point of tangency
being North 35 degrees 05 minuted 56 seconds East 40.00
feet from the radius point of said curves, thence North
56 50 minutes 04 seconds West 117.95 feet to the point
of curvature of a curve tot he right, said point of
curvature being South 35 degrees 05 minutes 54 seconds
West northeasterly 50.84 feet along said curve to its
point of tangency, said point of tagency being North 57
degrees 40 minutes 52 seconds West 40.00 feet from the
radius to the poing of curvature of a curve left, said
point of curvature being South thence northeasterly,
northerly and northwesterly 60.76 feet along said curve
to its point of tangency, said curve point of tangency,
said point of tangency being North 35 degrees 17
minutes 10 seconds East 40.00 feet from the radius
point of said curve; thence North 54 degrees
description, Containing 1,017 acres, more or less.
Excepting therefrom the property described on the following two
(2) pages.
CURVE 11 CURVE 12
-------- --------
? - 02'10'41' ? - 01'40'?4'
R - 1?37.02' R - ???.7?'
T - 31.12' T - 42.05'
L - 62 23' L - ?4.0?'
C - S52'06'19'E- 62.22' C - S54'02'0?'E- 84.08'
CURVE 13 CURVE 14
-------- ---------
? - 148"0000" ? - 58'??'??'
R - 55.00' R - ??.00'
T - 191.81' T - 31.11'
L - 142.07' L - 5?.?2'
C - N?1'07'27'E-105.74 C - N0?'3?'S3'E-54.1S'
CURVE 15 CURVE 16
-------- --------
? - ?0'??'23' ? - ?7'0?'12'
R - 40,00' R - 40.00'
T - 40,??' T - 38.06'
L - ?3,49' L - ?0.84'
C - N09'21'52'W-57.03' C - N1?'15'28'W-S?.1S'
CURVE 17
--------
? - 87'01'58'
R - 40.00'
T - 37.?8'
L - 60.7?'
C - N11'11'?1'W-??.0?'
EXHIBIT A, PAGE 10 OF 14
<PAGE>
LAND DESCRIPTION
Redevelopment Commission Sublease
Water Department Perimeter Road
version 2
24 MAY 96
A 32.00 foot-wide strip of land being a part of the Northwest Quarter of Section
6, Township 37 North, Range 9 West located in North Township, Lake County,
Indiana the centerline of which is described as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,091.63 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West to a point on
a non-tangent curve concave to the northeast, said point being South 38 degrees
59 minutes 01 second West 1,637.02 feet from the radius point of said curve;
thence southeasterly 62.23 feet along said curve to its point of tangency, said
point of tangency being South 36 degrees 48 minutes 21 seconds West 1,637.02
feet from the radius point of said curve; thence South 53 degrees 11 minutes 39
seconds East 650.47 feet to the point of curvature of a curve to the left, said
point of curvature being South 36 degrees 48 minutes 21 seconds West 2,864.79
feet from the radius point of said curve; thence southeasterly 84.09 feet along
said curve to its point of tangency, said point of tangency being South 35
degrees 07 minutes 27 seconds West 2,864.79 feet from the radius point of said
curve; thence South 54 degrees 52 minutes 33 seconds East 325.80 feet to the
point of curvature of a curve to the left, said point of curvature being South
35 degrees 07 minutes 27 seconds West 55.00 feet from the radius point of said
curve; thence southeasterly, easterly, northeasterly, northerly, and
northwesterly 142.07 feet along said curve to its point of tangency, said point
of tangency being North 67 degrees 07 minutes 27 seconds East 55.00 feet from
the radius point of said curve; thence North 22 degrees 52 minutes 33 seconds
West 53.74 feet to the point of curvature of a curve to the right, said point of
curvature being South 67 degrees 07 minutes 27 seconds West 55.00 feet from the
radius point of said curve; thence northwesterly, northerly, and northeasterly
56.62 feet along said curve to its point of tangency, said point of tangency
being North 53 degrees 53 minutes 40 seconds West 55.00 feet from the radius
point of said curve; thence North 35 degrees 06 minutes 20 seconds East 15.67
feet to the POINT OF BEGINNING of this centerline description; thence North 36
degrees 06 minutes 20 seconds East 254.64 feet to the point of curvature of a
curve left, said point of curvature being South 53 degrees 53 minutes 40 seconds
East 40.00 feet from the radius point of said curve; thence northeasterly.
EXHIBIT A, PAGE 11 OF 14
<PAGE>
northerly, and northwesterly 63.49 feet along said curve to its point of
tangency, said point of tangency being North 35 degrees 09 minutes 56 seconds
East 40.00 feet from the radius point of said curve; thence North 54 degrees 50
minutes 04 seconds West 117.95 feet to the point of curvature of a curve to the
right, said point of curvature being South 35 degrees 09 minutes 56 seconds West
40.00 feet from the radius point of said curve; thence northwesterly, northerly,
and northeasterly 60.84 feet along said curve to its point of tangency, said
point of tangency being North 57 degrees 40 minutes 52 seconds West 40.00 feet
from the radius point of said curve; thence North 32 degrees 19 minutes 08
seconds East 330.68 feet to the point of curvature of a curve to the left, said
point of curvature being South 57 degrees 40 minutes 52 seconds East 40.00 feet
from the radius point of said curve; thence northeasterly, northerly, and
northwesterly 60.76 feet along said curve to its point of tangency, said point
of tangency being North 35 degrees 17 minutes 10 seconds East 40.00 feet from
the radius point of said curve; thence North 54 degrees 42 minutes 50 Seconds
West 227.88 to the TERMINUS of this centerline description. Containing 0.820
acres, more or less.
EXHIBIT A, PAGE 12 OF 14
<PAGE>
LAND DESCRIPTION
parking premises
Hammond Water Works
version 2
14 JUN 96
A part of the Northwest Quarter of Section 6, Township 37 North, Range 9 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West, thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,091.63 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West to a point on
a non-tangent curve concave to the northeast, said point being South 38 degrees
59 minutes 01 second West 1,637.02 feet from the radius point of said curve;
thence southeasterly 62.23 feet along said curve to its point of tangency, said
point of tangency being South 36 degrees 48 minutes 21 seconds West 1,637.02
feet from the radius point of said curve; thence South 53 degrees 11 minutes 39
seconds East 273.37 feet, thence North 35 degrees 17 minutes 19 seconds East
178.74 feet, thence South 54 degrees 42 minutes 50 seconds East 19.00 feet to
the POINT OF BEGINNING of this description; thence South 54 degrees 42 minutes
50 seconds East 107.00 feet; thence South 35 degrees 17 minutes 10 seconds West
78.47 feet; thence North 54 degrees 42 minutes 50 seconds West 107.00 feet
thence North 35 degrees 17 minutes 10 seconds East 78.47 feet to the POINT OF
BEGINNING containing 0.193 acres, more or less.
EXHIBIT A, PAGE 13 OF 14
<PAGE>
LAND DESCRIPTION
landscape/???? ????????
Hammond Water Works
Version 1
? JUN 96
A ???? of the Northwest Quarter of Section 6, ???????? 17 North Range 10 West
thence,North 01 degrees 01 minute 03 seconds West (????????? bearing) 6,?16?
feet along the East Line of said Section 1 and along the West Line of Section 6,
???????? 37 North, Range ? West to a point on a non- tangency curve concave to
the northeast,said point being South 38 degrees 5? minutes 01 seconds West
1,?57.02 feet from the radius point of said curve thence southeasterly 62.??
feet along said curve to its point of tangency, said point of tangency being
South ?? degrees ?? minutes 21 seconds West 1,6?7.02 feet from the radius
point of said curve thence South ?? degrees 11 minutes 38 seconds East ?50.47
feet to the point of curvature of a curve to the left, said point of curvature
being South ?? degrees ?? minutes 2? seconds West 2.??4.79 feet from the
radius point of said curve thence southeasterly ?4.0? feet along said curve to
its point of, said point of tangency being South ?? degrees 07 minutes 27
seconds West 2,???.7? feet from the radius point of said curve thence South 54
degrees 52 minutes ?? seconds East ???.?? feet to the point of curvature of a
curve to the left, said point of curvature being South 35 degrees 07 minutes 27
seconds West 55.00 feet from the radius point of said curve thence
southeasterly,easterly, northeasterly, northerly, and northwesterly, 142.07 feet
along said curve to its point of tangency, said point of tangency being North
?7 degrees 07 minutes 27 seconds East ??.00 feet from the radius point of said
curve; thence North 22 degrees 52 minutes ?3 seconds West ?3.74 feet to the
point of curvature of a curve to the right, said point of curvature being South
?7 degrees 07 minutes 27 seconds West ??.00 feet from the radius point of said
curve; thence northwesterly, northerly, and northeasterly 56.?2 feet along said
curve to its point of tangency, said point of tangency being North 5? degrees
?? 40 seconds West 55.00 feet from the radius point of said curve: thence North
?? degrees 0? minutes 20 seconds East 270.31 feet to the point of curvature of
a curve left, said point of curvature being South 53 degrees ?? minutes 40
seconds East 40.00 feet from the radius point of said curve: thence
northeasterly, northerly and northwesterly ?1?? feet along said curve to its
point of tangency, said point of tangency being North ?? degrees 0? minutes
5? seconds East 40.00 feet from the radius point of said curve thence North 54
degrees 50 minutes 04 seconds West 117.?5 feet to the point to the point of
curvature of a curve to the right, said point of curvature being South 35
degrees 0? minutes ?? seconds West 40.00 feet from the radius point of said
curve: thence northwesterly, northerly and northeasterly ?0.84 feet along said
curve to its point tangency, said point tangency being North 5? degrees 40
minutes 52 seconds West 40.00 feet from the radius point of said curve: thence
North 32 degrees 1? minutes 0? seconds East 330.68 feet to the point of
curvature of a curve to the left, said point of curvature being South 57 degrees
40 minutes 52 seconds East 40.00 feet from the radius point of said curve:
northeasterly, northerly, and northwesterly ?0.7? feet along said curve to its
point of tangency, said point of tangency being North 3? degrees 17 minutes
10 seconds East 40.00 feet from the radius point of said curve : thence South
3? degrees 17 minutes 10 seconds West 1?.00 along radius ??? of said curve to
the POINT OF BEGINNING of the description thence South ?? degrees 17 minutes 10
seconds West 1?.00 feet along the radius ??? of said curve: thence North 54
degrees 42 minutes 50 seconds West 227.8? feet thence North ?5 degrees 1?
minutes ?7 seconds East 1?.00 feet thence South ?4 degrees 42 minutes 50
seconds East 227.8? feet to the POINT OF BEGINNING containing 0.078 acres, more
or less.
CURVE 11 CURVE 12 CURVE 13
- --------- ---------- ----------
? - 02?0'41' ? - 01'40'S?' ? - 14?00'00'
R _ 1??7.02' R - 28?4,7?' R - ??.00'
T - ??.1?' T - 42.0?' T - 1?1.?1"
L - ?2???' L - ?4.0?' L -142.0?'
C - S????????- ?????' C - ??4'02'06? ?40?' C - N51'0?'??E- 10?.74'
CURVE 14 CURVE 15 CURVE 16
- --------- ---------- ----------
? - ?8'?8'??' ? - ?0' ??'?3' ? - 87'0??2'
R - ??.00' R - 40.00' R - 40.00'
T - ?1.11' T - 40.??' T - ??.0?
L - ??.?2' L - ??.??' L - ?0.84'
C - N0?'3?'??E- 54,15' C - N0?'21' ?2'W?57.0?' C - N1?'15'?8'?-??.1S'
CURVE 17
- ---------
? - ?7'01"??'
R - 40.00'
T - 37.??'
L - ??.78'
C - N11'?1'?1'W-??.0?'
EXHIBIT A, Page 14 of 14
End of File
<PAGE>
EXHIBIT 4.8(h)
SECURITY AGREEMENT AND PLEDGE OF STOCK
--------------------------------------
(Indiana)
THIS SECURITY AGREEMENT AND PLEDGE OF STOCK ("Agreement") is made and
entered into this 17th day of June, 1998, by and between EMPRESS ENTERTAINMENT,
INC., a Delaware corporation, hereinafter referred to as "Debtor", and WELLS
FARGO BANK, National Association, as Agent Bank on behalf of itself and each of
the Banks described hereinbelow, hereinafter referred to as "Secured Party".
R E C I T A L S:
- - - - - - -
A. Reference is made to that certain Credit Agreement, dated as of
June 17, 1998 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), by and among EMPRESS ENTERTAINMENT, INC., a Delaware
corporation, EMPRESS CASINO JOLIET CORPORATION, an Illinois corporation and
EMPRESS CASINO HAMMOND CORPORATION, an Indiana corporation (collectively the
"Borrowers"), the Lenders therein named (each, together with their respective
successors and assigns, individually being referred to as a "Lender" and
collectively as the "Lenders"), WELLS FARGO BANK, National Association, as the
swingline lender (herein in such capacity, together with its successors and
assigns, the "Swingline Lender"), WELLS FARGO BANK, National Association, as the
issuer of letters of credit thereunder (herein in such capacity, together with
its successors and assigns, the "L/C Issuer"), and WELLS FARGO BANK, National
Association, as administrative and collateral agent for the Lenders, Swingline
Lender and L/C Issuer (herein, in such capacity, called the "Agent Bank" and,
together with the Lenders, Swingline Lender and L/C Issuer, collectively
referred to as the "Banks").
B. In this Agreement, all capitalized words and terms not otherwise
defined herein shall have the respective meanings and be construed herein as
provided in Section 1.01 of the Credit Agreement and any reference to a
provision of the Credit Agreement shall be deemed to incorporate that
<PAGE>
provision as a part hereof in the same manner and with the same effect as if the
same were fully set forth herein.
C. Debtor is the owner of all of the outstanding stock (collectively
the "Pledged Stock") of the following Subsidiary (collectively the "Pledged
Subsidiary"):
(i) Empress Casino Hammond Corporation, an Indiana corporation
("ECHC") represented by Stock Certificate No. 27, dated June 11, 1998,
for one thousand (1,000) shares of the common voting capital stock of
ECHC.
D. This Agreement is governed by the Indiana Gambling Act and the
regulations promulgated ("Indiana Gaming Laws") as enforced by the Indiana
Gaming Commission ("Indiana Gaming Authority") as to the Pledged Stock of ECHC.
AGREEMENTS:
----------
In consideration of the terms and conditions set forth herein and the
making of the Bank Facilities by Banks, the parties agree as follows:
1. As security for the performance by Borrowers of each and every
term and provision contained in the Credit Agreement and the due and punctual
payment of the Revolving Credit Note, the Swingline Note and all other amounts
owing under any of the Loan Documents (collectively the "Secured Obligations"),
and, subject to the receipt of all necessary approvals under the Indiana Gaming
Laws, Debtor hereby pledges, assigns, and transfers as security the Pledged
Stock to Secured Party, and grants to Secured Party a security interest in the
Pledged Stock, together with all rights, products, proceeds, dividends,
redemption payments, liquidation payments, instruments and any other securities
derived therefrom, substituted therefor or otherwise subject to the lien hereof
pursuant to the provisions hereof, all of which shall be treated as part of the
Pledged Stock and collateral hereunder.
-2-
<PAGE>
2. Debtor represents and warrants that: (a) the Pledged Stock
represents all of the issued and outstanding shares of the common voting capital
stock of the Pledged Subsidiary and the Pledged Subsidiary has not issued any
shares of non-voting capital stock, (b) the Pledged Subsidiary has not
authorized or issued any class of stock other than common voting and non-voting
stock, (c) it is the legal, record and beneficial owner of, has good and
marketable title to and has the right to pledge and create a security interest
in the Pledged Stock, subject to Indiana Gaming Authority approval, (d) the
Pledged Stock is validly issued, fully paid and non-assessable and is not
subject to any lien, pledge, charge, encumbrance or security interest (other
than the security interest hereby created in favor of Secured Party) or right or
option on the part of any third Person to purchase or otherwise acquire the
Pledged Stock or any part thereof nor is the Pledged Stock subject to any
restriction relating to the voting or other rights attaching thereto, other than
those imposed by and under the Indiana Gaming Laws and under the EEI
Stockholders Agreement, (e) this Agreement and the delivery of the Pledged
Stock to Secured Party creates a valid and enforceable perfected lien on all of
the Pledged Stock in favor of the Secured Party for the benefit of the Banks,
(f) except for the required consents and approvals under the Indiana Gaming Laws
specified herein, no consent, filing, recording or registration is required to
perfect the lien purported to be created by this Agreement, and (g) each of the
representations and warranties contained in Article IV of the Credit Agreement
is true and correct. Debtor covenants and agrees that it will defend Secured
Party's right, title and lien in and to the Pledged Stock against the claims and
demands of all Persons and that it will have like title to and right to pledge
any other property at any time hereafter pledged to the Secured Party as Pledged
Stock.
3. Concurrently herewith, Debtor shall cause to be delivered to
Secured Party the certificate or certificates evidencing the Pledged Stock (each
individually a "Certificate" and collectively the "Certificates") together with
an Irrevocable Stock Power with respect to each of the
-3-
<PAGE>
Certificates in the form of Exhibit A, affixed hereto and by this reference
incorporated herein and made a part hereof (the "Stock Power"). Each Certificate
evidencing the Pledged Stock shall be delivered to Secured Party in suitable
form for transfer by delivery and shall be accompanied by a duly executed Stock
Power, all in form and substance reasonably satisfactory to Secured Party.
Secured Party agrees to hold all Certificates evidencing the Pledged Stock
within the State of Nevada (or such other location or locations as may be
required by the Indiana Gaming Authority) at all times during the life of this
Agreement, and to make such certificates available for inspection by the Indiana
Gaming Authorities or its agents or representatives.
4. Upon the full and complete satisfaction of the Revolving Credit
Note, the Swingline Note and all other amounts owing under any of the Loan
Documents and termination of the Bank Facilities, Secured Party shall release
its security interest hereunder, and will deliver to Debtor the Certificates
evidencing the Pledged Stock, together with all Stock Powers, and Secured Party
shall, at the request and expense of Debtor, file such documents and take such
action as may be required by law or as Debtor may reasonably request, at
Debtor's expense, to release Secured Party's security interest in the Pledged
Stock.
5. Secured Party shall have with respect to the Pledged Stock the
rights and obligations of a secured party under the Nevada Uniform Commercial
Code, Chapter 104 of the Nevada Revised Statutes (the "Code"). Such rights
shall include, without limitation:
a. The right, subject to the approval of the Indiana Gaming
Authority, upon the occurrence of an Event of Default, to have the Pledged Stock
or any part thereof transferred to its own name or to the name of its nominee;
or, if any Pledged Stock has been sold by Secured Party in foreclosure after the
occurrence of an Event of Default, to have such Pledged Stock transferred to and
issued in the name of the purchaser.
-4-
<PAGE>
b. The right, subject to the approval of the Indiana Gaming
Authority, upon the occurrence of an Event of Default, to sell, assign or
deliver as many shares of the Pledged Stock as is reasonably necessary to repay
the defaulted Secured Obligations owing the Banks, together with expenses,
including, but not limited to, reasonable selling expenses, broker's fees and
attorneys' fees attendant upon such sale and repayment, at public or private
sale, as Secured Party, in its sole option, may elect, either for cash or on
credit, without assumption of any credit risk and without demand or
advertisement, unless otherwise required by law.
6. Debtor hereby covenants, agrees and acknowledges that an "Event
of Default" shall exist under this Agreement upon the occurrence of any of the
following events or conditions, and without the necessity of any demand or
notice except as may be expressly required herein or under the Credit Agreement
or under applicable law:
a. the occurrence of any "Event of Default" as defined and
described in the Credit Agreement; and/or
b. any default hereunder not cured within thirty (30) days
after written notice from Agent Bank.
7. Subject to the Indiana Gaming Laws, at any private or public sale
of the Pledged Stock or any part thereof, Secured Party may purchase and pay for
the same by cancellation of a principal amount of the Credit Facility and Notes
or other amounts owing under the Credit Agreement and Loan Documents equal to
the purchase price and free of any right of redemption on the part of Debtor.
For the purpose of this Paragraph, the "Purchase Price" where the Pledged Stock
is listed on any publicly traded stock exchange ("Exchange"), shall be deemed to
be the mean of the high and low selling prices in that Exchange on the date of
sale. Secured Party may, in its sole and absolute discretion, sell all or any
part of the Pledged Stock at private sale in such manner and under such
circumstances as Secured Party may deem necessary or advisable in order that the
sale may be lawfully conducted.
-5-
<PAGE>
Without limiting the foregoing, Secured Party may (i) approach and negotiate
with a limited number of potential purchasers; and (ii) restrict the prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing the Pledged Stock for their own account for investment and not with a
view to the distribution or resale thereof. In the event that the Pledged Stock
is sold at private sale, Debtor agrees that if the Pledged Stock is sold for a
price which Secured Party in good faith believes to be reasonable under the
circumstances then existing, then: (aa) the sale shall be deemed to be
commercially reasonable in all respects; (bb) the credit against the Secured
Obligations, to which Debtor may be entitled, shall not exceed the purchase
price; and (cc) Secured Party shall not incur any liability or responsibility to
Debtor in connection therewith, notwithstanding the possibility that a
substantially higher price might have been realized at a public sale. Debtor
recognizes that a ready market may not exist for the Pledged Stock if it is not
regularly traded on a recognized securities exchange, and that a sale by Secured
Party of the Pledged Stock for an amount substantially less than a pro rata
share of the fair market value of the issuer's assets minus liabilities may be
commercially reasonable in view of the difficulties that may be encountered in
attempting to sell the Pledged Stock. Secured Party agrees, however, that the
Debtor shall have all rights, including rights of notice, provided by the Code.
In any case where notice is required, thirty (30) days notice shall be deemed to
be reasonable notice. In the event of any sale hereunder, Secured Party shall
apply the proceeds in the order set forth in Section 7.03 of the Credit
Agreement. Secured Party may resort to the Pledged Stock or any portion thereof
with no requirement on the part of Secured Party to proceed first against any
other Person or Collateral or under any other Security Documentation.
Additionally, (a) Debtor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the Pledged
Stock, whether before or after sale hereunder and all rights, if any, of
marshalling of the Pledged Stock and any other security for the obligations of
the Borrowers under the Credit Agreement or otherwise;
-6-
<PAGE>
(b) neither Secured Party nor any of the Banks shall be liable for failure to
collect or realize upon any or all of the Pledged Stock or for any delay in so
doing nor shall any of them be under any obligation to take any action
whatsoever with regard thereto; (c) Debtor agrees it will not sell or otherwise
dispose of or create any lien on any portion of the Pledged Stock (except as
permitted by the Credit Agreement); and (d) Debtor agrees to promptly take all
actions required under applicable law to maintain the perfection of the security
interest in the Pledged Stock in the event that such stock is or becomes
uncertificated and to take such actions as the Secured Party reasonably deems
necessary or desirable to effect the foregoing and to permit the Secured Party
to exercise any of its rights and remedies hereunder.
8. While the Pledged Stock shall continue to be held by Secured
Party pursuant to this Agreement, so long as no Event of Default has occurred
and remains continuing and until written notice from Secured Party: (a) Debtor
shall be entitled to exercise any rights or subscription privileges accruing to
it as the owner of the Pledged Stock which are not inconsistent with the terms
of this Agreement or the Credit Agreement or any other Loan Document or any
other instrument or agreement referred to herein or therein, or which would have
the effect of impairing the position or interest of Secured Party, any Bank or
holder of the Revolving Credit Note or Swingline Note, provided, however, that
any additional shares of stock purchased or otherwise received on account of any
such rights or subscription privileges shall be delivered to Secured Party,
together with an appropriate Stock Power, and shall be treated as part of the
Pledged Stock; and (b) Debtor shall be entitled to receive and to retain and use
any dividends or distributions paid in respect of the Pledged Stock. The
Secured Party shall also be entitled to receive directly, and retain as part of
the Collateral:
a. all other or additional stock or securities or property
(other than cash) paid or distributed by way of dividend in respect of the
Pledged Stock;
-7-
<PAGE>
b. all other or additional stock or securities or property
(other than cash) paid or distributed in respect of the Pledged Stock by way of
stock-split, spin-off, split-up, reclassification, combination of shares or
similar rearrangement; and
c. all other or additional stock or other securities or
property (other than cash) which may be paid in respect of the Pledged Stock by
reason of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
9. Notwithstanding anything to the contrary herein, the parties
hereto will at all times comply with all Securities and Exchange Commission,
Indiana Gaming Authority and other regulatory requirements with respect to its
ownership and pledge of the Pledged Stock.
10. Upon any Event of Default hereunder, subject to applicable law
and the requirements of the Indiana Gaming Authority: (a) Secured Party shall
have the right, upon written notice to Debtor, but shall not be required, to
vote or give its consent with respect to the voting of any or all of the Pledged
Stock, and in such event and for such purpose Debtor hereby irrevocably
constitutes and appoints Secured Party the proxy and attorney-in-fact of the
Debtor, with full power of substitution to do so, and (b) Secured Party shall be
entitled to receive all dividends and distributions (other than Tax
Distributions) and apply the same toward payment of the Secured Obligations
owing under the Bank Facilities in the manner and sequence set forth in Section
7.03 of the Credit Agreement.
11. The Debtor represents to Secured Party that the Debtor has made
its own arrangements for keeping informed of changes or potential changes
affecting the Pledged Stock including, but not limited to, rights to convert,
rights to subscribe, payment of dividends, reorganization or other exchanges,
tender offers and voting rights, and the Debtor agrees that Secured Party shall
have no responsibility or
-8-
<PAGE>
liability for informing the Debtor of any such changes or potential changes or
for taking any action or omitting to take any action with respect thereto.
12. No renewal, extension or modification of the Credit Agreement,
Revolving Credit Note, Swingline Note or any other Loan Document, no release or
surrender of any Pledged Stock as security hereunder, no invalidity,
irregularity or unenforceability of all or any part of this Agreement or any
other Loan Document and no delay in exercising any right or power with respect
thereto or hereunder shall affect the rights of Secured Party with respect to
the Pledged Stock or any part thereof. Secured Party's rights, liens and
security interests hereunder shall continue unimpaired and Debtor shall be and
remain obligated in accordance with the terms hereof notwithstanding any
compromise or other indulgence granted by Secured Party. The Debtor hereby
waives notice of acceptance of this Agreement and of extensions of credit,
loans, advances, or other financial assistance made by Banks to Borrowers. The
Debtor further waives presentment and demand for payment on the Notes, protest
and notice of dishonor or default with respect to the Notes or any other Loan
Document, and all other notices to which the Debtor might otherwise be entitled
except as herein otherwise expressly provided or as otherwise provided in the
Credit Agreement or Notes.
13. All notices and other communications provided to any party hereto
under this Agreement shall be in writing or by facsimile and addressed,
delivered or transmitted to such party at its address or facsimile number set
forth in the Credit Agreement or at such other address or facsimile number as
may be designated by such party in a notice to the other parties. Any notice,
if mailed and properly addressed with postage prepaid, shall be deemed given
when received; any notice, if transmitted by facsimile, shall be deemed given
when transmitted.
14. Whether or not the transactions contemplated hereunder are
completed, the Debtor will pay all expenses relating to this Agreement,
including, but not limited to:
-9-
<PAGE>
a. All reasonable costs, outlays, attorneys' fees and expenses
of any kind and character had or incurred in the enforcement or defense of any
of the provisions of this Agreement, the preparation for, negotiations
regarding, consultations concerning, or the defense of legal proceedings
involving any claim or claims made or threatened against Secured Party or any
Bank arising out of this transaction or the protection of the Pledged Stock
securing the Bank Facilities or advances made hereunder;
b. All taxes levied against or paid by Secured Party (other
than taxes on, or measured by, the income of Secured Party) and all filing and
recording fees, costs, expenses which may be incurred by Secured Party in
respect of the filing and/or recording of any document or instrument relating to
the transactions described in this Agreement.
15. Debtor agrees that it will duly execute and deliver to Secured
Party any additional documents which may be reasonably required by Secured Party
to give full effect to, perfect or protect the pledge and security interest
granted to Secured Party hereunder or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to the Pledged Stock and
to preserve, protect and maintain the Pledged Stock, including, without
limitation, payment of all taxes, assessments and other charges imposed on or
relating to the Pledged Stock. Debtor hereby consents and agrees that the
issuers of the Pledged Stock, or any registrar or transfer agent or trustee for
any of the Pledged Stock, shall be entitled to accept the provisions of this
Agreement as conclusive evidence of the right of Secured Party to effect any
transfer or exercise any right hereunder, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by Debtor or any other
Person to such issuers or to any such registrar or transfer agent or trustee.
16. Debtor agrees to assist Secured Party in obtaining all approvals
of the Indiana Gaming Authority or any other Governmental Authority that are
required by law for or in connection with any action or transaction contemplated
by
-10-
<PAGE>
this Agreement or by the Code and, at Secured Party's request after and during
the continuance of an Event of Default, to prepare, sign and file with the
Indiana Gaming Authority the transferor's portion of any application or
applications for consent to the transfer of control thereof necessary or
appropriate under applicable Indiana Gaming Laws for approval of any sale or
transfer of the Pledged Stock pursuant to the exercise of Secured Party's
remedies hereunder and under the Loan Documents.
17. This Agreement shall be binding upon and inure to the benefit of
the Debtor, Secured Party and their respective legal representatives, heirs,
successors and assigns, and the authorized transferees and holders of the
Revolving Credit Note and the Swingline Note; provided, however, that Debtor may
not assign or transfer any of its rights or obligations hereunder without the
prior written consent of Secured Party.
18. This Agreement, including the exhibits and other agreements
referred to herein, constitutes the entire agreement between the parties
relating to the subject matter hereof and cannot be changed or terminated
orally, and shall be deemed effective as of the date it is accepted by Secured
Party.
19. Other than with respect to compliance with the Indiana Gaming
Laws and the requirements of the Indiana Gaming Authorities, this Agreement
shall be governed and construed under the laws of the State of Nevada in all
respects, including, but not limited to, matters of perfection, construction,
validity, performance and discharge. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
said laws. However, if any provision of this Agreement shall be held to be
prohibited or invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
-11-
<PAGE>
20. Time is of the essence of this Agreement.
21. Debtor and Secured Party further agree that:
(a) This Agreement shall not be effective until it is approved
by the Indiana Gaming Authority. In this regard, Debtor represents to Secured
Party that it has obtained all necessary consents from the Indiana Gaming
Authority for the execution of this Agreement, delivery to Secured Party of the
Pledged Stock and execution and delivery of the Stock Powers; and
(b) Notwithstanding approval by the Indiana Gaming Authority
pursuant to paragraph (a), other approvals may be required before certain
transactions relating to this Agreement may occur, including, but not limited
to, the following:
(1) Any re-registration or action similar to re-
registration of the Pledged Stock must be approved in advance by the
Indiana Gaming Authority;
(2) Any foreclosure, sale, transfer, or other disposition
of the Pledged Stock must be approved in advance by the Indiana Gaming
Authority, and shall not be effective unless so approved; and
(3) The payment or receipt of any money or other thing of
value constituting any part of the consideration for the transfer or
acquisition of the Pledged Stock must be approved in advance by the
Indiana Gaming Authority, except that such consideration may be placed
in escrow pending the necessary approvals.
22. Debtor agrees to indemnify and hold harmless Secured Party in
accordance with the provisions of
-12-
<PAGE>
Section 5.14 of the Credit Agreement which is incorporated by this reference as
though fully set forth herein.
23. This Security Agreement and Pledge of Stock may be executed in
any number of separate counterparts with the same effect as if the signatures
hereto and hereby were upon the same instrument. All such counterparts shall
together constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first hereinabove written.
DEBTOR: SECURED PARTY:
EMPRESS ENTERTAINMENT, INC., WELLS FARGO BANK,
a Delaware corporation National Association,
Agent Bank
By /s/ John Costello
-----------------------------
By /s/ Joseph Brady
---------------------------
Joseph Brady
Senior Vice President
-13-
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
Before me, a Notary Public in and for the State of Illinois,
personally appeared John Castello, the Vice President - CFO of EMPRESS
ENTERTAINMENT, INC., who being first duly sworn, acknowledged the execution of
the foregoing Security Agreement and Pledge of Stock for and on behalf of said
EMPRESS ENTERTAINMENT, INC.
WITNESS my hand and Notarial Seal this 17th day of June, 1998.
[OFFICIAL SEAL] /s/ Joanne Bruen
-------------------------------
Printed Name JOANNE BRUEN
-------------------
I am a resident of Cook County, Illinois.
My commission expires: 10/14/00
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
This instrument was acknowledged before me on June 17, 1998, by
JOSEPH BRADY as Senior Vice President of/for WELLS FARGO BANK, National
Association.
/s/ Joanne Bruen [OFFICIAL SEAL]
- ----------------------------
Notary Public
-14-
<PAGE>
IRREVOCABLE STOCK POWER
-----------------------
KNOW ALL MEN BY THESE PRESENTS:
That EMPRESS ENTERTAINMENT, INC., a Delaware corporation, for value
received has bargained, sold, assigned and transferred and by these presents
does bargain, sell, assign and transfer unto ___________________, one thousand
(1,000) shares of the common voting stock of Empress Casino Hammond Corporation,
an Indiana corporation, standing in its name on the books of said corporation
represented by Certificate No. ________ herewith and does hereby constitute and
appoint Wells Fargo Bank, National Association, Agent Bank, as its true and
lawful attorney, IRREVOCABLY, for it and in its name and stead to sell, assign,
transfer, hypothecate, pledge and make over all or any part of the said stock
and for that purpose to make and execute all necessary acts of assignment and
transfer thereof, and to substitute one or more persons with like full power,
hereby ratifying and confirming all that said Attorney shall lawfully do by
virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand on this ______ day of
__________, 1998.
EMPRESS ENTERTAINMENT, INC.,
a Delaware corporation
By _________________________
Name _______________________
Title ______________________
EXHIBIT A
TO FORM OF SECURITY AGREEMENT
AND PLEDGE OF STOCK
<PAGE>
STATE OF ____________ )
) SS
COUNTY OF ___________ )
Before me, a Notary Public in and for the State of ______________,
personally appeared ________________, the ________________ of EMPRESS
ENTERTAINMENT, INC., who being first duly sworn, acknowledged the execution of
the foregoing Irrevocable Stock Power for and on behalf of said EMPRESS
ENTERTAINMENT, INC.
WITNESS my hand and Notarial Seal this ______ day of ______________,
1998.
_____________________
Printed Name ________
I am a resident of _____________ County, ____________.
My commission expires: _____________________
-2-
<PAGE>
EXHIBIT 4.8(i)
TRADEMARK SECURITY AGREEMENT
----------------------------
THIS TRADEMARK SECURITY AGREEMENT ("Agreement") is made and entered
into this 17 day of JUNE, 1998 by and among EMPRESS ENTERTAINMENT, INC., a
Delaware corporation ("EEI"), EMPRESS CASINO JOLIET CORPORATION, an Illinois
corporation ("ECJC"), and EMPRESS CASINO HAMMOND CORPORATION, an Indiana
corporation ("ECHC"), all of which are hereinafter collectively referred to as
"Debtors", and WELLS FARGO BANK, National Association, as Agent Bank on behalf
of the Lenders, the Swingline Lender and the L/C Issuer, all of which are
described hereinbelow (hereinafter referred to, in such capacity, as "Agent
Bank").
R E C I T A L S:
A. Reference is made to that certain Credit Agreement executed
concurrently, or substantially concurrent, herewith (as it may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
by and among Debtors, as Borrowers, the Lenders therein named (each, together
with their respective successors and assigns, individually being referred to
herein as a "Lender" and collectively as the "Lenders"), the Swingline Lender
therein named (together with its successors and assigns, the "Swingline
Lender"), the L/C Issuer therein named (together with its successors and
assigns, the "L/C Issuer"), and Agent Bank (with the Lenders, the Swingline
Lender, the L/C Issuer and Agent Bank being collectively referred to herein as
the "Banks").
B. In this Agreement, all capitalized words and terms not otherwise
defined herein shall have the respective meanings and be construed herein as
provided in Section 1.01 of the Credit Agreement and any reference to a
provision of the Credit Agreement shall be deemed to incorporate that provision
as a part hereof in the same manner and with the same effect as if the same were
fully set forth herein.
C. The Debtors desire to grant a security interest to Agent Bank in
all of their now owned, or hereafter acquired, right, title and interest in, and
to, the Trademarks and the Copyrights as well as the proceeds of all such
collateral.
<PAGE>
NOW, THEREFORE, in consideration of the premises and the terms and
conditions contained herein, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the respective meanings set forth below and unless the context otherwise
requires, capitalized terms used herein without definition shall have the
respective meanings assigned to such terms in the Credit Agreement.
"Abandoned and De Minimis Common Law Trademarks" shall mean those
common law Trademarks owned or previously owned by any of the Debtors that have
been abandoned and have not more than de minimis value.
"Abandoned and De Minimis Trademarks" shall mean those Trademarks
owned or previously owned by any of the Debtors that have been abandoned and
have not more than de minimis value.
"Agreement" shall mean this Trademark Security Agreement, including
all amendments, supplements and extensions hereto and restatements hereof
entered into at any time and from time to time and any exhibits or schedules to
any of the foregoing.
"Copyrights" mean all copyrights, copyright registrations, and
copyright applications, which, in each case, are now or hereafter filed with the
Copyright Office of the Library of Congress or any similar office or agency of
any other countries or used in the United States, any state, territory or
possession thereof or any other country, and all renewals thereof, which are
owned by Debtors, or any of them.
"Empress Banquets License" shall mean that certain License Agreement
under date of May 20, 1998 by and between The Empress, Ltd. and ECJC pursuant to
which ECJC has granted to The Empress, Ltd. the right to continued use of the
"Empress Banquets" and "Empress" trademarks at its facility in Addison,
Illinois.
"Hammond License" shall mean that certain Trademark License Agreement
dated as of June 30, 1997 by and between ECJC and ECHC pursuant to which ECHC is
granted a license to utilize some of the Trademarks.
2
<PAGE>
"Intellectual Property Collateral" shall mean all of the property and
interests in property described in Section 2.01 hereof which shall, from time to
time, secure any of the Secured Obligations.
"Loan Documents" shall have the meaning set forth by Section 1.01 of
the Credit Agreement.
"Secured Obligations" shall mean all indebtedness, obligations and
liabilities of Debtors, or any of them, arising under the Credit Agreement, the
Notes and/or any other Loan Document and any other indebtedness, obligation or
liability of Debtors, or any of them, which may be secured by any of said Loan
Documents, all as such obligations or Loan Documents may be modified, amended,
supplemented, restated, increased or extended from time to time.
"Trademarks" shall mean all right, title and interest of the Debtors,
or any of them, in the United States and throughout the world, in and to all of
their respective now owned and hereafter acquired trademarks, service marks,
trade names, trade dress, colors, designs, logos, indicia, corporate names,
company names, business names, fictitious business names, trade styles and/or
other source and/or business identifiers and all registrations and applications
to register the same, except applications based on an intent to use until the
filing of a verified statement of use accepted by the U.S. Trademark Office, and
all renewals thereof, and the goodwill and business relating to such
applications, which Trademarks include, without limitation, all such items which
are particularly described by Schedule A attached hereto and incorporated by
reference herein.
Section 2. Intellectual Property Collateral; General Terms.
-----------------------------------------------
2.01. Security Interest. To secure the prompt payment of the
-----------------
Secured Obligations, the Debtors hereby grant to the Agent Bank a first priority
continuing security interest in and to all of the following property and
interests in property of the Debtors, or any of them, whether now owned or
existing, hereafter acquired or arising, or in which the Debtors, or any of
them, now or hereafter have any rights, including without limitation any such
property used in or useful to the businesses of Debtors, or any of them, or the
operation of such businesses, and wheresoever located (collectively, the
"Intellectual Property Collateral"):
3
<PAGE>
a. all right, title and interest of Debtors, or any of
them, in and to the Trademarks (other than Abandoned and De Minimis Trademarks);
b. all right, title and interest of Debtors, or any of
them, in and to all: (i) income, royalties, damages and payments now and
hereafter due and/or payable under all Trademarks; and (ii) rights accruing
during the term of this Agreement to sue and collect damages and payments for
past or future infringements of the Trademarks;
c. all the goodwill in the businesses symbolized by the
Trademarks;
d. all right, title and interest of Debtors, or any of
them, in and to the Copyrights;
e. all right, title and interest of Debtors, or any of
them, in and to all (i) income, royalties, damages and payments now and
hereafter due and/or payable under all Copyrights and (ii) rights accruing
during the term of this Agreement to sue and collect damages and payments for
past or future infringement of the Copyrights; and
f. all proceeds of any of the foregoing.
2.02. Existing Trademarks and Copyrights. All presently known
----------------------------------
registered Trademarks or pending applications for Trademarks, registered
Copyrights and pending applications for copyright registration in which the
Debtors, or any of them, have an interest, other than Abandoned and De Minimis
Trademarks, are listed on Schedule A attached hereto and made a part hereof.
All presently known common law Trademarks in which the Debtors, or any of them,
have an interest, other than Abandoned and De Minimis Common Law Trademarks, are
also listed on Schedule A attached hereto and made a part hereof.
2.03. Initial Filing. This Agreement may, in the sole and
--------------
absolute discretion of Agent Bank, be filed for recordation in the United States
Patent and Trademark Office, with respect to Trademarks and in the U.S.
Copyright Office with respect to Copyrights. Upon request by the Agent Bank, the
Debtors shall cause this Agreement to be filed with the copyright or trademark
registration office of the States of Illinois and Indiana and any province,
territory or country in which the Agent Bank, in its reasonable discretion,
determines that registration and/or recordation is necessary or
4
<PAGE>
appropriate to perfect the Agent Bank's security interest in the Intellectual
Property Collateral.
Section 3. Representations and Warranties.
------------------------------
3.01. General Representations and Warranties. The Debtors
--------------------------------------
represent and warrant to the Agent Bank that:
a. Title to Intellectual Property Collateral.
-----------------------------------------
(i) The Debtors own all Intellectual Property Collateral,
subject to no assignments, liens, licenses or other security
interests, encumbrances or title defects, infringements or other
adverse claims, other than: (i) the Hammond License; (ii) the
Empress Banquets License; (iii) the ECJC Permitted Encumbrances;
(iv) the ECHC Permitted Encumbrances; and (v) or other adverse
claims which would not reasonably be expected to result in
Material Adverse Effect. None of the Debtors have signed, filed
or recorded any assignment in favor of any person (other than
Agent Bank) with respect to any of the Intellectual Property
Collateral, in the United States Patent and Trademark Office, in
the U.S. Copyright Office or in the copyright or trademark office
of any state, province, territory or country; and
(ii) All federally registered or state registered
Intellectual Property Collateral now owned by the Debtors, or any
of them, are listed in Schedule A hereto and all material common
law Intellectual Property Collateral known to and now owned by
the Debtors, or any of them, is listed in Schedule B hereto.
b. Due Execution. The Debtors have the right and power
-------------
and are duly authorized and empowered to enter into, execute and deliver and
perform this Agreement and the transactions contemplated hereby; this Agreement
has been duly and validly executed by the Debtors and constitutes a legal, valid
and binding obligation of Debtors enforceable in accordance with its terms.
5
<PAGE>
c. Perfection. This Agreement creates a valid security
----------
interest in the Intellectual Property Collateral securing the repayment of the
Secured Obligations and all filing and other actions necessary in order to
perfect and protect such security interest have been duly taken or will be taken
immediately following the date hereof.
3.02. Trademark and Copyright Representation and Warranty. All
---------------------------------------------------
Intellectual Property Collateral consisting of applications for registrations of
Trademarks and Copyrights have been duly and properly filed and all Intellectual
Property Collateral consisting of registrations of Trademarks and Copyrights
(including, without limitation, any and all renewals, reissues, continuations or
divisions thereof, as the case may be) have been duly and properly filed and
issued (other than pending applications) and are valid and enforceable.
3.03. Warranty and Reaffirmation of Warranties and
--------------------------------------------
Representations; Survival of Warranties and Representations. Each request for a
- -----------------------------------------------------------
Borrowing made by the Debtors, or any of them, pursuant to the Loan Documents
shall constitute a reaffirmation, as of the date of said request, of the
representations and warranties of the Debtors contained in Section 3 hereof with
respect to Intellectual Property Collateral then existing (except to the extent
that Debtors may otherwise notify Agent Bank, in writing, concurrently with, or
prior to, any such request). All representations and warranties of the Debtors
contained in this Agreement shall survive the execution, delivery and acceptance
of this Agreement by the parties thereto.
Section 4. Covenants.
---------
4.01. Affirmative Covenants. Unless the Agent Bank otherwise
---------------------
agrees in writing, the Debtors covenant that they shall:
a. Delivery of Documents. Furnish to the Agent Bank, from
---------------------
time to time upon its request, a complete status report of all Intellectual
Property Collateral and deliver to the Agent Bank copies of any such
Intellectual Property Collateral and other documents concerned with or related
to the prosecution, protection, maintenance, enforcement and issuance of the
Intellectual Property Collateral, and such other data and information as the
Agent Bank from time to time may reasonably request bearing upon or related to
the Intellectual Property Collateral.
6
<PAGE>
b. Defense of Title. Use all reasonable efforts to
----------------
defend their title to the Intellectual Property Collateral against all claims of
all Persons whomsoever which could reasonably be expected to have a Material
Adverse Effect (as defined in the Credit Agreement) on the business of any of
the Debtors, except with respect to liens and other rights created or permitted
hereby.
c. Execute Addenda. Promptly upon the filing of any
---------------
application for registration of a trademark or copyright and upon the issuance
of any trademark registration, they shall, unless the Agent Bank agrees
otherwise in writing:
(i) execute an addendum to this Agreement, which addendum
shall identify such trademark or copyright application as
necessary to perfect a security interest in such trademark or
copyright application;
(ii) with respect to United States trademark or copyright
applications, cause this Agreement and such addendum to be
recorded in the United States Patent and Trademark Office or U.S.
Copyright Office, as appropriate; and
(iii) upon request by the Agent Bank, cause this Agreement
and such addendum to be recorded with the trademark or copyright
registration office of any state in the United States in which
the Agent Bank determines, in its sole discretion, that filing is
necessary or advisable to perfect the Agent Bank's security
interest in the Intellectual Property Collateral subject to such
addendum.
d. Affix Notices. Whenever any trademarks or trade
-------------
names are used by or on behalf of any of them, use their best efforts to affix
or cause to be affixed, where necessary to protect all of their right, title and
interest in any such trademark or trade name, a notice that the mark is a
trademark, a service mark or is registered, which notice shall be in a form
accepted or required by the trademark marking laws of each province, territory
or country in which the mark is so used.
7
<PAGE>
e. Notice of Abandonment. Notify the Agent Bank as soon
---------------------
as reasonably practicable of its intention to voluntarily suspend use of or
voluntarily abandon any material trademarks, trade names or applications or
registrations thereof (it being understood that suspension of use or abandonment
of a material trademark, trade name or application or registration thereof shall
be deemed reasonable by the Agent Bank under circumstances in which the Debtors
reasonably believe that: (i) continued use or maintenance of the trademark,
trade name or application or registration thereof will subject them to liability
to a third party for wilful infringement; and (ii) the contemplated suspension
or abandonment represents a reasonable alternative to the contemplated
liability), and obtain the written permission of the Agent Bank to such
abandonment, which permission shall not be unreasonably withheld or delayed. In
the event that such permission to abandon is reasonably withheld by the Agent
Bank, the Debtors shall, at their own expense, take all action reasonably
necessary to continue and maintain each item of Intellectual Property Collateral
in force.
4.02. Negative Covenants. Without the Agent Bank's prior
------------------
written consent, which may be withheld by Agent Bank in its sole discretion,
none of the Debtors shall license (excluding the Hammond License and the Empress
Banquets License, and also excluding licenses made in the ordinary course of
business), transfer, convey or encumber any interest in or to the Intellectual
Property Collateral or take any action, or permit any action to be taken, or
fail to take any action which individually or in the aggregate would affect the
validity or enforceability of any material portion of the Intellectual Property
Collateral or of the security interest of the Agent Bank therein or which would
otherwise violate, in any material respect, any provision of any Loan Document.
4.03. Notice of Proceedings. The Debtors shall promptly notify
---------------------
the Agent Bank, in writing, of any suit, action or proceeding brought against
any of them relating to, concerned with, or affecting any of the Intellectual
Property Collateral, if such suit, action or proceeding constitutes or becomes a
Material Adverse Effect. Debtors shall, upon request from Agent Bank, deliver to
the Agent Bank a copy of all pleadings, papers, orders or decrees theretofore
and thereafter filed in any such suit, action or proceeding, and shall keep the
Agent Bank fully advised in writing of the progress of any such suit, action or
proceeding.
8
<PAGE>
4.04. Infringement. In the event of any infringement of the
------------
Intellectual Property Collateral by other persons, or in the event of any other
conduct by other persons to the detriment of the Intellectual Property
Collateral, which has constituted or in the future could reasonably be expected
to constitute a Material Adverse Effect on the business and operations of any of
the Debtors, the Debtors shall promptly notify the Agent Bank in writing of such
infringement or other conduct and the full nature, extent, evidence and
circumstances of such infringement or other conduct known to any of the Debtors.
The Debtors shall take all reasonable steps to protect their interests and
rights in such Intellectual Property Collateral and shall provide the Agent Bank
written notice of all material occurrences and developments with respect to such
Intellectual Property Collateral. If reasonably requested by the Agent Bank,
the Debtors shall send to the person committing such infringement or engaging in
such other conduct, no later than thirty (30) calendar days after such request,
a letter, in form and substance reasonably satisfactory to the Agent Bank, by
personal delivery or by U.S. first-class registered or certified mail (return
receipt requested) demanding that such person cease and desist forthwith from
committing such infringement or engaging in such other conduct. In the event
that (a) within forty-five (45) calendar days thereafter, good faith
negotiations between the Debtors and such other person have not commenced
regarding the cessation of such infringement or other conduct or (b)
negotiations have commenced within such period, but thereafter cease to be
carried on in good faith; the Debtors shall, at the request of Agent Bank,
promptly bring and diligently and vigorously maintain an action to stop such
infringement and other conduct (to the extent that, and so long as, such
diligent and vigorous maintenance of an action is reasonable in light of the
materiality of such infringement or other conduct and in light of the
materiality of the item(s) of Intellectual Property Collateral which are subject
to such infringement or other action). The Debtors shall diligently and
vigorously maintain such action until a decision is obtained from which no
review or appeal can or has been taken or until such action is resolved
otherwise in a manner reasonably satisfactory to the Agent Bank. If any Debtor
requests Agent Bank to approve an action as reasonable and Agent Bank does not
object thereto within ten (10) days after receipt of such request, specifying
the reasons for such objection, the same shall be deemed approved. If
reasonably requested by the Agent Bank, subject to other provisions of this
Agreement, the Debtors shall assume and continue, at their own cost and expense,
through
9
<PAGE>
counsel reasonably acceptable to the Agent Bank, full and complete
responsibility for the prosecution of any infringement of (or other conduct
materially and adversely affecting) the Intellectual Property Collateral and
otherwise defend and take all reasonable steps to assure the grant, validity and
enforceability of the Intellectual Property Collateral, whether by judicial or
nonjudicial means.
4.05. Payment of Charges and Claims. If the Debtors, at any
-----------------------------
time or times hereafter, shall fail to pay charges in respect of the
Intellectual Property Collateral when due or promptly obtain the discharge of
such charges or of any lien, claim or encumbrance asserted against the
Intellectual Property Collateral, the Agent Bank may, without waiving or
releasing any obligation or liability of the Debtors hereunder or any Event of
Default under any of the Loan Documents, in its sole discretion, at any time or
times thereafter, make such payment, or any part thereof, or obtain such
discharge and take any other action with respect thereto which the Agent Bank
reasonably deems advisable (provided that Agent Bank has first given Debtors
notice of the proposed payment or action and Debtors have failed to make such
payment or take such action within ten (10) Banking Business Days thereafter).
All sums so paid by the Agent Bank and any expenses incurred by the Agent Bank
on its behalf, including reasonable attorneys' fees, court costs, expenses and
other charges relating thereto, shall be payable, upon demand, by the Debtors to
the Agent Bank and shall be Secured Obligations secured by the Collateral under
any of the Loan Documents, including, without limitation, the Intellectual
Property Collateral, and shall bear interest, accruing from the date of such
demand, at the Default Rate which is set forth in the Credit Agreement.
Section 5. Agent Bank's Rights and Remedies.
--------------------------------
5.01. Remedies. Upon the occurrence and continuation of an
--------
Event of Default under any of the Loan Documents, the Agent Bank shall have and
may exercise any one (1) or more of the rights and remedies provided to it under
any of the Loan Documents or provided by any applicable law, including but not
limited to, all of the rights and remedies of a secured party under the Uniform
Commercial Code and the Debtors hereby agree to make the Intellectual Property
Collateral available to the Agent Bank, to extent applicable, at a place to be
designated by the Agent Bank which is reasonably convenient to the parties,
authorize the Agent Bank to take possession of the Intellectual Property
Collateral
10
<PAGE>
with or without demand and with or without process of law and, following at
least ten (10) days' notice to Debtors of the time and place of sale, to sell
and dispose of the same at public or private sale and to apply the proceeds of
such sale to the Secured Obligations in the order specified in the Credit
Agreement, or as otherwise agreed to by the Agent Bank. In addition to the
foregoing, if an Event of Default shall occur and be continuing, the Agent Bank
may, by written notice to the Debtors, take any or all of the following actions
to the extent permitted by law: (i) declare the entire right, title and
interest of the Debtors in and to each of the Copyrights and the Trademarks, the
goodwill in the business symbolized by the Trademarks, together with all
trademark rights and rights of protection to the same to be immediately vested
in the Agent Bank, in which case the Debtors agree to execute an assignment in
form and substance reasonably satisfactory to the Agent Bank of all their
rights, title and interest in and to the Copyrights and the Trademarks to the
Agent Bank; (ii) take and use or sell the Copyrights and Trademarks and the
goodwill of any of the Debtors' businesses symbolized by the Trademarks and the
right to carry on the businesses and use of the assets of any of the Debtors in
connection with which the Copyrights and Trademarks have been used; and (iii)
direct the Debtors to refrain, in which event the Debtors shall refrain, from
using the Copyrights and Trademarks in any manner whatsoever, directly or
indirectly, and, if requested by the Agent Bank, change the Debtors' corporate
name(s) to eliminate therefrom any use of any Trademark and execute such other
and further documents that the Agent Bank may request to further confirm this
and to transfer ownership of the Trademarks and registrations and any pending
trademark application in the United States Patent and Trademark Office and/or
the Copyrights and registrations and any pending applications for copyright
registration in the U.S. Copyright Office to the Agent Bank.
5.02. Appointment of the Agent Bank as the Debtors' Lawful Attorney.
-------------------------------------------------------------
Upon the occurrence and during the continuation of an Event of Default under any
of the Loan Documents, the Debtors irrevocably designate, make, constitute and
appoint the Agent Bank (and all persons designated by the Agent Bank) as the
true and lawful attorney (and agent-in-fact) of each of them, and the Agent
Bank, or the Agent Bank's agent, may, without notice to any of them take any
action as the Agent Bank reasonably deems necessary under the circumstances to
file, prosecute, defend, issue, maintain, enforce or otherwise take action in
respect to the Intellectual Property Collateral as required or permitted
11
<PAGE>
hereby, or to carry out any other obligation or duty of any of the Debtors under
this Agreement, including, without limitation, the right to execute any
assignment of the Intellectual Property Collateral in the event any of the
Secured Obligations are accelerated in accordance with any of the Loan
Documents, and the employment of counsel. The Debtors shall pay all reasonable
fees and expenses, including reasonable attorneys' fees and expenses, incurred
by the Agent Bank in connection with such action and such fees and expenses
shall form part of the Secured Obligations.
Section 6. Remedies Cumulative; etc. The rights, remedies and
-------------------------
benefits of the Agent Bank herein expressly specified are cumulative and not
exclusive of any other rights, remedies or benefits which the Agent Bank may
have under this Agreement, the Credit Agreement or any other Loan Document or at
law, in equity, by statue or otherwise. The obligations of Debtors hereunder
shall be joint and several.
Section 7. Expenses. The Debtors will pay the Agent Bank all
--------
reasonable expenses (including reasonable expenses for legal services of every
kind) of, or incidental to: (i) the preparation or filing of, or the
performance or enforcement of any of the provisions of, this Agreement; (ii) or
to the extent permitted hereunder, any actual or attempted sale, or any
exchange, enforcement, collection, compromise or settlement of any of the
Intellectual Property Collateral or the care of the Intellectual Property
Collateral or defending or asserting the rights and claims of the Agent Bank in
respect of the Collateral, by litigation or otherwise, including but not limited
to reasonable expenses of insurance and the reasonable fees and expenses of
counsel for the Agent Bank. All such expenses shall be payable to Agent Bank
upon demand and shall, at any time when there is an uncured Event of Default
existing, accrue interest, from the date of such demand, at the Default Rate as
defined in the Credit Agreement. Debtors' obligation to repay such expenses and
accrued interest thereon shall be Secured Obligations secured by the
Intellectual Property Collateral and the Collateral under the Loan Documents.
Section 8. Indemnity. Debtors hereby agree to jointly and severally
---------
indemnify, protect, defend and save harmless Agent Bank and each of the Banks as
well as their respective directors, trustees, officers, employees, agents,
attorneys and stockholders (individually an "Indemnified Party" and
collectively, the "Indemnified Parties") from and against, any and all losses,
damages, expenses or liabilities
12
<PAGE>
of any kind or nature from any investigations, suits, claims, demands or other
proceedings, including reasonable counsel fees incurred in investigating or
defending such claim, suffered by any of them and caused by, relating to,
arising out of, resulting from, or in any way connected with: (i) the
preparation or administration of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from or other realization upon,
any of the Intellectual Property Collateral, (iii) the exercise or enforcement
of any of the rights, or the defense thereof, of the Agent Bank hereunder or
under any of the Loan Documents, or (iv) the failure of the Debtors to perform
or observe any of the provisions hereof. It is provided, however, that Debtors
shall not be obligated to indemnify, protect, defend or save harmless an
Indemnified Party if, and to the extent, the loss, damage, expense or liability
was caused by (a) the gross negligence or willful misconduct of such Indemnified
Party, or (b) the breach of this Agreement or any other Loan Document by such
Indemnified Party or the breach of any laws, rules or regulations by such
Indemnified Party (other than those breaches of laws arising from any Debtor's
default). In case any action shall be brought against any Indemnified Party
based upon any of the above and in respect to which indemnity may be sought
against Debtors, Agent Bank shall promptly notify Debtors in writing, and
Debtors shall assume the defense thereof, including the employment of counsel
selected by Debtors and reasonably satisfactory to Agent Bank, the payment of
all costs and expenses and the right to negotiate and consent to settlement.
Upon reasonable determination made by an Indemnified Party that such counsel
would have a conflict representing such Indemnified Party and Debtors, the
applicable Indemnified Party shall have the right to employ, at the expense of
Debtors, separate counsel in any such action and to participate in the defense
thereof. Debtors shall not be liable for any settlement of any such action
effected without their consent, but if settled with Debtors' consent, or if
there be a final judgment for the claimant in any such action, Debtors agree to
indemnify, defend and save harmless such Indemnified Parties from and against
any loss or liability by reason of such settlement or judgment. In the event
that any Person is adjudged by a court of competent jurisdiction not to have
been entitled to indemnification under this Section 8, it shall repay all
amounts with respect to which it has been so adjudged. If and to the extent
that the indemnification provisions contained in this Section 8 are
unenforceable for any reason, the Debtors hereby agree to make the maximum
contribution to the payment and satisfaction of such obligations that is
permissible under applicable law.
13
<PAGE>
The provisions of this Section 8 shall survive the termination of this
Agreement, the repayment of the Bank Facilities and the assignment or
subparticipation of all or any portion of the Bank Facilities.
Section 9. No Delay; Waiver, etc. No delay on the part of the Agent
----------------------
Bank in exercising any power or right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any power or right hereunder
preclude other or further exercise thereof or the exercise of any other power or
right. To the fullest extent permitted by law and except as otherwise provided
for in this Agreement, the Debtors waive: (a) all rights to notice of a hearing
prior to the Agent Bank's taking possession or control of, or to the Agent
Bank's reply, attachment or levy upon, the Intellectual Property Collateral or
any bond or security which might be required by any court prior to allowing the
Agent Bank to exercise any of the Agent Bank's remedies; and (b) the benefit of
all valuation, appraisement and exemption laws. The Debtors acknowledge that
they have been advised by counsel with respect to this Agreement, the waivers
contained herein and the transactions evidenced by this Agreement.
Section 10. Further Assurances. The Debtors agree to do such further
------------------
acts and things and to pay the reasonable costs and expenses in connection with
such acts (including, without limitation, the recording of the security interest
with respect to the Intellectual Property Collateral with any trademark office
in any state, province, territory or country), and to execute and deliver or
cause to be executed and delivered such supplemental documentation, additional
conveyances, assignments, and similar instruments, as the Agent Bank may at any
time reasonably request in connection with the administration and enforcement of
this Agreement or with respect to the Intellectual Property Collateral or any
part thereof or in order better to assure and confirm unto the Agent Bank its
rights and remedies hereunder or further to effectuate the purposes of this
Agreement and to pay the costs and expenses in connection with such acts. The
Debtors agree that, where permitted under applicable law, a carbon, photographic
or other reproduction, of this Agreement is sufficient as a recordable
assignment.
Section 11. Modification. No amendment hereof shall be effective
------------
unless contained in a written instrument signed by the parties hereto.
14
<PAGE>
Section 12. Notices. All notices and other communications provided
-------
to any party hereto under this Agreement shall be in writing or by facsimile and
addressed, delivered or transmitted to such party at its address or facsimile
number set forth below or at such other address or facsimile number as may be
designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted. If any facsimile is transmitted at a time which is not during
regular business hours at the location to which such facsimile is transmitted,
it shall be deemed transmitted on the next Banking Business Day.
If to Debtors: Empress Entertainment, Inc.
2300 Empress Drive
Joliet, Illinois 60436
Attn: Mike Hansen
Facsimile No. (815)744-5818
Empress Casino Joliet
Corporation
2300 Empress Drive
Joliet, Illinois 60436
Attn: Mike Hansen
Facsimile No. (815)744-5818
Empress Casino Hammond
Corporation
2300 Empress Drive
Joliet, Illinois 60436
Attn: Mike Hansen
Facsimile No. (815)744-5818
If to Secured
Party: Wells Fargo Bank, N.A.,
Agent Bank
Commercial Banking Division
One East First Street
Reno, NV 89501
Attn: Mr. Casey Potter, V.P.
Facsimile No. (702) 334-5637
15
<PAGE>
Section 13. Termination. This Agreement shall terminate upon the
-----------
occurrence of Bank Facility Termination and the due release and termination of
the Security Documentation which is executed and delivered concurrently, or
substantially concurrent, herewith. Upon any such termination the Agent Bank
will, at the Debtors' expense, execute and deliver to the Debtors such documents
as the Debtors shall reasonably request to evidence such termination and release
the security interest in the Intellectual Property Collateral granted hereunder;
provided, however, that this Agreement shall continue to be effective, or shall
be automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is reduced, rescinded or
must otherwise be restored or returned by the Agent Bank upon the bankruptcy,
insolvency, dissolution, liquidation or reorganization of the Debtors, or any of
them, or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to any of the Debtors
or any of their respective property or otherwise.
Section 14. Governing Law. This Agreement has been delivered and
-------------
shall be deemed to have been made in Illinois and, shall be interpreted, and the
rights and liabilities of the parties hereto determined, in accordance with the
laws of the State of Illinois (exclusive of choice and conflict of laws
provisions thereof to the extent allowed by law) except with respect to those
matters regarding the Intellectual Property Collateral to which the law of the
United States or the law of a foreign sovereign jurisdiction applies.
Section 15. Consent to Jurisdiction. Any suit, action or proceeding
-----------------------
against any of the Debtors arising out of or relating to this Agreement may be
instituted in any court of competent jurisdiction in the State of Illinois, and
the Debtors hereby irrevocably waive any objection which any of them may have or
hereafter have to the laying of such venue of any such suit, action or
proceeding and any claim that any such suit, action or proceeding has been
brought in inconvenient forum, and the Debtors hereby irrevocably submit the
person and property of each of them to the jurisdiction of any such court in any
such suit, action or proceeding. The Debtors hereby consent to the service of
process in any suit, action or proceeding of the nature referred to in this
paragraph by the mailing of the copy thereof by registered or certified mail,
postage prepaid, or personally delivering a copy thereof to the Debtors,
addressed to the addresses specified in Section 12 hereof or at such other
address(es) as the Debtors may hereafter specify to the Agent Bank in
16
<PAGE>
writing. Nothing in this paragraph shall affect the right of the Agent Bank to
serve process in any other manner permitted by law or limit the right of Agent
Bank to bring any such action or proceeding against any of the Debtors or their
property in the courts of any other jurisdiction.
Section 16. Successors and Assigns. Whenever in this Agreement any
----------------------
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party and all grants, covenants, promises and
agreements by or on behalf of any of the Debtors shall bind the successors and
assigns of such Debtors and inure to the benefit of the successors, assigns and
transferees of the Agent Bank, provided that none of the Debtors shall assign
all or any portion of their respective rights, duties or obligations hereunder
without the prior written consent of Agent Bank. The obligations of Debtors
hereunder shall be joint and several.
Section 17. Severability. If any part of this Agreement is contrary
------------
to, prohibited by or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible. If any part of this Agreement is
contrary to, prohibited by or deemed invalid under the applicable laws and
regulations of one (1) jurisdiction, such provisions shall not thereby be
rendered invalid in any other jurisdiction. Should any part or provision of
this Agreement be deemed by a court or other Governmental Authority of competent
jurisdiction to be an assignment of any trademark, trade name or registration
thereof so as to result in the Debtors' abandonment thereof, such part or
provision (but no other) shall be construed as providing for a security interest
and not an assignment, all in order to preclude such abandonment and, if such
construction shall not be accepted by such court or other Governmental Authority
such part or provision (but no other) shall be deemed null and void as to such
trademark, trade name or registration thereof in the jurisdiction where
abandonment might otherwise result.
Section 18. Headings. Section headings used herein are for
--------
convenience of reference only and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.
17
<PAGE>
Section 19. Subsequent Execution by ECJC. This Agreement is executed
----------------------------
by EEI and by ECHC on the date set forth above, and will be executed by ECJC on,
or before, the Closing Date. By execution of this Agreement, EEI and ECHC
acknowledge that they shall be jointly and severally liable for all obligations
of the Debtors hereunder, until such time as this Agreement is executed by ECJC
(if at all), at which time EEI, ECHC and ECJC shall be jointly and severally
liable for all obligations of the Debtors hereunder.
Section 20. Counterparts. This Agreement may be executed by the
------------
parties hereto in any number of separate counterparts with the same effect as if
the signatures hereto and hereby were upon the same instrument. All such
counterparts shall together constitute but one and the same document.
18
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
DEBTORS: AGENT BANK
EMPRESS ENTERTAINMENT, INC., WELLS FARGO BANK, National
a Delaware corporation Association, as Agent Bank
By /s/ John Costello By /s/ Joseph L. Brady
------------------------- -------------------------
Joseph L. Brady
Name John Costello Sr. Vice President
-----------------------
Title VP & ???
----------------------
EMPRESS CASINO JOLIET
CORPORATION, an Illinois
corporation
By__________________________
Name________________________
Title_______________________
EMPRESS CASINO HAMMOND
CORPORATION, an Indiana
corporation
By /s/ John Costello
-------------------------
Name John Costello
-----------------------
Title VP & ???
----------------------
19
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that JOHN COSTELLO, whose name as Vice President - CFO of
EMPRESS ENTERTAINMENT, INC., a Delaware corporation, is signed to the foregoing
instrument, and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument, he/she, as such officer and
with full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand and Official Seal this 17th day of June, 1998.
/s/ Joanne Bruen
--------------------------------
[Seal] Notary Public
My commission expires: 10/14/00
----------
Joanne Bruen
--------------------------------
(Printed Name)
Notary Public in and for the
State of ILLINOIS
-----------------------
[Seal]
20
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that __________________, whose name as ___________________
signed to the foregoing instrument, and who is known to me, acknowledged before
me on this day that, being informed of the contents of the instrument, he/she,
as such officer and with full authority, executed the same voluntarily for and
as the act of said corporation.
Given under my hand and Official Seal this _____ day of
________________, 1998.
______________________________
[Seal] Notary Public
My commission expires:________
______________________________
(Printed Name)
Notary Public in and for the
State of _____________________
21
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that John Costello, whose name as Vice President, CFO of
EMPRESS CASINO JOLIET CORPORATION, an Illinois corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this day
that, being informed of the contents of the instrument, he/she, as such officer
and with full authority, executed the same voluntarily for and as the act of
said corporation.
Given under my hand and Official Seal this 17th day of June, 1998.
/s/ Joanne Bruen
------------------------------
[Seal] Notary Public
My commission expires:10/14/00
--------
Joanne Bruen
------------------------------
(Printed Name)
Notary Public in and for the
State of ILLINOIS
---------------------
[SEAL]
22
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that JOSEPH ?????, whose name as SR Vice President of
WELLS FARGO BANK, National Association, a national banking association, is
signed to the foregoing instrument, and who is known to me, acknowledged before
me on this day that, being informed of the contents of the instrument, he, as
such officer and with full authority, executed the same voluntarily for and as
the act of said national banking association.
Given under my hand and Official Seal this 17th day of June, 1998.
/s/ Joanne Bruen
------------------------------
[Seal] Notary Public
My commission expires:10/14/00
Joanne Bruen
------------------------------
(Printed Name)
Notary Public in and for the
State of ILLINOIS
23
<PAGE>
UPDATED: 06/10/98
EMPRESS CASINO JOLIET CORPORATION
TRADEMARKS & SERVICE MARKS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MARK SERIAL FILING STATUS REGISTRATION INTERNATIONAL GOODS OR SERVICES
NO DATE DATE CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MISCELLANEOUS DESIGN 75/421,079 1/21/98 Pending 35,41,42 (IC 35) Promoting casino
OF A WOMEN WITH Assigned to Examiner services through the
EXTENDED HAIR 6/9/98 administration of incentive
award programs; (IC 41)
casino services, and
preferred customer program
in the Field of casino
services; (IC 42) hotel
services, restaurant
services and retail shop
services featuring novelties
and souvenirs
- ------------------------------------------------------------------------------------------------------------------------------------
THE EMPRESS 74/226,028 11/29/91 Registered, Reg. No. 8/15/95 41 Casino services, not
1,912,772. including dinner cruise ship
services
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS 74/255,169 03/13/92 Registered, Reg. No. 2/11/97 41 Casino services, not
2,034,357. including dinner cruise ship
services [originally --
casino services, excluding
those rendered on a cruise
ship]
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS 74/255,297 03/13/92 Registered, Reg. No. 10/21/97 41 Casino services
2,107,523
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS 74/495,726 03/01/94 Opposition dismissed; 41 Casino services, not
(child) Application to proceed. including dinner cruise ship
services
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MARK SERIAL FILING STATUS REGISTRATION INTERNATIONAL GOODS OR SERVICES
NO. DATE DATE CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EMPRESS (stylized) 74/495,672 03/01/94 Opposition 41 Casino services,
(parent) dismissed; not including
Application to dinner cruise ship
proceed. services
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS RIVER CASINO 74/495,673 03/01/94 Opposition 41 Casino services,
and design (woman dismissed; not including
with hair extended- Application to dinner cruise ship
black and white) proceed. services
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS RIVER CASINO 74/495,676 03/01/94 Opposition 41 Casino services,
and design (woman (child) dismissed; not including
with hair extended- Application to dinner cruise ship
teal and gold) proceed. services
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESSMILES 74/613,639 12/21/94 Registered, Reg. 1/2/96 35 Promoting casino
No. 1,945,518 services through the
administration of
incentive award
programs
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS 75/067,616 03/05/96 Registered, Reg. 9/30/97 42 Hotel services
No. 2,102,174
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS CASINO 75/070,785 03/11/96 Opposition 41 Casino services
dismissed;
Application to
proceed.
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS 75/059,142 02/16/96 Response to 6,20,21,30 (IC 6) Metal money
(Parent) Final Office Action clips, metal key
entered on 12/22/97 chains and metal
license plate
frames; (IC 20) non-
metal key chains and
non-metal license
plate frames; (IC
21) a full line of
glassware and mugs;
(IC 30) candy
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MARK SERIAL FILING STATUS REGISTRATION INTERNATIONAL GOODS OR SERVICES
NO. DATE DATE CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EMPRESS 75/957,808 02/16/96 Filed 2/16/96 3,9,16 & 34 (IC 3) Perfume; (IC 9)
(Child) Divided from binoculars and magnets;
75/059,142 (IC 16) pens pencils,
Non-final Office photography albums and
Action entered playing cards; (IC 34)
8/15/96 ashtrays, not of precious
metals
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS 75/976,982 02/16/96 Divided from 25 Clothing, namely t-shirts
(Child) 75/059,142 Sweat shirts, sweat
Approved for shorts, tank tops, hats
publication and jackets.
5/5/98
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS CLUB 75/061,443 02/23/96 Opposition No. 41 Preferred customer
107,106 Opposed program in the field of
by Caesars casino services
World's Inc.; (amendment to services
Filed new Motion pending)
to Extend Time
6/2/98
The Empress, Ltd.
Opposition
dismissed;
Application to
proceed.
- ------------------------------------------------------------------------------------------------------------------------------------
THE JEWEL OF THE GREAT 75/339,905 05/13/97 Publication date 41 Casino services
MIDWEST 03/24/98
- ------------------------------------------------------------------------------------------------------------------------------------
EXCITEMENT IS A LADY 75/329,326 05/13/97 Registered, Reg. 5/19/98 41 Casino services
NAMED EMPRESS No. 2,159,095
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EMPRESS STATE REGISTRATIONS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SERIAL FILING REGISTRATION INTERNATIONAL
MARK NO. DATE STATUS DATE CLASS GOODS OR SERVICES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THE GREAT ESCAPE Illinois Reg. No. 77,295 10/12/95 --- Casino services and
Registration restaurant services
- ------------------------------------------------------------------------------------------------------------------------------------
THE GREAT ESCAPE Illinois Reg. No. 77,294 10/12/95 --- Retail store services
Registration
- ------------------------------------------------------------------------------------------------------------------------------------
CHICAGOLAND'S Illinois Reg. No. 74,175 3/8/94 --- Casino services
CASINO Registration
- ------------------------------------------------------------------------------------------------------------------------------------
JUMPING JACKPOTS Indiana Reg. No. 1997-0231 5/12/97 --- Promotion of casino
Registration services
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS Illinois Reg. No. 069,775 1/22/92 --- Riverboat casino gambling,
Registration food and beverage, and
entertainment
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS Illinois Reg. No. 069,776 1/2/92 --- Riverboat casino gambling,
Registration food and beverage, and
entertainment
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
COMMON LAW TRADEMARKS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
MARK STATUS GOODS OR
SERVICES
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
YOU CAN Search performed Casino services
NEVER HAVE under request of and ancillary
TO MUCH FUN client services
- ----------------------------------------------------------------------------------------------
OASIS Search performed RV Park
under request of
client
- ----------------------------------------------------------------------------------------------
CLUB Search performed Nightclub
CHAMELEON under request of
client
- ----------------------------------------------------------------------------------------------
THE In use Restaurant
HARBORSIDE
STEAKHOUSE
- ----------------------------------------------------------------------------------------------
EMPRESSIVE In use Restaurant
BUFFET
- ----------------------------------------------------------------------------------------------
WAVES DELI In use Restaurant
- ----------------------------------------------------------------------------------------------
BLUE WATER In use Lounge
LOUNGE
- ----------------------------------------------------------------------------------------------
STEAKHOUSE In use Restaurant
ALEXANDRIA
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------
<S> <C> <C>
CAFE In Use Restaurant
CASABLANCA
- -------------------------------------------------------------------------------
MARRAKECH In Use Restaurant
BUFFET
- -------------------------------------------------------------------------------
PALACE In Use Gift shop
TREASURES
- -------------------------------------------------------------------------------
OASIS BAR In Use Lounge
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 4.8(k)
AFTER RECORDING THIS
INSTRUMENT SHOULD BE
RETURNED TO:
James L. Morgan, Esq.
Henderson & Morgan, LLC
164 Hubbard Way, Suite B
Reno, NV 89502
____________________________________________________________
SENIOR MORTGAGE, WITH ABSOLUTE ASSIGNMENT OF LEASES AND
-------------------------------------------------------
RENTS, SECURITY AGREEMENT AND FIXTURE FILING
--------------------------------------------
NOTICE: THIS MORTGAGE SECURES CREDIT IN THE INITIAL MAXIMUM PRINCIPAL
AMOUNT OF ONE HUNDRED MILLION DOLLARS ($100,000,000.00), TOGETHER WITH:
(i) INTEREST ON THE OUTSTANDING PORTION OF SAID PRINCIPAL AMOUNT; and (ii)
OTHER AMOUNTS DESCRIBED HEREIN. THE OBLIGATIONS SECURED HEREBY INCLUDE
REVOLVING CREDIT OBLIGATIONS WHICH PERMIT BORROWING, REPAYMENT AND
REBORROWING, ALL SUBJECT TO THE TERMS AND CONDITIONS OF THE CREDIT
AGREEMENT AND THE NOTES THAT ARE REFERRED TO HEREIN. INTEREST ON
OBLIGATIONS SECURED HEREBY ACCRUES AT RATES WHICH MAY FLUCTUATE FROM TIME
TO TIME.
THE PARTIES TO THIS SENIOR MORTGAGE, WITH ABSOLUTE ASSIGNMENT OF LEASES AND
RENTS, SECURITY AGREEMENT AND FIXTURE FILING, made as of June 30, 1998 (this
-------
"Mortgage"), are EMPRESS CASINO JOLIET CORPORATION, an Illinois corporation
("Mortgagor"), having its chief executive office at 2300 Empress Drive, Joliet,
Illinois, 60436, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent Bank on
behalf of the Lenders, the Swingline Lender and the L/C Issuer, all of which are
defined and described in the Credit Agreement referred to below ("Mortgagee"),
having an office at One East First Street, Reno, Nevada 89501.
ARTICLE 1. GRANT
1.1 GRANT. Upon the terms and conditions in this Mortgage, Mortgagor
-----
irrevocably grants, bargains, sells, conveys, assigns, mortgages and warrants to
Mortgagee, its successors and assigns, all of Mortgagor's right, title and
interest in all of the real property located in the City of Joliet, County of
Will, State of Illinois described on Exhibit A attached hereto and made a part
---------
<PAGE>
hereof (the "Land"), together with and including, without limitation:
(a) all right, title and interest of Mortgagor whether now owned or
hereafter acquired, in or to any real property lying within the right of
way of any street, open or proposed, which adjoins any of said Land and any
and all sidewalks, bridges, elevated walkways, tunnels, alleys, strips and
gores of real property adjacent to, connecting or used in connection with
any of said Land (collectively, the "Adjacent Property");
(b) all buildings, structures and all other improvements and fixtures
that are, or that may be hereafter erected or placed on, or in, the Land
and all right, title and interest of Mortgagor which is now owned or
hereafter acquired, in or to, all buildings, structures and all other
improvements and fixtures that are, or that may be hereafter, erected or
placed on, or in, any of the Adjacent Property (collectively, the
"Improvements");
(c) the Vessels (which are defined by Article 4 below), to the extent
that such Vessels are deemed to constitute real property under applicable
law (to such extent, collectively referred to herein as, the "Vessel Real
Property Interests");
(d) all right, title and interest of Mortgagor, whether now owned or
hereafter acquired in and to all of the present and future accretions,
alluvions, avulsions, batture and other riparian rights in, to, and with
respect to, the Des Plaines River (collectively, the "Riparian Rights");
(e) all water rights and conditional water rights that are now, or may
hereafter be, appurtenant to, used in connection with or intended for use
in connection with the Land, the Adjacent Property, the Improvements, the
Vessels and/or the Riparian Rights including, without limitation: (i)
ditch, well, pipeline, spring and reservoir rights, whether or not
adjudicated or evidenced by any well or other permit; (ii) all rights with
respect to groundwater underlying the Land or the Adjacent Property; (iii)
any permit to construct any water well, water from which is intended to be
used in connection with the Land, the Adjacent Property or the Vessels; and
(iv) all of Mortgagor's right, title and interest under any decreed or
pending plan of augmentation or water exchange plan (collectively, the
"Water Rights", and together with the Land, the Adjacent Property, the
Improvements, the Vessel Real Property Interests and the Riparian Rights,
the "Real Estate");
(f) all right, title and interest of Mortgagor in, and under, all
leases, subleases, licenses, concessions, franchises and other use or
occupancy agreements now or
2
<PAGE>
hereafter relating to any of the Real Estate and all renewals, extensions,
amendments, restatements and other modifications thereof (collectively, the
"Real Property Leases") subject, however, to the absolute assignment given
to Mortgagee in Article 3 hereof entitled Assignment of Leases and
Payments, and to which Article this grant to Mortgagee is subject and
subordinate;
(g) all present and future rents, issues, products, earnings,
revenues, payments, profits, royalties and other proceeds and income of the
Real Estate, and of any activities conducted thereon or in connection
therewith, regardless of whether such proceeds or income accrue by virtue
of the Real Property Leases, or otherwise (collectively, the "Rents")
subject, however, to the absolute assignment given to Mortgagee in Article
3 hereof entitled Assignment of Leases and Payments, and to which Article
this grant to Mortgagor is subject and subordinate; and
(h) all and singular the tenements, easements, hereditaments and
appurtenances now, or hereafter, belonging to or in any wise appertaining
to the Real Estate and/or the Rents and the reversion and reversions,
remainder and remainders thereof and all the estate, right, title, interest
or other claim which Mortgagor now has or hereafter may acquire of, in and
to the Real Estate, the Real Property Leases, the Rents and/or any part
thereof, with the appurtenances thereto (collectively, the "Other
Interests").
The Real Estate, the Real Property Leases, the Rents and the Other Interests are
hereinafter collectively referred to as the "Real Property".
TO HAVE AND TO HOLD the Real Property, properties, rights and
privileges hereby conveyed or assigned, or intended so to be, unto Mortgagee,
and its successors and assigns, in fee simple forever for the uses and purposes
herein set forth subject only to the ECJC Permitted Encumbrances (as defined in
the Credit Agreement).
1.2 ADDRESS. The address of the Real Property is: 2300 Empress Drive,
-------
Joliet, Illinois. However, neither the failure to designate an address nor any
inaccuracy in the address designated shall affect the validity or priority of
the lien of this Mortgage on the Real Property.
1.3 NON-AGRICULTURAL USE. Mortgagor represents and warrants to Mortgagee
--------------------
that the Real Property is not used principally for agricultural or farming
purposes.
3
<PAGE>
ARTICLE 2. OBLIGATIONS SECURED
2.1 OBLIGATIONS SECURED. Mortgagor makes this Mortgage for the purpose of
-------------------
securing the following obligations (collectively, the "Secured Obligations"):
(a) Payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)), of: (i) the
principal sum which is, at any time, advanced and unpaid under the Credit
Facility (as defined in the Credit Agreement), not to exceed One Hundred Million
Dollars ($100,000,000.00) at any one time, all on a reducing revolving line of
credit basis; (ii) interest and other charges accrued on said principal sum, or
accrued on interest and other charges then outstanding under the Credit Facility
(all including, without limitation, interest and other charges that would accrue
on such obligations, but for the filing of a petition in bankruptcy with respect
to Empress Entertainment, Inc., a Delaware corporation, Mortgagor, Empress
Casino Hammond Corporation, an Indiana corporation (collectively, "Borrowers"),
or any of them; and (iii) any other obligations of Borrowers, or any of them,
under the RLC Note referred to below; all according to the terms of a Revolving
Credit Promissory Note dated June 17, 1998 which is made by Borrowers and is
payable to the order of Mortgagee according to the tenor and effect of said
Revolving Credit Promissory Note, and all renewals, extensions, amendments,
restatements, replacements, substitutions and other modifications thereof
(hereinafter collectively referred to as the "RLC Note").
(b) Payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. (S) 362(a)), of: (i) the
principal sum which is, at any time, advanced and unpaid under the Swingline
Facility (as defined in the Credit Agreement), not to exceed Five Million
Dollars ($5,000,000.00) at any one time, all on a revolving line of credit
basis; (ii) interest and other charges accrued on said principal sum, or accrued
on interest and other charges then outstanding under the Swingline Facility (all
including, without limitation, interest and other charges that would accrue on
such obligations, but for the filing of a petition in bankruptcy with respect to
Borrowers, or any of them); and (iii) any other obligations of Borrowers, or any
of them, under the S/L Note referred to below; all according to the terms of a
Swingline Note dated June 17, 1998 which is made by Borrowers and is payable to
the order of Mortgagee according to the tenor and effect of said Swingline Note,
and all renewals, extensions, amendments, restatements, replacements,
substitutions and other modifications
4
<PAGE>
thereof (hereinafter referred to as the "S/L Note", and together with the RLC
Note, collectively referred to as the "Notes").
(c) Payment and performance of every obligation, warranty,
representation, covenant, promise and agreement of Borrowers, or any of them,
contained in that certain Certificate and Indemnification Regarding Hazardous
Substances, together with all extensions, renewals, amendments, restatements and
other modifications thereof, which is executed by Empress Entertainment, Inc.,
and Empress Casino Hammond Corporation under date of June 17, 1998 and which is
to be executed by Mortgagor on or before July 31, 1998.
(d) Payment and performance of every obligation, covenant, promise and
agreement of Mortgagor herein contained or incorporated herein by reference,
including any sums paid or advanced by Mortgagee or any of the Banks (which are
defined below) pursuant to the terms hereof.
(e) Payment of the expenses and costs incurred or paid by Mortgagee or
any of the Banks in the preservation and enforcement of the rights and remedies
of Mortgagee and the duties and liabilities of Mortgagor hereunder, including,
but not by way of limitation, reasonable attorney's fees, court costs, witness
fees, expert witness fees, collection costs, and reasonable costs and expenses
paid by Mortgagee or any of the Banks in performing for Mortgagor's account any
obligation of said Mortgagor.
(f) Payment of any sums which may hereafter be owing by Borrowers, or
any of them, to any of the Banks or any of their affiliates, under the terms of
any interest rate swap agreement, interest rate cap agreement, basis swap
agreement, forward rate agreement, interest collar agreement or interest floor
agreement to which Borrowers, or any of them, may be a party, or under any other
agreement or arrangement to which Borrowers, or any of them, may be a party,
which in each case is designed to protect Borrowers, or any of them, against
fluctuations in interest rates or currency exchange rates with respect to any
indebtedness secured by the Mortgage.
(g) Payment of additional sums and interest thereon which may
hereafter be loaned to Borrowers, or any of them, pursuant to the Credit
Agreement when evidenced by a promissory note or notes which recite that this
Mortgage is security therefor.
(h) Performance and payment of every obligation, warranty,
representation, covenant, agreement and promise of Borrowers, or any of them,
contained in that certain Credit Agreement (the "Original Credit Agreement")
executed under date of June 17, 1998 by Borrowers, the Lenders therein named
(each, together with their respective successors and assigns, individually
referred to herein as a "Lender" and collectively referred to
5
<PAGE>
herein as the "Lenders"), the Swingline Lender therein named (together with its
successors and assigns, referred to herein as the "Swingline Lender"), the L/C
Issuer therein named (together with its successors and assigns, referred to
herein as the "L/C Issuer"), and Wells Fargo Bank, National Association, as
administrative and collateral agent for the Lenders, the Swingline Lender and
the L/C Issuer (referred to herein, in such capacity, together with its
successors and assigns, as the "Agent Bank" and together with the Lenders, the
Swingline Lender and the L/C Issuer, collectively referred to herein as the
"Banks"), as well as performance and payment of every obligation, warranty,
representation, covenant, agreement and promise of Borrowers, or any of them,
contained in all extensions, renewals, amendments, restatements and other
modifications of the Original Credit Agreement (with the Original Credit
Agreement, as so extended, renewed, amended, restated, substituted and/or
otherwise modified being collectively referred to herein as the "Credit
Agreement").
2.2 FUTURE ADVANCES. This Mortgage is given for the purpose of securing,
---------------
among other things, loan advances which the Mortgagee may make to or for
Mortgagor pursuant and subject to the terms and provisions of the Credit
Agreement. The parties hereto intend that, in addition to any other debt or
obligation secured hereby, this Mortgage shall secure unpaid balances of loan
advances made after this Mortgage is delivered to the Recorder of Deeds, Will
County, Illinois, whether made pursuant to an obligation of Mortgagee or
otherwise, provided that such advances are within twenty (20) years from the
date hereof and in such event, such advances shall be secured to the same extent
as if such future advances were made on the date hereof, although there may be
no advance made at the time of execution hereof and although there may be no
indebtedness outstanding at the time any advance is made. Such loan advances
may or may not be evidenced by notes executed pursuant to the Credit Agreement.
2.3 OBLIGATIONS. The term "obligation" is used herein in its broadest and
-----------
most comprehensive sense and shall be deemed to include, without limitation, all
protective advances and all sums advanced to protect the Property or the lien of
this Mortgage or otherwise disbursed or incurred under the terms of the Loan
Documents (as defined in the Credit Agreement), together with all interest and
charges, prepayment charges (if any), late charges and loan fees at any time
accruing or assessed on any of said obligations. The principal portion of the
Secured Obligations shall not exceed an aggregate amount, at any one time
outstanding, of Two Hundred Million Dollars ($200,000,000); provided that the
foregoing limitation shall apply only to the lien upon the Real Property created
by this Mortgage, and it shall not in any manner limit, affect or impair any
grant of a security interest or other right in favor of the Mortgagee under the
provisions of: (i) this Mortgage; (ii) the Credit Agreement; or (iii) any other
security agreement at any time executed by Mortgagor.
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2.4 INCORPORATION. All terms of the Secured Obligations and the documents
-------------
evidencing such obligations are incorporated herein by this reference. All
persons who may have or acquire an interest in the Property (which is defined by
Article 4 below), or any portion thereof, shall be deemed to have notice of the
terms of the Secured Obligations, which terms include without limitation,
provisions which: (i) provide that the rate of interest on one or more Secured
Obligations may vary from time to time; and (ii) permit borrowing, repayment and
reborrowing.
ARTICLE 3. ASSIGNMENT OF LEASES AND PAYMENTS
3.1 ASSIGNMENT. Mortgagor hereby irrevocably assigns to Mortgagee all of
----------
Mortgagor's right, title and interest in, to and under: (a) the Real Property
Leases and, to the extent not included within the Real Property Leases, all
leases, subleases, licenses, concessions, franchises and other use or occupancy
agreements now or hereafter relating to any of the Vessels and all renewals,
extensions, amendments, restatements and other modifications thereof (all of
which are collectively referred to herein as the "Leases"); and (b) the Rents
and, to the extent not included within the Rents, all present and future rents,
issues, products, earnings, revenues, payments, profits, royalties and other
proceeds and income of the Vessels and of any activities conducted thereon (all
of which are collectively referred to herein as the "Payments"). This is a
present and absolute assignment, not an assignment for security purposes only,
and Mortgagee's right to the Leases and Payments is not contingent upon, and may
be exercised without possession of, the Real Property or the Vessels, and
without the commencement of a foreclosure action or the appointment of a
receiver or the institution of any legal proceeding of any kind whatsoever.
Furthermore, upon any Default (as defined by Article 6 below), Mortgagee shall
be entitled to receive pursuant to the foregoing assignment, and Mortgagor shall
be obligated to deliver to Mortgagee or its designee (including any receiver),
any and all Payments collected by Mortgagor which remain in the possession or
control of Mortgagor, whether or not commingled with other funds of Mortgagor,
and whether collected by Mortgagor before or after the occurrence of the
Default.
3.2 GRANT OF LICENSE. Mortgagee confers upon Mortgagor a license
----------------
("License") to collect and retain the Payments as they become due and payable,
until the occurrence of a Default (as hereinafter defined). Upon a Default, the
License shall be automatically revoked and Mortgagee may collect and apply the
Payments pursuant to Article 6 below, without notice and without taking
possession of the Real Property or of the Vessels. Mortgagor hereby irrevocably
authorizes and directs the lessees under the Leases to rely upon and comply with
any notice or demand by Mortgagee for the payment to Mortgagee of any rental or
other sums which may at any time become due under the Leases, or for the
performance of any of the lessees' undertakings under the Leases,
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and the lessees shall have no right or duty to inquire as to whether any Default
has actually occurred or is then existing hereunder. Mortgagor hereby relieves
the lessees from any liability to Mortgagor by reason of relying upon and
complying with any such notice or demand by Mortgagee.
3.3 EFFECT OF ASSIGNMENT. The foregoing irrevocable assign ment shall not
--------------------
cause Mortgagee to be: (a) a mortgagee in possession; (b) responsible or liable
for the control, care, management or repair of the Real Property, or the
Vessels, or for performing any of the terms, agreements, undertakings,
obligations, representations, warranties, covenants and conditions of the
Leases; (c) responsible or liable for any waste committed on the Real Property,
or the Vessels, by the lessees under any of the Leases or any other parties; (d)
responsible or liable for any dangerous or defective condition of the Real
Property or the Vessels; or (e) responsible or liable for any negligence in the
management, upkeep, repair or control of the Real Property or the Vessels
resulting in loss or injury or death to any lessee, licensee, employee, invitee
or other person. Mortgagee shall not directly or indirectly be liable to
Mortgagor or any other person as a consequence of: (i) the exercise or failure
to exercise any of the rights, remedies or powers granted to Mortgagee
hereunder; or (ii) the failure or refusal of Mortgagee to perform or discharge
any obligation, duty or liability of Mortgagor arising under any of the Leases.
3.4 REPRESENTATIONS AND WARRANTIES. Mortgagor represents and warrants
------------------------------
that: (a) to Mortgagor's knowledge, all existing Leases are in full force and
effect and are enforceable in accordance with their respective terms, and no
breach, default or event which would constitute a breach or default after notice
or the passage of time, or both, exists under any existing Leases on the part of
any party; (b) no rent or other payment under any existing Lease has been paid
by any lessee for more than one (1) month in advance; and (c) none of the
Mortgagor's interests under any of the Leases has been transferred or assigned.
3.5 COVENANTS. Mortgagor covenants and agrees at Mortgagor's sole cost
---------
and expense to: (a) perform the lessor's obligations contained in the Leases
and enforce by all available remedies performance by the lessees of the
obligations of the lessees contained in the Leases; and (b) execute and record
(or cause to be executed and recorded) such additional assignments of any Lease
or specific subordinations of any Lease to this Mortgage, in form and substance
acceptable to Mortgagee, as Mortgagee may reasonably request. Mortgagor shall
not, without Mortgagee's prior written consent or as otherwise permitted by any
provision of the Credit Agreement: (i) execute any other assignment relating to
any of the Leases; or (ii) subordinate or agree to subordinate any of the Leases
to pay other mortgage or encumbrance. Any such action in violation of this
Section 3.5 shall be null and void.
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ARTICLE 4. SECURITY AGREEMENT
AND FIXTURE FILING
4.1 SECURITY INTEREST. Mortgagor hereby grants and assigns to Mortgagee a
-----------------
security interest, to secure payment and performance of all of the Secured
Obligations in, and to, all right, title and interest of Mortgagor which is now
owned or hereafter acquired in or to any of the following described personal
property (collectively, the "Personal Property"):
(a) All present and future chattels, furniture, furnishings,
equipment, fixtures, building materials, building contents and building
components, all of every kind and nature, and other tangible personal property:
(i) which is used in connection with, situate in or on, affixed to, or
incorporated into any portion of the Real Property; (ii) which is used in
connection with, situate in or on, affixed to, or incorporated into, any
building, structure or other improvement that is now or that may be hereafter
constructed on or under the Real Property; (iii) which is used in connection
with, placed on, or incorporated into any of the Vessels which are referred to
below; and/or (iv) in which Mortgagor otherwise has or acquires an interest; all
including, without limitation: (aa) all lumber, bricks, cement, masonry, steel,
doors, windows, fasteners, nails, bolts, scaffolding, tools, construction
supplies, construction tools and equipment and all other building materials,
supplies and equipment of any kind or nature; (bb) all air conditioning,
heating, electrical, lighting, fire fighting and fire prevention, plumbing, food
and beverage preparation, laundry, security, sound, signaling, telephone,
television, entertainment stage, window washing, irrigation, storage, shop,
landscaping, signage and other equipment and fixtures, of whatever kind or
nature, consisting of, without limitation, air conditioners, compressors, fans,
duct work, thermostats, furnaces, boilers, radiators, burners, wiring, conduits,
cables, generators, transformers, switching gear, lighting fixtures, sprinkler
systems and other fire extinguishing equipment, fire alarms and other fire
detection equipment, piping, pumps, valves, sinks, toilets, tubs, motors, carts,
elevators and other lifts, ovens, refrigerators, dishwashers and dishwashing
equipment, fabric washing and drying equipment, lock and key systems,
surveillance and entry detection systems, speakers, intercoms and public address
systems, hardware, shelving, maintenance and repair equipment and all other
similar items; (cc) all furniture, furnishings, wall coverings, floor coverings,
window coverings, artwork and decorative items including, without limitation,
casino, guest room, bathroom, lobby, bar, restaurant, storage, retail, meeting,
convention, leisure, recreation, office, administrative and other furniture,
furnishings, wall coverings, floor coverings, window coverings, artwork and
decorative items; (dd) all hotel equipment and supplies, including without
limitation, televisions, radios, telephones, linen, bedding, amenities, carts,
recreational equipment, leisure equipment and all
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other equipment and supplies utilized in the occupation or renting of hotel
guest rooms and public areas; (ee) all bar and restaurant equipment and
supplies, including, without limitation, kitchen and bar appliances, pots, pans,
plates, dishes, cups, glasses, serving utensils, cooking utensils and all other
equipment and supplies used in the operation of bars and/or restaurants; (ff)
all casino equipment and supplies including, without limitation, slot machines,
gaming tables, cards, dice, gaming chips, player tracking systems, Gaming
Devices and Related Equipment as defined in The Riverboat Gambling Act 230 ILCS
10/1 et. Seq. and all other equipment and supplies utilized in operation of a
casino; (gg) all cabaret, stage and entertainment equipment and supplies
including, without limitation, stage equipment, sets, spotlights, sound
equipment, musical instruments and other equipment and supplies utilized in the
operation of stage and cabaret shows and other entertainment productions; (hh)
all office and administrative equipment and supplies including, without
limitation, office appliances, filing cabinets, computers, peripheral computer
equipment and other data processing and storage equipment, stationery and other
office supply items, and other office and administrative equipment and supplies;
(ii) all indoor and outdoor pool and recreational equipment and supplies; (jj)
all tools and other maintenance and repair equipment; (kk) all landscaping
equipment and supplies; and (ll) all equipment and supplies utilized in
connection with any other activity engaged in by Mortgagor;
(b) The following vessels (collectively, the "Vessels"): (i) that
certain casino vessel named "Empress" which is designated by U.S. Coast Guard
Official Number 984286 and which is currently afloat on the Des Plaines River at
Joliet, Illinois ("Empress"); (ii) that certain casino vessel named "Empress II"
which is designated by U.S. Coast Guard Official Number 998517 and which is also
currently afloat on the Des Plaines River at Joliet, Illinois ("Empress II");
and (iii) any vessels which are hereafter substituted for Empress or Empress II
and all other boats, barges and other vessels which are now owned or hereafter
acquired, regardless of whether afloat or placed on dry land; all together with
any and all present and future engines, boilers, machinery, components, masts,
boats, anchors, cables, chains, rigging, tackle, apparel, furniture, capstans,
outfit, tools, pumps, gear, furnishings, appliances, fittings, spare and
replacement parts, and any and all other appurtenances to any of the Vessels
whether now or hereafter acquired, and whether on board or not on board, all
accounts, earned hire, charter payments, freight, earnings, revenues, income and
profit from any of the Vessels; and all log books, manuals, trip records,
maintenance records, inspection reports, seaworthiness certificates, and other
historical records or information relating to any of the Vessels;
(c) All present and future supplies, inventory and merchandise which
is used in connection with, or in the conduct of,
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the business of Mortgagor or in which Mortgagor has or acquires an interest,
including, without limitation: (i) all present and future goods held for sale
or lease or to be furnished under a contract of service, all raw materials, work
in process and finished goods, all packing materials, supplies and containers
relating to or used in connection with any of the foregoing, and all bills of
lading, warehouse receipts or documents of title relating to any of the
foregoing; (ii) all food stuffs, beverages, prepared food and other similar
items; and (iii) all hotel amenities, cleaning supplies, office supplies,
consumables and similar items;
(d) All present and future goods, which are not otherwise set forth
herein, and which are used in connection with, or in the conduct of, the
business of Mortgagor or in which Mortgagor has or acquires an interest;
(e) All present and future accounts, accounts receivable, rentals,
deposits, rights to payment, instruments, documents, chattel paper, security
agreements, guaranties, undertakings, surety bonds, insurance policies and notes
and drafts which are owned, or used in connection with, or in the conduct of,
the business of Mortgagor, or in which Mortgagor has or acquires an interest,
however created or arising;
(f) All present and future contracts, or agreements and all other
present and future general intangibles which are owned, or used in connection
with, or in the conduct of, the business of Mortgagor, or in which Mortgagor has
or acquires an interest, including, without limitation: (aa) all leases and
purchase contracts for equipment, furniture and/or fixtures of any kind and
character relating to the Real Property, the Vessels and/or the businesses
conducted thereon; and (bb) all goodwill, choses in action, trade secrets,
customer lists, trademarks, trade names and service marks, patents, copyrights,
technology, processes, and proprietary information which are owned, or used in
connection with, or in the conduct of, the business of Mortgagor, or in which
Mortgagor has or acquires an interest (including, without limitation, the trade
names of "Empress", "Empress Casino", "Empress River Casino" and/or any
derivation thereof including any and all state and federal registrations
thereof);
(g) All present and future deposit accounts which are owned, or used
in connection with, or in the conduct of, the business of Mortgagor, or in which
Mortgagor has or acquires an interest including, without limitation, any demand,
time, savings, passbook or like account maintained with any bank, savings and
loan association, credit union or like organization, and all money, cash and
cash equivalents of Mortgagor, whether or not deposited in any such deposit
account;
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(h) All present and future revenues, receipts, payments and income of
any nature whatsoever, in which Mortgagor now owns or hereafter acquires an
interest, regardless of whether such items are derived from or received with
respect to hotel rooms, banquet facilities, convention facilities, retail
premises, bars, restaurants, casinos or any other facilities on the Real
Property and/or any of the Vessels and regardless of whether such items are
derived from any other source;
(i) All present and future books and records which are owned, or used
in connection with, or in the conduct of, the business of Mortgagor, or in which
Mortgagor, has or acquires an interest including, without limitation, books of
account and ledgers of every kind and nature, all electronically recorded data
relating to the business of Mortgagor, all receptacles and containers for such
records, and all files and correspondence;
(j) Other than with respect to Unrestricted Subsidiaries, all present
and future investment property, stocks, bonds, debentures, securities,
subscription rights, options, warrants, puts, calls, certificates, partnership
interests, joint venture interests, investments and/or brokerage accounts which
are owned, or used in connection with, or in the conduct of, the business of
Mortgagor, or in which Mortgagor has or acquires an interest and all rights,
preferences, privileges, dividends, distributions, redemption payments, or
liquidation payments with respect thereto;
(k) All right, title and interest of Mortgagor in and to all leases,
licenses, concessions, or similar agreements whether or not specifically herein
described which now or may hereafter pertain to the Real Property and/or any of
the Vessels and all amendments to the same, including, but not limited to the
following: (aa) all payments due and to become due under such agreements,
whether as rent, damages, insurance payments, condemnation awards, or otherwise;
(bb) all claims, rights, powers, privileges and remedies under such agreements;
and (cc) all rights of the Mortgagor under such leases to exercise any election
or option, or to give or receive any notice, consent, waiver or approval, or to
accept any surrender of the premises or any part thereof, together with full
power and authority in the name of Mortgagor or otherwise, to demand and
receive, enforce, collect, or receipt for any or all of the foregoing, to
endorse or execute any checks or any instruments or orders, to file any claims
or to take any action which Mortgagee may deem necessary or advisable in
connection therewith;
(l) All plans, specifications, soil reports, engineering reports, land
planning maps, surveys, and any other reports, exhibits or plans used or to be
used in connection with the construction, planning, operation or maintenance of
the Real
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Property and/or any of the Vessels, together with all amendments and
modifications thereof;
(m) The Water Rights;
(n) All present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions, additions,
issue and/or improvements to or of or with respect to any of the foregoing;
(o) All rights, remedies, powers and/or privileges of Mortgagor with
respect to any of the foregoing; and
(p) Any and all proceeds and products of any of the foregoing,
including, without limitation, all money, accounts, general intangibles, deposit
accounts, documents, instruments, chattel paper, goods, insurance proceeds, and
any other tangible or intangible property received upon the sale or disposition
of any of the foregoing.
SUBJECT, HOWEVER, to the following:
(i) the right of Mortgagor to sell or otherwise dispose of Personal
Property in the ordinary course of business, free and clear of the lien hereof,
provided, and to the extent, that such sale or other disposition is permitted
under the terms of the Credit Agreement; and
(ii) as to the fixtures and equipment covered hereby, the leases
and/or purchase money security interests pursuant to which Mortgagor has
acquired an interest in such fixtures and equipment provided, and to the extent,
that such leases and/or purchase money security interests are permitted under
the terms of the Credit Agreement.
The Real Property and the Personal Property described hereinabove are
hereinafter collectively referred to as the "Property". The parties intend for
this Mortgage to create a lien on and security interest in the Property, and, as
provided in Article 3 hereof entitled Assignment of Leases and Payments, an
absolute assignment of the Leases and Payments, all in favor of Mortgagee. To
the extent any of said Property, Leases and Payments are not encumbered by a
perfected lien or security interest created above, and are not absolutely
assigned by the assignment set forth in Article 3 above, it is the intention of
the parties that such Property, Leases and/or Payments shall constitute
"proceeds, product, offspring, rents or profits" (as defined in and for the
purposes of Section 552(b) of the United States Bankruptcy Code, as such section
may be modified or supplemented) of the Property and/or "fees, charges,
accounts, or other payments for the use or occupancy of rooms and other public
facilities in . . . lodging properties," as applicable (as such terms are
defined in and for
13
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the purpose of Section 552(b) of the United States Bankruptcy Code, as such
Section may be modified or supplemented).
4.2 FIXTURE FILING. As to all of the above described Personal Property
--------------
which is or which hereafter becomes a "fixture" under applicable law, this
Mortgage constitutes a fixture filing under the Illinois Uniform Commercial
Code, as amended or recodified from time to time ("UCC").
4.3 REPRESENTATIONS AND WARRANTIES. Mortgagor represents and warrants
------------------------------
that (subject to the ECJC Permitted Encumbrances): (a) Mortgagor has good title
to the Personal Property; and (b) Mortgagor has not previously assigned or
encumbered the Personal Property, and no financing statement covering any of the
Personal Property has been delivered to any other person or entity.
4.4 RIGHTS OF MORTGAGEE. In addition to Mortgagee's rights as a "Secured
-------------------
Party" under the UCC, Mortgagee may, but shall not be obligated to, at any time
without notice (except as provided below) and at the expense of Mortgagor: (a)
give notice to any person of Mortgagee's rights hereunder and enforce such
rights at law or in equity; (b) insure, protect, defend and preserve the
Personal Property or any rights or interests of Mortgagee therein; and (c)
inspect the Personal Property at reasonable times and upon reasonable prior
notice. Notwithstanding the above, in no event shall Mortgagee be deemed to
have accepted any property other than cash in satisfaction of any obligation of
Mortgagor to Mortgagee unless Mortgagee shall make an express written election
of said remedy under the UCC, or other applicable law.
4.5 RIGHTS OF MORTGAGEE ON DEFAULT. Upon the occurrence of a Default
------------------------------
under this Mortgage, then in addition to all of Mortgagee's rights as a "Secured
Party" under the UCC or otherwise at law:
(a) Mortgagee may (i) upon written notice, require Mortgagor to
assemble any or all of the Personal Property and make it
available to Mortgagee at the Real Property; (ii) without prior
notice (except as otherwise required by applicable law), enter
upon the Property or other place where any of the Personal
Property may be located and take possession of, and/or collect
any or all of the Personal Property, and store the same at
locations acceptable to Mortgagee at Mortgagor's expense; and/or
(iii) upon ten (10) days' prior written notice to Mortgagor
(except with respect to Personal Property which is perishable,
which threatens to decline speedily in value, or which is of a
type customarily sold on a recognized market, in which case no
such notice shall be required) sell, assign, or otherwise dispose
of, and deliver,
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at any place or in any lawful manner, all or any part of the
Personal Property and bid and become purchaser at any such sales;
and
(b) Mortgagee may, for the account of Mortgagor and at Mortgagor's
expense: (i) upon ten (10) days' prior written notice to
Mortgagor, operate, use, consume, sell or dispose of the Personal
Property as Mortgagee reasonably deems appropriate for the
purpose of performing any or all of the Secured Obligations; (ii)
upon ten (10) days' prior written notice to Mortgagor, enter into
any agreement, compromise, or settlement, including insurance
claims, which Mortgagee may reasonably deem desirable or proper
with respect to any of the Personal Property; (iii) endorse,
collect and receive any right to payment of money owing to
Mortgagor under or from the Personal Property; and (iv) endorse
and deliver evidences of title for, and receive, enforce and
collect by legal action or otherwise, all indebtedness and
obligations now or hereafter owing to Mortgagor in connection
with or on account of any or all of the Personal Property.
4.6 POWER OF ATTORNEY. Mortgagor hereby irrevocably appoints Mortgagee as
-----------------
Mortgagor's attorney-in-fact (such agency being coupled with an interest), and
as such attorney-in-fact Mortgagee may, without the obligation to do so, in
Mortgagee's name, or in the name of Mortgagor, prepare, execute and file or
record financing statements, continuation statements, applications for
registration and like papers necessary to create, perfect or preserve any of
Mortgagee's security interests and rights in or to any of the Personal Property,
and, upon a Default hereunder, take any other action required of Mortgagor;
provided, however, that Mortgagee as such attorney-in-fact shall be accountable
- -------- -------
only for such funds as are actually received by Mortgagee.
ARTICLE 5. RIGHTS AND DUTIES OF THE PARTIES
5.1 CERTAIN REPRESENTATIONS AND WARRANTIES OF MORTGAGOR. Mortgagor
---------------------------------------------------
represents, warrants and covenants that:
(a) This Mortgage creates a first priority mortgage lien and/or, to
the extent applicable, a first priority security interest on the Land and all of
the Property which is in addition to the Land, subject only to ECJC Permitted
Encumbrances (as defined in the Credit Agreement); and
(b) Neither Mortgagor, nor any Affiliate thereof (as defined in the
Credit Agreement), has any interest in any real property, not encumbered hereby,
which is utilized in any material manner in connection with the use and/or
operation of the Real
15
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Property or any of the Vessels, or which is necessary and required for the use
and operation of said Real Property and/or Vessels.
5.2 PAYMENT OF SECURED OBLIGATIONS. Mortgagor shall pay when due, or
------------------------------
cause to be paid when due: (i) the principal of, and interest on, the
indebtedness evidenced by the Notes; (ii) all charges, fees and other sums as
provided in the Loan Documents (as defined in the Credit Agreement) including,
without limitation, all reasonable costs, fees and expenses of this mortgage
incurred by Mortgagee in connection with any Default; (iii) the principal of,
and interest on, any future advances secured by this Mortgage; and (iv) the
principal of, and interest on, any other indebtedness secured by this Mortgage.
5.3 COMPLIANCE WITH LAWS. Mortgagor shall comply in all material respects
--------------------
with all applicable material existing and future laws, rules, regulations,
orders, ordinances and requirements of all Governmental Authorities (as defined
in the Credit Agreement), and with all recorded covenants and restrictions
affecting the Real Property and/or Vessels.
5.4 MAINTENANCE OF PROPERTY. Except to the extent that any of the
-----------------------
following would be prohibited under, or would constitute a violation of, the
terms and conditions of the Credit Agreement, Mortgagor agrees: (a) to properly
care for and keep said Property in good condition and repair; (b) not to remove,
demolish or substantially alter any of the Vessels or any material building on
the Real Property, except upon the prior written consent of Mortgagee; (c) to
complete promptly and in a good and workmanlike manner any building or other
improvement which may be constructed on the Real Property, and to pay when due
all claims for labor performed and materials furnished therefor (subject to
Mortgagor's right to contest the validity or amount of mechanic's and/or
materialman's liens in accordance with Section 5.04 of the Credit Agreement);
(d) not to commit or permit any waste or deterioration of the Property (ordinary
wear and tear, casualty and condemnation excepted); (e) not to commit, suffer or
permit any act to be done, or condition to exist, in or upon said Property in
material violation of any law, covenant, condition or restriction now, or
hereafter, affecting said Property (including any which require alteration or
improvement thereof); (f) to keep and maintain all grounds, sidewalks, roads,
parking and landscaped areas situate on the Property in good and neat order and
repair; (g) not to drill or extract or enter into any lease for the drilling for
or extraction of oil, gas or other hydrocarbon substances or any mineral of any
kind or character on or from the Property or any part thereof; (h) not to apply
for, willingly suffer or permit any subdivision, change in zoning, change in
land use regulation, or inclusion within a general improvement district or
similar assessment mechanism, with regard to any portion of the Real Property
without the prior written consent of Mortgagee; and (i) except as otherwise
permitted in the Credit Agreement, to do all other acts, in a
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timely and proper manner, which, from the character or use of the Property, may
be reasonably necessary to maintain and preserve its value, the specific
enumerations herein not excluding the general.
5.5 INSURANCE. During the continuance of this mortgage, Mortgagor shall
---------
obtain, or cause to be obtained, and shall maintain or cause to be maintained,
at all times throughout the term of the Bank Facilities, at its own cost and
expense, and shall deposit with Mortgagee, Certificates of Insurance, each in a
form and substance, and at such times, as is required under Section 5.09 of the
Credit Agreement (collectively, the "Insurance Coverage"). All monies received
from "All Risk" insurance policies (including flood and earthquake policies)
covering any of the Property shall be: (i) paid directly to Mortgagee and
retained by Mortgagee or released to Mortgagor by Mortgagee; or (ii) paid
directly to Mortgagor; all in accordance with Section 8.02 of the Credit
Agreement. Nothing in this Mortgage shall be deemed to excuse Mortgagor from
restoring, repairing and maintaining the Property, as herein provided,
regardless of whether or not insurance proceeds are available for restoration,
whether or not any such proceeds are sufficient in amount, or whether or not the
Property can be restored to the same condition and character as existed prior to
such damage or destruction. Without limitation of any other right or remedy
which Mortgagee may have hereunder, under the Credit Agreement, or under any
other Loan Document, it is specifically provided that if Mortgagor fails to
provide evidence of the Insurance Coverage for a period of ten(10) days
following written notice from Mortgagee to Mortgager specifying such failure,
Mortgagee may purchase the Insurance Coverage not obtained by Mortgager at
Mortgagor's expense (the "Mortgagee Insurance") to protect Mortgagee's interests
in the Property. The Mortgagee Insurance may, but need not, protect Mortgagor's
interests. The coverage that Mortgagee purchases may, or may not, pay any claim
that Mortgagor makes or any claim that is made against Mortgagor in connection
with the Property. Mortgagor may later cancel any Mortgagee Insurance, but only
after providing Mortgagee with evidence that Mortgagor has obtained the
insurance as required by the Credit Agreement. Mortgagor will be responsible
for the costs of all Mortgagee Insurance, including interest and any other
charges Mortgagee may impose in connection with the placement of the Mortgagee
Insurance, until the effective date of the cancellation or expiration of the
Mortgagee Insurance. The costs of the Mortgagee Insurance may be added to the
existing balance of the Secured Obligations. The costs of the Mortgagee
Insurance may be more than the cost of the insurance Mortgagor is able to obtain
on its own. All monies received from Mortgagee Insurance shall be: (i) paid
directly to Mortgagee and retained by Mortgagee or released to Mortgagor by
Mortgagee; or (ii) paid directly to Mortgagor; all in accordance with Section
8.02 of the Credit Agreement.
17
<PAGE>
5.6 TAXES AND ASSESSMENTS. Mortgagor shall pay all taxes, assessments and
---------------------
other governmental charges or levies affecting said Property, or any part
thereof, in the manner required by the Credit Agreement except such taxes,
assessments and other governmental levies as are being contested in good faith
in the manner provided by Section 4.07 or Section 5.10 of the Credit Agreement.
5.7 LIEN CLAIMS. If any mechanic's lien or materialman's lien shall be
-----------
recorded, filed or suffered to exist against the Property or any interest
therein by reason of any work, labor, services or materials supplied, furnished
or claimed to have been supplied and furnished in connection with any work of
improvement upon the Property, said lien or claim shall be paid, released or
otherwise discharged of record to the extent required by, and in accordance
with, Section 5.04 of the Credit Agreement.
5.8 EASEMENTS. If an easement or other incorporeal right (collectively,
---------
an "Easement") constitutes any portion of the Real Property, Mortgagor shall not
amend, change, terminate or modify such Easement, or any right thereto or
interest therein, without the prior written consent of Mortgagee, which consent
may be withheld in Mortgagee's sole discretion, and any such amendment, change,
termination or modification without such prior written consent shall be deemed
void and of no force or effect. Mortgagor agrees to perform all obligations and
agreements with respect to said Easement and shall not take any action or omit
to take any action which would effect or permit the termination thereof. Upon
receipt of notice, or otherwise becoming aware, of any default or purported
default under any Easement, by any party thereto, Mortgagor shall promptly
notify Mortgagee in writing of such default or purported default and shall
deliver to Mortgagee copies of all notices, demands, complaints or other
communications received or given by Mortgagor with respect to any such default
or purported default.
5.9 PERFORMANCE BY MORTGAGEE. Should Mortgagor fail to make any payment
------------------------
or perform any act which would have Material Adverse Effect, then Mortgagee, at
its election, upon giving reasonable notice to Mortgagor, and without releasing
Mortgagor from any obligation hereunder, may make such payment or perform such
act and incur any liability, or expend whatever amounts, in its discretion, it
may deem necessary therefor. All sums incurred or expended by Mortgagee, under
the terms hereof, shall become due and payable by Mortgagor to Mortgagee, on the
next interest or instalment payment date under any of the promissory notes
secured hereby and shall bear interest until paid at an annual percentage rate
equal to the Default Rate expressed in the Credit Agreement. In no event shall
such payment or performance of any such act by Mortgagee be construed as a
waiver of the default occasioned by Mortgagor's failure to make such payment(s)
or perform such act(s).
18
<PAGE>
5.10 ACTIONS AFFECTING PROPERTY. Mortgagor promises and agrees that
--------------------------
if, during the existence of this Mortgage, there shall be commenced or pending
any suit or action affecting said Property, or any part thereof, or the title
thereto, or if any adverse claim for or against said Property, or any part
thereof, be made or asserted, it will appear in and defend any such matter
purporting to affect the security of this Mortgage and will pay all costs and
damages arising because of such action.
5.11 EMINENT DOMAIN. Any award of damages in connection with any
--------------
condemnation or similar actions in regard to said Property, or any part thereof,
shall be: (i) paid directly to Mortgagee and shall be retained by Mortgagee or
released to Mortgagor by Mortgagee; or (ii) paid directly to Mortgagor; all in
accordance with Section 8.02 of the Credit Agreement.
5.12 SUBROGATION. To the extent that any sums advanced by Mortgagee are
-----------
used to pay any outstanding lien, charge or prior encumbrance against the
Property, such sums shall be deemed to have been advanced by Mortgagee at the
request of Mortgagor and Mortgagee shall be subrogated to any and all rights and
liens held by any owner or holder of such outstanding liens, charges and prior
encumbrances, regardless of whether said liens, charges or encumbrances are
released.
5.13 DUE ON SALE. If Mortgagor shall be voluntarily, or involuntarily,
-----------
divested of title or possession of any Property, by merger or otherwise, or
shall lease, sell, convey, further encumber or in any other manner voluntarily
or involuntarily alienate any of its interest in any of the Property, or shall
enter into an agreement to do any of the foregoing, other than as permitted
herein, or in the Credit Agreement, any indebtedness or obligation secured
hereby, irrespective of the maturity dates expressed in any notes evidencing the
same, shall at the option of Mortgagee, and upon the giving of any notice which
may be required under the Credit Agreement, immediately become due and payable.
5.14 PARTIAL OR LATE PAYMENT. By accepting payment of any sum secured
-----------------------
hereby after its due date, Mortgagee does not waive its right either to require
prompt payment, when due, of all other sums so secured or to declare default, as
herein provided, for failure to so pay.
5.15 RIGHT OF MORTGAGEE TO APPEAR. If, during the existence of this
----------------------------
Mortgage, there be commenced or pending any suit or action affecting the
Property, or any part thereof, or the title thereto, or if any adverse claim for
or against the Property, or any part thereof, be made or asserted, Mortgagee
(unless such suit, action or claim is being contested in good faith by Mortgagor
and Mortgagor shall have established and maintained adequate reserves in
accordance with generally accepted accounting principles for the full payment
and satisfaction of such suit or action if determined
19
<PAGE>
adversely to Mortgagor), may appear or intervene in the suit or action and
retain counsel therein and defend same, or otherwise take such action therein as
they may be advised, and may settle or compromise same or the adverse claim; and
in that behalf and for any of the purposes may pay and expend such sums of money
as the Mortgagee may deem to be necessary and Mortgagor shall reimburse
Mortgagee for such sums expended, together with accrued interest thereon, at the
Default Rate which is defined in the Credit Agreement.
5.16 EXCULPATION; INDEMNIFICATION.
----------------------------
(a) Mortgagee shall not directly or indirectly be liable to Mortgagor
or any other person as a consequence of (i) the exercise of the rights, remedies
or powers granted to Mortgagee in this Mortgage (unless the loss is caused by
the gross negligence or willful misconduct of Mortgagee); (ii) the failure or
refusal of Mortgagee to perform or discharge any obligation or liability of
Mortgagor under any agreement related to the Real Property or under this
Mortgage; or (iii) any loss sustained by Mortgagor or any third party resulting
from Mortgagee's failure to lease the Property, or any portion thereof, after a
Default or from any other act or omission of Mortgagee in managing the Property
after a Default (unless the loss is caused by the gross negligence or willful
misconduct of Mortgagee) and no such liability shall be asserted against or
imposed upon Mortgagee, and all such liability is hereby expressly waived and
released by Mortgagor. It is agreed by Mortgagor that the liability waived and
released by Mortgagor pursuant to the preceding sentence shall include any
liability arising from or caused by the sole, joint, active, or passive,
concurrent or contributing, negligence or fault of Mortgagee or its agents, and
even though such liability is based upon the strict liability of Mortgagee or
its agents.
(b) Mortgagor agrees to and does hereby jointly and severally
indemnify, protect, defend and save harmless Mortgagee and each of the Banks and
their respective directors, trustees, officers, employees, agents, attorneys and
shareholders (individually an "Indemnified Party" and collectively the
"Indemnified Parties") from and against any and all losses, damages, expenses or
liabilities of any kind or nature from any investigations, suits, claims,
demands or other proceedings, including reasonable counsel fees incurred in
investigating or defending such claim, suffered by any of them and caused by,
relating to, arising out of, resulting from, or in any way connected with this
Mortgage, any of the Property, or Mortgagee's exercise or enforcement of any
rights or remedies which it may have hereunder; provided, however, Mortgagor
shall not be obligated to indemnify, protect, defend or save harmless an
Indemnified Party if, and to the extent, the loss, damage, expense or liability
was caused by (a) the gross negligence or wilful misconduct of such Indemnified
Party, or (b) the breach of this Mortgage or any other
20
<PAGE>
Loan Document by such Indemnified Party or the breach of any laws, rules or
regulations by such Indemnified Party (other than those breaches of laws arising
from any Borrower's default). In case any action shall be brought against any
Indemnified Party based upon any of the above and in respect to which indemnity
may be sought against Mortgagor, Mortgagee shall promptly notify Mortgagor in
writing, and Mortgagor shall assume the defense thereof, including the
employment of counsel selected by Mortgagor and reasonably satisfactory to
Mortgagee, the payment of all costs and expenses and the right to negotiate and
consent to settlement. Upon reasonable determination made by an Indemnified
Party that such counsel would have a conflict representing such Indemnified
Party and Mortgagor, the applicable Indemnified Party shall have the right to
employ, at the expense of Mortgagor, separate counsel in any such action and to
participate in the defense thereof. Mortgagor shall not be liable for any
settlement of any such action effected without their consent, but if settled
with Mortgagor's consent, or if there be a final judgment for the claimant in
any such action, Mortgagor agrees to indemnify, defend and save harmless such
Indemnified Parties from and against any loss or liability by reason of such
settlement or judgment. In the event that any Person is adjudged by a court of
competent jurisdiction not to have been entitled to indemnification under this
Section 5.16, it shall repay all amounts with respect to which it has been so
adjudged. If and to the extent that the indemnification provisions contained in
this Section 5.16 are unenforceable for any reason, the Mortgagor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations that is permissible under applicable law. The provisions of this
Section 5.16 shall survive the termination of this Mortgage and the repayment of
the Secured Obligations.
5.17 RELEASES, EXTENSIONS, MODIFICATIONS AND ADDITIONAL SECURITY. Without
-----------------------------------------------------------
notice to or the consent, approval or agreement of any persons or entities
having any interest at any time in the Property or in any manner obligated under
the Secured Obligations ("Interested Parties"), Mortgagee may, from time to
time, release any person or entity from liability for the payment or performance
of any Secured Obligation, take any action or make any agreement extending the
maturity or otherwise altering the terms or increasing the amount of any Secured
Obligation, or accept additional security or release all or a portion of the
Property and other security for the Secured Obligations. None of the foregoing
actions shall release or reduce the personal liability of any of said Interested
Parties, or release or impair the priority of the lien of this Mortgage upon the
Property.
5.18 RIGHT OF INSPECTION. Mortgagee, its agents and employees, may enter
-------------------
the Real Property at any reasonable time, upon reasonable advance notice, for
the purpose of inspecting the Real Property and ascertaining Mortgagor's
compliance with the terms hereof.
21
<PAGE>
ARTICLE 6. DEFAULT PROVISIONS
6.1 DEFAULT. For all purposes hereof, the term "Default" shall mean the
-------
existence of any Event of Default as defined by Section 7.01 of the Credit
Agreement.
6.2 RIGHTS AND REMEDIES. At any time after Default, Mortgagee shall have
-------------------
all the following rights and remedies (in addition to (and without limiting) any
rights and remedies that are available hereunder, or under applicable law):
(a) With or without notice, to declare all Secured Obligations
immediately due and payable;
(b) With or without notice, and without releasing Mortgagor from any
Secured Obligation, and without becoming a mortgagee in possession, to cure any
breach or Default of Mortgagor and, in connection therewith, to enter upon the
Real Property and do such acts and things as Mortgagee deems necessary or
desirable to protect the security hereof, including, without limitation: (i) to
appear in and defend any action or proceeding purporting to affect the security
of this Mortgage or the rights or powers of Mortgagee; (ii) to pay, purchase,
contest or compromise any encumbrance, charge, lien or claim of lien which, in
the sole judgment of Mortgagee, is or may be senior in priority to this
Mortgage, the judgment of Mortgagee being conclusive as between the parties
hereto; (iii) to obtain insurance; (iv) to pay any premiums or charges with
respect to insurance required to be carried under the Loan Documents; and (v) to
employ counsel, accountants, contractors and other appropriate persons;
(c) To commence and maintain an action or actions in any court of
competent jurisdiction to foreclose this Mortgage or to obtain specific
enforcement of the covenants of Mortgagor hereunder, and Mortgagor agrees that
such covenants shall be specifically enforceable by injunction or any other
appropriate equitable remedy and that for the purposes of any suit brought under
this subparagraph, Mortgagor waives the defense of laches and any applicable
statute of limitations;
(d) To apply to a court of competent jurisdiction for and obtain
appointment of a receiver of the Real Property as a matter of strict right and
without regard to the adequacy of the security for the repayment of the Secured
Obligations, the existence of a declaration that the Secured Obligations are
immediately due and payable, or the filing of a notice of default, and Mortgagor
hereby consents to such appointment;
(e) To enter upon, possess, manage and operate the Real Property or
any part thereof, to take and possess all documents, books, records, papers and
accounts of Mortgagor or the then owner of the Real Property, to make,
terminate, enforce or modify Leases
22
<PAGE>
of the Real Property upon such terms and conditions as Mortgagee deems proper,
to make repairs, alterations and improvements to the Real Property as necessary,
in Mortgagee's sole judgment, all to protect or enhance the security hereof;
(f) To execute a written notice of such Default and of its election to
cause the Real Property to be sold to satisfy the Secured Obligations. As a
condition precedent to any such sale, Mortgagee shall give, post and record such
notices as Illinois law then requires. When the minimum period of time required
after such notices has elapsed, Mortgagee, without notice to or demand upon
Mortgagor except as required by law, shall sell the Real Property at the time
and place of sale fixed by it in the notice of sale, at one or several sales,
either as a whole or in separate parcels and in such manner and order, all as
Mortgagee in its sole discretion may determine, at public auction to the highest
bidder for cash, in lawful money of the United States, payable at time of sale.
Neither Mortgagor nor any other person or entity other than Mortgagee shall have
the right to direct the order in which the Real Property is sold. Subject to
requirements and limits imposed by law, Mortgagee may from time to time postpone
sale of all or any portion of the Real Property by public announcement at such
time and place of sale. Mortgagee shall deliver to the purchaser at such sale a
deed conveying the Real Property or portion thereof so sold, but without any
covenant or warranty, express or implied. The recitals in the deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including Mortgagee or Mortgagor may purchase at the sale;
(g) To resort to and realize upon the security hereunder and any other
security now or later held by Mortgagee concurrently or successively and in one
or several consolidated or independent judicial actions or lawfully taken non-
judicial proceedings, or both, and to apply the proceeds received upon the
Secured Obligations all in such order and manner as Mortgagee determines in its
sole discretion;
(h) Upon sale of the Real Property pursuant to the power of sale
granted herein or at any judicial or non-judicial foreclosure, Mortgagee may
credit bid (as determined by Mortgagee in its sole and absolute discretion) all
or any portion of the Secured Obligations. In determining such credit bid,
Mortgagee may, but is not obligated to, take into account all or any of the
following: (i) appraisals of the Real Property as such appraisals may be
discounted or adjusted by Mortgagee in its sole and absolute underwriting
discretion; (ii) expenses and costs incurred by Mortgagee with respect to the
Real Property prior to foreclosure; (iii) expenses and costs which Mortgagee
anticipates will be incurred with respect to the Real Property after
foreclosure, but prior to resale, including, without limitation, costs of
structural reports and other due diligence, costs to carry the Real Property
prior to resale, costs of resale (e.g. commissions, attorneys' and
23
<PAGE>
paralegals' fees, and taxes), costs of any hazardous materials clean-up and
monitoring, costs of deferred maintenance, repair, refurbishment and retrofit,
costs of defending or settling litigation affecting the Real Property, and lost
opportunity costs (if any), including the time value of money during any
anticipated holding period by Mortgagee; (iv) declining trends in real property
values generally and with respect to properties similar to the Real Property;
(v) anticipated discounts upon resale of the Real Property as a distressed or
foreclosed property; (vi) the fact of additional collateral (if any), for the
Secured Obligations; and (vii) such other factors or matters that Mortgagee (in
its sole and absolute discretion) deems appropriate. In regard to the above,
Mortgagor acknowledges and agrees that: (w) Mortgagee is not required to use any
or all of the foregoing factors to determine the amount of its credit bid; (x)
this Section does not impose upon Mortgagee any additional obligations that are
not imposed by law at the time the credit bid is made; (y) the amount of
Mortgagee's credit bid need not have any relation to any loan-to-value ratios
specified in the Loan Documents or previously discussed between Mortgagor and
Mortgagee; and (z) Mortgagee's credit bid may be (at Mortgagee's sole and
absolute discretion) higher or lower than any appraised value of the Real
Property.
(i) The rights and remedies of Mortgagee upon the occurrence of
one or more Defaults (whether such rights and remedies are conferred by statute,
by rule of law, by this Mortgage, by any Loan Document, as defined in the Credit
Agreement, or otherwise) may be exercised by Mortgagee, in the sole discretion
of Mortgagee, either alternatively, concurrently, or consecutively in any order.
The exercise by Mortgagee of any one or more of such rights and remedies shall
not be construed to be an election of remedies nor a waiver of any other rights
and remedies Mortgagee might have unless, and limited to the extent that,
Mortgagee shall so elect or so waive by an instrument in writing delivered to
Mortgagor. Without limiting the generality of the foregoing, to the extent that
this Mortgage covers both Real Property and Personal Property, Mortgagee may, in
the sole discretion of Mortgagee, either alternatively, concurrently, or
consecutively in any order:
(i) proceed as to both the Real Property and Personal
Property in accordance with Mortgagee's rights and remedies in respect of the
Real Property; or
(ii) proceed as to the Real Property in accordance with
Mortgagee's rights and remedies in respect of the Real Property and proceed as
to the Personal Property in accordance with Mortgagee's rights and remedies in
respect of the Personal Property.
24
<PAGE>
If Mortgagee should elect to proceed as to both the Real Property and Personal
Property collateral in accordance with Mortgagee's rights and remedies in
respect to the Real Property:
(i) all, or any portion of, the Real Property and all, or any
portion of, the Personal Property may be sold, in the manner and at the time(s)
and place(s) provided in this Mortgage, in one lot, or in separate lots
consisting of any combination or combinations of Real Property and Personal
Property, as the Mortgagee may elect, in the sole discretion of Mortgagee.
(ii) Mortgagor acknowledges and agrees that a disposition of the
Personal Property collateral in accordance with Mortgagee's rights and remedies
in respect of Real Property, as hereinabove provided, is a commercially
reasonable disposition of said collateral.
If Mortgagee should elect to proceed as to the Personal Property collateral in
accordance with Mortgagee's rights and remedies with respect to personal
property, Mortgagee shall have all the rights and remedies conferred on a
secured party by the UCC.
6.3 APPLICATION OF PROCEEDS. All sums received by Mortgagee under Section
----------------------- -------
6.2 or Section 4.5, shall be applied in payment of the Secured Obligations in
- --- -----------
the order set forth by Section 7.03 of the Credit Agreement; provided, however,
-------- -------
Mortgagee shall have no liability for funds not actually received by Mortgagee.
6.4 NO CURE OR WAIVER. Neither Mortgagee's nor any receiver's entry upon
-----------------
and taking possession of all or any part of the Real Property, nor any
collection of rents, issues, profits, insurance proceeds, condemnation proceeds
or damages, other security or proceeds of other security, or other sums, nor the
application of any collected sum to any Secured Obligation, nor the exercise or
failure to exercise of any other right or remedy by Mortgagee or any receiver
shall cure or waive any breach, Default or notice of default under this
Mortgage, or nullify the effect of any notice of default or sale (unless all
Secured Obligations then due have been paid and performed and Mortgagor has
cured all other defaults), or impair the status of the security, or prejudice
Mortgagee in the exercise of any right or remedy, or be construed as an
affirmation by Mortgagee of any tenancy, lease or option or a subordination of
the lien of this Mortgage.
6.5 PAYMENT OF COSTS, EXPENSES AND ATTORNEY'S AND PARALEGALS' FEES.
--------------------------------------------------------------
Mortgagor agrees to pay to Mortgagee immediately and upon demand all reasonable
costs and expenses incurred by Mortgagee in connection with the exercise of the
rights and remedies provided for herein and/or in any of the other Loan
Documents (including, without limitation, court costs, appraisal fees and
reasonable attorneys' and paralegals' fees, whether incurred in litigation or
not, and all whether internal costs, external costs or both) with
25
<PAGE>
interest from the date such amounts are demanded hereunder until said sums have
been paid, at the Default Rate set forth by the Credit Agreement.
6.6 POWER TO FILE NOTICES AND CURE DEFAULTS. Mortgagor hereby irrevocably
---------------------------------------
appoints Mortgagee and its successors and assigns, as its attorney-in-fact,
which agency is coupled with an interest, (a) to execute and/or record any
notices of completion, cessation of labor, or any other notices that Mortgagee
deems appropriate to protect Mortgagee's interest, (b) upon the issuance of a
deed pursuant to the foreclosure of this Mortgage or power of sale granted
herein, or the delivery of a deed in lieu of foreclosure, to execute all
instruments of assignment or further assurance with respect to the Leases and
Payments in favor of the grantee of any such deed, as may be necessary or
desirable for such purpose, (c) to prepare, execute and file or record financing
statements, continuation statements, applications for registration and like
papers necessary to create, perfect or preserve Mortgagee's security interests
and rights in or to any of the Personal Property and any other property or
interests securing the payment and the performance of the Secured Obligations,
and (d) upon the occurrence of an event, act or omission which, with notice or
passage of time or both, would constitute a Default, Mortgagee may perform any
obligation of Mortgagor hereunder; provided, however, that: (i) Mortgagee as
-------- -------
such attorney-in-fact shall only be accountable for such funds as are actually
received by Mortgagee; and (ii) Mortgagee shall not be liable to Mortgagor or
any other person or entity for any failure to act under this Section.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 ADDITIONAL PROVISIONS. The Loan Documents contain or incorporate by
---------------------
reference the entire agreement of the parties with respect to matters
contemplated herein and supersede all prior negotiations. The Loan Documents
grant further rights to Mortgagee and contain further agreements and affirmative
and negative covenants by Mortgagor which apply to this Mortgage and to the
Property and such further rights and agreements are incorporated herein by this
reference.
7.2 MERGER. No merger shall occur as a result of Mortgagee's acquiring
------
any other estate in, or any other lien on, the Property unless Mortgagee
consents to a merger in writing.
7.3 WAIVER OF MARSHALLING RIGHTS. Mortgagor, for itself and for all
----------------------------
parties claiming through or under Mortgagor, and for all parties who may acquire
a lien on or interest in the Property, hereby waives all rights to have the
Property and/or any other property which is now or later may be security for any
Secured Obligation ("Other Property") marshaled upon any foreclosure of this
Mortgage or on a foreclosure of any Other Property. Mortgagee
26
<PAGE>
shall have the right to sell, and any court in which foreclosure proceedings may
be brought shall have the right to order a sale of, the Real Property and any or
all of the Personal Property or Other Property as a whole or in separate
parcels, in any order that Mortgagee may designate.
7.4 WAIVER OF RIGHTS OF REDEMPTION AND REINSTATEMENT. Mortgagor, for
------------------------------------------------
itself and for all parties claiming through or under Mortgagor, and for all
parties who may acquire a lien on or interest in the Property, hereby waives any
and all rights of redemption and reinstatement under law and under any order or
decree of foreclosure of this Mortgage, and all such rights of redemption and
reinstatement of Mortgagor and of all other persons, are and shall be deemed to
be hereby waived to the full extent permitted by the provisions of the
applicable law.
7.5 EXERCISE OF REMEDIES. Notwithstanding any of the terms or provisions
--------------------
contained in this Mortgage (or in any of the other Loan Documents), if at any
time after the occurrence of a Default under any of the Loan Documents (but
prior to the time (if any) that said Default has been cured to the satisfaction
of Mortgagee), Mortgagee has commenced to exercise one or more of its remedies
provided for herein (or provided in any of the other Loan Documents or available
at law or in equity), Mortgagee will not be precluded from continuing to
exercise all of its rights and remedies upon said Default (notwithstanding the
fact that Mortgagor may have cured, attempted to cure or be in the process of
curing said Default). It is the intention of the parties hereto that (to the
extent permitted by law) once Mortgagee has commenced to exercise one or more of
its rights or remedies (upon a Default), said Default cannot be cured, unless
Mortgagee expressly agrees in writing to accept said cure and to cease the
exercise of said rights and remedies.
7.6 RULES OF CONSTRUCTION. The term: (i) "Real Property" means all and
---------------------
any part of the Real Property and any interest in the Real Property; (ii)
"Personal Property" means all and any part of the Personal Property and any
interest in the Personal Property; and (iii) "Property" means all and any part
of the Property and any interest in the Property.
7.7 SUCCESSORS IN INTEREST. The terms, covenants, and conditions herein
----------------------
contained shall be binding upon and inure to the benefit of the successors and
assigns of the parties hereto; provided, however, that this section does not
-------- -------
waive or modify any restrictions on transfer contained herein or in any of the
other Loan Documents.
7.8 GOVERNING LAW. MORTGAGOR AGREES THAT THIS MORTGAGE, THE CREDIT
-------------
AGREEMENT, THE NOTES AND ALL OTHER RELATED DOCUMENTS ARE TO BE CONSTRUED,
GOVERNED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
27
<PAGE>
LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
7.9 INCORPORATION. Exhibit A is incorporated into this Mortgage by this
------------- ---------
reference.
7.10 NOTICES. All notices, reports, demands, requests and other
-------
communications authorized or required under this Mortgage to be given to
Mortgagor or Mortgagee, shall be given in the manner and to the addresses
specified in the Credit Agreement for the giving of notices. Mortgagor shall
forward to Mortgagee, without delay, any notices, letters or other
communications delivered to the Real Property or to Mortgagor naming Mortgagee,
"Lender" or any similar designation as addressee, or which could reasonably be
deemed to affect the ability of Mortgagor to perform its obligations to
Mortgagee under the Notes, the Credit Agreement or any other Loan Documents.
7.11 MAXIMUM INDEBTEDNESS; FUTURE ADVANCES. This Mortgage shall secure not
-------------------------------------
only existing indebtedness but also such future advances, whether such advances
are obligatory or to be made at the option of Mortgagee, or otherwise, to the
same extent as if such future advances were made on the date of the execution of
this Mortgage.
7.12 SEVERABILITY. If any provision or obligation under this Mortgage
------------
shall be determined by a court of competent jurisdiction to be invalid, illegal
or unenforceable, that provision shall be deemed severed from the Mortgage and
the validity, legality and enforceability of the remaining provisions or
obligations shall remain in full force as though the invalid, illegal or
unenforceable provision had never been a part of the Mortgage.
7.13 TIME. Time is of the essence of each and every term of this Mortgage.
----
7.14 NO INTEREST IN GAMING LICENSE. The terms of this Mortgage
-----------------------------
notwithstanding, it is specifically provided that no interest is granted
hereunder in, or to, the Gaming License which is granted to Mortgagor by the
Illinois Gaming Board (the "Gaming
28
<PAGE>
License") and that the Gaming License is specifically excluded from the
Property, as defined herein.
IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the day and
year set forth above.
MORTGAGOR HEREBY DECLARES AND ACKNOWLEDGES THAT IT HAS RECEIVED, WITHOUT
CHARGE, A TRUE COPY OF THIS MORTGAGE.
"MORTGAGOR"
EMPRESS CASINO JOLIET
CORPORATION, an
Illinois corporation
By /s/ John Costello
-------------------------
Name John Costello
-----------------------
Title /s/ VP/CFO
----------------------
29
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in said State,
hereby certify that John Costello, whose name as Vice President - CFO of EMPRESS
CASINO JOLIET CORPORATION, an Illinois corporation, is signed to the foregoing
instrument, and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument, he/she, as such officer and
with full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand and Official Seal this 30th day of June, 1998.
/s/ Joanne Bruen
_________________________________
[Seal] Notary Public
My commission expires: 10/14/00
----------
Joanne Bruen
_________________________________
(Printed Name)
Notary Public in and for the
State of Illinois
This instrument was prepared by James L. Morgan, Esq., Henderson & Morgan,
LLC, 164 Hubbard Way, Suite B, Reno, Nevada 89502; (702) 825-7000.
30
<PAGE>
Exhibit 4.8(1)
=========================
FIRST PREFERRED FLEET MORTGAGE
ON THE WHOLE OF THE
EMPRESS OFFICIAL NUMBER 984286
AND THE
EMPRESS II OFFICIAL NUMBER 998517
$100,000,000.00
=========================
Empress Casino Joliet Corporation
[address]
Owner and Mortgagor
In Favor of
WELLS FARGO BANK, NATIONAL ASSOCIATION, AGENT BANK
ONE EAST FIRST STREET
RENO, NEVADA 89501
Mortgagee
=========================
Dated as of June 30, 1998
=========================
Discharge Amount: $100,000,000.00 Together
With Interest and Performance
of Mortgage Covenants
<PAGE>
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
PARTIES........................................................................1
WHEREAS CLAUSES................................................................1
GRANTING CLAUSE................................................................2
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.01. Definition of Terms.............................................4
Section 1.02. Rules of Construction...........................................5
ARTICLE II
GENERAL MORTGAGE PROVISIONS
Section 2.01. General.........................................................5
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MORTGAGOR
Section 3.01. Corporate Status of Mortgagor...................................6
Section 3.02. Outstanding Liens...............................................6
Section 3.03. Compliance With Law.............................................6
Section 3.04. Operation of Vessels............................................7
Section 3.05. Payment of Taxes, etc...........................................7
Section 3.06. Notice of Mortgage..............................................7
Section 3.07. Release From Arrest.............................................7
Section 3.08. Maintenance of Vessels..........................................7
Section 3.09. Access to Vessels...............................................8
Section 3.10. Documentation of Vessels........................................8
Section 3.11. Sale, Charter or Mortgage of Vessels............................8
Section 3.12. Insurance.......................................................8
Section 3.13. Requisition of Title to Vessels.................................8
Section 3.14. Requisition of Vessels but not Title............................9
Section 3.15. Execution of Additional Documents...............................9
</TABLE>
<PAGE>
I
INDEX
-----
(Continued)
Page
----
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
<TABLE>
<CAPTION>
<S> <C>
Section 4.01.................................................................. 9
A. Events of Default......................................................... 9
B. Remedies..................................................................10
Section 4.02. Sale of Vessels by Mortgagee....................................12
Section 4.03. Mortgagee to Sign for Mortgagor.................................12
Section 4.04. Mortgagee to Collect Hire, etc..................................12
Section 4.05. Mortgagee's Right to Possession.................................13
Section 4.06. Appearance by Mortgagee on Behalf of Mortgagor..................13
Section 4.07. Acceleration of Indebtedness Secured Hereby.....................13
Section 4.08. Right of Mortgagee..............................................13
Section 4.09. Cure of Defaults................................................14
Section 4.10. Restoration of Position.........................................14
Section 4.11. Proceeds of Sale................................................14
Section 4.12. Repairs to Vessels and Sale of Equipment........................15
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. Addresses.......................................................15
Section 5.02. Counterparts....................................................16
Section 5.03. Interest of Mortgagor...........................................16
Section 5.04. Survivorship of Covenants.......................................16
Section 5.05. Amendments......................................................17
Section 5.06. Discharge of Lien...............................................17
Section 5.07. Incorporation into Mortgage.....................................17
Section 5.08. Governing Law...................................................17
SIGNATURE PAGE................................................................17
ACKNOWLEDGMENT................................................................18
</TABLE>
ii
<PAGE>
FIRST PREFERRED FLEET MORTGAGE
THIS FIRST PREFERRED FLEET MORTGAGE dated as of June 3O, 1998 is
granted by:
Empress Casino Joliet Corporation
[address]
a corporation organized and existing under and by virtue of the laws of the
State of Illinois (the "Mortgagor") in favor of:
WELLS FARGO BANK, NATIONAL ASSOCIATION, AGENT BANK
One East First Street
Reno, Nevada 89501
a national banking association organized and existing under and by virtue of the
laws of the United States (the "Mortgagee"), as administrative and collateral
agent for the Lenders, the Swingline Lender and the L/C Issuer.
WHEREAS:
A. The Mortgagor is the sole owner of the whole of the Vessels
(collectively the "Vessels" and individually a "Vessel") identified and
described in the Granting Clause of this First Preferred Fleet Mortgage (the
"Mortgage").
B. Under the terms of that certain Credit Agreement (the "Credit
Agreement") executed concurrently herewith by and among Mortgagor, Empress
Entertainment, Inc., a Delaware corporation ("EEI"), and Empress Casino Hammond
Corporation, an Indiana corporation ("ECHC" and together with Mortgagor and EEI
collectively referred to as the "Borrowers"), each of the Lenders, as therein
defined, Wells Fargo Bank, National Association, as the swingline lender
(therein in such capacity, together with its successors and assigns, the
"Swingline Lender"), and Wells Fargo Bank, National Association, as
administrative and collateral agent for the Lenders, Swingline Lender and L/C
Issuer (therein, in such capacity, called the "Agent Bank" and, together with
the Lenders, Swingline Lender and L/C Issuer collectively referred to as the
"Banks"), have agreed to establish a Credit Facility, a Swingline Facility and a
L/C facility (collectively the "Bank Facilities") in favor of Mortgagor and the
Borrowers in the aggregate principal amount of One Hundred Million Dollars
($100,000,000) in accordance with the terms and conditions set forth in the
Credit Agreement and as evidenced by that certain Revolving Credit Note (the
"Note") dated June 17, 1998
1
<PAGE>
payable to the order of Agent Bank in the principal sum of One Hundred Million
Dollars ($100,000,000.00), including the Swingline Note as a subfacility
thereof in the principal sum of Five Million Dollars ($5,000,000.00), (together
with the Revolving Credit Note, collectively referred to as the "Notes").
Mortgagor is thus or will be truly and justly indebted unto the Mortgagee in an
amount up to the full and true principal sum of $100,000,000.00, plus interest
and the performance of mortgage covenants.
C. In order to secure the due and punctual payment of the principal
of and interest on the Notes, together with the payment of all other sums and
the performance of all other obligations now or hereafter owing by the Mortgagor
to the Mortgagee as described in the Granting Clause below, the Mortgagor has
agreed to execute and deliver this Mortgage to Mortgagee, individually and as
administrative and collateral agent for the Lenders, Swingline Lender and L/C
Issuer:
GRANTING CLAUSE
---------------
NOW, THEREFORE, THIS MORTGAGE WITNESSETH:
THAT, in consideration of the premises and of the additional covenants
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and for the purpose of securing as a
first priority lien in favor of the Mortgagee (1) the due and punctual payment
of the indebtedness evidenced by the Notes, (2) the performance of each covenant
and agreement of the Mortgagor contained herein, in the Credit Agreement and in
the Loan Documents (as hereinafter defined), (3) the satisfaction of those terms
and conditions contained herein applicable to the Mortgagor or within the
Mortgagor's control, (4) the payment of such additional loans or advances as
hereafter may be made to the Mortgagor or its successors or assigns, when
evidenced by a note or notes reciting that they are secured by this Mortgage,
provided, however, that any and all future advances to or on behalf of the
Mortgagor made for the improvement, protection or preservation of the Vessels,
together with interest at the Default Rate (as hereinafter defined), shall be
automatically secured hereby unless such a note or instrument evidencing such
advances specifically recites that it is not intended to be secured hereby, and
(5) the payment of all sums expended or advanced by the Mortgagee under or
pursuant to the terms hereof or to protect the security hereof, together with
interest thereon as herein provided, whether any of the foregoing obligations
now exist or are hereafter created or incurred, and whether they are or may be
direct or indirect, due or to become due, absolute or contingent, primary or
secondary, liquidated or unliquidated, or sole, joint, several or joint and
several (collectively, the "Obligations"), THE MORTGAGOR HAS granted, mortgaged,
pledged, hypothecated, set over and confirmed AND THE MORTGAGOR DOES BY THESE
PRESENTS grant, mortgage, pledge, hypothecate, set over and confirm UNTO AND IN
FAVOR OF THE MORTGAGEE the whole of the following named and described Vessels to
wit:
2
<PAGE>
================================================================================
NAME OFFICIAL NO. HOME PORT
---- ------------ ---------
- --------------------------------------------------------------------------------
EMPRESS 984286 National Vessel
Documentation Center
998517 National Vessel
EMPRESS II Documentation Center
================================================================================
================================================================================
TOGETHER WITH all of their boilers, engines, machinery, masts, spars, boats,
cables, motors, tools, anchors, chains, booms, cranes, rigs, pumps, pipe, tanks,
tackle, apparel, furniture, fixtures, rigging, supplies, fittings and gaming
machinery, equipment and accessories relating to the gaming operations,
including but not limited to communication systems, visual and electronic
surveillance systems and transportation systems, tools, utensils, food and
beverage, liquor, uniforms, linens, housekeeping and maintenance supplies, fuel,
all gaming equipment and devices, gaming and financial equipment, computer
equipment, calculators, adding machines, video game and slot machines, and any
other electronic equipment of every nature used in connection with the operation
of the Vessel, all machinery, equipment, engines, appliances and fixtures for
generating or distributing air, water, heat, electricity, light, fuel or
refrigeration, or for ventilating or sanitary purposes, or for the exclusion of
vermin or insects, or for the removal of dust, refuse or garbage, all wall-beds,
wall-safes, built-in furniture and installations, shelving, lockers, partitions,
doorstops, vaults, motors, elevators, dumb-waiters, awnings, window shades,
venetian blinds, light fixtures, fire hoses and brackets and boxes for the same,
fire sprinklers, alarm, surveillance and security systems, computers, drapes,
drapery rods and brackets, mirrors, mantels, screens, linoleum, carpets and
carpeting, plumbing, bathtubs, sinks, basins, pipes, faucets, water closets,
laundry equipment, washers, dryers, ice-boxes and heating units, all kitchen and
restaurant equipment, including but not limited to silverware, dishes, menus,
cooking utensils, stoves, refrigerators, ovens, ranges, dishwashers, disposals,
water heaters, incinerators, furniture, fixtures and furnishings, all cocktail
lounge supplies, including but not limited to bars, glassware, bottles and
tables used in connection with the Vessels, all chaise lounges, hot tubs,
swimming pool heaters and equipment, and all other recreational equipment
(computerized and otherwise), beauty and barber equipment, and maintenance
supplies used in connection with the Vessels, all specifically designed
installations and furnishings, and all furniture, furnishings and personal
property of every nature whatsoever now or hereafter owned or leased by
Mortgagor, to the extent of Mortgagor's interest in such personal property, or
in which Mortgagor has any rights or interest and located in or on, or attached
to, or used or intended to be used or which are now or may hereafter be
appropriated for use on or in connection with the operation of the Vessels, or
in connection with any construction being conducted or which may be conducted
thereon, and all extensions, additions, accessions, improvements, betterments,
renewals, substitutions, and replacements to any of the foregoing, all of which
(to the
3
<PAGE>
fullest extent permitted by law) shall be conclusively deemed appurtenances of
the Vessels, and all other appurtenances to the Vessels appertaining or
belonging, whether now owned or hereafter acquired, whether on board or not, and
all additions, improvements and replacements hereafter made in or to the
Vessels. Mortgagor and Mortgagee acknowledge that significant structures,
improvements, additions, equipment and other appurtenances may be added to the
Vessels after the execution of this Mortgage, and the Mortgagor specifically
affirms and agrees that all such appurtenances to the Vessels shall be subject
to this Mortgage.
TO HAVE AND HOLD the same unto Mortgagee, its successors and assigns,
forever upon the terms herein set forth to secure the performance and observance
of and compliance with the covenants, terms and conditions in the Notes and the
Credit Agreement.
PROVIDED, only, and the condition of these presents is such, that if
the Mortgagor, its successors or assigns, shall pay or cause to be paid to the
holder of the Notes and shall perform, observe and comply with the covenants,
terms and conditions in the Notes, the Credit Agreement and the other Loan
Documents contained, expressed or implied, to be performed, observed or complied
with by and on the part of the Mortgagor, then these presents and the rights
hereunder shall cease, terminate and be void; otherwise to be and remain in full
force and effect.
AND NOW, THE PARTIES HEREBY FURTHER AGREE, COVENANT AND DECLARE that
the Vessels are to be held subject to the following covenants, conditions,
provisions, terms and uses:
ARTICLE I
---------
DEFINITIONS AND RULES OF CONSTRUCTION
-------------------------------------
For all purposes of this Mortgage, unless the context otherwise
requires:
SECTION 1.01. Definition of Terms.
--------------------
(a) Act shall mean Chapter 313 of Title 46 of the United States Code.
(b) Office of the Documentation Officer shall mean the Office of the
Documentation Officer of the United States Coast Guard at New Orleans, Louisiana
or the National Vessel Documentation Center, or such other documentation office
at which the Certificates of Documentation of the Vessels may hereinafter be
kept.
(c) Loan Documents shall have the meaning as set forth in Section
1.01 of the Credit Agreement, and any and all pledges, security agreements,
guaranties, financing statements,
4
<PAGE>
filings, instruments, documents or other agreements or assignments executed by
the Mortgagor or any other party in order to evidence, secure or perfect the
Notes and/or any other Loan Document.
(d) Default Rate shall have the meaning as set forth in Section
2.11(b) of the Credit Agreement.
SECTION 1.02. Rules of Construction. Unless the context otherwise
requires:
(a) A term has the meaning assigned to it;
(b) "Or" is not exclusive;
(c) Words in the singular include the plural, and in the plural
include the singular;
(d) All references herein to particular articles or sections, unless
otherwise provided, are references to articles or sections of this Mortgage.
(e) The headings herein are solely for convenience of reference and
shall not constitute a part of this Mortgage nor shall they affect its meaning,
construction or effect.
(f) References to the Notes, Credit Agreement and other instruments
shall be deemed to refer to such Notes, Credit Agreement or other instruments as
the same may from time to time be amended, supplemented or modified by the
parties hereto in accordance with the terms thereof.
(g) Unless defined herein, capitalized terms have the meaning given
to them in the Credit Agreement.
ARTICLE II
----------
GENERAL MORTGAGE PROVISIONS
---------------------------
SECTION 2.01. General. For purposes of this Mortgage and in order to
comply with Title 46, Section 31321(b)(3), of the United States Code, the
parties to this Mortgage hereby declare that the indebtedness which is now or
will in the future be owed under the Notes and the Credit Agreement is an amount
up to the sum of $100,000,000.00, as the total of all possible advances that may
be made, together with interest and performance of the covenants of the
Mortgage, the Notes and the Credit Agreement. The discharge amount is the same
as the total amount, together with interest and performance of the covenants of
the Mortgage, the Notes and the Credit Agreement. The Bank Facilities secured by
this Mortgage consist of a revolving line of credit ("Revolving Credit
Facility") in the aggregate principal amount of One Hundred Million Dollars
5
<PAGE>
($100,000,000.00), including the Swingline Note as a subfacility thereof in the
principal sum of Five Million Dollars ($5,000,000.00).
ARTICLE III
-----------
REPRESENTATIONS. WARRANTIES AND COVENANTS OF THE MORTGAGOR
----------------------------------------------------------
The Mortgagor represents, warrants, covenants and agrees with
Mortgagee as follows:
SECTION 3.01. Corporate Status of Mortgagor. The Mortgagor is a
corporation organized and existing under and by virtue of the laws of the State
of Illinois and is and will remain a citizen of the United States of America
within the meaning of Title 46, Section 802, of the United States Code, entitled
to own and document the Vessels and to operate them in the trade in which they
are then engaged.
SECTION 3.02. Outstanding Liens. The Mortgagor lawfully owns and is
lawfully possessed of the Vessels free and clear of all liens, mortgages, taxes
and encumbrances, and the Mortgagor will and does hereby warrant and defend the
title and possession thereto and to every part thereof for the benefit of
Mortgagee against the claims and demands of all persons whomsoever.
SECTION 3.03. Compliance With Law. The Mortgagor will comply with and
satisfy all applicable formalities end provisions of the laws, rules and
regulations of the United States of America in order to perfect, establish and
maintain this Mortgage, any supplement or amendment thereto and any assignment
thereof by the Mortgagee as a first preferred mortgage upon the Vessels and upon
all additions, improvements and replacements made in or to the same. Mortgagor
does not warrant that any such laws, rules and regulations apply to the Vessels
as a matter of law, but does warrant that it will not render such laws, rules
and regulations inapplicable by its own acts or failure to act. The Mortgagor
shall furnish to Mortgagee, from time to time, such proofs as Mortgagee may
reasonably request with respect to the Mortgagor's compliance with the foregoing
covenant. The Mortgagor shall promptly pay and discharge all United States Coast
Guard fees and expenses in connection with the recordation of this Mortgage, any
supplement or amendment thereto and any assignment thereof by the Mortgagee. In
the event that the Notes or the other Loan Documents secured hereby, or any
provisions hereto or thereof, shall be deemed invalidated in whole or in part by
reason of any present or future law or any decision of any court, the Mortgagor
will execute, on its behalf, such other and further assurances and documents as
in the opinion of Mortgagee may be required to more effectually subject the
Vessels to the payment and performance of the terms and provisions of the Notes
and the other Loan Documents. In addition, the Mortgagor will furnish to
Mortgagee such additional information as Mortgagee may reasonably require.
6
<PAGE>
SECTION 3.04. Operation of Vessels. The Mortgagor will not cause or
permit the Vessels to be operated in any manner contrary to law and the
Mortgagor will not engage in any unlawful trade or violate any law or expose the
Vessels to penalty or forfeiture, and will not do, or suffer or permit to be
done, anything which can or may injuriously affect the registration or flag of
the Vessels under the laws and regulations of the United States of America.
Mortgagor will never operate the Vessels outside the navigation limits of the
insurance carried pursuant to Section 3.12 of Article III of this Mortgage.
SECTION 3.05. Payment of Taxes, etc. The Mortgagor will pay or cause
to be paid prior to delinquency, all taxes, assessments, governmental levies,
fines and penalties lawfully imposed on the Mortgagor or on the Vessels;
provided, however, that the Mortgagor shall not be required to pay or discharge
any such tax, assessment, charge, fine or penalty so long as the legality
thereof shall be contested in good faith and by appropriate proceedings and the
failure to pay would not have a material adverse effect on the Mortgagor or this
Mortgage unless and until foreclosure, distraint, sale or other similar
proceedings shall have been commenced with respect to the property which is
subject to any such tax, assessment, charge, fine or penalty.
SECTION 3.06. Notice of Mortgage. The Mortgagor will place, and at all
times will retain, properly certified copies of this Mortgage and a Notice of
this Mortgage with the Certificate of Documentation of the Vessels on board the
Vessels, in substantially the following form:
Neither Mortgagor nor the Master nor any employee or member of the
crew of this vessel has any right, power or authority to create, incur
or permit to be imposed upon this vessel any liens whatsoever, except
for crew wages and salvage.
SECTION 3.07. Release From Arrest. If a complaint be filed against the
Vessels, or any one of them, or if a Vessel is otherwise attached, arrested,
levied upon or taken into custody by virtue of any legal proceeding in any
court, the Mortgagor will promptly notify Mortgagee thereof by telephone
facsimile, confirmed by letter, and within three (3) Banking Business Days will
cause the Vessel to be released by posting security in the form of a Letter of
Undertaking or a Release Bond, and will promptly notify Mortgagee thereof in the
manner aforesaid.
SECTION 3.08. Maintenance of Vessels. The Mortgagor will at its own
expense at all times maintain, preserve and keep the Vessels in good condition,
working order and repair and will from time to time make all needed and proper
repairs, renewals, replacements, betterments and improvements, including without
limitation those replacements required by Section 4.12 of Article IV. The
Vessels shall, and the Mortgagor covenants that they will, at all times comply
with all applicable laws, treaties and covenants and rules and regulations
issued thereunder.
7
<PAGE>
SECTION 3.09. Access to Vessels. The Mortgagor at all reasonable
times will afford Mortgagee or its authorized representatives full and complete
access to the Vessels for the purpose of inspecting the same and their papers
and records.
SECTION 3.10. Documentation of Vessels. The Mortgagor will keep the
Vessels duly documented as Vessels of the United States of America, under the
flag of the United States of America, entitled to engage in the operations
conducted by the Mortgagor and eligible for the trade in which the Vessels are
operating.
SECTION 3.11. Sale, Charter or Mortgage of Vessels. The Mortgagor will
not mortgage, transfer, or demise charter the Vessels, or any one of them,
without the written consent of Mortgagee first had and obtained. Any such
written consent to any one mortgage, transfer, or demise charter shall not be
construed to be a waiver of this provision in respect of any subsequent proposed
mortgage, transfer, or demise charter. Any such mortgage, transfer, or demise
charter of the Vessels shall be subject to the provisions of this Mortgage and
the lien it creates, unless released therefrom by the Mortgagee.
SECTION 3.12. Insurance. Mortgagor shall at its own expense keep the
Vessels insured to their full replacement value and shall maintain at a minimum
those insurance coverages and limits required of it in Section 5.09 of the
Credit Agreement. Mortgagor agrees, nonetheless, that it will adjust the amounts
and nature of coverages if so advised in writing by its insurance broker that
such increased amounts are necessary or advisable, and such increased amount is
reasonable, in light of the nature of business conducted thereon. If Mortgagor
shall at any time fail to comply with the foregoing, Mortgagee may, but shall
not be obligated to, procure such insurance and pay any unpaid premiums or
calls, the costs and expenses of said procurement and payment, together with
interest at the Default Rate from the date of such expenditure, shall become an
additional indebtedness due from Mortgagor to Mortgagee and part of the
Obligations secured by this Mortgage and which shall be paid by Mortgagor on
demand. In the case of an insured loss, all insurance monies, awards or other
payments shall be paid over to the Mortgagee and the Mortgagee shall pay such
amounts over to the Mortgagor subject to any applicable conditions set forth in
the Credit Agreement, provided, however, that if at the time of such proposed
payment an Event of Default shall then exist, the Mortgagee shall apply all such
amounts in the manner provided in Section 4.11 hereof.
SECTION 3.13. Requisition of Title to Vessels. In the event that the
title or ownership of the Vessels shall be requisitioned, purchased or taken by
the United States of America or any government of any State of the United States
or any other country or any department, agency or representative thereof,
pursuant to any present or future law, proclamation, decree, order or otherwise,
the lien of this Mortgage shall be deemed to attach to the claim for
compensation, and the compensation, purchase price, reimbursement or award for
such requisition, purchase or other taking of such title or ownership is hereby
declared payable to Mortgagee, who shall be entitled to receive
8
<PAGE>
the same and shall apply all such amounts in the manner provided in Section 4.11
hereof. In the event of any such requisition, purchase or taking, the
Mortgagor shall promptly execute and deliver to Mortgagee such documents, if
any, as in the opinion of counsel for Mortgagee may be necessary or useful to
facilitate or expedite the collection by Mortgagee of such compensation,
purchase price, reimbursement or award.
SECTION 3.14. Requisition of Vessels but not Title. In the event that
the United States of America or any government of any other country or any
department, agency or representative thereof shall not take the title or
ownership of the Vessels but shall requisition, charter, or in any manner take
over the use of the Vessels pursuant to any present or future law, proclamation,
decree, order or otherwise, and in the event Mortgagor is in default of the
terms of this Mortgage, all charter hire and compensation resulting therefrom
shall be payable to Mortgagee, and if, as a result of such requisitioning,
chartering or taking of the use of the Vessels such government, department,
agency or representative thereof shall pay or become liable to pay any sum by
reason of the loss of or injury to or depreciation of the Vessels any such sum
is hereby made payable to Mortgagee, who shall be entitled to receive the same
and shall apply any such sums referred to in this Section as provided in Section
4.11 hereof. In the event of any such requisitioning, chartering or taking of
the use of the Vessels, or any one of them, the Mortgagor shall promptly execute
and deliver to Mortgagee such documents, if any, and shall promptly do and
perform such acts, if any, as in the opinion of counsel for Mortgagee may be
necessary or useful to facilitate or expedite the collection by Mortgagee of
such claims arising out of the requisitioning, chartering or taking of the use
of the Vessels.
SECTION 3.15. Execution of Additional Documents. Mortgagor agrees to
execute all additional documents, instruments, UCC Financing Statements and
other agreements that Mortgagee may deem necessary and appropriate, within its
sole discretion, in form and substance satisfactory to Mortgagee, to keep this
Mortgage in effect, to better reflect the true intent of this Mortgage, and to
consummate fully all of the transactions contemplated by the Notes and the other
Loan Documents.
ARTICLE IV
----------
EVENTS OF DEFAULT AND REMEDIES
SECTION 4.01.
a. Events of Default. The term "Event of Default," wherever used in
this Mortgage, shall mean any one or more of the following events (whether any
such event shall be voluntary or involuntary or come about or be effected by
operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulations of any administrative or
governmental body):
9
<PAGE>
i. The occurrence of an Event of Default as defined in Section
7.01 of the Credit Agreement; or
ii. Default in the due observance or performance of any of the
covenants and conditions herein required to be kept and performed and
continuance of such default for sixty (60) days after notice by Mortgagee,
provided, however, that the Mortgagor shall not be deemed to be in default for
failure to keep the Vessels in good condition, working order and repair pursuant
to Section 3.08 of Article III if the Mortgagor shall be diligently taking steps
to comply with the requirements of said Section; or
iii. Any representations and warranties made in this Mortgage are
untrue in any material respect as of the time when the same shall have been
made; or
iv. The Mortgagor shall (i) abandon a Vessel without due cause; or
(ii) cease to be a citizen of the United States of America within the meaning of
Title 46, Section 802 of the United States Code entitled to engage in the trade
in which a Vessel is operating; or
v. The title or ownership of a Vessel shall be requisitioned,
purchased or taken by the government of any country or by any department, agency
or representative thereof and there shall not have been paid to Mortgagee an
amount in cash in United States dollars equal to the fair value of that Vessel
within ninety (90) days after such event occurs.
b. Remedies. Then and in each and every such case Mortgagee shall
have the right to:
(1) Declare all the then unpaid principal sum of the Notes, or
either of them, with the interest accrued thereon, and all other indebtedness or
sums secured hereby, to be due and payable immediately, and upon such
declaration such principal and with interest and other sums shall immediately
become due and payable without demand, presentment, notice or other requirements
of any kind (all of which the Mortgagor waives) notwithstanding anything in this
Mortgage or any Loan Document or applicable law to the contrary;
(2) Exercise all the rights and remedies in foreclosure and
otherwise given to Mortgagee by the laws and regulations of the United States of
America or of the country wherein the Vessels, or either one of them, shall then
be found or of any country or state of the United States wherein the Vessels, or
either one of them, may thereafter be found or of any other applicable
jurisdiction;
10
<PAGE>
(3) Bring suit at law, in equity or in admiralty, as it may be
advised, to recover judgment for any and all amounts due under the Notes, the
Credit Agreement, the other Loan Documents and this Mortgage, and collect the
same from the Mortgagor and/or out of any and all property of the Mortgagor
whether covered by this Mortgage or otherwise;
(4) Take the Vessels, or either one of them, without legal
process, but in a commercially reasonable manner, wherever the same may be, and
the Mortgagor or other person in possession, forthwith upon demand of Mortgagee
shall surrender to Mortgagee possession of the Vessels and Mortgagee may,
without being responsible for loss or damage, hold, lay up, lease, charter,
operate or otherwise use the Vessels for such time and upon such terms as it may
deem to be for its best advantage, accounting only for the net profits, if any,
arising from such use of the Vessels and charging upon all receipts from the use
of the Vessels or from the sale thereof by court proceedings or pursuant to
Subsection (5) of Section 4.01 next following, all costs, expenses, charges,
damages or losses by reason of such use; and if at any time Mortgagee shall
avail itself of the right herein given it to take the Vessels, or either one of
them, Mortgagee shall have the right to dock the Vessels for a reasonable time
at any dock, pier, or other premises of the Mortgagor or leased by the Mortgagor
without charge, or to dock it at any other place at the reasonable cost and
expense of the Mortgagor;
(5) Without being responsible for loss or damage, except in the
event of Mortgagee's willful misconduct or gross negligence, sell the Vessels at
any place and at such time as Mortgagee may specify and in such manner as
Mortgagee may deem advisable free from any claim by the Mortgagor in admiralty,
in equity, at law or by statute, after first giving notice of the time and place
of sale with a general description of the property in the following manner:
(a) By publishing such notice for three (3) times a week
for two consecutive weeks, with the last date of publication not more than
twenty (20) nor less than five (5) days immediately preceding the sale, in a
daily newspaper of general circulation published in the place where the Vessel
or Vessels are then located and in the Journal of Commerce;
(b) By mailing a similar notice to the Mortgagor on the
day of first publication.
Mortgagee may adjourn any such sale from time to time by announcement
at the time and place appointed for such sale or for such adjourned sale, and
without further notice or publication Mortgagee may make any such sale at the
time and place to which the same shall be so adjourned. Any such sale may be
conducted without bringing the Vessels to be sold to the place designated for
such sale and in such manner as Mortgagee may deem to be for its best advantage,
provided such sale is conducted in a commercially reasonable manner.
11
<PAGE>
(6) Mortgagor hereby consents to the appointment of a consent
keeper or substitute custodian by Mortgagee with the costs thereof to be a cost
of the sale to be paid from the proceeds of the sale or by Mortgagor.
SECTION 4.02. Sale of Vessels by Mortgagee. Any sale of the Vessels
made in pursuance of this Mortgage, whether under the power of sale hereby
granted or any judicial proceedings, shall operate to divest all right, title
and interest of any nature whatsoever of the Mortgagor therein and thereto, and
shall bar the Mortgagor, its successors and assigns, and all persons claiming
by, through or under them. At any such sale Mortgagee or any other holder of the
Notes (the "Holder") may bid for and purchase the Vessels and upon compliance
with the terms of sale may hold, retain and dispose of such property without
further accountability therefor. In case of any such sale the Holder shall be
entitled, for the purpose of making settlement or payment for the property
purchased, to use and apply the Notes or any portion thereof in order that there
may be credited against the amount remaining due and unpaid thereon the sums
payable to the Holder out of the net proceeds of such sale after allowing for
the costs and expense of sale and other charges; and thereupon the Mortgagor
shall be credited, on account of such purchase price, with the net proceeds that
shall have been so credited upon the Notes. No purchaser shall be bound to
inquire whether notice has been given, or whether any default has occurred, or
as to the propriety of the sale or as to the application of the proceeds
thereof.
SECTION 4.03. Mortgagee to Sign for Mortgagor. For purposes of any
sale of the Vessels made in pursuance of this Mortgage, whether under the power
of sale hereby granted or any judicial proceedings, Mortgagee is hereby
appointed attorney-in-fact of the Mortgagor to execute and deliver to any
purchaser aforesaid and is hereby vested with full power and authority to make,
in the name and in behalf of the Mortgagor, a good conveyance of the title to
the Vessel or Vessels so sold. In the event of any sale of a Vessel, under any
power herein contained, the Mortgagor will, if and when required by Mortgagee,
execute such form of conveyance of the Vessel or Vessels as Mortgagee may direct
or approve.
SECTION 4.04. Mortgagee to Collect Hire, etc. Mortgagee is hereby
appointed attorney-in-fact of the Mortgagor upon the happening of any Event of
Default, in the name of the Mortgagor to demand, collect, receive, compromise
and sue for, so far as may be permitted by law, all earnings, tolls, rents,
issues, revenues, income and profits of the Vessels and all amounts due from
underwriters under any insurance thereon as payment of losses or as return
premiums or otherwise, and all other sums, due or to become due at the time of
the happening of any Event of Default in respect of the Vessels, or in respect
of any insurance thereof from any person whomsoever, and to make, give and
execute in the name of the Mortgagor acquittances, receipts, releases, or other
discharges for the same, whether under seal or otherwise, and to endorse and
accept in the name of the Mortgagor all checks, Notes, drafts, warrants,
agreements and all other instruments in writing with respect to the foregoing.
All amounts so received shall first be applied
12
<PAGE>
to operating expenses and then to unpaid Obligations under the Notes and the
other Loan Documents.
SECTION 4.05. Mortgagee's Right to Possession. Whenever any right to
enter and take possession of the Vessels accrues to Mortgagee, it may require
the Mortgagor to deliver, and the Mortgagor shall on demand, at its own cost and
expense, deliver the Vessels to Mortgagee as demanded. If any legal proceedings
shall be taken to enforce any right under this Mortgage, Mortgagee shall be
entitled as a matter of right to the appointment of a receiver of the Vessels
and the earnings, tolls, rents, issues, revenues, income and profits due or to
become due and arising from the operation thereof
SECTION 4.06. Appearance by Mortgagee on Behalf of Mortgagor. The
Mortgagor authorizes and empowers Mortgagee or its appointees or any of them to
appear in the name of the Mortgagor, its successors and assigns, in any court
where a suit is pending against a Vessel because of or on account of any alleged
lien against a Vessel from which the Vessel has not been released and to take
such proceedings as it or any of them may deem proper towards the defense of
such suit and the discharge of such lien, in the event that the Mortgagor shall
not be taking proceedings reasonably satisfactory to Mortgagee, and in such case
all reasonable expenditures made or incurred by Mortgagee or his appointees for
the purpose of such defense or discharge shall be a debt due from the Mortgagor,
its successors and assigns, to Mortgagee, and shall be secured by the lien of
this Mortgage in like manner and extent as if the amount and description thereof
were written herein.
SECTION 4.07. Acceleration of Indebtedness Secured Hereby. The
Mortgagor covenants that upon the happening of any one or more of the Events of
Default, then upon written demand of Mortgagee, the Mortgagor will pay to
Mortgagee the whole of the sum due under the Notes and perform its obligations
to Mortgagee under the other Loan Documents and this Mortgage, and in case the
Mortgagor shall fail to pay the same forthwith upon such demand, Mortgagee shall
be entitled to recover judgment for the whole amount so due and unpaid, together
with such further amounts as shall be sufficient to cover the reasonable costs
and expenses of collection, including a reasonable compensation to Mortgagee's
agents, attorneys and counsel and any necessary advances, expenses and
liabilities made or incurred by them hereunder. All moneys collected by
Mortgagee under this Section shall be applied by Mortgagee in accordance with
the provisions of Section 4.11 of this Article.
SECTION 4.08. Rights of Mortgagee. Each and every power and remedy
herein given to Mortgagee shall be cumulative and shall be in addition to every
other power and remedy herein given or now or hereafter existing at law, in
equity, in admiralty or by statute, and each and every power and remedy whether
herein given or otherwise existing may be exercised from time to time and as
often and in such order as may be deemed expedient by Mortgagee, and the
13
<PAGE>
exercise or the beginning of the exercise of any power to remedy shall not be
construed to be a waiver of the right to exercise at the same time or
thereafter any other power or remedy. No delay or omission by Mortgagee in the
exercise of any right or power or in the pursuance of any remedy accruing upon
any default as above defined shall impair any such right, power or remedy or be
construed to be a waiver of any such Event of Default or to be any acquiescence
therein; nor shall the acceptance by Mortgagee of any security or of any payment
of or on account of the Notes after any Event of Default or of any payment on
account of any past default be construed to be a waiver of any right to take
advantage of any future Event of Default or of any past Event of Default not
completely cured thereby.
SECTION 4.09. Cure of Defaults. If at any time after an Event of
Default and prior to the actual sale of a Vessel by Mortgagee or prior to any
foreclosure proceedings or prior to the acceleration of the Notes (and provided
that such acceleration has not been rescinded), the Mortgagor completely cures
all Events of Default and pays all expenses, advances and damages to Mortgagee
consequent on such Events of Default, with interest at the Default Rate, then
Mortgagee shall restore the Mortgagor to its former position, but such action,
if any, shall not affect any subsequent Event of Default or impair any rights
consequent thereon.
SECTION 4.10. Restoration of Position. In case Mortgagee shall have
proceeded to enforce any right, power or remedy under this Mortgage by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely
to Mortgagee, then and in every such case the Mortgagor and Mortgagee shall be
restored to their former positions and rights hereunder with respect to the
property subject or intended to be subject to this Mortgage, and all rights,
remedies and powers of Mortgagee shall continue as if no such proceedings had
been taken.
SECTION 4.11. Proceeds of Sale. The proceeds of any sale of a Vessel
and the net earnings from the hire or from any operation or use of a Vessel by
Mortgagee under any of the powers herein specified and any and all other money
received by Mortgagee pursuant to or under the terms of this Mortgage or in any
proceedings hereunder, the application of which has not elsewhere herein been
specifically provided, shall be applied at the discretion of Mortgagee with
Mortgagee having the right to impute payments as it may desire among the
following:
FIRST: To the payment of all reasonable expenses and charges,
including the expenses of any sale, and expenses of any retaking, reasonable
attorneys' fees, court costs, keepers' fees, necessary repairs and any other
expenses or advances made or incurred by Mortgagee in the protection of its
rights or the pursuance of its remedies hereunder, and to provide adequate
indemnity against liens claiming priority over or equality with the lien of this
Mortgage;
SECOND: To the payment in full of any amounts then due and unpaid
under the Credit Agreement and any other Loan Documents (other than the Notes).
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<PAGE>
THIRD: To the payment of the balance of interest remaining unpaid
under the Notes.
FOURTH: To the balance, if any, of principal remaining unpaid under
the Notes; and
FIFTH: The balance, if any, of such payment on proceeds to any party
who may be legally entitled thereto.
SECTION 4.12. Repairs to Vessels and Sale of Equipment. Until one or more
of the Events of Default hereinabove described shall happen, the Mortgagor
(a) shall be suffered and permitted to retain actual possession and use of the
Vessels; (b) may at any time alter, repair, change or re-equip the Vessels,
subject, however, to the provisions of Section 3.08 of Article III; and (c)
shall have the right, from time to time in its discretion and without obtaining
a release thereof by Mortgagee, to dispose of, free from the lien hereof,
equipment or other appurtenances, including any gaming machinery, any equipment
and accessories relating to the gaming operations, of the Vessels that may
become worn out or obsolete or otherwise are no longer useful, necessary,
profitable or advantageous in the operation of the Vessels, provided that such
does not materially affect the value of the Vessels. Either prior to or promptly
following such removal any such property shall be replaced with serviceable
equipment or other appurtenances of substantially equal utility and of a value
at least substantially equal to that of the replaced property when first
acquired and free of any security interest of any other person, which shall
forthwith become subject to the lien of this Mortgage as a preferred mortgage
thereon.
ARTICLE V
---------
MISCELLANEOUS PROVISIONS
------------------------
SECTION 5.01. Addresses. Any notice to be given under this Mortgage
shall, except as otherwise expressly provided herein, be served by registered or
certified mail or hand delivered, addressed as follows:
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<PAGE>
(a) To Mortgagor:
EMPRESS CASINO JOLIET CORPORATION
[address]
with a copy to:
(b) To Mortgagee:
WELLS FARGO BANK, NATIONAL ASSOCIATION
Gaming Division
One East First Street
Reno, Nevada 89501
Attention: Casey Potter, Vice President
with copies to:
Timothy J. Henderson, Esq.
Henderson & Morgan, L.L.C.
164 Hubbard Way, Suite B
Reno, Nevada 89502
unless another address shall be furnished in writing by the party to receive
such notice to the party giving such notice, and any such notice shall be deemed
made as of the date of mailing or hand delivery.
SECTION 5.02. Counterparts. This Mortgage may be executed in any number of
counterparts and all such counterparts executed and delivered each as an
original shall constitute but one and the same instrument.
SECTION 5.03. Interest of Mortgagor. The interest of the Mortgagor in
the Vessels and the interest mortgaged by this Mortgage is that of one hundred
percent (100%) absolute and sole ownership.
SECTION 5.04. Survivorship of Covenants. All the covenants, promises,
stipulations and agreements of the Mortgagor secured hereby shall bind the
Mortgagor and its successors and assigns and shall inure to the benefit of
Mortgagee and its successors and assigns.
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<PAGE>
SECTION 5.05. Amendments. The Notes, the Loan Documents and this
Mortgage may not be modified, supplemented or amended in any respect, or any
waiver given in regard to any of the provisions hereof, in any case which might
affect the rights of Mortgagee hereunder, except with the written consent of
Mortgagee, and so long as Mortgagor shall do all acts and things necessary to
maintain the preferred status of this Mortgage.
SECTION 5.06. Discharge of Lien. When the Notes have been paid in
full, and the Mortgagor's obligations to the Mortgagee arising under the other
Loan Documents have been satisfied in full, Mortgagee shall, at the Mortgagor's
expense, execute and deliver to the Mortgagor such documents as the Mortgagor
shall reasonably request to evidence the surrender and discharge of the lien
hereof upon the Vessels.
SECTION 5.07. Incorporation into Mortgage. The Whereas Clauses and the
Granting Clause of this Mortgage are incorporated in and are made a part of this
Mortgage.
SECTION 5.08. Governing Law. This Mortgage shall be governed by and
construed according to the provisions of the Act, and where silent, by the
General Maritime Law of the United States.
IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage in
multiple original counterparts effective as of the day and year first above
written.
EMPRESS CASINO JOLIET CORPORATION
BY: /s/ Peter A. Ferro, Jr.
-----------------------------
NAME: Peter A. Ferro, Jr.
TITLE: Chief Executive Officer
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ACKNOWLEDGMENT
EMPRESS CASINO JOLIET CORPORATION
STATE OF ILLINOIS )
) SS:
COUNTY OF COOK )
On the 30th day of June 1998, before me personally came Peter A.
Ferro, Jr., to me known, who, being by me duly sworn, did depose and say that he
resides at 19941 Manhatten Rd, Elwood, IL 60421; that he is the Chief Executive
Officer of EMPRESS CASINO JOLIET CORPORATION, the corporation described in and
on whose behalf he executed the above instrument; and that he has been duly
authorized and instructed by the Board of Directors of said corporation to
execute the foregoing First Preferred Fleet Mortgage for the uses and purposes
set forth therein.
------------------------------------
"OFFICIAL SEAL"
GINA A. BILOTTO
Notary Public State of Illinois /s/ Gina A. Bilotto
My Commission Expires April 21, 1999 ---------------------------
------------------------------------ Notary Public
My Commission expires:
April 21, 1999
- ----------------------
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EXHIBIT 4.8(m)
SECURITY AGREEMENT AND PLEDGE OF STOCK
--------------------------------------
(Illinois)
THIS SECURITY AGREEMENT AND PLEDGE OF STOCK ("Agreement") is made and
entered into this 30th day of June, 1998, by and between EMPRESS ENTERTAINMENT,
INC., a Delaware corporation, hereinafter referred to as "Debtor", and WELLS
FARGO BANK, National Association, as Agent Bank on behalf of itself and each of
the Banks described hereinbelow, hereinafter referred to as "Secured Party".
R E C I T A L S:
- - - - - - - -
A. Reference is made to that certain Credit Agreement, dated as of
June 17, 1998 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), by and among EMPRESS ENTERTAINMENT, INC., a Delaware
corporation, EMPRESS CASINO JOLIET CORPORATION, an Illinois corporation and
EMPRESS CASINO HAMMOND CORPORATION, an Indiana corporation (collectively the
"Borrowers"), the Lenders therein named (each, together with their respective
successors and assigns, individually being referred to as a "Lender" and
collectively as the "Lenders"), WELLS FARGO BANK, National Association, as the
swingline lender (herein in such capacity, together with its successors and
assigns, the "Swingline Lender"), WELLS FARGO BANK, National Association, as the
issuer of letters of credit thereunder (herein in such capacity, together with
its successors and assigns, the "L/C Issuer"), and WELLS FARGO BANK, National
Association, as administrative and collateral agent for the Lenders, Swingline
Lender and L/C Issuer (herein, in such capacity, called the "Agent Bank" and,
together with the Lenders, Swingline Lender and L/C Issuer, collectively
referred to as the "Banks").
B. In this Agreement, all capitalized words and terms not otherwise
defined herein shall have the respective meanings and be construed herein as
provided in Section 1.01 of the Credit Agreement and any reference to a
provision of the Credit Agreement shall be deemed to incorporate that
<PAGE>
provision as a part hereof in the same manner and with the same effect as if the
same were fully set forth herein.
C. Debtor is the owner of all of the outstanding stock (collectively
the "Pledged Stock") of the following Subsidiary (collectively the "Pledged
Subsidiary"):
(i) Empress Casino Joliet Corporation, an Illinois corporation
("ECJC") represented by Stock Certificate No. 66, dated June 5, 1998,
for One Thousand (1,000) shares of the common voting capital stock of
ECJC.
D. This Agreement is governed by the Illinois Riverboat Gambling Act
and the regulations promulgated thereunder ("Illinois Gaming Laws") as enforced
by the Illinois Gaming Board ("Illinois Gaming Authority") as to the Pledged
Stock of ECJC.
AGREEMENTS:
----------
In consideration of the terms and conditions set forth herein and the
making of the Bank Facilities by Banks, the parties agree as follows:
1. As security for the performance by Borrowers of each and every
term and provision contained in the Credit Agreement and the due and punctual
payment of the Revolving Credit Note, the Swingline Note and all other amounts
owing under any of the Loan Documents (collectively the "Secured Obligations"),
and, subject to the receipt of all necessary approvals under the Illinois Gaming
Laws, Debtor hereby pledges, assigns, and transfers as security the Pledged
Stock to Secured Party, and grants to Secured Party a security interest in the
Pledged Stock, together with all rights, products, proceeds, dividends,
redemption payments, liquidation payments, instruments and any other securities
derived therefrom, substituted therefor or otherwise subject to the lien hereof
pursuant to the provisions hereof, all of which shall be treated as part of the
Pledged Stock and collateral hereunder.
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<PAGE>
2. Debtor represents and warrants that: (a) the Pledged Stock
represents all of the issued and outstanding shares of the common voting capital
stock of the Pledged Subsidiary and the Pledged Subsidiary has not issued any
shares of non-voting capital stock, (b) the Pledged Subsidiary has not
authorized or issued any class of stock other than common voting and non-voting
stock, (c) it is the legal, record and beneficial owner of, has good and
marketable title to and has the right to pledge and create a security interest
in the Pledged Stock, subject to Illinois Gaming Authority approval, (d) the
Pledged Stock is validly issued, fully paid and non-assessable and is not
subject to any lien, pledge, charge, encumbrance or security interest (other
than the security interest hereby created in favor of Secured Party) or right or
option on the part of any third Person to purchase or otherwise acquire the
Pledged Stock or any part thereof nor is the Pledged Stock subject to any
restriction relating to the voting or other rights attaching thereto, other than
those imposed by and under the Illinois Gaming Laws and under the EEI
Shareholders Agreement, (e) this Agreement and the delivery of the Pledged
Stock to Secured Party creates a valid and enforceable perfected lien on all of
the Pledged Stock in favor of the Secured Party for the benefit of the Banks,
(f) except for the required consents and approvals under the Illinois Gaming
Laws specified herein, no consent, filing, recording or registration is required
to perfect the lien purported to be created by this Agreement, and (g) each of
the representations and warranties contained in Article IV of the Credit
Agreement is true and correct. Debtor covenants and agrees that it will defend
Secured Party's right, title and lien in and to the Pledged Stock against the
claims and demands of all Persons and that it will have like title to and right
to pledge any other property at any time hereafter pledged to the Secured Party
as Pledged Stock.
3. Concurrently herewith, Debtor shall cause to be delivered to
Secured Party the certificate or certificates evidencing the Pledged Stock (each
individually a "Certificate" and collectively the "Certificates") together with
an Irrevocable Stock Power with respect to each of the Certificates in the form
of Exhibit A, affixed hereto and by
-3-
<PAGE>
this reference incorporated herein and made a part hereof (the "Stock Power").
Each Certificate evidencing the Pledged Stock shall be delivered to Secured
Party in suitable form for transfer by delivery and shall be accompanied by a
duly executed Stock Power, all in form and substance reasonably satisfactory to
Secured Party. Secured Party agrees to hold all Certificates evidencing the
Pledged Stock within the State of Nevada (or such other location or locations as
may be required by the Illinois Gaming Authority) at all times during the life
of this Agreement, and to make such certificates available for inspection by the
Illinois Gaming Authority or its agents or representatives.
4. Upon the full and complete satisfaction of the Revolving Credit
Note, the Swingline Note and all other amounts owing under any of the Loan
Documents and termination of the Bank Facilities, Secured Party shall release
its security interest hereunder, and will deliver to Debtor the Certificates
evidencing the Pledged Stock, together with all Stock Powers, and Secured Party
shall, at the request and expense of Debtor, file such documents and take such
action as may be required by law or as Debtor may reasonably request, at
Debtor's expense, to release Secured Party's security interest in the Pledged
Stock.
5. Secured Party shall have with respect to the Pledged Stock the
rights and obligations of a secured party under the Nevada Uniform Commercial
Code, Chapter 104 of the Nevada Revised Statutes (the "Code"). Such rights
shall include, without limitation:
a. The right, subject to the approval of the Illinois Gaming
Authority, upon the occurrence of an Event of Default, to have the Pledged Stock
or any part thereof transferred to its own name or to the name of its nominee;
or, if any Pledged Stock has been sold by Secured Party in foreclosure after the
occurrence of an Event of Default, to have such Pledged Stock transferred to and
issued in the name of the purchaser.
-4-
<PAGE>
b. The right, subject to the approval of the Illinois Gaming
Authority, upon the occurrence of an Event of Default, to sell, assign or
deliver as many shares of the Pledged Stock as is reasonably necessary to repay
the defaulted Secured Obligations owing the Banks, together with expenses,
including, but not limited to, reasonable selling expenses, broker's fees and
attorneys' fees attendant upon such sale and repayment, at public or private
sale, as Secured Party, in its sole option, may elect, either for cash or on
credit, without assumption of any credit risk and without demand or
advertisement, unless otherwise required by law.
6. Debtor hereby covenants, agrees and acknowledges that an "Event
of Default" shall exist under this Agreement upon the occurrence of any of the
following events or conditions, and without the necessity of any demand or
notice except as may be expressly required herein or under the Credit Agreement
or under applicable law:
a. the occurrence of any "Event of Default" as defined and
described in the Credit Agreement; and/or
b. any default hereunder not cured within thirty (30) days
after written notice from Agent Bank.
7. Subject to the Illinois Gaming Laws, at any private or public
sale of the Pledged Stock or any part thereof, Secured Party may purchase and
pay for the same by cancellation of a principal amount of the Credit Facility
and Notes or other amounts owing under the Credit Agreement and Loan Documents
equal to the purchase price and free of any right of redemption on the part of
Debtor. For the purpose of this Paragraph, the "Purchase Price" where the
Pledged Stock is listed on any publicly traded stock exchange ("Exchange"),
shall be deemed to be the mean of the high and low selling prices in that
Exchange on the date of sale. Secured Party may, in its sole and absolute
discretion, sell all or any part of the Pledged Stock at private sale in such
manner and under such circumstances as Secured Party may deem necessary or
advisable in order that the sale may be lawfully conducted. Without limiting the
foregoing, Secured Party may (i) approach
-5-
<PAGE>
and negotiate with a limited number of potential purchasers; and (ii) restrict
the prospective bidders or purchasers to persons who will represent and agree
that they are purchasing the Pledged Stock for their own account for investment
and not with a view to the distribution or resale thereof. In the event that the
Pledged Stock is sold at private sale, Debtor agrees that if the Pledged Stock
is sold for a price which Secured Party in good faith believes to be reasonable
under the circumstances then existing, then: (aa) the sale shall be deemed to be
commercially reasonable in all respects; (bb) the credit against the Secured
Obligations, to which Debtor may be entitled, shall not exceed the purchase
price; and (cc) Secured Party shall not incur any liability or responsibility to
Debtor in connection therewith, notwithstanding the possibility that a
substantially higher price might have been realized at a public sale. Debtor
recognizes that a ready market may not exist for the Pledged Stock if it is not
regularly traded on a recognized securities exchange, and that a sale by Secured
Party of the Pledged Stock for an amount substantially less than a pro rata
share of the fair market value of the issuer's assets minus liabilities may be
commercially reasonable in view of the difficulties that may be encountered in
attempting to sell the Pledged Stock. Secured Party agrees, however, that the
Debtor shall have all rights, including rights of notice, provided by the Code.
In any case where notice is required, thirty (30) days notice shall be deemed to
be reasonable notice. In the event of any sale hereunder, Secured Party shall
apply the proceeds in the order set forth in Section 7.03 of the Credit
Agreement. Secured Party may resort to the Pledged Stock or any portion thereof
with no requirement on the part of Secured Party to proceed first against any
other Person or Collateral or under any other Security Documentation.
Additionally, (a) Debtor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the Pledged
Stock, whether before or after sale hereunder and all rights, if any, of
marshalling of the Pledged Stock and any other security for the obligations of
the Borrowers under the Credit Agreement or otherwise; (b) neither Secured Party
nor any of the Banks shall be liable for failure to collect or realize upon any
or all of the
-6-
<PAGE>
Pledged Stock or for any delay in so doing nor shall any of them be under any
obligation to take any action whatsoever with regard thereto; (c) Debtor agrees
it will not sell or otherwise dispose of or create any lien on any portion of
the Pledged Stock (except as permitted by the Credit Agreement); and (d) Debtor
agrees to promptly take all actions required under applicable law to maintain
the perfection of the security interest in the Pledged Stock in the event that
such stock is or becomes uncertificated and to take such actions as the Secured
Party reasonably deems necessary or desirable to effect the foregoing and to
permit the Secured Party to exercise any of its rights and remedies hereunder.
8. While the Pledged Stock shall continue to be held by Secured
Party pursuant to this Agreement, so long as no Event of Default has occurred
and remains continuing and until written notice from Secured Party: (a) Debtor
shall be entitled to exercise any rights or subscription privileges accruing to
it as the owner of the Pledged Stock which are not inconsistent with the terms
of this Agreement or the Credit Agreement or any other Loan Document or any
other instrument or agreement referred to herein or therein, or which would have
the effect of impairing the position or interest of Secured Party, any Bank or
holder of the Revolving Credit Note or Swingline Note, provided, however, that
any additional shares of stock purchased or otherwise received on account of any
such rights or subscription privileges shall be delivered to Secured Party,
together with an appropriate Stock Power, and shall be treated as part of the
Pledged Stock; and (b) Debtor shall be entitled to receive and to retain and use
any dividends or distributions paid in respect of the Pledged Stock. The
Secured Party shall also be entitled to receive directly, and retain as part of
the Collateral:
a. all other or additional stock or securities or property
(other than cash) paid or distributed by way of dividend in respect of the
Pledged Stock;
b. all other or additional stock or securities or property
(other than cash) paid or distributed in respect of the Pledged Stock by way of
stock-split, spin-
-7-
<PAGE>
off, split-up, reclassification, combination of shares or similar rearrangement;
and
c. all other or additional stock or other securities or
property (other than cash) which may be paid in respect of the Pledged Stock by
reason of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
9. Notwithstanding anything to the contrary herein, the parties
hereto will at all times comply with all Securities and Exchange Commission,
Illinois Gaming Authority and other regulatory requirements with respect to its
ownership and pledge of the Pledged Stock.
10. Upon any Event of Default hereunder, subject to applicable law
and the requirements of the Illinois Gaming Authority: (a) Secured Party shall
have the right, upon written notice to Debtor, but shall not be required, to
vote or give its consent with respect to the voting of any or all of the Pledged
Stock, and in such event and for such purpose Debtor hereby irrevocably
constitutes and appoints Secured Party the proxy and attorney-in-fact of the
Debtor, with full power of substitution to do so, and (b) Secured Party shall be
entitled to receive all dividends and distributions (other than Tax
Distributions) and apply the same toward payment of the Secured Obligations
owing under the Bank Facilities in the manner and sequence set forth in Section
7.03 of the Credit Agreement.
11. The Debtor represents to Secured Party that the Debtor has made
its own arrangements for keeping informed of changes or potential changes
affecting the Pledged Stock including, but not limited to, rights to convert,
rights to subscribe, payment of dividends, reorganization or other exchanges,
tender offers and voting rights, and the Debtor agrees that Secured Party shall
have no responsibility or liability for informing the Debtor of any such changes
or potential changes or for taking any action or omitting to take any action
with respect thereto.
-8-
<PAGE>
12. No renewal, extension or modification of the Credit Agreement,
Revolving Credit Note, Swingline Note or any other Loan Document, no release or
surrender of any Pledged Stock as security hereunder, no invalidity,
irregularity or unenforceability of all or any part of this Agreement or any
other Loan Document and no delay in exercising any right or power with respect
thereto or hereunder shall affect the rights of Secured Party with respect to
the Pledged Stock or any part thereof. Secured Party's rights, liens and
security interests hereunder shall continue unimpaired and Debtor shall be and
remain obligated in accordance with the terms hereof notwithstanding any
compromise or other indulgence granted by Secured Party. The Debtor hereby
waives notice of acceptance of this Agreement and of extensions of credit,
loans, advances, or other financial assistance made by Banks to Borrowers. The
Debtor further waives presentment and demand for payment on the Notes, protest
and notice of dishonor or default with respect to the Notes or any other Loan
Document, and all other notices to which the Debtor might otherwise be entitled
except as herein otherwise expressly provided or as otherwise provided in the
Credit Agreement or Notes.
13. All notices and other communications provided to any party hereto
under this Agreement shall be in writing or by facsimile and addressed,
delivered or transmitted to such party at its address or facsimile number set
forth in the Credit Agreement or at such other address or facsimile number as
may be designated by such party in a notice to the other parties. Any notice,
if mailed and properly addressed with postage prepaid, shall be deemed given
when received; any notice, if transmitted by facsimile, shall be deemed given
when transmitted.
14. Whether or not the transactions contemplated hereunder are
completed, the Debtor will pay all expenses relating to this Agreement,
including, but not limited to:
a. All reasonable costs, outlays, attorneys' fees and expenses
of any kind and character had or incurred in the enforcement or defense of any
of the provisions of this Agreement, the preparation for, negotiations
regarding,
-9-
<PAGE>
consultations concerning, or the defense of legal proceedings involving any
claim or claims made or threatened against Secured Party or any Bank arising out
of this transaction or the protection of the Pledged Stock securing the Bank
Facilities or advances made hereunder;
b. All taxes levied against or paid by Secured Party (other
than taxes on, or measured by, the income of Secured Party) and all filing and
recording fees, costs, expenses which may be incurred by Secured Party in
respect of the filing and/or recording of any document or instrument relating to
the transactions described in this Agreement.
15. Debtor agrees that it will duly execute and deliver to Secured
Party any additional documents which may be reasonably required by Secured Party
to give full effect to, perfect or protect the pledge and security interest
granted to Secured Party hereunder or to enable Secured Party to exercise and
enforce its rights and remedies hereunder with respect to the Pledged Stock and
to preserve, protect and maintain the Pledged Stock, including, without
limitation, payment of all taxes, assessments and other charges imposed on or
relating to the Pledged Stock. Debtor hereby consents and agrees that the
issuers of the Pledged Stock, or any registrar or transfer agent or trustee for
any of the Pledged Stock, shall be entitled to accept the provisions of this
Agreement as conclusive evidence of the right of Secured Party to effect any
transfer or exercise any right hereunder, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by Debtor or any other
Person to such issuers or to any such registrar or transfer agent or trustee.
16. Debtor agrees to assist Secured Party in obtaining all approvals
of the Illinois Gaming Authority or any other Governmental Authority that are
required by law for or in connection with any action or transaction contemplated
by this Agreement or by the Code and, at Secured Party's request after and
during the continuance of an Event of Default, to prepare, sign and file with
the Illinois Gaming Authority the transferor's portion of any application or
applications for consent to the transfer of control thereof
-10-
<PAGE>
necessary or appropriate under applicable Illinois Gaming Laws for approval of
any sale or transfer of the Pledged Stock pursuant to the exercise of Secured
Party's remedies hereunder and under the Loan Documents.
17. This Agreement shall be binding upon and inure to the benefit of
the Debtor, Secured Party and their respective legal representatives, heirs,
successors and assigns, and the authorized transferees and holders of the
Revolving Credit Note and the Swingline Note; provided, however, that Debtor may
not assign or transfer any of its rights or obligations hereunder without the
prior written consent of Secured Party.
18. This Agreement, including the exhibits and other agreements
referred to herein, constitutes the entire agreement between the parties
relating to the subject matter hereof and cannot be changed or terminated
orally, and shall be deemed effective as of the date it is accepted by Secured
Party.
19. Other than with respect to compliance with the Illinois Gaming
Laws and the requirements of the Illinois Gaming Authority, this Agreement shall
be governed and construed under the laws of the State of Nevada in all respects,
including, but not limited to, matters of perfection, construction, validity,
performance and discharge. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under said
laws. However, if any provision of this Agreement shall be held to be
prohibited or invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
20. Time is of the essence of this Agreement.
21. Debtor and Secured Party further agree that:
-11-
<PAGE>
(a) This Agreement shall not be effective until it is approved
by the Illinois Gaming Authority. In this regard, Debtor represents to Secured
Party that it has obtained all necessary consents from the Illinois Gaming
Authority for the execution of this Agreement, delivery to Secured Party of the
Pledged Stock and execution and delivery of the Stock Powers; and
(b) Notwithstanding approval by the Illinois Gaming Authority
pursuant to paragraph (a), other approvals may be required before certain
transactions relating to this Agreement may occur, including, but not limited
to, the following:
(1) Any re-registration or action similar to re-
registration of the Pledged Stock must be approved in advance by the
Illinois Gaming Authority;
(2) Any foreclosure, sale, transfer, or other disposition
of the Pledged Stock must be approved in advance by the Illinois
Gaming Authority, and shall not be effective unless so approved; and
(3) The payment or receipt of any money or other thing of
value constituting any part of the consideration for the transfer or
acquisition of the Pledged Stock must be approved in advance by the
Illinois Gaming Authority, except that such consideration may be
placed in escrow pending the necessary approvals.
22. Debtor agrees to indemnify and hold harmless Secured Party in
accordance with the provisions of Section 5.14 of the Credit Agreement which is
incorporated by this reference as though fully set forth herein.
23. This Security Agreement and Pledge of Stock may be executed in
any number of separate counterparts with the same effect as if the signatures
hereto and hereby were upon
-12-
<PAGE>
the same instrument. All such counterparts shall together constitute one and the
same document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first hereinabove written.
DEBTOR: SECURED PARTY:
EMPRESS ENTERTAINMENT, INC., WELLS FARGO BANK,
a Delaware corporation National Association,
Agent Bank
By /s/ John Costello By /s/ Joseph Brady
------------------------------- ------------------------------
John Costello, Joseph Brady
Chief Financial Officer Senior Vice President
STATE OF Illinois )
) ss
COUNTY OF Cook )
Before me, a Notary Public in and for the State of Illinois, personally
appeared John Costello, the Vice President - CEO of EMPRESS ENTERTAINMENT, INC.,
who being first duly sworn, acknowledged the execution of the foregoing Security
Agreement and Pledge of Stock for and on behalf of said EMPRESS ENTERTAINMENT,
INC.
WITNESS my hand and Notarial Seal this 30th day of June, 1998.
[SEAL] /s/ Joanne Bruen
---------------------------
Printed Name Joanne Bruen
I am a resident of Cook County, Illinois.
My commission expires: 10/14/00
-13-
<PAGE>
STATE OF Illinois )
) ss
COUNTY OF Cook )
This instrument was acknowledged before me on June 30, 1998, by Joseph L
Brady as Sr Vice President of/for WELLS FARGO BANK, National Association.
/s/ Joanne Bruen [SEAL]
- ----------------------------
Notary Public
-14-
<PAGE>
IRREVOCABLE STOCK POWER
-----------------------
KNOW ALL MEN BY THESE PRESENTS:
That EMPRESS ENTERTAINMENT, INC., a Delaware corporation, for value
received has bargained, sold, assigned and transferred and by these presents
does bargain, sell, assign and transfer unto _______________________, One
Thousand (1,000) shares of the common voting stock of Empress Casino Joliet
Corporation, an Illinois corporation, standing in its name on the books of said
corporation represented by Certificate No. 66 herewith and does hereby
constitute and appoint Wells Fargo Bank, National Association, Agent Bank, as
its true and lawful attorney, IRREVOCABLY, for it and in its name and stead to
sell, assign, transfer, hypothecate, pledge and make over all or any part of the
said stock and for that purpose to make and execute all necessary acts of
assignment and transfer thereof, and to substitute one or more persons with like
full power, hereby ratifying and confirming all that said Attorney shall
lawfully do by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand on this 17 day of
June, 1998.
EMPRESS ENTERTAINMENT, INC.,
a Delaware corporation
By /s/ John Costello
----------------------------
John Costello
Chief Financial Officer
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
Before me, a Notary public in and for the State of Illinois,
personally appeared John Castello, the Vice President - CFO of EMPRESS
ENTERTAINMENT, INC., who being first duly sworn, acknowledged the execution of
the foregoing Irrevocable Stock Power for and on behalf of said EMPRESS
ENTERTAINMENT, INC.
WITNESS my hand and Notarial Seal this 30th day of June, 1998.
[SEAL]
Joanne Bruen
-------------------------
Printed Name Joanne Bruen
------------
I am a resident of Cook County, Illinois.
My commission expires: 10/14/00
-2-
<PAGE>
EXHIBIT 4.8(n)
TRADEMARK SECURITY AGREEMENT
----------------------------
THIS TRADEMARK SECURITY AGREEMENT ("Agreement") is made and entered
into this 30th day of June, 1998 by and among EMPRESS ENTERTAINMENT, INC., a
Delaware corporation ("EEI"), EMPRESS CASINO JOLIET CORPORATION, an Illinois
corporation ("ECJC"), and EMPRESS CASINO HAMMOND CORPORATION, an Indiana
corporation ("ECHC"), all of which are hereinafter collectively referred to as
"Debtors", and WELLS FARGO BANK, National Association, as Agent Bank on behalf
of the Lenders, the Swingline Lender and the L/C Issuer, all of which are
described hereinbelow (hereinafter referred to, in such capacity, as "Agent
Bank").
R E C I T A L S:
- - - - - - - -
A. Reference is made to that certain Credit Agreement executed
concurrently, or substantially concurrent, herewith (as it may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
by and among Debtors, as Borrowers, the Lenders therein named (each, together
with their respective successors and assigns, individually being referred to
herein as a "Lender" and collectively as the "Lenders"), the Swingline Lender
therein named (together with its successors and assigns, the "Swingline
Lender"), the L/C Issuer therein named (together with its successors and
assigns, the "L/C Issuer"), and Agent Bank (with the Lenders, the Swingline
Lender, the L/C Issuer and Agent Bank being collectively referred to herein as
the "Banks").
B. In this Agreement, all capitalized words and terms not otherwise
defined herein shall have the respective meanings and be construed herein as
provided in Section 1.01 of the Credit Agreement and any reference to a
provision of the Credit Agreement shall be deemed to incorporate that provision
as a part hereof in the same manner and with the same effect as if the same were
fully set forth herein.
C. The Debtors desire to grant a security interest to Agent Bank in
all of their now owned, or hereafter acquired, right, title and interest in, and
to, the Trademarks and the Copyrights as well as the proceeds of all such
collateral.
<PAGE>
NOW, THEREFORE, in consideration of the premises and the terms and
conditions contained herein, the parties hereto hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
-----------
have the respective meanings set forth below and unless the context otherwise
requires, capitalized terms used herein without definition shall have the
respective meanings assigned to such terms in the Credit Agreement.
"Abandoned and De Minimis Common Law Trademarks" shall mean those
common law Trademarks owned or previously owned by any of the Debtors that have
been abandoned and have not more than de minimis value.
"Abandoned and De Minimis Trademarks" shall mean those Trademarks
owned or previously owned by any of the Debtors that have been abandoned and
have not more than de minimis value.
"Agreement" shall mean this Trademark Security Agreement, including
all amendments, supplements and extensions hereto and restatements hereof
entered into at any time and from time to time and any exhibits or schedules to
any of the foregoing.
"Copyrights" mean all copyrights, copyright registrations, and
copyright applications, which, in each case, are now or hereafter filed with the
Copyright Office of the Library of Congress or any similar office or agency of
any other countries or used in the United States, any state, territory or
possession thereof or any other country, and all renewals thereof, which are
owned by Debtors, or any of them.
"Empress Banquets License" shall mean that certain License Agreement
under date of May 20, 1998 by and between The Empress, Ltd. and ECJC pursuant to
which ECJC has granted to The Empress, Ltd. the right to continued use of the
"Empress Banquets" and "Empress" trademarks at its facility in Addison,
Illinois.
"Hammond License" shall mean that certain Trademark License Agreement
dated as of June 30, 1997 by and between ECJC and ECHC pursuant to which ECHC is
granted a license to utilize some of the Trademarks.
2
<PAGE>
"Intellectual Property Collateral" shall mean all of the property and
interests in property described in Section 2.01 hereof which shall, from time to
time, secure any of the Secured Obligations.
"Loan Documents" shall have the meaning set forth by Section 1.01 of
the Credit Agreement.
"Secured Obligations" shall mean all indebtedness, obligations and
liabilities of Debtors, or any of them, arising under the Credit Agreement, the
Notes and/or any other Loan Document and any other indebtedness, obligation or
liability of Debtors, or any of them, which may be secured by any of said Loan
Documents, all as such obligations or Loan Documents may be modified, amended,
supplemented, restated, increased or extended from time to time.
"Trademarks" shall mean all right, title and interest of the Debtors,
or any of them, in the United States and throughout the world, in and to all of
their respective now owned and hereafter acquired trademarks, service marks,
trade names, trade dress, colors, designs, logos, indicia, corporate names,
company names, business names, fictitious business names, trade styles and/or
other source and/or business identifiers and all registrations and applications
to register the same, except applications based on an intent to use until the
filing of a verified statement of use accepted by the U.S. Trademark Office, and
all renewals thereof, and the goodwill and business relating to such
applications, which Trademarks include, without limitation, all such items which
are particularly described by Schedule A attached hereto and incorporated by
reference herein.
Section 2. Intellectual Property Collateral; General Terms.
-----------------------------------------------
2.01. Security Interest. To secure the prompt payment of the
-----------------
Secured Obligations, the Debtors hereby grant to the Agent Bank a first priority
continuing security interest in and to all of the following property and
interests in property of the Debtors, or any of them, whether now owned or
existing, hereafter acquired or arising, or in which the Debtors, or any of
them, now or hereafter have any rights, including without limitation any such
property used in or useful to the businesses of Debtors, or any of them, or the
operation of such businesses, and wheresoever located (collectively, the
"Intellectual Property Collateral"):
3
<PAGE>
a. all right, title and interest of Debtors, or any of
them, in and to the Trademarks (other than Abandoned and De Minimis Trademarks);
b. all right, title and interest of Debtors, or any of
them, in and to all: (i) income, royalties, damages and payments now and
hereafter due and/or payable under all Trademarks; and (ii) rights accruing
during the term of this Agreement to sue and collect damages and payments for
past or future infringements of the Trademarks;
c. all the goodwill in the businesses symbolized by the
Trademarks;
d. all right, title and interest of Debtors, or any of
them, in and to the Copyrights;
e. all right, title and interest of Debtors, or any of
them, in and to all (i) income, royalties, damages and payments now and
hereafter due and/or payable under all Copyrights and (ii) rights accruing
during the term of this Agreement to sue and collect damages and payments for
past or future infringement of the Copyrights; and
f. all proceeds of any of the foregoing.
2.02. Existing Trademarks and Copyrights. All presently known
----------------------------------
registered Trademarks or pending applications for Trademarks, registered
Copyrights and pending applications for copyright registration in which the
Debtors, or any of them, have an interest, other than Abandoned and De Minimis
Trademarks, are listed on Schedule A attached hereto and made a part hereof.
All presently known common law Trademarks in which the Debtors, or any of them,
have an interest, other than Abandoned and De Minimis Common Law Trademarks, are
also listed on Schedule A attached hereto and made a part hereof.
2.03. Initial Filing. This Agreement may, in the sole and
--------------
absolute discretion of Agent Bank, be filed for recordation in the United States
Patent and Trademark Office, with respect to Trademarks and in the U.S.
Copyright Office with respect to Copyrights. Upon request by the Agent Bank, the
Debtors shall cause this Agreement to be filed with the copyright or trademark
registration office of the States of Illinois and Indiana and any province,
territory or country in which the Agent Bank, in its reasonable discretion,
determines that registration and/or recordation is necessary or
4
<PAGE>
appropriate to perfect the Agent Bank's security interest in the Intellectual
Property Collateral.
Section 3. Representations and Warranties.
------------------------------
3.01. General Representations and Warranties. The Debtors
--------------------------------------
represent and warrant to the Agent Bank that:
a. Title to Intellectual Property Collateral.
-----------------------------------------
(i) The Debtors own all Intellectual Property Collateral,
subject to no assignments, liens, licenses or other security
interests, encumbrances or title defects, infringements or other
adverse claims, other than: (i) the Hammond License; (ii) the
Empress Banquets License; (iii) the ECJC Permitted Encumbrances;
(iv) the ECHC Permitted Encumbrances; and (v) or other adverse
claims which would not reasonably be expected to result in
Material Adverse Effect. None of the Debtors have signed, filed
or recorded any assignment in favor of any person (other than
Agent Bank) with respect to any of the Intellectual Property
Collateral, in the United States Patent and Trademark Office, in
the U.S. Copyright Office or in the copyright or trademark office
of any state, province, territory or country; and
(ii) All federally registered or state registered
Intellectual Property Collateral now owned by the Debtors, or any
of them, are listed in Schedule A hereto and all material common
law Intellectual Property Collateral known to and now owned by
the Debtors, or any of them, is listed in Schedule B hereto.
b. Due Execution. The Debtors have the right and power
-------------
and are duly authorized and empowered to enter into, execute and deliver and
perform this Agreement and the transactions contemplated hereby; this Agreement
has been duly and validly executed by the Debtors and constitutes a legal, valid
and binding obligation of Debtors enforceable in accordance with its terms.
5
<PAGE>
c. Perfection. This Agreement creates a valid security
----------
interest in the Intellectual Property Collateral securing the repayment of the
Secured Obligations and all filing and other actions necessary in order to
perfect and protect such security interest have been duly taken or will be taken
immediately following the date hereof.
3.02. Trademark and Copyright Representation and Warranty. All
---------------------------------------------------
Intellectual Property Collateral consisting of applications for registrations of
Trademarks and Copyrights have been duly and properly filed and all Intellectual
Property Collateral consisting of registrations of Trademarks and Copyrights
(including, without limitation, any and all renewals, reissues, continuations or
divisions thereof, as the case may be) have been duly and properly filed and
issued (other than pending applications) and are valid and enforceable.
3.03. Warranty and Reaffirmation of Warranties and
--------------------------------------------
Representations; Survival of Warranties and Representations. Each request for a
- -----------------------------------------------------------
Borrowing made by the Debtors, or any of them, pursuant to the Loan Documents
shall constitute a reaffirmation, as of the date of said request, of the
representations and warranties of the Debtors contained in Section 3 hereof with
respect to Intellectual Property Collateral then existing (except to the extent
that Debtors may otherwise notify Agent Bank, in writing, concurrently with, or
prior to, any such request). All representations and warranties of the Debtors
contained in this Agreement shall survive the execution, delivery and acceptance
of this Agreement by the parties thereto.
Section 4. Covenants.
---------
4.01. Affirmative Covenants. Unless the Agent Bank otherwise
---------------------
agrees in writing, the Debtors covenant that they shall:
a. Delivery of Documents. Furnish to the Agent Bank, from
---------------------
time to time upon its request, a complete status report of all Intellectual
Property Collateral and deliver to the Agent Bank copies of any such
Intellectual Property Collateral and other documents concerned with or related
to the prosecution, protection, maintenance, enforcement and issuance of the
Intellectual Property Collateral, and such other data and information as the
Agent Bank from time to time may reasonably request bearing upon or related to
the Intellectual Property Collateral.
6
<PAGE>
b. Defense of Title. Use all reasonable efforts to defend
----------------
their title to the Intellectual Property Collateral against all claims of all
Persons whomsoever which could reasonably be expected to have a Material Adverse
Effect (as defined in the Credit Agreement) on the business of any of the
Debtors, except with respect to liens and other rights created or permitted
hereby.
c. Execute Addenda. Promptly upon the filing of any
---------------
application for registration of a trademark or copyright and upon the issuance
of any trademark registration, they shall, unless the Agent Bank agrees
otherwise in writing:
(i) execute an addendum to this Agreement, which addendum
shall identify such trademark or copyright application as
necessary to perfect a security interest in such trademark or
copyright application;
(ii) with respect to United States trademark or copyright
applications, cause this Agreement and such addendum to be
recorded in the United States Patent and Trademark Office or U.S.
Copyright Office, as appropriate; and
(iii) upon request by the Agent Bank, cause this Agreement
and such addendum to be recorded with the trademark or copyright
registration office of any state in the United States in which
the Agent Bank determines, in its sole discretion, that filing is
necessary or advisable to perfect the Agent Bank's security
interest in the Intellectual Property Collateral subject to such
addendum.
d. Affix Notices. Whenever any trademarks or trade names
-------------
are used by or on behalf of any of them, use their best efforts to affix or
cause to be affixed, where necessary to protect all of their right, title and
interest in any such trademark or trade name, a notice that the mark is a
trademark, a service mark or is registered, which notice shall be in a form
accepted or required by the trademark marking laws of each province, territory
or country in which the mark is so used.
7
<PAGE>
e. Notice of Abandonment. Notify the Agent Bank as soon
---------------------
as reasonably practicable of its intention to voluntarily suspend use of or
voluntarily abandon any material trademarks, trade names or applications or
registrations thereof (it being understood that suspension of use or abandonment
of a material trademark, trade name or application or registration thereof shall
be deemed reasonable by the Agent Bank under circumstances in which the Debtors
reasonably believe that: (i) continued use or maintenance of the trademark,
trade name or application or registration thereof will subject them to liability
to a third party for wilful infringement; and (ii) the contemplated suspension
or abandonment represents a reasonable alternative to the contemplated
liability), and obtain the written permission of the Agent Bank to such
abandonment, which permission shall not be unreasonably withheld or delayed. In
the event that such permission to abandon is reasonably withheld by the Agent
Bank, the Debtors shall, at their own expense, take all action reasonably
necessary to continue and maintain each item of Intellectual Property Collateral
in force.
4.02. Negative Covenants. Without the Agent Bank's prior
------------------
written consent, which may be withheld by Agent Bank in its sole discretion,
none of the Debtors shall license (excluding the Hammond License and the Empress
Banquets License, and also excluding licenses made in the ordinary course of
business), transfer, convey or encumber any interest in or to the Intellectual
Property Collateral or take any action, or permit any action to be taken, or
fail to take any action which individually or in the aggregate would affect the
validity or enforceability of any material portion of the Intellectual Property
Collateral or of the security interest of the Agent Bank therein or which would
otherwise violate, in any material respect, any provision of any Loan Document.
4.03. Notice of Proceedings. The Debtors shall promptly notify
---------------------
the Agent Bank, in writing, of any suit, action or proceeding brought against
any of them relating to, concerned with, or affecting any of the Intellectual
Property Collateral, if such suit, action or proceeding constitutes or becomes a
Material Adverse Effect. Debtors shall, upon request from Agent Bank, deliver to
the Agent Bank a copy of all pleadings, papers, orders or decrees theretofore
and thereafter filed in any such suit, action or proceeding, and shall keep the
Agent Bank fully advised in writing of the progress of any such suit, action or
proceeding.
8
<PAGE>
4.04. Infringement. In the event of any infringement of the
------------
Intellectual Property Collateral by other persons, or in the event of any other
conduct by other persons to the detriment of the Intellectual Property
Collateral, which has constituted or in the future could reasonably be expected
to constitute a Material Adverse Effect on the business and operations of any of
the Debtors, the Debtors shall promptly notify the Agent Bank in writing of such
infringement or other conduct and the full nature, extent, evidence and
circumstances of such infringement or other conduct known to any of the Debtors.
The Debtors shall take all reasonable steps to protect their interests and
rights in such Intellectual Property Collateral and shall provide the Agent Bank
written notice of all material occurrences and developments with respect to such
Intellectual Property Collateral. If reasonably requested by the Agent Bank,
the Debtors shall send to the person committing such infringement or engaging in
such other conduct, no later than thirty (30) calendar days after such request,
a letter, in form and substance reasonably satisfactory to the Agent Bank, by
personal delivery or by U.S. first-class registered or certified mail (return
receipt requested) demanding that such person cease and desist forthwith from
committing such infringement or engaging in such other conduct. In the event
that (a) within forty-five (45) calendar days thereafter, good faith
negotiations between the Debtors and such other person have not commenced
regarding the cessation of such infringement or other conduct or (b)
negotiations have commenced within such period, but thereafter cease to be
carried on in good faith; the Debtors shall, at the request of Agent Bank,
promptly bring and diligently and vigorously maintain an action to stop such
infringement and other conduct (to the extent that, and so long as, such
diligent and vigorous maintenance of an action is reasonable in light of the
materiality of such infringement or other conduct and in light of the
materiality of the item(s) of Intellectual Property Collateral which are subject
to such infringement or other action). The Debtors shall diligently and
vigorously maintain such action until a decision is obtained from which no
review or appeal can or has been taken or until such action is resolved
otherwise in a manner reasonably satisfactory to the Agent Bank. If any Debtor
requests Agent Bank to approve an action as reasonable and Agent Bank does not
object thereto within ten (10) days after receipt of such request, specifying
the reasons for such objection, the same shall be deemed approved. If
reasonably requested by the Agent Bank, subject to other provisions of this
Agreement, the Debtors shall assume and continue, at their own cost and expense,
through
9
<PAGE>
counsel reasonably acceptable to the Agent Bank, full and complete
responsibility for the prosecution of any infringement of (or other conduct
materially and adversely affecting) the Intellectual Property Collateral and
otherwise defend and take all reasonable steps to assure the grant, validity and
enforceability of the Intellectual Property Collateral, whether by judicial or
nonjudicial means.
4.05. Payment of Charges and Claims. If the Debtors, at any
-----------------------------
time or times hereafter, shall fail to pay charges in respect of the
Intellectual Property Collateral when due or promptly obtain the discharge of
such charges or of any lien, claim or encumbrance asserted against the
Intellectual Property Collateral, the Agent Bank may, without waiving or
releasing any obligation or liability of the Debtors hereunder or any Event of
Default under any of the Loan Documents, in its sole discretion, at any time or
times thereafter, make such payment, or any part thereof, or obtain such
discharge and take any other action with respect thereto which the Agent Bank
reasonably deems advisable (provided that Agent Bank has first given Debtors
notice of the proposed payment or action and Debtors have failed to make such
payment or take such action within ten (10) Banking Business Days thereafter).
All sums so paid by the Agent Bank and any expenses incurred by the Agent Bank
on its behalf, including reasonable attorneys' fees, court costs, expenses and
other charges relating thereto, shall be payable, upon demand, by the Debtors to
the Agent Bank and shall be Secured Obligations secured by the Collateral under
any of the Loan Documents, including, without limitation, the Intellectual
Property Collateral, and shall bear interest, accruing from the date of such
demand, at the Default Rate which is set forth in the Credit Agreement.
Section 5. Agent Bank's Rights and Remedies.
--------------------------------
5.01. Remedies. Upon the occurrence and continuation of an
--------
Event of Default under any of the Loan Documents, the Agent Bank shall have and
may exercise any one (1) or more of the rights and remedies provided to it under
any of the Loan Documents or provided by any applicable law, including but not
limited to, all of the rights and remedies of a secured party under the Uniform
Commercial Code and the Debtors hereby agree to make the Intellectual Property
Collateral available to the Agent Bank, to extent applicable, at a place to be
designated by the Agent Bank which is reasonably convenient to the parties,
authorize the Agent Bank to take possession of the Intellectual Property
Collateral
10
<PAGE>
with or without demand and with or without process of law and, following at
least ten (10) days' notice to Debtors of the time and place of sale, to sell
and dispose of the same at public or private sale and to apply the proceeds of
such sale to the Secured Obligations in the order specified in the Credit
Agreement, or as otherwise agreed to by the Agent Bank. In addition to the
foregoing, if an Event of Default shall occur and be continuing, the Agent Bank
may, by written notice to the Debtors, take any or all of the following actions
to the extent permitted by law: (i) declare the entire right, title and
interest of the Debtors in and to each of the Copyrights and the Trademarks, the
goodwill in the business symbolized by the Trademarks, together with all
trademark rights and rights of protection to the same to be immediately vested
in the Agent Bank, in which case the Debtors agree to execute an assignment in
form and substance reasonably satisfactory to the Agent Bank of all their
rights, title and interest in and to the Copyrights and the Trademarks to the
Agent Bank; (ii) take and use or sell the Copyrights and Trademarks and the
goodwill of any of the Debtors' businesses symbolized by the Trademarks and the
right to carry on the businesses and use of the assets of any of the Debtors in
connection with which the Copyrights and Trademarks have been used; and (iii)
direct the Debtors to refrain, in which event the Debtors shall refrain, from
using the Copyrights and Trademarks in any manner whatsoever, directly or
indirectly, and, if requested by the Agent Bank, change the Debtors' corporate
name(s) to eliminate therefrom any use of any Trademark and execute such other
and further documents that the Agent Bank may request to further confirm this
and to transfer ownership of the Trademarks and registrations and any pending
trademark application in the United States Patent and Trademark Office and/or
the Copyrights and registrations and any pending applications for copyright
registration in the U.S. Copyright Office to the Agent Bank.
5.02. Appointment of the Agent Bank as the Debtors' Lawful
----------------------------------------------------
Attorney. Upon the occurrence and during the continuation of an Event of Default
- --------
under any of the Loan Documents, the Debtors irrevocably designate, make,
constitute and appoint the Agent Bank (and all persons designated by the Agent
Bank) as the true and lawful attorney (and agent-in-fact) of each of them, and
the Agent Bank, or the Agent Bank's agent, may, without notice to any of them
take any action as the Agent Bank reasonably deems necessary under the
circumstances to file, prosecute, defend, issue, maintain, enforce or otherwise
take action in respect to the Intellectual Property Collateral as required or
permitted
11
<PAGE>
hereby, or to carry out any other obligation or duty of any of the Debtors under
this Agreement, including, without limitation, the right to execute any
assignment of the Intellectual Property Collateral in the event any of the
Secured Obligations are accelerated in accordance with any of the Loan
Documents, and the employment of counsel. The Debtors shall pay all reasonable
fees and expenses, including reasonable attorneys' fees and expenses, incurred
by the Agent Bank in connection with such action and such fees and expenses
shall form part of the Secured Obligations.
Section 6. Remedies Cumulative; etc. The rights, remedies and
-------------------------
benefits of the Agent Bank herein expressly specified are cumulative and not
exclusive of any other rights, remedies or benefits which the Agent Bank may
have under this Agreement, the Credit Agreement or any other Loan Document or at
law, in equity, by statue or otherwise. The obligations of Debtors hereunder
shall be joint and several.
Section 7. Expenses. The Debtors will pay the Agent Bank all
--------
reasonable expenses (including reasonable expenses for legal services of every
kind) of, or incidental to: (i) the preparation or filing of, or the
performance or enforcement of any of the provisions of, this Agreement; (ii) or
to the extent permitted hereunder, any actual or attempted sale, or any
exchange, enforcement, collection, compromise or settlement of any of the
Intellectual Property Collateral or the care of the Intellectual Property
Collateral or defending or asserting the rights and claims of the Agent Bank in
respect of the Collateral, by litigation or otherwise, including but not limited
to reasonable expenses of insurance and the reasonable fees and expenses of
counsel for the Agent Bank. All such expenses shall be payable to Agent Bank
upon demand and shall, at any time when there is an uncured Event of Default
existing, accrue interest, from the date of such demand, at the Default Rate as
defined in the Credit Agreement. Debtors' obligation to repay such expenses and
accrued interest thereon shall be Secured Obligations secured by the
Intellectual Property Collateral and the Collateral under the Loan Documents.
Section 8. Indemnity. Debtors hereby agree to jointly and severally
---------
indemnify, protect, defend and save harmless Agent Bank and each of the Banks as
well as their respective directors, trustees, officers, employees, agents,
attorneys and stockholders (individually an "Indemnified Party" and
collectively, the "Indemnified Parties") from and against, any and all losses,
damages, expenses or liabilities
12
<PAGE>
of any kind or nature from any investigations, suits, claims, demands or other
proceedings, including reasonable counsel fees incurred in investigating or
defending such claim, suffered by any of them and caused by, relating to,
arising out of, resulting from, or in any way connected with: (i) the
preparation or administration of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from or other realization upon,
any of the Intellectual Property Collateral, (iii) the exercise or enforcement
of any of the rights, or the defense thereof, of the Agent Bank hereunder or
under any of the Loan Documents, or (iv) the failure of the Debtors to perform
or observe any of the provisions hereof. It is provided, however, that Debtors
shall not be obligated to indemnify, protect, defend or save harmless an
Indemnified Party if, and to the extent, the loss, damage, expense or liability
was caused by (a) the gross negligence or willful misconduct of such Indemnified
Party, or (b) the breach of this Agreement or any other Loan Document by such
Indemnified Party or the breach of any laws, rules or regulations by such
Indemnified Party (other than those breaches of laws arising from any Debtor's
default). In case any action shall be brought against any Indemnified Party
based upon any of the above and in respect to which indemnity may be sought
against Debtors, Agent Bank shall promptly notify Debtors in writing, and
Debtors shall assume the defense thereof, including the employment of counsel
selected by Debtors and reasonably satisfactory to Agent Bank, the payment of
all costs and expenses and the right to negotiate and consent to settlement.
Upon reasonable determination made by an Indemnified Party that such counsel
would have a conflict representing such Indemnified Party and Debtors, the
applicable Indemnified Party shall have the right to employ, at the expense of
Debtors, separate counsel in any such action and to participate in the defense
thereof. Debtors shall not be liable for any settlement of any such action
effected without their consent, but if settled with Debtors' consent, or if
there be a final judgment for the claimant in any such action, Debtors agree to
indemnify, defend and save harmless such Indemnified Parties from and against
any loss or liability by reason of such settlement or judgment. In the event
that any Person is adjudged by a court of competent jurisdiction not to have
been entitled to indemnification under this Section 8, it shall repay all
amounts with respect to which it has been so adjudged. If and to the extent
that the indemnification provisions contained in this Section 8 are
unenforceable for any reason, the Debtors hereby agree to make the maximum
contribution to the payment and satisfaction of such obligations that is
permissible under applicable law.
13
<PAGE>
The provisions of this Section 8 shall survive the termination of this
Agreement, the repayment of the Bank Facilities and the assignment or
subparticipation of all or any portion of the Bank Facilities.
Section 9. No Delay; Waiver, etc. No delay on the part of the Agent
----------------------
Bank in exercising any power or right hereunder shall operate as a waiver
thereof nor shall any single or partial exercise of any power or right hereunder
preclude other or further exercise thereof or the exercise of any other power or
right. To the fullest extent permitted by law and except as otherwise provided
for in this Agreement, the Debtors waive: (a) all rights to notice of a hearing
prior to the Agent Bank's taking possession or control of, or to the Agent
Bank's reply, attachment or levy upon, the Intellectual Property Collateral or
any bond or security which might be required by any court prior to allowing the
Agent Bank to exercise any of the Agent Bank's remedies; and (b) the benefit of
all valuation, appraisement and exemption laws. The Debtors acknowledge that
they have been advised by counsel with respect to this Agreement, the waivers
contained herein and the transactions evidenced by this Agreement.
Section 10. Further Assurances. The Debtors agree to do such further
------------------
acts and things and to pay the reasonable costs and expenses in connection with
such acts (including, without limitation, the recording of the security interest
with respect to the Intellectual Property Collateral with any trademark office
in any state, province, territory or country), and to execute and deliver or
cause to be executed and delivered such supplemental documentation, additional
conveyances, assignments, and similar instruments, as the Agent Bank may at any
time reasonably request in connection with the administration and enforcement of
this Agreement or with respect to the Intellectual Property Collateral or any
part thereof or in order better to assure and confirm unto the Agent Bank its
rights and remedies hereunder or further to effectuate the purposes of this
Agreement and to pay the costs and expenses in connection with such acts. The
Debtors agree that, where permitted under applicable law, a carbon, photographic
or other reproduction, of this Agreement is sufficient as a recordable
assignment.
Section 11. Modification. No amendment hereof shall be effective
------------
unless contained in a written instrument signed by the parties hereto.
14
<PAGE>
Section 12. Notices. All notices and other communications provided
-------
to any party hereto under this Agreement shall be in writing or by facsimile and
addressed, delivered or transmitted to such party at its address or facsimile
number set forth below or at such other address or facsimile number as may be
designated by such party in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted. If any facsimile is transmitted at a time which is not during
regular business hours at the location to which such facsimile is transmitted,
it shall be deemed transmitted on the next Banking Business Day.
If to Debtors: Empress Entertainment, Inc.
2300 Empress Drive
Joliet, Illinois 60436
Attn: Mike Hansen
Facsimile No. (815)744-5818
Empress Casino Joliet
Corporation
2300 Empress Drive
Joliet, Illinois 60436
Attn: Mike Hansen
Facsimile No. (815)744-5818
Empress Casino Hammond
Corporation
2300 Empress Drive
Joliet, Illinois 60436
Attn: Mike Hansen
Facsimile No. (815)744-5818
If to Secured
Party: Wells Fargo Bank, N.A.,
Agent Bank
Commercial Banking Division
One East First Street
Reno, NV 89501
Attn: Mr. Casey Potter, V.P.
Facsimile No. (702) 334-5637
15
<PAGE>
Section 13. Termination. This Agreement shall terminate upon the
-----------
occurrence of Bank Facility Termination and the due release and termination of
the Security Documentation which is executed and delivered concurrently, or
substantially concurrent, herewith. Upon any such termination the Agent Bank
will, at the Debtors' expense, execute and deliver to the Debtors such documents
as the Debtors shall reasonably request to evidence such termination and release
the security interest in the Intellectual Property Collateral granted hereunder;
provided, however, that this Agreement shall continue to be effective, or shall
be automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is reduced, rescinded or
must otherwise be restored or returned by the Agent Bank upon the bankruptcy,
insolvency, dissolution, liquidation or reorganization of the Debtors, or any of
them, or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to any of the Debtors
or any of their respective property or otherwise.
Section 14. Governing Law. This Agreement has been delivered and
-------------
shall be deemed to have been made in Illinois and, shall be interpreted, and the
rights and liabilities of the parties hereto determined, in accordance with the
laws of the State of Illinois (exclusive of choice and conflict of laws
provisions thereof to the extent allowed by law) except with respect to those
matters regarding the Intellectual Property Collateral to which the law of the
United States or the law of a foreign sovereign jurisdiction applies.
Section 15. Consent to Jurisdiction. Any suit, action or proceeding
-----------------------
against any of the Debtors arising out of or relating to this Agreement may be
instituted in any court of competent jurisdiction in the State of Illinois, and
the Debtors hereby irrevocably waive any objection which any of them may have or
hereafter have to the laying of such venue of any such suit, action or
proceeding and any claim that any such suit, action or proceeding has been
brought in inconvenient forum, and the Debtors hereby irrevocably submit the
person and property of each of them to the jurisdiction of any such court in any
such suit, action or proceeding. The Debtors hereby consent to the service of
process in any suit, action or proceeding of the nature referred to in this
paragraph by the mailing of the copy thereof by registered or certified mail,
postage prepaid, or personally delivering a copy thereof to the Debtors,
addressed to the addresses specified in Section 12 hereof or at such other
address(es) as the Debtors may hereafter specify to the Agent Bank in
16
<PAGE>
writing. Nothing in this paragraph shall affect the right of the Agent Bank to
serve process in any other manner permitted by law or limit the right of Agent
Bank to bring any such action or proceeding against any of the Debtors or their
property in the courts of any other jurisdiction.
Section 16. Successors and Assigns. Whenever in this Agreement any
----------------------
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party and all grants, covenants, promises and
agreements by or on behalf of any of the Debtors shall bind the successors and
assigns of such Debtors and inure to the benefit of the successors, assigns and
transferees of the Agent Bank, provided that none of the Debtors shall assign
all or any portion of their respective rights, duties or obligations hereunder
without the prior written consent of Agent Bank. The obligations of Debtors
hereunder shall be joint and several.
Section 17. Severability. If any part of this Agreement is contrary
------------
to, prohibited by or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible. If any part of this Agreement is
contrary to, prohibited by or deemed invalid under the applicable laws and
regulations of one (1) jurisdiction, such provisions shall not thereby be
rendered invalid in any other jurisdiction. Should any part or provision of
this Agreement be deemed by a court or other Governmental Authority of competent
jurisdiction to be an assignment of any trademark, trade name or registration
thereof so as to result in the Debtors' abandonment thereof, such part or
provision (but no other) shall be construed as providing for a security interest
and not an assignment, all in order to preclude such abandonment and, if such
construction shall not be accepted by such court or other Governmental Authority
such part or provision (but no other) shall be deemed null and void as to such
trademark, trade name or registration thereof in the jurisdiction where
abandonment might otherwise result.
Section 18. Headings. Section headings used herein are for
--------
convenience of reference only and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.
17
<PAGE>
Section 19. Subsequent Execution by ECJC. This Agreement is executed
----------------------------
by EEI and by ECHC on the date set forth above, and will be executed by ECJC on,
or before, the Closing Date. By execution of this Agreement, EEI and ECHC
acknowledge that they shall be jointly and severally liable for all obligations
of the Debtors hereunder, until such time as this Agreement is executed by ECJC
(if at all), at which time EEI, ECHC and ECJC shall be jointly and severally
liable for all obligations of the Debtors hereunder.
Section 20. Counterparts. This Agreement may be executed by the
------------
parties hereto in any number of separate counterparts with the same effect as if
the signatures hereto and hereby were upon the same instrument. All such
counterparts shall together constitute but one and the same document.
18
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed as of the day and year first above written.
DEBTORS: AGENT BANK:
EMPRESS ENTERTAINMENT, INC., WELLS FARGO BANK, National
a Delaware corporation Association, as Agent Bank
By John Costello By Joseph L. Brady
------------------------- -----------------------------
Name John Costello Joseph L. Brady
----------------------- SR Vice President
Title VP & CFO
----------------------
EMPRESS CASINO JOLIET
CORPORATION, an Illinois
corporation
By John Costello
-------------------------
Name John Costello
-----------------------
Title VP & CFO
----------------------
EMPRESS CASINO HAMMOND
CORPORATION, an Indiana
corporation
By John Costello
-------------------------
Name John Costello
-----------------------
Title VP & CFO
----------------------
19
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that John Costello, whose name as Vice President - CFO of
EMPRESS ENTERTAINMENT, INC., a Delaware corporation, is signed to the foregoing
instrument, and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument, he/she, as such officer and
with full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand and Official Seal this 30th day of June, 1998.
Joanne Bruen
-------------------------------
[Seal] Notary Public
My commission expires: 10/14/00
Joanne Bruen
-------------------------------
(Printed Name)
Notary Public in and for the
State of Illinois
20
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that John Costello, whose name as Vice President - CFO of
EMPRESS CASINO JOLIET CORPORATION, an Illinois corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this day
that, being informed of the contents of the instrument, he/she, as such officer
and with full authority, executed the same voluntarily for and as the act of
said corporation.
Given under my hand and Official Seal this 30th day of June, 1998.
Joanne Bruen
-------------------------------
[Seal] Notary Public
My commission expires: 10/14/00
Joanne Bruen
-------------------------------
(Printed Name)
Notary Public in and for the
State of Illinois
21
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF COOK )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that John Costello, whose name as Vice President - CFO of
EMPRESS CASINO HAMMOND CORPORATION, an Indiana corporation, is signed to the
foregoing instrument, and who is known to me, acknowledged before me on this day
that, being informed of the contents of the instrument, he/she, as such officer
and with full authority, executed the same voluntarily for and as the act of
said corporation.
Given under my hand and Official Seal this 30th day of June, 1998.
Joanne Bruen
-------------------------------
[Seal] Notary Public
My commission expires: 10/14/00
Joanne Bruen
-------------------------------
(Printed Name)
Notary Public in and for the
State of Illinois
22
<PAGE>
STATE OF ILLINOIS )
) ss
COUNTY OF ILLINOIS )
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that Joseph L. Brady, whose name as SR Vice President of
WELLS FARGO BANK, National Association, a national banking association, is
signed to the foregoing instrument, and who is known to me, acknowledged before
me on this day that, being informed of the contents of the instrument, he, as
such officer and with full authority, executed the same voluntarily for and as
the act of said national banking association.
Given under my hand and Official Seal this 30th day of June, 1998.
Joanne Bruen
-------------------------------
[Seal] Notary Public
My commission expires: 10/14/00
Joanne Bruen
-------------------------------
(Printed Name)
Notary Public in and for the
State of ILLINOIS
23
<PAGE>
Updated:06/10/98
EMPRESS CASINO JOLIET CORPORATION
TRADEMARKS & SERVICE MARK
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
MARK SERIAL FILING STATUS REGISTRATION INTERNATIONAL GOODS OR
NO. DATE DATE CLASS SERVICES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MISCELLANEOUS 75/421,079 1/21/98 Pending 35,41,42 (IC 35) Promoting casino
DESIGN OF A Assigned to services through the
WOMEN WITH Examiner administration of incentive
EXTENDED HAIR 6/9/98 award programs; (IC 41)
casino services, and
preferred customer program
in the field of casino
services; (IC 42) hotel
services,restaurant services
and retail shop services
featuring novelties and
souvenirs
- ------------------------------------------------------------------------------------------------------------------------------------
THE EMPRESS 74/226,028 11/29/91 Registered, Reg. No. 8/15/95 41 Casino services, not
1,912,772. including dinner cruise ship
services
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS 74/255,169 03/13/92 Registered, Reg. No.
2,034,357. 2/11/97 41 Casino services, not
including dinner cruise ship
services [originally--
casino services, excluding
those rendered on a cruise
ship]
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS 74/255,297 03/13/92 Registered, Reg. No. 10/21/97 41 Casino services
2,107,523.
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS 74/495,726 03/01/94 Opposition dismissed, 41 Casino services, not
(child) Application to proceed. including dinner cruise ship
services
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
MARK SERIAL FILING STATUS REGISTRATION INTERNATIONAL GOODS OR SERVICES
NO. DATE DATE CLASS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EMPRESS (stylized) 74/495,672 03/01/94 Opposition dismissed; 41 Casino services, not including
(parent) Application to proceed. dinner cruise ship services
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS RIVER CASINO 74/495,673 03/01/94 Opposition dismissed; 41 Casino services, not
and design (woman Application to proceed. including dinner cruise ship
with hair extended - services
black and white)
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS RIVER CASINO 74/495,676 03/01/94 Opposition dismissed; 41 Casino services, not including
and design (woman (child) Application to proceed. dinner cruise ship services
with hair extended -
leaf and gold)
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESSMILES 74/613,639 12/21/94 Registered, Reg. No. Promoting casino services
1,945,518 1/2/96 35 through the administration of
incentive award programs
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS 75/067,616 03/05/96 Registered, Reg. No. 9/30/97 42 Hotel services
2,102,174
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS CASINO 75/070,785 03/11/96 Opposition dismissed; 41 Casino services
Application to proceed
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS 75/059,142 02/16/96 Response to Final 6,20,21,30 (IC 6) Metal money clips,
(Parent) Office Action entered metal key chains and metal
on 12/22/97 license plate frames; (IC 20)
non-metal money chips,
non-metal key chains and
non-metal license plate
frames; (IC 21) a full line
of glassware and mugs;
(IC 30) candy
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
MARK SERIAL FILLING STATUS REGISTRATION INTERNATIONAL GOODS OR SERVICES
NO. DATE DATE CLASS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EMPRESS 75/975,808 02/16/96 Filed 2/16/96 3, 9, 16 & 34 (IC 3) Perfume; (IC 9)
(Child) Divided from binoculars and
75/059,142 magnets; (IC 16) pens,
Non-final Office Action pencils, photograph
entered 8/15/96 albums and playing
cards; (IC 34)
ashtrays, not of
precious metals
- -----------------------------------------------------------------------------------------------------------------------------------
EMPRESS 75/976,982 02/16/96 Divided from 25 Clothing, namely
(Child) 75/059,142 t-shirts, sweat shirts,
Approved for sweat shorts, tank
publication 5/5/98 tops, hats and jackets.
- ------------------------------------------------------------------------------------------------------------------------------------
EMPRESS CLUB 75/061,443 02/23/96 Opposition No. 107,106 41 Preferred customer
Opposed by Caesars program in the field of
World's Inc.; casino services
Filed new Motion to (amendment to services
Extend Time 6/2/98. pending)
The Empress, Ltd.
Opposition dismissed;
Application to proceed.
- ------------------------------------------------------------------------------------------------------------------------------------
THE JEWEL OF THE GREAT 75/339,905 05/13/97 Publication date 41 Casino services
MIDWEST 03/24/98
- ------------------------------------------------------------------------------------------------------------------------------------
EXCITEMENT IS A LADY 75/329,326 05/13/97 Registered, Reg. No. 5/19/98 41 Casino services
NAMED EMPRESS 2,159,095
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EMPRESS STATE REGISTRATIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SERIAL FILLING REGISTRATION INTERNATIONAL
MARK NO. DATE STATUS DATE CLASS GOODS OR SERVICES
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THE GREAT ESCAPE ILLINOIS Reg. No. 77,295 10/12/95 - Casino services and restaurant
REGISTRATION services
- ----------------------------------------------------------------------------------------------------------------------------------
THE GREAT ESCAPE ILLINOIS Reg. No. 77,294 10/12/95 - Retail store services
REGISTRATION
- ----------------------------------------------------------------------------------------------------------------------------------
CHICAGOLAND'S ILLINOIS Reg. No. 74,175 3/8/94 - Casino services
CASINO REGISTRATION
- ----------------------------------------------------------------------------------------------------------------------------------
JUMPING JACKPOTS ILLINOIS Reg. No. 1997-0231 5/12/97 - Promotion of Casino services
REGISTRATION
- ----------------------------------------------------------------------------------------------------------------------------------
EMPRESS ILLINOIS Reg. No. 069,775 1/22/92 - Riverboat casino gambling, food
REGISTRATION and beverage, and entertainment
- ----------------------------------------------------------------------------------------------------------------------------------
EMPRESS ILLINOIS Reg. No. 069,776 1/2/92 - Riverboat casino gambling, food
REGISTRATION and beverage, and entertainment
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
COMMON LAW TRADEMARKS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MARK STATUS GOODS OR
SERVICES
- -------------------------------------------------------------------------------
YOU CAN Search performed Casino services
NEVER HAVE under request of and ancillary
TO MUCH FUN client services
- -------------------------------------------------------------------------------
OASIS Search performed RV Park
under request of
client
- -------------------------------------------------------------------------------
CLUB Search performed Nightclub
CHAMELEON under request of
client
- -------------------------------------------------------------------------------
THE In use Restaurant
HARBORSIDE
STEAKHOUSE
- -------------------------------------------------------------------------------
EMPRESSIVE In use Restaurant
BUFFET
- -------------------------------------------------------------------------------
WAVES DELI In use Restaurant
- -------------------------------------------------------------------------------
BLUE WATER In use Lounge
LOUNGE
- -------------------------------------------------------------------------------
STEAKHOUSE In use Restaurant
ALEXANDRIA
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CAFE In use Restaurant
CASABLANCA
- -------------------------------------------------------------------------------
MARRAKECH In use Restaurant
BUFFET
- -------------------------------------------------------------------------------
PALACE In use Gift shop
TREASURES
- -------------------------------------------------------------------------------
OASIS BAR In use Lounge
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 4.8 (o)
CERTIFICATE AND INDEMNIFICATION
-------------------------------
REGARDING HAZARDOUS MATERIALS
-----------------------------
THIS CERTIFICATE AND INDEMNIFICATION REGARDING HAZARDOUS MATERIALS
(the "Agreement") is executed as of the dates set forth below by EMPRESS
ENTERTAINMENT, INC., a Delaware corporation ("EEI"), EMPRESS CASINO JOLIET
CORPORATION, an Illinois corporation ("ECJC") and EMPRESS CASINO HAMMOND
CORPORATION, an Indiana corporation ("ECHC"), all of which are hereinafter
collectively referred to as "Indemnitors", in order to induce: (i) the Lenders
as defined by the Credit Agreement referred to below (collectively referred to
herein, in such capacity, together with their successors and assigns, as
"Lenders"), to provide a reducing revolving line of credit facility for the
benefit of Indemnitors in a maximum principal amount of One Hundred Million
Dollars ($100,000,000.00) (the "Credit Facility"); (ii) WELLS FARGO BANK,
National Association, as Swingline Lender under the Credit Agreement (referred
to herein, in such capacity, together with its successors and assigns, as the
"Swingline Lender") to provide a subfacility under the Credit Facility, in a
maximum principal amount of Five Million Dollars ($5,000,000.00), for funding by
the Swingline Lender, in smaller minimum amounts and on shorter notice than
would otherwise be required under said Credit Facility; and (iii) WELLS FARGO
BANK, National Association as L/C Issuer under the Credit Agreement (referred to
herein, in such capacity, together with its successors and assigns, as the "L/C
Issuer") to provide a subfacility for the issuance of Letters of Credit by the
L/C Issuer; all according to the terms and conditions of the Credit Agreement
(together with all restatements, amendments and other modifications thereto, the
"Credit Agreement") executed concurrently, or substantially concurrent, herewith
by Indemnitors, as Borrowers, Lenders, the Swingline Lender, the L/C Issuer and
WELLS FARGO BANK, National Association, as administrative and collateral agent
for the Lenders, the Swingline Lender and the L/C Issuer (hereinafter, in such
capacity, referred to as the "Agent Bank" and, together with the Lenders, the
Swingline Lender and the L/C Issuer, collectively referred to as the "Banks").
1. DEFINITIONS:
-----------
1.1. In this Agreement all capitalized words and terms shall
have the respective meanings and be construed herein as provided in Section 1.01
of the Credit Agreement,
<PAGE>
and any reference to a provision of the Credit Agreement shall be deemed to
incorporate that provision as a part hereof in the same manner and with the same
effect as if the same were fully set forth herein.
1.2. The term "Environmental Laws" shall mean any and all state,
federal and local statutes, regulations, ordinances, plans, policies or decrees
and the like relating to: (i) environmental matters, including, without
limitation, those relating to fines, injunctions, penalties, damages,
contribution, cost recovery compensation, losses or injuries resulting from the
Release, as defined below, or threatened Release of Hazardous Materials, as also
defined below; (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials; or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or welfare,
in any manner applicable to Indemnitors or any of their properties; all
including, without limitation, the Federal Water Pollution Control Act (33
U.S.C. Section 1251, et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901, et seq.), the Superfund Amendments and Reauthorization Act
of 1986 (Pub.L. No. 99-499), the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601, et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. (S) 1801, et seq.), the Clean Air Act
(42 U.S.C. (S) 7401, et seq.), the Occupational Safety and Health Act (29 U.S.C.
(S) 651, et seq.), the Emergency Planning and Community Right-to-Know Act (42
U.S.C. (S) 11001, et seq.), the Federal Insecticide, Fungicide and Rodenticide
Act (7 U.S.C. (S) 136 et seq.), Illinois Environmental Protection Act, 41SILCS5-
1 et. seq., Indiana Code Title 6-6-10, Indiana Code Title 13, 14, 15 and 16,
Indiana Code Titles 22-8-1.1, 22-11, 22-12, 22-13, 22-14, 22-15 and all rules,
regulations and standards promulgated pursuant thereto, the Uniform Fire Code
(1988 Edition), the United States Environmental Protection Agency's rules
concerning underground storage tanks, and any and all federal, state or local
rules promulgated from time to time under the above, and any other environmental
laws administered by the Environmental Protection Agency or similar laws and
regulations of the State of Illinois, of the State of Indiana or any other
governmental organization or agency having jurisdiction over: (i) the ECJC
Property, or any portion thereof; (ii) the Hammond Fee Property, the Hammond
Facilities Property or any portion of any such property (collectively, the
"Hammond Property" and together with the ECJC Property, the "Empress Property");
(iii) the ECJC
2
<PAGE>
Riverboats, or either of them; or (iv) the ECHC Riverboat (together with the
ECJC Riverboats, the "Empress Riverboats"); all as amended or supplemented, and
any analogous future or present local, state and federal statutes and
regulations promulgated pursuant thereto, each as in effect as of the date of
determination.
1.3. The term "Hazardous Material" shall mean (a) any chemical,
material or substance at any time defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials", "extremely
hazardous waste", "restricted hazardous waste", "infectious waste", "toxic
substances" or any other formulations intended to define, list or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproduction toxicity, "TCLP
toxicity" or "EP toxicity" or words of similar import under any applicable
Environmental Laws or publications promulgated pursuant thereto; (b) any
petroleum, including crude oil and any fraction thereof, petroleum derived
substances, any drilling fluids, produced waters and other wastes associated
with the exploration, development or production of crude oil, natural gas or
geothermal resources, any flammable substances or explosives, any radioactive
materials; (c) asbestos in any regulated form, urea formaldehyde foam
insulation, electrical equipment which contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million; (d) any pesticides; and (e) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any Governmental
Authority under any Environmental Law or which could reasonably be expected to
pose a hazard to the health and safety of the owners, occupants, or any Persons
in the vicinity of, any property owned or leased by ECHC or ECJC.
1.4 "Hazardous Material Activity" means any actual, proposed or
threatened use, storage, holding, existence, release (including any spilling,
leaking, pumping, pouring, emitting, emptying, dumping, disposing into the
environment, and the continuing migration into or through soil, surface water,
or groundwater), emission, discharge, generation, processing, abatement,
removal, disposition, handling or transportation to or from any Empress Property
or Empress Riverboat of any Hazardous Material.
3
<PAGE>
1.5 The term "Release" shall mean any release, spill, emission,
leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of Hazardous Materials into the indoor
or outdoor environment (including, without limitation, the abandonment or
disposal of any barrels, containers or other closed receptacles containing any
Hazardous Materials), or into or out of any real property, structure, vessel or
vehicle, including, without limitation, the movement of any Hazardous Materials
into or through the air, soil, surface water, groundwater or other property.
1.6 "Transfer Date" with respect to any Empress Property or
Empress Riverboat means the date on which any of the Banks (or any of their
affiliates) acquires fee title to any Empress Property or Empress Riverboat
pursuant to foreclosure under the ECHC Mortgage or the ECJC Mortgage, or by
receipt of a deed in lieu of such foreclosure, and all redemption rights that
Indemnitors may have are expired, so long as a period of ninety-one (91) days
have elapsed since the date on which fee title vests in Agent (or its affiliate)
and during such period no bankruptcy or other insolvency proceeding is filed by
or against Indemnitors or any of them. If any Indemnitor should remain in
possession of such Empress Riverboat or Empress Property after the Transfer
Date, or if Indemnitor should engage in any Hazardous Material Activity on or at
such Empress Riverboat or Empress Property after the Transfer Date, the Transfer
Date shall be deemed to be the date after which such Indemnitor is no longer in
possession of such Empress Riverboat or Empress Property and has ceased to
engage in any Hazardous Material Activity on or at such Empress Riverboat or
Empress Property.
2. INDEMNITORS' REPRESENTATIONS.
----------------------------
2.1. To the best knowledge of Indemnitors, and each of them, and
except as disclosed in the Phase I Environmental Site Assessments submitted to
Agent Bank in accordance with Section 3.14 of the Credit Agreement (the "Phase I
Environmental Assessments"): (i) there has been no Release onto, under, into or
from: (aa) any of the Empress Riverboats; or (bb) the Empress Property or any
portion thereof; in violation of any Environmental Law, that gave rise to a
requirement that such Release be reported to any Governmental Authority; and
(ii) there is no facility in or on any of the Empress Riverboats, or the Empress
Property (or any portion thereof) which is used for the generation,
4
<PAGE>
manufacture, treatment, storage, placing or disposal of any Hazardous Material
except for those limited quantities of cleaning solvents, gasoline and other
petroleum products, pesticides and other similar chemicals and materials, all:
(aa) used and required for the normal maintenance and operation of the ECJC
Casino Facilities or the ECHC Casino Facilities, all as contemplated under the
Credit Agreement; and (bb) properly stored, utilized and disposed of in
accordance with all Environmental Laws.
2.2. Except as disclosed in the Phase I Environmental
Assessments and in Schedule 2.1: (i) none of the Indemnitors have received any
written summons, citation, directive, letter or other written communication from
any agency or department of any county or state or the U.S. Government
concerning any intentional or unintentional action or omission on the part of
any of the Indemnitors, or on the part of any occupant of any of the Empress
Riverboats, or any of the Empress Property, which has resulted in any Release in
violation of any Environmental Law that gave rise to a requirement that such
occurrence be reported to any Governmental Authority; and (ii) to Indemnitors'
knowledge, there has been no actual or threatened litigation, or written claims
of any kind by any person relating to: (aa) any Empress Riverboat, or any
portion of the Empress Property; and (bb) any Release of Hazardous Materials or
violation of Environmental Laws.
3. COVENANTS.
---------
3.1. Compliance with Environmental Laws. Indemnitors shall
----------------------------------
comply, in all material respects, with all Environmental Laws and orders of any
Governmental Authorities having jurisdiction over: (i) any Empress Riverboat;
or (ii) any Empress Property; with respect to administration or enforcement of
any Environmental Laws and shall obtain, keep in effect and comply with all
material governmental permits and authorizations required by Environmental Laws
with respect to any of their operations at, any of the Empress Riverboats, the
Empress Property, the ECJC Casino Facilities or the ECHC Casino Facilities, or
any of them. At the request of Agent Bank, Indemnitors shall furnish Agent Bank
with copies of all such material permits and authorizations and any amendments
or renewals thereof that are in possession or control of the Indemnitors, or any
of them, or are reasonably available to the Indemnitors, or any of them, and
shall notify Agent Bank of any expiration or revocation of such permits or
authorizations. Indemnitors shall also furnish Agent Bank
5
<PAGE>
with all material written citations, notices, summonses, or other communications
which are received by any of them from any Governmental Authority pursuant to,
or in connection with the enforcement of, any Environmental Law.
3.2. Investigatory and Remedial Action. Indemnitors, at their
---------------------------------
expense, shall undertake any and all preventative, investigatory or remedial
action (including emergency response, removal, containment and other remedial
action): (a) that they, or any of them, are required to undertake by any
applicable Environmental Laws or orders of any Governmental Authority having
jurisdiction over any Empress Riverboat or any of the Empress Property with
respect to administration or enforcement of any Environmental Laws (unless the
enforceability of any such order has been stayed by a court or Governmental
Authority of competent jurisdiction and such stay remains in effect, or such
requirement is being contested in good faith by Indemnitors and Indemnitors
maintain adequate reserves determined in accordance with GAAP, for the required
undertaking); or (b) that is reasonably necessary to minimize material property
damage (including, without limitation, damage to any of the Empress Riverboats
or any of the Empress Property), material personal injury or material damage to
the environment, or the threat of any such damage or injury, by Releases of or
exposure to Hazardous Materials in connection with the occupation or operation
of any Empress Riverboat, any of the Empress Property, the ECJC Casino
Facilities or the ECHC Casino Facilities. In the event Indemnitors fail to
perform any of their obligations under this Section 3.2, after reasonable demand
by Agent Bank, Agent Bank may (but shall not be required or under any obligation
or duty to) secure the performance of such obligations at Indemnitors' expense.
All such reasonable costs and expenses incurred by Agent Bank under this section
and otherwise under this Agreement shall be reimbursed by Indemnitors to Agent
Bank upon Agent Bank submitting an accounting of such costs and expenses and
making demand for the payment thereof with interest at the Default Rate
specified in the Credit Agreement. In securing the performance of any such
obligations of Indemnitors, Agent Bank shall at all times be deemed to be the
agent of Indemnitors and shall not by reason of such performance be deemed to be
assuming any responsibility of Indemnitors under any Environmental Law or to any
third party. If Indemnitors fail to act after reasonable demand by Agent Bank,
Indemnitors shall be deemed to and do hereby irrevocably appoint Agent Bank as
their attorney-in-fact with full power to secure performance of such
6
<PAGE>
of Indemnitors' obligations under this Section 3.2 as Agent Bank deems necessary
and appropriate.
4. NOTICES, REPORTS AND INSPECTIONS.
--------------------------------
4.1. Notices. Indemnitors shall provide all notices required
-------
under Section 5.21 of the Credit Agreement in the manner, and within the time
period(s), which are set forth therein.
4.2. Access to Records. Indemnitors shall deliver to Agent Bank,
-----------------
at the written request of Agent Bank, copies of any and all documents in any of
their possession or to which any of them have access relating to: (i) Hazardous
Materials or Environmental Laws; and (ii) any of the Empress Riverboats, any of
the Empress Property or operations conducted on any of them; including, without
limitation results of laboratory analysis, site assessments or studies,
environmental audit reports and other consultants' studies and reports.
4.3 Inspections. Agent Bank reserves the right to inspect and
-----------
investigate the Empress Riverboats, the Empress Property, and the operations
conducted thereon at its sole cost and expense (except to the extent provided by
this Agreement or by any other Loan Document) and subject to the reasonable
rights of Indemnitors' tenants, subtenants and other occupants of the Empress
Riverboats and Empress Property, from time to time upon reasonable prior written
notice to Indemnitors and to perform such tests as would be commercially
reasonable under the circumstances, and Indemnitors shall cooperate fully with
Agent Bank in such inspection, investigations and tests. All such inspections,
investigations and tests shall be conducted at reasonable times agreed to in
advance by Indemnitors and Agent Bank and, at Indemnitors' election, Indemnitors
may have a representative present at each inspection, investigation or test.
All such inspections, investigations and tests shall be: (i) conducted in a
manner which does not unreasonably interfere with the businesses and the
operations at the Empress Riverboats and the Empress Property; and (ii) for
Agent Bank's purposes only and shall not be construed to create any liability or
responsibility on the part of Agent Bank to Indemnitors or to any other Person.
If Agent Bank at any time reasonably believes that Indemnitors or any tenants or
other occupants of the Empress Riverboats or the Empress Property are failing to
comply in any material respect with the requirements of this Agreement or
requirements of
7
<PAGE>
Environmental Laws, or that a Release of Hazardous Materials has occurred onto,
under, into or from any Empress Riverboat or any Empress Property, Agent Bank
may require Indemnitors to furnish Agent Bank at Indemnitors' expense an
environmental audit or a site assessment limited solely to the matters of
concern to Agent Bank. Such audit or assessment shall be performed at
Indemnitors' expense by a qualified consultant reasonably approved by Agent Bank
and shall be delivered to both Indemnitors and Agent Bank upon completion.
5. INDEMNIFICATION. (a) Indemnitors agree to and do hereby jointly
---------------
and severally indemnify, protect, defend and save harmless Agent Bank and each
of the Banks and their respective trustees, directors, officers, employees,
agents, attorneys and shareholders (individually an "Indemnified Party" and
collectively the "Indemnified Parties") from and against any and all losses,
damages, expenses or liabilities of any kind or nature from any suits, claims,
or demands (including without limitation claims asserted by any successor to any
Indemnified Party as owner of any of the Empress Riverboats, or any of the
Empress Property), including reason able counsel fees incurred in investigating
or defending such claim, suffered by any of them and caused by, relating to,
arising out of, resulting from, or in any way connected with:
(i) any investigatory or remedial action instituted
under, or required by, Environmental Laws or by orders of any Governmental
Authority having jurisdiction under any Environmental Laws: (i) involving
contamination of any Empress Riverboat or any Empress Property with Hazardous
Materials; or (ii) involving the operations conducted on any Empress Riverboat
or any Empress Property; or
(ii) any claims of any Person or Governmental Authority
(including, without limitation, any Person or Governmental Authority responsible
for environmental remediation), for injury to any Person whatsoever or for
damage to any property or waterway arising out of, in connection with or in any
way relating to: (i) the breach of any covenants of Indemnitors contained in
this Agreement; (ii) the violation of any Environmental Laws at any Empress
Property, on any Empress Riverboat, or in connection with operation of any
Empress Property or of any Empress Riverboat; or (iii) the use, treatment,
storage, generation, manufacture, transport or Release at, onto, under, into or
from or to any Empress Property or any Empress Riverboat; or
8
<PAGE>
(iii) the contamination of any Empress Property or any
Empress Riverboat by Hazardous Materials by any means whatsoever or the
contamination of any real property or waterway as a result of any Release from
or in connection with the operation of, any Empress Property or any Empress
Riverboat;
provided, however, Indemnitors shall not be obligated to indemnify, protect,
defend or save harmless an Indemnified Party if, and to the extent, the loss,
damage, expense or liability was caused by (a) the gross negligence or
intentional misconduct of such Indemnified Party, or (b) the breach of this
Agreement or any other Loan Document by such Indemnified Party or the breach of
any laws, rules or regulation by such Indemnified Party (other than those
breaches of laws arising from any Indemnitors' default). In case any action
shall be brought against any Indemnified Party based upon any of the above and
in respect to which indemnity may be sought against Indemnitors, Agent Bank
shall promptly notify Indemnitors in writing, and Indemnitors shall assume the
defense thereof, including the employment of counsel selected by Indemnitors and
reasonably satisfactory to Agent Bank, the payment of all costs and expenses and
the right to negotiate and consent to settlement. Upon reasonable determination
made by an Indemnified Party that such counsel would have a conflict
representing such Indemnified Party and Indemnitors, the applicable Indemnified
Party shall have the right to employ separate counsel in any such action and to
participate in the defense thereof. Indemnitors shall not be liable for any
settlement of any such action effected without its consent, but if settled with
Indemnitors' consent, or if there be a final judgment for the claimant in any
such action, Indemnitors agree to indemnify, defend and save harmless such
Indemnified Parties from and against any loss or liability by reason of such
settlement or judgment. In the event that any Person is adjudged by a court of
competent jurisdiction not to have been entitled to indemnification under this
Section 5, it shall repay all amounts with respect to which it has been so
adjudged. If and to the extent that the indemnification provisions contained in
this Section 5 are unenforceable for any reason, the Indemnitors hereby agree to
make the maximum contribution to the payment and satisfaction of such
obligations that is permissible under applicable law.
(b) notwithstanding anything in this Section 5 to the contrary, the
indemnity provided herein shall not extend to any losses, damages, expenses or
liabilities to the extent such losses, damages, expenses or liabilities arise
9
<PAGE>
from circumstances occurring subsequent to the Transfer Date for the Empress
Property or Empress Riverboat with respect to which such loss damage expense or
liability has occurred.
6. PAYMENT: FULL RECOURSE TO INDEMNITORS. The Banks shall have
--------------------------------------
full joint and several recourse to all of the Indemnitors for those liabilities,
losses, claims, damages and expenses for which the Banks are indemnified under
this Agreement. The Banks and each of the Indemnitors intend that the Banks and
the other Indemnified Parties shall have full recourse to Indemnitors for any
sum at any time due to the Banks and the other Indemnified Parties under this
Agreement. In addition to any remedy available for failure to pay such amounts,
such amounts shall bear interest from the date due until payment in full at the
Default Rate as set forth in the Credit Agreement.
7. ACCEPTANCE: NO WAIVER. Indemnitors waive any acceptance of this
----------------------
Agreement by the Banks or any of the other Indemnified Parties. The failure of
the Banks or any of the other Indemnified Parties to enforce any right or remedy
hereunder, or to promptly enforce any such right or remedy, shall not constitute
a waiver thereof nor give rise to any estoppel against the Banks or any of the
other Indemnified Parties, nor excuse Indemnitors from their obligations
hereunder. Any waiver of such right or remedy must be in writing and signed by
the Agent Bank and any Bank affected thereby. This indemnity may be enforced at
law and/or in equity. Remedies include, but are not limited to, actions for
damages and/or specific performance.
8. SURVIVAL. Indemnitors' obligations and liability, with respect
--------
to any breach of their respective covenants under this Agreement and with
respect to indemnification under Section 5 hereof shall survive: (i) complete
satisfaction of all of Indemnitors' obligations under the Loan Documents (other
than this Agreement); (ii) any foreclosure, whether judicial or nonjudicial, of
the Empress Property, or any portion thereof, any deed or other conveyance of
the Empress Property, or any portion thereof, in lieu of such foreclosure; and
(iii) any foreclosure, whether judicial or nonjudicial, of the Empress
Riverboats, or any of them, and any transfer or other conveyance of any of the
Riverboats in lieu of such foreclosure. Such obligations and liability of
Indemnitors shall be for the benefit of the Banks and all Indemnified Parties
including, without limitation, any successor to any of the Banks as holder of
any security interest in the Empress Property, or any portion thereof, as
10
<PAGE>
holder of any security interest in any of the Empress Riverboats, or as the
holder of any of the indebtedness secured by any of the Empress Property or any
of the Empress Riverboats.
9. OBLIGATIONS SEPARATE. The obligations of Indemnitors under this
--------------------
Agreement are separate from and in addition to the obligations to pay the
Indebtedness evidenced by the Notes, the obligations under the Credit Agreement
and the obligations under the Security Documentation. The liability of
Indemnitors under this Agreement shall not be limited to or measured by the
amount of such Indebtedness or obligations; nor shall it be limited to, or
measured by, the value of any of the Empress Property or of the Empress
Riverboats. Indemnitors shall be fully and personally jointly and severally
liable for all obligations of Indemnitors under this Agreement and a separate
action may be brought and prosecuted against Indemnitors under this Agreement.
Indemnitors waive the right to assert any statute of limitations as a bar to the
enforcement of this Agreement or to any action brought to enforce this
Agreement. This Agreement shall not affect, impair or waive any rights or
remedies of the Banks or any obligations of Indemnitors with respect to
Hazardous Materials, where such rights, remedies or obligations are created or
imposed by Environmental Laws (including the Banks' rights of reimbursement or
contribution under Environmental Laws). The remedies in this Agreement are
cumulative and in addition to all remedies provided by law.
10. ATTORNEYS' FEES. In the event of suit or action under or in
---------------
connection with this Agreement, the prevailing party shall be entitled to
recover its costs and attorneys' fees to the extent provided by Section 10.19 of
the Credit Agreement.
11. CHOICE OF LAW. The terms of this Agreement shall be governed by
-------------
the internal laws of the State of Nevada without regard to the principles of
conflicts of law.
12. LOAN DOCUMENT. This Agreement is a Loan Document under the
-------------
Credit Agreement.
13. SUBSEQUENT EXECUTION BY ECJC. This Agreement is executed by EEI
----------------------------
and by ECHC on the date set forth below, and will be executed by ECJC on, or
before, the Closing Date. By execution of this Agreement, EEI and ECHC
acknowledge that they shall be jointly and severally liable for all obligations
of the Indemnitors hereunder, until such time as this
11
<PAGE>
Agreement is executed by ECJC (if at all), at which time EEI, ECHC and ECJC
shall be jointly and severally liable for all obligations of the Indemnitors
hereunder.
IN WITNESS WHEREOF, EEI and ECHC have caused this Agreement to be
executed as of June 17, 1998.
EMPRESS ENTERTAINMENT, INC., EMPRESS CASINO HAMMOND
a Delaware corporation CORPORATION, an Indiana
corporation
By /s/ John Costello By /s/ John Costello
----------------------------- ------------------------------
Name John Costello Name John Costello
--------------------------- ----------------------------
Title Vice President and Title Vice President and
Chief Financial Officer Chief Financial Officer
-------------------------- ---------------------------
IN WITNESS WHEREOF, ECJC has caused this Agreement to be executed as
of June 30, 1998.
EMPRESS CASINO JOLIET
CORPORATION, an Illinois
corporation
By /s/ John Costello
-----------------------------
Name John Costello
---------------------------
Title Vice President and
Chief Financial Officer
--------------------------
12
<PAGE>
STATE OF ILLINOIS)
) ss
COUNTY OF COOK )
The foregoing instrument was acknowledged before me this 17th day of
June, 1998 by John Costello as Vice President - CFO of EMPRESS ENTERTAINMENT,
INC., a Delaware corporation, on behalf of the corporation.
Joanne Bruen
- ------------------------ [SEAL APPEARS HERE]
Notary Public
STATE OF ILLINOIS)
) ss
COUNTY OF COOK )
The foregoing instrument was acknowledged before me this 17th day of
June, 1998 by John Costello as Vice President - CFO of EMPRESS CASINO HAMMOND
CORPORATION, an Indiana corporation, on behalf of the corporation.
Joanne Bruen
- ------------------------ [SEAL APPEARS HERE]
Notary Public
STATE OF ILLINOIS)
) ss
COUNTY OF COOK )
The foregoing instrument was acknowledged before me this 30th day of
June, 1998 by John Costello as Vice President - CFO of EMPRESS CASINO JOLIET
CORPORATION, an Illinois corporation, on behalf of the corporation.
Joanne Bruen
- ------------------------ [SEAL APPEARS HERE]
Notary Public
13
<PAGE>
EXHIBIT 9.1
AMENDED AND RESTATED
--------------------
STOCKHOLDERS AGREEMENT
----------------------
THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT is made and entered into
as of this 15th day of April, 1998, by and among LMC Leasing, Ltd., a Delaware
corporation (the "Company"), and Peter A. Ferro, Jr., as Voting Trustee of the
Ferro Brothers LMC Leasing, Ltd. Voting Trust; Peter A. Ferro, Jr. and William
J. Sabo, as Co-Trustees of the Melissa Kate Lambrecht Trust u/t/a Dated 5/3/93,
the Paul John Lambrecht Trust u/t/a Dated 5/3/93 and the Matthew Lambrecht Trust
u/t/a Dated 5/3/93; Charles P. Hammersmith, Jr.; Robert W. Kegley, Sr.; Thomas
J. Lambrecht; William J. McEnery, as Trustee fbo William J. McEnery; Edward T.
McGowan, as Trustee fbo Edward T. McGowan; William J. Sabo; and Martin McNally
(collectively, the "Stockholders").
RECITAL
-------
The Stockholders are parties to a Stockholder Agreement (the "Original
Agreement") dated as of July 8, 1997, as amended, with respect to the
Corporation and desire to amend and restate the Original Agreement, all on the
terms and subject to the conditions contained herein.
IT IS THEREFORE, AGREED:
ARTICLE I
---------
GENERAL DEFINITIONS
-------------------
Section 1.1 BOARD OF DIRECTORS. The term "Board of Directors" shall
------------------
refer to the Board of Directors of the Corporation as now or hereafter
constituted.
Section 1.2 COMPETITOR. The term "Competitor" shall refer to any
----------
corporation, partnership, limited partnership, sole proprietorship, joint
venture or any other person or entity whatsoever which is in any way engaged in
the business of gaming in the State of Illinois or Indiana.
Section 1.3 CONTRIBUTION SHARE. Intentionally Omitted.
------------------
Section 1.4 DIRECT INDEBTEDNESS FINANCING. Intentionally Omitted.
-----------------------------
Section 1.5 EQUITY CONTRIBUTION. Intentionally Omitted.
-------------------
Section 1.6 FINANCIAL STATEMENTS. The term "Financial Statements" shall
--------------------
refer to the consolidated balance sheets, consolidated statements of income and
retained earnings and consolidated statements of cash flow of the Corporation
and its Subsidiaries, for and as of each calendar month and each Fiscal Year,
prepared in accordance with generally accepted accounting
<PAGE>
principles or, in the case of the calendar month or quarterly Financial
Statements, in accordance with those accounting practices and principles,
consistently applied, utilized by the Corporation's management in the
preparation of unaudited financial statements in the ordinary course of
business.
Section 1.7 FISCAL YEAR. The term "Fiscal Year" shall refer to the
-----------
twelve month period selected by the Corporation for purposes of accounting for
its operations on an annual basis and for the preparation of its annual audited
financial statements.
Section 1.8 OFFER. The term "Offer" shall refer to a written bona fide
-----
offer from an independent third party to purchase Shares, which states the
number of Shares to be transferred, the name and business address of the
proposed transferees, and the amount of the consideration and the other
essential terms of the sale.
Section 1.9 OWNER'S START-UP AMOUNT. Intentionally Omitted.
-----------------------
Section 1.10 PERMITTED TRANSFEREE. The term "Permitted Transferee" shall
--------------------
refer to:
(a) Any inter vivos trust established by any Stockholder which
is revocable at any time by the Stockholder and of which the Stockholder
(or a person approved by (i) all appropriate regulatory authorities and
(ii) Stockholders holding at least 50% of the Shares outstanding) is the
sole trustee, and which is a Qualified Subchapter S Trust under Section
1361 (d) of the Internal Revenue Code of 1986 as amended from time to time
(the "Code") .
(b) Any transfer which would not cause the Corporation to cease
to be qualified as a Subchapter S corporation under the Code and which is
approved in advance of the transfer by an affirmative vote of those
Stockholders holding more than fifty percent (50%) of the Shares
outstanding, on such terms and conditions as the Stockholders so voting
deem appropriate.
Notwithstanding the preceding provisions of this Section 1.10, a person shall
not be a Permitted Transferee unless the transfer to such person has been
formally approved in writing by all appropriate regulatory authorities (unless
in the opinion of legal counsel to the Corporation such approvals are not
legally required), and is otherwise in compliance with the applicable terms of
all applicable laws and regulations regarding such transfer.
Section 1.11 REPURCHASE EVENTS. The term "Repurchase Events" shall refer
-----------------
to any of the following events with respect to a Stockholder:
(a) Death. The death of the Stockholder.
-----
2
<PAGE>
(b) Bankruptcy. The Stockholder shall (i) admit in writing his or
----------
her inability to pay debts generally as they become due; (ii) file a
petition in bankruptcy or a petition to take advantage of any insolvency
act; (iii) make an assignment for the benefit of his or her creditors; (iv)
consent to the appointment of a receiver for himself or herself or the
whole or substantially all of his or her property; (v) on a petition in
bankruptcy filed against him or her, be adjudicated a bankrupt; or (vi)
file a petition or answer seeking reorganization or arrangement or other
aid or relief under any bankruptcy or insolvency laws or any other law for
the relief of debtors.
(c) Judicial Transfer of Control. If, under the provisions of any
----------------------------
law for the relief of debtors, any court of competent jurisdiction shall
assume custody or control of the Stockholder's assets, without the consent
of the Stockholder, and such custody or control shall not be terminated or
stayed within sixty (60) days from the date of assumption of such custody
or control.
(d) Mandatory Transfers. The Shares owned by the Stockholder shall
-------------------
be subject to mandatory transfer to a person or entity other than a
Permitted Transferee by operation of law or similar circumstances.
(e) Violation of Laws. The Stockholder shall no longer meet the
-----------------
minimum requirements imposed upon Stockholders of the Corporation by the
laws or regulations of any state applicable to the Corporation or any of
its Subsidiaries.
(f) 10% Interest in Competitor. The Stockholder shall have, directly
--------------------------
or indirectly, acquired a ten percent (10%) or more interest in the
ownership value, voting rights or beneficial interests of any Competitor.
(g) Subchapter S Violations. The Stockholder shall no longer qualify
-----------------------
as an eligible Stockholder of a Subchapter S corporation under Section
1361(b) of the Code.
Section 1.12 RESTRICTED STOCK TRANSFER CLOSING DATE. The term
--------------------------------------
"Restricted Stock Transfer Closing Date" shall refer to the date for the closing
of the purchase and sale of Shares pursuant to Article IV hereof, which date
shall be:
(a) Pre-Solicitation Sales. In the case of Shares sold to the
----------------------
Corporation or the remaining Stockholders under Section 4.3(a), no later
than forty-five (45) days from the date on which the parties have agreed
upon the terms of the sale.
(b) First Refusal Sales. In the case of Shares sold pursuant to an
-------------------
Offer under Section 4.3(b), the date set forth in the applicable Offer
which date shall be no later than forty-five (45) days from the date on
which the last option to the Corporation and the Stockholders has expired.
3
<PAGE>
(c) Repurchase Events. In the case of Shares purchased by the
-----------------
Corporation or the remaining Stockholders under Section 4.4, the date
agreed upon by the parties to the transaction which date shall be no later
than forty-five (45) days from the date on which the applicable Restricted
Stock Transfer Purchase Price has been determined. However, if in the
opinion of legal counsel to the Corporation any transfer of Shares to which
this Section applies requires the approval of any regulatory authority the
applicable forty-five (45) day period shall be extended by the number of
days required to obtain such approvals. The purchasing party or parties
shall be responsible for setting the Restricted Stock Transfer Closing Date
within the time periods set forth above and shall give at least fifteen
(15) days' prior notice of the Restricted Stock Transfer Closing Date to
the selling party.
Section 1.13 RESTRICTED STOCK TRANSFER PURCHASE PRICE. The term
----------------------------------------
"Restricted Stock Transfer Purchase Price" shall refer to the price payable for
Shares to be purchased pursuant to Section 4.4 of this Agreement. The
Restricted Stock Transfer Purchase Price shall be the fair market value of the
subject Shares determined as set forth in Section 4.5.
Section 1.14 STOCKHOLDERS. The term "Stockholders" shall refer to each of
------------
the Stockholders, any Permitted Transferee of such Stockholders and any other
parties who from time to time acquire Shares and execute an agreement by which
they agree to be bound by the terms of Article IV of this Stockholders
Agreement.
Section 1.15 STOCKHOLDERS AGREEMENT. The term "Stockholders Agreement"
----------------------
shall refer to this Stockholders Agreement as it may be amended, modified or
supplemented from time to time.
Section 1.16 SHARES. The term "Shares" shall refer to all voting and non-
------
voting shares of the Common Stock of the Corporation presently outstanding or
hereafter issued and outstanding.
Section 1.17 SUBSIDIARY. The term "Subsidiary" shall refer to any
----------
corporation or other organization, whether incorporated or unincorporated, of
which at least fifty and one tenth percent (50.1%) of the securities or other
interests having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by the Corporation or by any one or more of its Subsidiaries.
Section 1.18 THIRD PARTY GUARANTEE FINANCING. Intentionally Omitted.
-------------------------------
4
<PAGE>
ARTICLE II
----------
FINANCING OBLIGATIONS OF STOCKHOLDER.
-------------------------------------
Section 2.1 UNDERTAKING OF THE STOCKHOLDERS. Intentionally Omitted.
-------------------------------
Section 2.2 ADMISSION OF ADDITIONAL STOCKHOLDERS. The Stockholders may,
------------------------------------
by a vote of over fifty percent (50%) of the Shares outstanding, agree to admit
to the Corporation and make parties to the Stockholders Agreement additional
Stockholders who shall become Stockholders for all purposes of this Agreement.
Any such additional Stockholders shall be admitted as Stockholders on the terms
and conditions set forth by the Board of Directors, which terms and conditions
may vary from those terms and conditions applicable to the Stockholders
originally signing this Agreement. Notwithstanding anything to the contrary
contained in this Section, no person who could otherwise become a Stockholder
hereunder shall become a Stockholder if either (i) the then-existing
Stockholders have not obtained formal written approval of the admission of such
person as a Stockholder from all applicable regulatory authorities, if in the
opinion of legal counsel to the Corporation such approval is legally required,
or (ii) the admission of such person as a Stockholder would result in the loss
of the Corporation's status as a Subchapter S corporation under the Code. Any
issuance of Shares under this Section 2.2 shall be subject to the provisions of
Section 3.5.
Section 2.3 REDETERMINATION OF CONTRIBUTION SHARE. Intentionally
-------------------------------------
Omitted.
Section 2.4 INDEMNIFICATION BY CORPORATION. Intentionally Omitted.
------------------------------
Section 2.5 FAILURE TO MEET UNDERTAKING. Intentionally Omitted.
---------------------------
ARTICLE III
-----------
SHARES AND RELATED RIGHTS
-------------------------
Section 3.1 ISSUANCE OF SHARES. Intentionally Omitted.
------------------
Section 3.2 LEGEND ON SHARES CERTIFICATES. Each certificate for the
-----------------------------
Shares issued under this Article III shall bear a legend in substantially the
following form:
"This stock certificate and the shares represented hereby are subject
to the terms and conditions of, and no transfer or other disposition
thereof may, be made except in accordance with, that certain
Stockholders Agreement (the "Agreement") dated [the date of this
Agreement], by and among LMC Leasing, Ltd., a Delaware corporation
(the "Corporation"), and those persons who are shown on the books and
records of the Corporation to be the stockholders of the
5
<PAGE>
Corporation as of such date, and such other persons who may thereafter
become stockholders of the Corporation. A copy of the Agreement is on
file at the office of the Corporation and will be furnished by the
Corporation to any Stockholder upon request and without charge. Under
certain circumstances, the Agreement provides for certain limitations
on the transfer of the shares represented hereby. In addition, the
shares represented hereby may not be offered for sale, sold,
transferred or otherwise disposed of unless (1) a registration
statement is then effective as to such shares under the Securities Act
of 1933, as amended, and all applicable state securities statutes, or
(2) prior thereto the issuer shall have received an opinion of counsel
satisfactory to it that such offer to sell, sale, transfer or other
disposition can be lawfully effected under such Act and all applicable
state securities statutes, without registration of the shares."
The last sentence of the above legend shall be removed and the Corporation shall
issue a certificate with a legend so amended for the applicable Shares in the
event that such Shares are registered under the Securities Act of 1933, as
amended and all applicable state securities statutes.
Section 3.3 EXEMPT TRANSACTION. Each Stockholder hereby expressly
------------------
acknowledges and agrees that the Corporation's issuance of the Shares hereunder
shall be exempt from the registration requirements of the Securities Act of
1933, as amended, and all regulations promulgated pursuant thereto, as well as
from all applicable state securities laws. Each Stockholder further expressly
represents and warrants to the Corporation that he or she will acquire the
Shares issued hereunder for investment purposes only and not with a view to
distribution or resale.
Section 3.4 SIZE OF BOARD OF DIRECTORS. Each of the Stockholders hereby
--------------------------
covenants and agrees that he shall vote his Shares for and take all other action
reasonably necessary to establish a Board of Directors composed of the following
seven (7) members: Peter A. Ferro, Jr., Charles P. Hammersmith, Jr., Robert W.
Kegley, Sr., Thomas J. Lambrecht, William J. McEnery, Edward T. McGowan and
William J. Sabo (each, an "Initial Director"). The directors and officers of
the Corporation, acting as a stockholder of each of its Subsidiaries, shall
cause each of the Initial Directors who has a right to be elected to the Board
of Directors of the Corporation to be elected to the Board of Directors of each
of the Subsidiaries. After the date hereof, the size of the Board of Directors
may be increased or decreased as allowed under applicable law, provided,
however, that so long as any Initial Director still holds, either beneficially
or of record, any Shares, each of the Stockholders hereby covenants and agrees
that he shall take all action reasonably necessary to assure the continued
selection of such Initial Directors.
6
<PAGE>
Section 3.5 PRE-EMPTIVE RIGHTS.
------------------
(a) Rights In General. Upon each issuance or sale by the
Corporationof Shares or securities convertible into or rights to acquire
Shares (for purposes of this Section 3.5, collectively referred to as the
"Shares"), each Stockholder shall have the right to purchase in accordance
with the procedure set forth in Section 3.5(b), such number of Shares as
shall be necessary for each such Stockholder to maintain, after such
issuance, his or her ownership of the total number of issued and
outstanding Shares as such Stockholder owned immediately prior to such
issuance.
(b) Notice. The Corporation shall give each Stockholder prior
------
written notice of its intention to issue Shares to any person. The
notice shall set forth the terms of the proposed issuance, including the
number of Shares proposed to be issued, the purchase price per Share, and
the other material terms of the proposed issuance. If any Stockholder
desires to exercise the right of such Stockholder under Section 3.5(a), he
or she shall do so, if at all, by written notice delivered to the
Corporation and all other Stockholders within twenty (20) days of the
Corporation's written notice. The failure of any Stockholder to exercise
its rights under Section 3.5(a) on any occasion when such right is
available shall not affect its future right to receive notice of and to
purchase Shares in accordance with and subject to the terms and conditions
of this Section 3.5.
(c) Notwithstanding anything to the contrary contained in this
Section 3.5, none of the Stockholders shall be entitled to any of the
rights contained in this Section 3.5 upon the issuance of Shares in
connection with the merger of Empress Casino Joliet Corporation ("Empress
Joliet") into a Subsidiary of the Corporation.
Section 3.6 CUMULATIVE VOTING. The Corporation shall have cumulative
-----------------
voting rights with respect to the election of its Board of Directors, and the
Stockholders shall take all necessary action to so provide in the Corporation's
bylaws; provided, however, that the exercise of such cumulated voting rights
shall not be inconsistent with Section 3.4 hereof.
Section 3.7 SPECIAL VOTING REQUIREMENTS REGARDING CERTAIN TRANSACTION.
---------------------------------------------------------
(a) Actions Requiring 75% Approval. Each of the Stockholders
------------------------------
expressly covenants and agrees that the following actions may not be
taken without the approval of those Stockholders holding at least seventy-
five percent (75%) of the Shares of the Corporation then outstanding:
(i) Sales of The Business. The sale, lease or disposition of all
---------------------
or substantially all of the assets of the Corporation or any
of its Subsidiaries or the merger or consolidation of the
Corporation or any of its Subsidiaries with or into any
other corporation, corporations or other entity, including a
sale of all or substantially all of the assets of the
Corporation or any of its
7
<PAGE>
Subsidiaries by means of a sale of the outstanding Shares of
the Corporation or any of its Subsidiaries. In the event
that a sale of the outstanding Shares of the Corporation as
described in the preceding sentence is favorably voted upon
in the manner required under this Section 3.7(a), all the
Stockholders, including Stockholders who may have voted
against such sale, shall tender their Shares as required
under the applicable Shares purchase agreement and execute
the purchase agreement and other related instruments
negotiated by the Corporation and approved by the
Stockholders as herein provided, provided that such purchase
agreement extends to all non-approving Stockholders the same
purchase price and terms of purchase accepted by those
Stockholders voting to approve the sale and does not impose
any personal liability on the Stockholder required to so
sign other than the Stockholder's agreement and
representation that he or she owns the Shares being sold
free and clear of all liens or other encumbrances of
whatsoever kind or nature. Each of the Stockholders
expressly covenants and agrees to waive any appraisal and/or
dissenter's rights provided to him or her by Section 262 of
the Delaware General Corporation Law in connection with this
Section 3.7(a).
(ii) Preferred Stock. The issuance or sale by the Corporation of
---------------
any shares of Preferred Stock.
(iii) Stock of Empress Hammond or Empress Joliet. The issuance or
------------------------------------------
sale by Empress Joliet, Empress Casino Hammond Corporation
("Empress Hammond") or the Corporation of any shares of
capital stock of Empress Joliet or Empress Hammond or
securities convertible into or other rights to acquire
shares of capital stock of Empress Joliet or Empress
Hammond.
(iv) Amendment of This Agreement. Any amendment of this
---------------------------
Agreement, other than an amendment to the specific
provisions discussed in Section 3.7(b)(i).
(b) Action Requiring Unanimous Approval. Each of the
-----------------------------------
Stockholders expressly covenants and agrees that the following actions
may not be taken without the approval of those Stockholders holding One
Hundred Percent (100%) of the Shares of the Corporation then outstanding:
(i) Amendment of Certain Provisions. Any amendment of Sections
-------------------------------
3.7(a)(i) or (iii) above or 4.3(b)(iii) below.
(ii) Amendment to Sections 2.5(a) and 2.5(b) Provisions.
--------------------------------------------------
Intentionally Omitted.
8
<PAGE>
(iii) Stockholder Contribution Obligations. Intentionally
------------------------------------
Omitted.
ARTICLE IV
----------
SALE OR DISPOSITION OF SHARES
-----------------------------
Section 4.1 GENERAL RESTRICTION ON SALE OR DISPOSITION. Each
------------------------------------------
Stockholder hereby covenants and agrees that, commencing on the date hereof, he
or she shall not, directly or indirectly, including, without limitation, by
means of a transfer of control of a Permitted Transferee, voluntarily or
involuntarily, sell, pledge, hypothecate, encumber or otherwise dispose of any
of his or her Shares or any interest therein, except as expressly permitted by
this Article IV. A Stockholder selling or otherwise transferring or desiring to
sell or transfer his or her Shares in accordance with this Article IV is
sometimes referred to herein as the "Selling Stockholder."
Section 4.2 PERMITTED TRANSFERS. Subject to the provisions of Article V
-------------------
(regarding the maintenance of Subchapter S status), a Stockholder may sell,
assign or otherwise transfer all or any portion of his or her Shares to a
Permitted Transferee, provided that prior to such transfer the Permitted
Transferee executes an appropriate supplement to this Agreement agreeing to be
bound by the terms and provisions thereof as if such Permitted Transferee were
an original party hereto.
Section 4.3 RIGHT OF FIRST REFUSAL. Except for sales or other transfers
----------------------
permitted pursuant to Section 4.2, a Selling Stockholder shall comply with the
following procedures:
(a) Actions Prior to Solicitation of Offers. Prior to soliciting
---------------------------------------
offers for purchase of all or any portion of his or her Shares, the
Selling Stockholder shall first give written notice to the Corporation
and the remaining Stockholders of the intention to solicit such offers,
specifying the number of Shares proposed to be offered for sale (the
"Offered Shares").
(i) Within ten (10) days of receipt of such notice, the
Corporation and the Selling Stockholder shall commence to
negotiate in good faith to determine the fair market value of
the Offered Shares and other terms and conditions for the sale
of all, but not less than all, of the Offered Shares to the
Corporation. If within twenty (20) days of the commencement of
such negotiations, the Corporation and the Selling Stockholder
are unable to agree on the terms of purchase of all of the
Offered Shares, then the Selling Stockholder shall repeat the
same procedure with the remaining Stockholders who desire to
acquire the Offered Shares.
(ii) If within twenty (20) days of the commencement of the second
level of negotiations, the parties to such negotiations are
unable to agree on the
9
<PAGE>
terms of purchase of all of the Offered Shares, then, subject to
the remaining provisions of this Article IV, the Selling
Stockholder may proceed to solicit offers from third parties for
the Offered Shares. Any purchase of the Offered Shares by the
Stockholders as provided in this Section shall be in the
proportion of the respective ownership of Shares among those
Stockholders purchasing the Offered Shares unless otherwise
agreed by such purchasing Stockholders.
(b) Treatment of Offer. Within five (5) days after receipt of an
------------------
Offer which the Selling Stockholder intends to accept, the Selling
Stockholder shall provide the Corporation and the remaining Stockholders
with a copy of the Offer. The following procedure shall then apply:
(i) Within thirty (30) days of the Corporation's receipt of the
copy of the Offer, the Corporation shall have the option (without
obligation) to purchase, if at all, all, but not less than all, of
Shares subject to the Offer (the "Third Party Offer Shares") at the
price and other terms disclosed in the Offer.
(ii) If the Corporation fails to purchase the Third Party Offer
Shares within the thirty (30)-day period, then the remaining
Stockholders shall have the option for a period of ten (10) days from
the end of the thirty (30)-day period to purchase the Third Party
Offer Shares at the price and other terms disclosed in the Offer. No
purchase under this Section 4.3(b)(ii) shall be final and effective
unless all the Shares purchasable pursuant to the Offer are purchased
pursuant to these provisions. Any purchase of Shares by any
Stockholders pursuant to these provisions shall be in the proportion
of the respective ownership of Shares among those Stockholders
purchasing such Shares unless otherwise agreed by such purchasing
Stockholders.
(iii) In lieu of exercising any option under the provisions of
Section 4.3(b)(ii), each remaining Stockholder shall have the option
exercisable within ten (10) days after the ten (10) day period
referred to in Section 4.3(b)(ii), to tender for sale to the offeror
of the Offer (each such tendering Stockholder hereafter a "Tendering
Stockholder"), on the same terms disclosed in the Offer, such number
of the Tendering Stockholder's Shares (including a fraction of a
single Share of the Tendering Stockholder's Shares if the Offer is for
a single Share) representing, as a percentage of the Third Party Offer
Shares, the same percentage of the Tendering Stockholder's ownership
interest in the Corporation as of the date of the Offer, thereby
reducing by the same number (or fraction thereof) the number of Third
Party Offer Shares which may be sold by the Selling Stockholder to the
offeror under the Offer. The Selling Stockholder agrees to take any
action necessary to accomplish the application of the provisions of
the preceding sentence, and any Offer which fails to allow Tendering
Stockholders to
10
<PAGE>
so apply the said provisions shall be ineffective and
may not be consummated as herein otherwise permitted.
(iv) If the Corporation and the remaining Stockholders fail to
exercise the options set forth in Sections 4.3(b)(i) and (ii) (and
after the expiration of the 10 day period granted to Tendering
Stockholders under Section 4.3(b)(iii)) the Selling Stockholder, and
to the extent options under Section 4.3(b)(iii) have been exercised,
the Tendering Stockholders, may proceed to consummate the sale of the
Third Party Offer Shares to the offeror under the Offer strictly in
accordance with the terms and conditions disclosed in the Offer,
provided that (A) the Selling and Tendering Stockholders have complied
with the provisions of Section 4.3(c), (B) such sale is consummated
within eighty five (85) days from the date on which the Corporation
received a copy of the Offer as herein provided; provided, however,
that if in the opinion of legal counsel to the Corporation any
transfer of Shares to which this Section applies requires the approval
of any regulatory authority, the aforesaid eighty five (85)-day period
shall be extended by the number of days required to obtain such
approval, and (C) the offeror, prior to the consummation of a sale,
has executed a supplement to this Stockholders Agreement in which it
agrees to be bound by the terms and conditions of this Stockholders
Agreement as if it were an original party thereto. If, however,
either the purchase price or other material terms disclosed in the
Offer are decreased or adjusted in a manner which is materially
favorable to the person proposing to purchase Shares under the Offer,
such change shall be deemed to be a new Offer, which shall again be
subject to compliance by the Selling Stockholder with all the
provisions of Section 4.3(b).
(c) Detrimental Sales. In the event that the Corporation concludes,
-----------------
for good and valid business reasons, that any proposed sale of Shares
pursuant to an Offer or otherwise to a specific purchaser would be
detrimental to the business of the Corporation, the Corporation shall
notify the Selling Stockholder of such fact in a written notice delivered
to the Selling Stockholder within thirty (30) days from being notified in
writing of the identity of the proposed purchaser, specifying with
particularity the specific reasons for its conclusion. Such notice may
also identify any other potential purchasers which the Corporation
concludes would be objectionable for similar reasons, it being understood
that any such identification is not inclusive. The Selling Stockholder
shall, in good faith, give due consideration to such concerns of the
Corporation but shall not, except as provided in the next sentence, be
prohibited from consummating such sale so long as the Selling Stockholder,
in good faith, does not believe that the proposed sale would be detrimental
to the business of the Corporation. Without limiting the generality of the
foregoing, each of the Stockholders hereby expressly acknowledges and
agrees that any of the following transfers, whether direct or indirect,
shall be conclusively presumed detrimental to the Corporation and shall be
prohibited: (i) any transfer to any person having any beneficial or legal
ownership interest in any Competitor of the Corporation,
11
<PAGE>
(ii) any transfer to a person which would cause the Corporation to lose its
status as a Subchapter S corporation under the Code or (iii) any transfer
to a person who, in the opinion of legal counsel to the Corporation, could
jeopardize any of the Corporation's gaming licenses.
(d) Notices. The exercise of any option granted under this Section
-------
4.3 shall be by delivery of written notice of the exercise within the time
period specified in the provisions to which the option relates.
Section 4.4 REPURCHASE EVENTS. Upon the occurrence of any Repurchase
-----------------
Event with respect to a Stockholder:
(a) Non-Death Events. In all Repurchase Events other than the death
----------------
of a Stockholder, the Corporation and the other Stockholders shall have the
right, without obligation, to purchase all the Shares of the Stockholder
which rights may be exercised in accordance with the procedures set forth
in Section 4.3(b) as if the Repurchase Event was an Offer to purchase all
the Shares of the Stockholder at the Restricted Stock Transfer Purchase
Price (determined in accordance with Section 4.5 below), except that all
time periods shall commence from the date on which the occurrence of the
applicable Repurchase Event has been communicated in writing to the
Corporation.
(b) Death Event. In the case of the death of a Stockholder, the
-----------
Corporation shall have the right, but not the obligation, to purchase the
Shares held by such Stockholder, his estate, legal representative and any
Permitted Transferee of such Stockholder (the "Corporation Call Option")
and, in the event of the exercise of the Corporation Call Option, each such
person shall sell such Shares to the Corporation at the Restricted Stock
Transfer Purchase Price determined in accordance with Section 4.5 below and
payable as set forth in Section 4.6(a)(i) below. In order to exercise the
Corporation Call Option, the Corporation must provide written notice of
such exercise to the deceased Stockholder's estate, legal representative
and/or any applicable Permitted Transferee within six (6) months after the
deceased Stockholder's death. Notwithstanding the provisions of the two
immediately preceding sentences, with respect to those Shares of the
deceased Stockholder which would, by reason of such Stockholder's death,
be, directly or indirectly transferred to or held for the benefit of such
Stockholder's spouse and/or children, the provisions of the two immediately
preceding sentences shall not apply and instead each of such spouse and/or
children (or the estate or other legal representative of the deceased
Stockholder acting on their behalf or other person holding such Shares for
their benefit) shall have the right to continue to own such Shares.
Section 4.5 DETERMINATION OF RESTRICTED STOCK TRANSFER PURCHASE PRICE.
---------------------------------------------------------
The Restrictive Stock Transfer Purchase Price shall be the fair market value of
the Shares being
12
<PAGE>
purchased by reason of a Repurchase Event, determined under the provisions of
this Section 4.5 without regard to any minority discount and taking into account
all income tax effects.
(a) Agreement by Corporation and Selling Stockholder. The Restricted
------------------------------------------------
Stock Transfer Purchase Price shall be as agreed to by the Corporation
and the Selling Stockholder within thirty (30) days from the date of the
Repurchase Event.
(b) First Fair Market Value Appraisal. If Section 4.5(a) is
---------------------------------
inapplicable, the Corporation and the Selling Stockholder shall each
appoint a qualified independent appraiser of their respective choice within
five (5) days after the end of the 30-day period referred to in Section
4.5(a), and both appraisers shall have thirty (30) days from the date of
their appointment to agree upon the fair market value of the Shares. For
all purposes of this Section 4.5, any two appraisers shall be deemed to
"agree" or to have "agreed" if their individual determinations do not vary
from each other by more than five percent (5%). However, the fair market
value shall then be the average of the two determinations.
(c) Subsequent Fair Market Value Appraisals. If the two appraisers
---------------------------------------
cannot agree upon the fair market value within thirty (30) days after
their appointment, they shall, within eight (8) days after the end of this
30-day period, appoint a third qualified independent appraiser of their
collective choice. The three appraisers shall then determine the fair
market value of the Shares within twenty (20) days of the appointment of
the third appraiser. The fair market value agreed to by two of the three
appraisers (as the term "agree" and "agreed" is defined in Section 4.5(b))
shall be the purchase price for purposes of Section 4.5. However, the fair
market value shall then be the average of the two determinations. If two
of the three appraisers cannot agree on the fair market value, then the
procedures set forth in Section 4.5(b) and (c) shall be repeated until the
fair market value has been determined as herein provided.
(d) General Valuation Requirements. Any party appointing an
------------------------------
appraiser pursuant to this Section 4.5 shall direct the appraiser to
strictly comply with (i) the time periods set forth in this Section 4.5,
(ii) the requirement for appointment of a third appraiser, and (iii) the
valuation standards herein prescribed, and to immediately notify the
selling and purchasing parties in writing of any determination made
hereunder. The fees of the first two appraisers appointed hereunder shall
be payable by the appointing party and the fees of the third appraiser
shall be divided equally between the selling and purchasing parties.
Section 4.6 CLOSING AND PAYMENT OF PURCHASE PRICE.
-------------------------------------
(a) Closing Date and Payment Terms. The purchase of Shares
------------------------------
pursuant to this Article IV shall be consummated on the applicable
Restricted Stock Transfer Closing Date at the office of the Corporation and
shall be paid as follows:
13
<PAGE>
(i) The Restricted Stock Transfer Purchase Price for Shares
purchased by reason of an event described in Section 4.4 shall be paid
as follows:
(A) If such purchase price for the applicable Selling
Stockholder is less than One Million Dollars ($1,000,000)
then twenty-five percent (25%) of the Restricted Stock
Transfer Purchase Price shall be paid within 60 days after
its determination and the balance shall be paid in equal
semi-annual installments over three years commencing on the
first anniversary of the applicable Repurchase Event and
continuing on each anniversary thereafter until payment in
full.
(B) If such purchase price for any Selling Stockholder equals
or exceeds One Million Dollars ($1,000,000), then twenty
five percent (25%) of the Restricted Stock Transfer
Purchase Price shall be paid within 60 days after its
determination and the balance shall be paid in equal annual
installments over five years commencing on the first
anniversary of the applicable Repurchase Event and
continuing on each anniversary thereafter until payment in
full.
(C) The amount of such purchase price outstanding during the
aforesaid three year or five year periods shall bear simple
interest at the rate of ten percent (10%) per annum which
interest shall be paid annually on the date of the
applicable principal payments. The Corporation shall pledge
the Shares being sold by the applicable Selling
Stockholders as collateral to secure the prompt payment of
all amounts due to such Selling Stockholder.
(D) Notwithstanding the preceding provisions, if at the time
any payment under this Section 4.6 is due, the Corporation
is prohibited under the laws of the State of Delaware or
any other competent jurisdiction from making the payment,
the Corporation shall have a grace period for making the
payment for the length of the prohibition period, provided
that, in addition to accrual of interest on the principal
portion of such payment as herein provided, interest shall
accrue on the interest portion of each payment so deferred
at the rate specified in Section 4.6(a)(i)(C) from the due
date thereof without regard to the grace period through the
payment thereof.
(iii) The purchase price for Shares purchased pursuant to Section
4.3(a) shall be paid in accordance with the terms and conditions
agreed upon by the Selling Stockholders and the Corporation or
remaining Stockholders (as applicable) on the applicable Restricted
Stock Transfer Closing Date.
14
<PAGE>
(iv) The purchase price for Shares purchased pursuant to Section
4.3(b) shall be paid in accordance with the payment terms stated in
the applicable Offer on the applicable Restricted Stock Transfer
Closing Date.
(vi) Notwithstanding anything to the contrary contained herein,
in the event that any person contests the ownership of any
Stockholder's Shares (by any applicable proceeding) the Corporation
may, at its option, deposit payments due to the Selling Stockholder
under this Section 4.6 into an escrow account or take such other
actions as it deems necessary or reasonable pending the resolution of
the applicable dispute.
(b) Delivery of Stock Certificate On the Restricted Stock Transfer
-----------------------------
Closing Date for a purchase of Shares pursuant to this Article IV, the
Selling Stockholder shall deliver to the purchasing party or parties a
certificate or certificates representing the purchased Shares, duly
endorsed in blank or accompanied by a duly executed assignment separate
from certificate. Any sale of Shares pursuant to this Article IV shall be
made free and clear of all liens, encumbrances and restrictions (except
those created by this Stockholders Agreement), and the Selling Stockholder
shall furnish to the purchasing party or parties such additional evidence
and executed documents as may be reasonably necessary to establish the
validity of and accomplish the transfer.
Section 4.7 TERM AND TERMINATION. The provisions of Article IV of the
--------------------
Stockholders Agreement shall cease to apply to any events which occur after the
occurrence of any of the following events:
(a) Bankruptcy and Dissolution. The bankruptcy or dissolution of the
--------------------------
Corporation;
(b) Single Remaining Stockholder. A single Stockholder becoming the
----------------------------
owner of all of the Shares of the Corporation which are then subject to
this Agreement; or
(c) Mutual Agreement. The execution of a written instrument
----------------
terminating the provisions of Article IV by the Corporation and those
Stockholders who approve such instrument by a vote of seventy-five percent
(75%) of the outstanding Shares.
The termination of the rights and obligations of the parties under this Section
4.7 for any reason shall not affect any right or remedy existing hereunder prior
to the effective date of termination.
Section 4.8 RELEASE FROM OBLIGATIONS. If a Stockholder disposes of his
------------------------
or her Shares in accordance with this Article IV, such Stockholder shall be
relieved of all obligations under this Article IV (except for any obligations
under this Article IV arising prior to or as a consequence of such disposition)
and the provisions of this Article IV shall have no further force and effect as
to that Stockholder. In addition, if any Stockholder disposes of his or her
Shares in accordance with
15
<PAGE>
this Article IV, the Corporation and the remaining Stockholders shall use their
good faith efforts to obtain the release of such selling Stockholder from such
Stockholder's liability under any guaranty or other obligation incurred by such
selling Stockholder as a result of his or her ownership of Shares; provided,
however, that such releases shall only be obtained if they result in no economic
cost to the Corporation or remaining Stockholders.
Section 4.9 CORPORATION RECORDS.
-------------------
(a) Effectiveness of Transfers. No Shares of any Stockholder shall
--------------------------
be transferred upon the books of the Corporation, nor shall any sale or
transfer or any other disposition thereof be effective, unless and until
all the terms and conditions of this Article IV shall first have been
complied with.
(b) Lending of Shares. Each Stockholder shall surrender the
-----------------
certificate of stock evidencing his or her Shares to the Secretary of the
Corporation, for the purpose of inscribing thereon the same legend as set
forth in Section 3.2, if such legend does not already appear thereon.
Section 4.10 SPECIAL PROVISION FOR PROPOSED SALE TO CERTAIN COMPETITORS.
----------------------------------------------------------
In addition to all other limitations imposed by this Article IV, in the event
that any Stockholder obtains any right to acquire or acquires, either directly
or indirectly, any interest in the ownership value, voting rights or beneficial
interests of any Competitor doing business in Will, Cook, DuPage, Grundy,
Kankakee or Lake Counties in Illinois (a "Competition Equity Right"), then such
Stockholder (the "Competitor Stockholder") shall, within ten (10) days after
receipt of such Competition Equity Right provide the other Stockholders with a
written copy of the terms of acquisition of such Competition Equity Right. Each
other Stockholder shall have the right, exercisable within fifteen (15) days
after their receipt of a copy of the Competition Equity Right, to participate
with the Competitor Stockholder in the Competition Equity Right by acquiring
that percentage of the aggregate capital stock or other beneficial or equitable
interests represented by the Competition Equity Right which is equal to their
percentage ownership interest of the Corporation on the date of the issuance of
the Competition Equity Right, thereby reducing by the same amount the percentage
of the aggregate capital stock or other beneficial or equitable interests of the
Competition Equity Right available to the Competitor Stockholder. The
Competitor Stockholder agrees to take any actions necessary to accomplish the
application of this Section 4.10 and no Stockholder shall exercise any rights
granted to him or her under a Competition Equity Right if such Stockholder fails
to provide for the application of this Section 4.10.
Section 4.11 REMEDIES. The parties hereto recognize and agree that the
--------
breach of any term, provision, or condition of this Stockholders Agreement may
cause irreparable damage which is difficult to ascertain and that the award of
damages may not be adequate relief to the party aggrieved. The parties
therefore agree that, in addition to all other remedies available in the
16
<PAGE>
event of a breach of this Stockholders Agreement, the party aggrieved shall have
the right to injunctive or other equitable relief.
Section 4.12 SPECIAL PROVISIONS APPLICABLE TO HANNIFIN, SHUBIC AND
-----------------------------------------------------
WIRSHING. Intentionally Omitted.
- --------
ARTICLE V
---------
SUBCHAPTER S PROVISIONS
-----------------------
Section 5.1 MAKING OF ELECTION. The Corporation and each of the
------------------
Stockholders have elected to be taxed as a small business corporation under
Subchapter S of the Code, and further agree that such election may be revoked
only upon the vote of more than fifty percent (50%) of the outstanding Shares.
Each Stockholder shall (i) execute all forms, consents and other documents
necessary in order to keep such election effective under the applicable
provisions of the Code and (ii) thereafter take such actions (or refrain from
taking such actions) as are necessary to preserve the Corporation's status as a
Subchapter S corporation under the Code.
Section 5.2 DISTRIBUTIONS FOR TAX PAYMENTS. So long as the S corporation
------------------------------
election is in effect, the Corporation shall make pro rata distributions to the
Stockholders at least equal to the estimated federal and state income taxes
payable by the Stockholders with respect to any tax items of the Corporation
which are reportable on the Stockholders' individual federal and state income
tax returns. This estimated tax liability, which shall be computed by the
accountant who regularly prepares the Corporation's tax returns, shall be
computed on the basis of the highest marginal rate applicable to individual
Stockholders on such tax items for the tax year in question, plus the marginal
Illinois state personal income tax rate (regardless of the rate of state income
tax, if any, applicable to individual Stockholders in the states in which they
reside). Unless prevented from making any distributions under applicable state
law, or the Stockholders unanimously otherwise agree, the total amount of the
minimum mandatory dividend required by this Section shall be declared and paid
no later than March 15 of the calendar year following the close of the
Corporation's taxable year, provided further that payments on account of such
distributions shall be made during the taxable year to the extent that said
accountant determines that such distributions are reasonably necessary in order
for Stockholders to comply with any estimated tax payments requirements
applicable to them.
Section 5.3 POST TERMINATION DISTRIBUTIONS. If the Subchapter S election
------------------------------
is revoked or terminated, the Corporation shall, except to the extent the
Stockholders unanimously agree to the election authorized by Section 1371(e)(2)
of the Code, or unless prevented from doing so by applicable state law, declare
and pay pro rata cash distributions during the post-termination transition
period equal to the Corporation's accumulated adjustment account; provided
however, that at the election of the Corporation any amount so distributable
shall contemporaneously with such distribution be re-loaned by each distributee
Stockholder to the Corporation. Such loan
17
<PAGE>
shall bear interest at the Prime Rate as publicly announced by the First
National Bank of Chicago from time to time, and shall be repaid in sixty (60)
equal monthly installments of principal, plus accrued interest, with each
installment being due and payable on the first day of each month following the
month during which such loan was made.
ARTICLE VI
----------
MISCELLANEOUS PROVISIONS
------------------------
Section 6.1 Financial Information. The Corporation shall furnish, in
---------------------
addition to any other information which the Stockholder may be entitled to
receive under applicable law, the following financial information to each of the
Stockholders:
(a) Annual Statements. Within ninety (90) days after the close of
-----------------
each Fiscal Year, the Corporation shall supply each of the Stockholders
with the Financial Statements of the Corporation and its Subsidiaries for
and as of the end of such Fiscal year.
(b) Quarterly Statements. Within thirty (30) days after the close
--------------------
of each fiscal quarter, the Corporation shall supply each of the
Stockholders with the Financial Statements of the Corporation and its
Subsidiaries for and as of the end of such fiscal quarter.
Section 6.2 AMENDMENT, MODIFICATION AND WAIVER. Any amendment or other
----------------------------------
change in the Agreement adopted as provided in Sections 3.7(a)(iv) and 3.7(b)(i)
hereto shall be binding upon all Stockholders, including Stockholders voting
against the amendment or other change. Any failure on the other hand, to comply
with any obligation, covenant, agreement, or condition herein contained may be
expressly waived, in writing only, by the party (or parties) to be benefitted by
such obligation, consent, agreement or condition, and shall be effective only in
the specific instance and for the specific purpose for which made or given.
Section 6.3 NOTICES. All notices provided for by this Agreement shall
-------
be made in writing either by (i) actual delivery of the notice into the hands of
the parties thereunto entitled, or (ii) by telecopy or by the mailing of the
notice in the U.S. Mails, registered or certified mail, return receipt
requested, as follows, or at such other address as a party may from time to time
designate in writing:
To the Corporation: P. 0. Box 2789
Joliet, Illinois 60434-2789
Attention: Chief Executive Officer
With a Copy to: P. 0. Box 2789
Joliet, Illinois 60434-2789
Attention: General Counsel
18
<PAGE>
To each Stockholder: At the most recent address for such
Stockholder shown in the
Corporation's books and records
Section 6.4 GOVERNING LAW AND SEVERABILITY. This Agreement and the rights
------------------------------
of the parties hereunder shall be governed by and interpreted in accordance with
the substantive laws (and not the conflict of laws rules) of the State of
Delaware. In the event any provision of this Agreement shall be determined to be
invalid, such provision shall be construed in a fashion which most closely
approximates the intention of the parties and the remainder of this Stockholders
Agreement shall continue in full force and effect in accordance with its terms.
Section 6.5 ASSIGNABILITY AND BINDING EFFECT. No party hereto shall assign
--------------------------------
any of his or her rights under this Stockholders Agreement without the prior
written consent of each of the other parties hereto. Subject to the provisions
of the preceding sentence, all the terms and conditions of this Stockholders
Agreement shall be binding upon the parties hereto and their heirs, legatees,
legal representatives, successor and assigns, and shall inure to the benefit of
all the foregoing.
Section 6.6 WILLS AND TRUSTS. Each Stockholder agrees to include in his
----------------
or her will or other instrument providing for the disposition of his or her
estate upon his or her death (or in all applicable trust documents in the case
of the transfer of Shares to a trust which trust qualifies as a Permitted
Transferee), direction and authorization to his or her legal representative to
comply with the provisions of this Stockholders Agreement and to transfer his or
her Shares in accordance with the terms of this Stockholders Agreement,
provided, however, that the failure of any Stockholder to do so shall not effect
the validity or enforceability of this Agreement.
Section 6.7 CAPTIONS. The captions of the Sections and Articles of this
--------
Agreement are inserted for convenience only and in no way define, limit or
extend the scope or intent of any provision of this Stockholders Agreement.
Section 6.8 GENDER. Whenever any words are used in this Stockholders
------
Agreement in the masculine gender, they shall be construed as though they were
also used in the feminine or neuter gender, and whenever any words are used in
this Stockholders Agreement in the singular, they shall be construed as though
they were also used in the plural, and vice versa, all as the context shall
require.
Section 6.9 COUNTERPARTS. This Stockholders Agreement and any amendments
------------
thereto may be executed in one or more counterparts, each of which shall for all
purposes be deemed to be an original, and all such counterparts shall constitute
one and the same instrument. In addition, this Stockholders Agreement and any
amendments thereto may contain more than one counterpart of the signature page,
and all such counterpart signature pages shall have the same force and effect as
though all parties had signed a single signature page.
19
<PAGE>
Section 6.10 ENTIRE AGREEMENT. This Stockholders Agreement contains the
----------------
entire understanding of the parties hereto in respect of the subject matter
contained herein, and supersedes all prior agreements, contracts or
understandings between the parties with respect to the subject matter hereof,
including, without limitation, the terms of the Original Agreement.
Section 6.11 NO THIRD PARTY BENEFICIARY RIGHTS. This Stockholders
---------------------------------
Agreement is not intended to and shall not be construed to give any person or
entity other than the parties signatory hereto any interest or rights
(including, without limitation, any third party beneficiary rights) with respect
to or in connection with any agreement or provision contained herein or
contemplated hereby.
Section 6.12 BOARD OF DIRECTOR APPROVAL. Any provision of this Agreement
--------------------------
requiring the approval of the Board of Directors shall be deemed to require the
approval of the majority of the duly elected members of the Board of Directors
as of the date of such approval.
Section 6.13 EFFECTIVENESS OF THIS STOCKHOLDERS AGREEMENT AND TERMINATION
------------------------------------------------------------
OF JOLIET AGREEMENT. This Stockholders Agreement shall become effective upon the
- -------------------
effective date of the merger of Empress Joliet into a Subsidiary of the
Corporation (the "Effective Date"). On the Effective Date, the signatories
hereto covenant and agree that the Shareholders Agreement dated September 30,
1991, as amended, of Empress Joliet shall terminate and be of no further force
or effect.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
LMC LEASING, INC.
By:_______________________________________
Title:______________________________________
/s/ Peter A. Ferro, Jr.
-------------------------------------------
Peter A. Ferro, Jr., as Voting Trustee of the Ferro Brothers
Lake Michigan Charters, Ltd. Voting Trust
MELISSA KATE LAMBRECHT TRUST U/T/A DATED 5/3/93
By: /s/ Peter A. Ferro, Jr.
------------------------------------------
Peter A. Ferro, Jr., as Trustee
By: /s/ William J. Sabo
------------------------------------------
William J. Sabo, as Trustee
PAUL JOHN LAMBRECHT TRUST U/T/A DATED 5/3/93
By: /s/ Peter A. Ferro, Jr.
-------------------------------------------
Peter A. Ferro, Jr., as Trustee
By: /s/ William J. Sabo
--------------------------------------------
William J. Sabo, as Trustee
MATTHEW LAMBRECHT TRUST U/T/A DATED 5/3/93
By: /s/ Peter A. Ferro, Jr.
----------------------------------------
Peter A. Ferro, Jr., as Trustee
By: /s/ William J. Sabo
---------------------------------------
William J. Sabo, as Trustee
/s/ Charles P. Hammersmith, Jr.
------------------------------------------
Charles P. Hammersmith, Jr.
__________________________________________
Robert W. Kegley, Sr.
/s/ Thomas J. Lambrecht
------------------------------------------
Thomas J. Lambrecht
__________________________________________
William J. McEnery, as Trustee fbo William J. McEnery
__________________________________________
Edward T. McGowan, as Trustee fbo Edward T. McGowan
/s/ William J. Sabo
-------------------------------------------
William J. Sabo
__________________________________________
Martin McNally
21
<PAGE>
MATTHEW LAMBRECHT TRUST U/T/A DATED 5/3/93
By:_____________________________________________
Peter A. Ferro, Jr., as Trustee
By: ______________________________________
William J. Sabo, as Trustee
__________________________________________
Charles P. Hammersmith, Jr.
/s/ Robert W. Kegley, Sr.
------------------------------------------
Robert W. Kegley, Sr.
__________________________________________
Thomas J. Lambrecht
/s/ William J. McEnery
------------------------------------------
William J. McEnery, as Trustee fbo William J. McEnery
__________________________________________
Edward T. McGowan, as Trustee fbo Edward T. McGowan
------------------------------------------
William J. Sabo
__________________________________________
Martin McNally
22
<PAGE>
EXHIBIT 9.2
FIRST AMENDMENT TO AMENDED
AND RESTATED STOCKHOLDERS AGREEMENT
THIS FIRST AMENDMENT ("AMENDMENT") TO AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT is made as of this 16th day of June, 1998 to that certain Amended and
Restated Stockholders Agreement dated as of the 15th day of April, 1998 (the
"Agreement"), by and among Empress Entertainment, Inc., f/k/a LMC Leasing, Ltd.,
a Delaware corporation (the "Corporation"), and Peter A. Ferro, Jr., as Voting
Trustee of the Ferro Brothers LMC Leasing, Ltd. Voting Trust; Peter A. Ferro,
Jr. and William J. Sabo, as Co-Trustees of the Melissa Kate Lambrecht Trust
u/t/a Dated 5/3/93, the Paul John Lambrecht Trust u/t/a Dated 5/3/93 and the
Matthew Lambrecht Trust u/t/a Dated 5/3/93; Charles P. Hammersmith, Jr.; Robert
W. Kegley, Sr.; Thomas J. Lambrecht; William J. McEnery, as Trustee fbo William
J. McEnery; Edward T. McGowan, as Trustee fbo Edward T. McGowan; William J.
Sabo; Martin McNally; and Gayle M. Franzen (collectively, the "Stockholders").
The Stockholders and the Corporation are parties to the Agreement and
desire to amend the Agreement on the terms and subject to the conditions
contained herein.
IT IS THEREFORE, AGREED:
1. Status of Agreement. Except as specifically set forth herein, the
-------------------
Agreement shall remain in full force and effect and shall not be waived,
modified, superseded or otherwise affected by this Amendment. This Amendment is
not to be construed as a release, waiver or modification of any of the terms,
conditions, representations, warranties, covenants, rights or remedies set forth
in the Agreement, except as specifically set forth herein. All defined terms
shall have the meanings set forth in the Agreement.
2. Repurchase Events. Section 1.11(e) of the Agreement is hereby deleted in
-----------------
its entirety and replaced with the following:
"(e) Violation of Laws. The Stockholder shall no longer meet the
-----------------
minimum requirements imposed upon Stockholders of the Corporation by the
Illinois Gaming Board or the Indiana Gaming Commission, or laws or
regulations applicable to the Corporation or any of its Subsidiaries."
3. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. The execution of this
Amendment shall not be deemed to be a consent, explicit or implicit, to or
waiver of any requirement with respect to any other action or transaction.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
EMPRESS ENTERTAINMENT, INC.
By: /s/ Peter A. Ferro, Jr.
----------------------------------------------
Peter A. Ferro, Jr., Chief Executive Officer
<PAGE>
EXHIBIT 9.3
EMPRESS RIVER CASINO CORPORATION
FERRO BROTHERS
VOTING TRUST AGREEMENT
THIS AGREEMENT, dated this day, May 3, 1993, is made by and among Peter A.
Ferro, Jr., John T. Ferro, and James J. Ferro (the "Shareholders"), and Peter A.
Ferro, Jr., as Trustee, and his successors in Trust under this Agreement (the
"Trustee"). Peter A. Ferro, Jr., John T. Ferro and James A. Ferro sometimes are
referred to by their given names. The term "Shareholder" includes any person who
receives any Shares or other equity securities in the Corporation directly or
remotely from a Shareholder who is an original signatory.
RECITAL:
Each Shareholder is the owner and holder of Thirty-three and one-third
(33-1/3) common shares in Empress River Casino Corporation, an Illinois
corporation (the "Corporation", which term also shall apply to any corporation
that shall issue "Shares," as defined in paragraph 1 of this Agreement). John
and James acquired their Shares from Peter concurrently with the execution of
this Agreement. The Shareholders individually and collectively consider in their
best interests and that of the Corporation to grant the Trustee the voting power
held by them, respectively, as Shareholders, so that they may be represented as
a group by the Trustee in all matters relating to the Corporation. To that end,
they have agreed to deposit their shares with the Trustee upon the terms and
conditions stated in this Agreement, creating a voting trust to be known as the
Ferro Brothers Voting Trust. Peter is a party to this Agreement both as a
Shareholder and as the Trustee and intends to be bound in both capacities.
AGREEMENTS
1. Transfer of Shares to Trustee; Issuance of Certificate. Each
Shareholder deposits with the Trustee for the term of this Agreement the
certificates representing the shares described in the Recital, and in the future
will deposit for such term all certificates representing any other equity
securities in the Corporation hereafter owned by such Shareholder (collectively,
the "Shares", which term also shall apply to the shares owned by such
Shareholder in any corporation that immediately or remotely succeeds to all or
substantially all the business and properties of the Corporation by purchase,
merger, consolidation or otherwise). The Trustee delivers or will deliver to the
Shareholder in exchange therefor a certificate or certificates issued in the
form attached hereto as Exhibit 1. The Shares shall be registered on the books
of the Corporation in the name of the Trustee. However, the Trustee at all times
shall keep the Corporation advised as to the ownership of the certificates so
<PAGE>
that the Corporation may file accurate reports with all governmental agencies.
The Trustee shall surrender to the Corporation for cancellation all certificates
for Shares delivered to or deposited with the Trustee pursuant to this
Agreement, and shall request the Corporation to issue new certificates therefor
in the name of the Trustee. The parties recognize that certificates for Shares
transferred to John and James by Peter concurrently with the execution of this
agreement may be registered directly in the name of the Trustee so that re-
registration and reissuance may be unnecessary. The Trustee is authorized and
empowered to cause to be made any further transfer of Shares that the Trustee
may deem advisable for any reason in accordance with the provisions of this
Agreement.
2. Rights of Trustee. The Trustee shall possess and be entitled to
exercise any and all rights as a shareholder of the Corporation, it being
understood, however, that the holder of the trust certificates shall be entitled
to receive payments equal to the cash dividends, if any, received by the Trustee
upon the Shares standing in his name, such payments to be made when and as
received by the Trustee. The Trustee shall in no event be under any duty to make
any cash payments to Shareholders, except out of cash received in respect of the
Shares. If any dividend or other property in respect of the Shares deposited
with the Trustee is paid other than in shares, Trustee shall distribute the
same. The Trustee, in his discretion, from time to time may authorize the
Corporation to make payment or delivery of dividends and distributions directly
to the Shareholders instead of receiving and distributing these dividends and
distributions himself. Any transferee of Shares deposited under this agreement
shall without further act become a party to this agreement. In addition, any
other present or future shareholder of the Corporation may become a party of
this agreement by depositing his or her shares with the trustee and subscribing
in writing delivered to the trustee all the terms and conditions of this
agreement. In any such event, the trustee shall notify the Shareholders of the
event.
3. Stock Dividends. In case the Trustee shall receive any shares or other
securities of the Corporation convertible or exercisable into or for shares
(which shall thereupon be deemed "Shares" under this Agreement), issued by way
of stock dividend or otherwise, in respect of Shares held by him under this
Agreement, he shall hold such Shares subject to the terms of this Agreement and
shall issue Trust Certificates representing such Shares to those entitled
thereto.
4. Power to Vote. The rights and powers granted to the Trustee shall
include all rights and powers to vote, consent or otherwise act in his sole
discretion in respect to all Shares deposited hereunder and in respect of any
Shares that may be received by him in exchange therefor or in addition thereto
and
-2-
<PAGE>
to take part in or consent to any corporate or shareholder action of any kind
whatsoever, including, but not limited to: the increase or diminution of the
number of shares of said Corporation; election of directors; the acquisition of
any property by the Corporation, or the sale or other disposal of any property
by it, including property constituting all or substantially all of its business
and properties; the merger or consolidation of the Corporation or with any other
Corporation upon such terms as he deems advisable, and in connection with any
such merger or consolidation, to accept for deposit hereunder any shares in the
resulting Corporation issued in lieu of or in exchange for the shares of said
Corporation held hereunder; the liquidation of the business and assets, with or
without the dissolution, of the Corporation; and the pledge, mortgage or sale of
any or all stock or assets of the Corporation. The enumeration in this Agreement
of the particular powers shall not be construed to limit or exclude any powers
which the Trustee otherwise would have hereunder or be entitled to exercise as
the absolute owner of the deposited Shares. The Trustee as holder of the Shares
assumes no liability as a shareholder. In voting the shares held by him, the
Trustee shall exercise his best judgment from time to time, to the end that the
affairs of the Corporation shall be properly managed and the interests of the
shareholders safeguarded, and in voting and acting on such matters, whether at
shareholders' meetings or otherwise, likewise will exercise his best judgment,
but he assumes no responsibility in respect of such management, or in respect of
any action taken by him hereunder or by directors of the Corporation elected by
him, or taken in pursuance of his consent thereto, and no individual Trustee
shall incur any responsibility or liability by reason of any error of law or of
any matter or thing done or suffered or omitted to be done under this Agreement,
except for his own gross negligence or willful misconduct.
5. Shareholder as Conclusive Owner. The Trustee, for all purposes,
including payment of sums equal to cash dividends, may treat the person in whose
name any trust certificate stands upon his books as the owner thereof, and shall
not be affected by any notice to the contrary. Trust certificates may be
transferred only in the manner therein stated and in accordance with the terms
of the certificate and this Agreement.
6. Trustee as Nominee. The Trustee shall have full power from time to
time and at any time to cause all Shares held hereunder to be transferred into
his own name or into the names of his nominees.
7. Discretionary Notification. The Trustee, in his sole discretion, may
notify certificate holders in regard to any proposed exercise by the Trustee of
any of the rights, powers or
-3-
<PAGE>
privileges vested in him. The Trustee shall not be bound to follow or act upon
any request of the certificate holders or to submit any matters to the
certificate holders.
8. Successor Trustee. The Trustee at any time may resign by mailing to
the registered holders of trust certificates a written resignation, to take
effect ten days thereafter or upon prior acceptance thereof. If at any time
Peter is not the beneficial owner of a number of Shares in the Corporation that
is at least twenty-five percent (25%) of the number of Shares held by
Shareholders other than himself under this Agreement, he shall be considered to
have resigned as Trustee. For purposes of the next preceding sentence, Peter
shall be considered the owner of any Shares owned by his wife, children or more
remote descendants or trusts for their benefit. Upon the death, resignation or
incapacity, of the original or any successor Trustee, he shall be succeeded as
Trustee by such individual or corporation as he shall have designated in a
written instrument delivered to the Shareholders not later than the date the
vacancy shall have occurred, and in the absence of such designation, as the
owners and holders of trust certificates representing sixty-six and two-thirds
percent (66-2/3%) of the voting power of the Shares deposited under this
Agreement shall designate by written instrument delivered to the predecessor so
designated and to the certificate holders, if any, not joining in the
designation. In the event of a vacancy in the office of Trustee, lasting more
than sixty (60) days, any court of competent jurisdiction, on the petition of
any Shareholder, may appoint a successor Trustee. The rights, powers and
privileges of the Trustee named hereunder shall be possessed by the successor
Trustees, with the same effect as though such successors originally had been
parties to this Agreement. The word "Trustee" as used in this Agreement means
the Trustee or any successor Trustees acting hereunder and shall include both
the single and plural number. Notwithstanding any contrary provision of this
paragraph, the naming of any successor shall be subject to the approval, if
required, of the Illinois Gaming Board.
9. Term. The trust created by this Agreement shall terminate on the tenth
anniversary of the date of this Agreement, or on such later date to which the
parties lawfully may extend the date of termination, or, if earlier, at any time
that (i) the Corporation, or any successor, shall have been dissolved, or (ii)
all Shares shall have been sold or exchanged for, or converted into, property
other than Shares, or (iii) in the event of the death, resignation as Trustee,
or incapacity, of Peter A. Ferro, Jr., the owners and holders of trust
certificates representing sixty-six and two-thirds percent (66-2/3%) of the
Shares deposited under this Agreement shall so decide by written agreement.
-4-
<PAGE>
10. Action at Termination. The Trustee is at termination authorized to
endorse the Share certificates in exchange for trust certificates representing
the same number of shares as are represented by the share certificates. Upon
termination the trust certificates shall cease to have any force and effect, and
the holders of same shall have no further rights under this Agreement other than
to receive certificates for Shares or other property distributable under the
terms hereof upon the surrender of such trust certificates. The Trustee shall
provide notice to the Corporation to deliver such Share certificates in exchange
for trust certificates representing a like number of Shares. Upon delivery of
the notice to the Corporation all further liability of the Trustee for the
delivery of such Share certificates shall cease, and the Trustee shall not be
required to take any further action hereunder.
11. Compensation. An individual Trustee who is related to Peter, John or
James shall not receive compensation for services as Trustee, but shall be
reimbursed by the Shareholders for any and all expenses and charges necessarily
incurred in the performance or discharge of any of the duties of the Trustee
under this Agreement, including reasonable attorney's fees. Any other Trustee
shall be entitled to receive reasonable compensation. The Trustee may act as,
and receive compensation as, a director, officer or agent of the corporation or
any member of any committee of board of directors of the corporation of any
controlled or subsidiary or affiliated company or be otherwise associated with
it.
12. Shareholders Agreement. The Shareholders confirm that the
Shareholders Agreement dated September 30, 1991 between the Corporation and its
then shareholders is binding on them, so that it controls their ownership and
disposition of the beneficial interest in the Shares.
13. Notices. All notices to be given to the trust certificate holders may
be given by ordinary mail, or may be delivered personally, to the registered
holders at the address appearing on the books kept by the Trustee. The date of
mailing shall be the date such notice is deemed given for all purposes.
14. Miscellaneous. This Agreement shall inure to the benefit of and shall
be binding upon, the parties hereto, their respective executors, administrators,
successors and assigns. A counterpart of this Agreement and of any amendment
hereto, shall be deposited with the Corporation at its registered office where
it may be examined by any Shareholder of the Corporation, in person or by agent
or attorney, at any reasonable time for any proper purpose.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Voting Trust Agreement
on the day and year first above written.
THE TRUSTEE: THE SHAREHOLDERS:
_____________________________________ ______________________________________
Peter A. Ferro, Jr., as Trustee Peter A. Ferro, Jr.
of the Ferro Brothers Voting Trust
______________________________________
John T. Ferro
___________________________________
James J. Ferro
-6-
<PAGE>
EXHIBIT 1
to
Voting Trust Agreement
FERRO BROTHERS VOTING TRUST
VOTING TRUST CERTIFICATE No. _________
THIS CERTIFICATE IS SUBJECT TO THE RESTRICTIONS AND PROVISIONS CONTAINED IN A
VOTING TRUST AGREEMENT DATED _______________, AND A SHAREHOLDERS AGREEMENT DATED
SEPTEMBER ___, 1991, COPIES OF BOTH OF WHICH AGREEMENTS ARE ON FILE IN THE
OFFICE OF THE CORPORATION.
This is to certify that _____________________ (the "Shareholder") has
deposited thirty three and one-third (33-1/3) common shares in Empress River
Casino Corporation (the "Corporation") with the undersigned Trustee under and
subject to the terms and conditions of an Agreement between the Shareholder and
the undersigned, therein referred to as Trustee (the "Agreement"), dated
____________________, 1993, and terminating on _____________________, 2003,
unless sooner terminated as provided in the Agreement, a counterpart of which
Agreement is on deposit with the Corporation.
This certificate is subject to all the terms and conditions of the
Agreement, and the holder hereof, whether a depositor under the said Agreement
or a successor in interest to any such depositor, by the acceptance hereof
becomes a party to the Agreement and is entitled to the benefits thereof with
the same effect as though he had duly executed and delivered the same.
The aforementioned Agreement is incorporated herein and made a part of this
Certificate for all purposes and governs the rights of the owner hereof.
IN WITNESS WHEREOF, the undersigned Trustee has executed this Certificate
___________.
_____________________________________
Peter A. Ferro, Jr., Trustee
<PAGE>
Exhibit 9.4
FIRST AMENDMENT TO EMPRESS RIVER CASINO CORPORATION
FERRO BROTHERS
VOTING TRUST AGREEMENT
THIS AGREEMENT dated September 6, 1993, is made by and among Peter A.
Ferro, Jr., John T. Ferro and James J. Ferro (the "Shareholders"), and Peter A.
Ferro, Jr., as Trustee, and his successors in Trust under this Agreement (the
"Trustee").
RECITAL:
The Shareholders and the Trustee entered into the Empress River Casino
Corporation Ferro Brothers Voting Trust Agreement ("Voting Trust Agreement") on
May 3, 1993 and desire to amend the trustee succession provisions.
AGREEMENTS
1. The terms used in this Agreement shall have the same meaning here as in
the Voting Trust Agreement.
2. Section 8 of the Voting Trust Agreement is amended to provide as
follows:
"8. Successor Trustee. The Trustee at any time may resign by mailing
to the registered holders of trust certificates a written resignation, to
take effect ten days thereafter or upon prior acceptance thereof. If at any
time Peter is not the beneficial owner of a number of Shares in the
Corporation that is at least twenty-five percent (25%) of the number of
Shares held by Shareholders other than himself under this Agreement, he
shall be considered to have resigned as Trustee. For purposes of the next
preceding sentence, Peter shall be considered the owner of any Shares owned
by his wife, children or more remote descendants or trusts for their
benefit. Upon the death, resignation or incapacity, of the original or any
successor Trustee, he shall be succeeded as Trustee by such one or more
individuals and corporations as the owners and holders of trust
certificates representing sixty-six and two-thirds percent (66-2/3%) of the
voting power of the Shares deposited under this agreement shall designate
by written instrument delivered to the successor or successors so
designated and to the certificate holders, if any, not joining in the
designation. In the event that for a period of more than twenty (20) days
no Trustee shall be acting, any court of competent jurisdiction, on the
petition of any Shareholder, may appoint a successor Trustee. The
successors to Peter A. Ferro, Jr., while acting as Trustees may adopt a
plan of succession of Trustees to modify the foregoing plan of succession
and having done so may amend or revoke any such plan or a plan adopted by
other successor Trustees at any time and
<PAGE>
from time to time. The rights, powers and privileges of the Trustee named
hereunder shall be possessed by the successor Trustees, with the same
effect as though such successors originally had been parties to this
Agreement. The word "Trustee" as used in this Agreement means the Trustee
or any successor Trustees acting hereunder and shall include both the
single and plural number. Notwithstanding any contrary provision of this
paragraph, the naming of any successor shall be subject to the approval, if
required, of the Illinois Gaming Board."
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Voting Trust Agreement on the day and year first above written.
THE TRUSTEE: THE SHAREHOLDERS:
- ------------ -----------------
/s/ Peter A. Ferro, Jr. /s/ Peter A. Ferro, Jr.
- ---------------------------------- ----------------------------------
Peter A. Ferro, Jr., as Trustee Peter A. Ferro, Jr.
of the Ferro Brothers Voting Trust
/s/ John T. Ferro
----------------------------------
John T. Ferro
/s/ James J. Ferro
----------------------------------
James J. Ferro
-2-
<PAGE>
EXHIBIT 10.1
TAX REIMBURSEMENT AGREEMENT
---------------------------
This Tax Reimbursement Agreement (the "Agreement"), dated as of June 18,
1998, is by and between Empress Entertainment, Inc. (the "Company") and the
Stockholders of the Company listed on the Signature Pages hereto (each a
"Stockholder and, collectively, the "Stockholders").
Recitals:
--------
WHEREAS, the Company has entered into that certain Indenture (the
"Indenture"), dated as of June 18, 1998, by and among the Company, the
Guarantors and U.S. Bank Trust National Association, as trustee (the "Trustee"),
pursuant to which the Company is permitted to make distributions of Tax Amounts
(as defined in the Indenture) to its Stockholders with respect to each tax year
that the Company receives a Certificate from an officer of the Company, and an
opinion of counsel to the Company, that the Company qualifies as an S
Corporation under the Internal Revenue Code of 1986, as amended, or any similar
provisions of state or local law.
WHEREAS, the Indenture provides that the Company shall enter into a binding
agreement with its Stockholders to provide for the reimbursement of the Company
by its Stockholders for the positive differences between the amounts distributed
to such Stockholders from time to time for the payment of taxes with respect to
a tax year (the "Distributed Tax Amount") and the Tax Amount (as defined in the
Indenture).
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Reimbursement of Certain Distributed Amounts. Within 40 days of the
--------------------------------------------
earlier of Company's filing of Internal Revenue Service Form 1120S (the "1120S")
for the applicable taxable year or the last date such form is required to be
filed (without regard to extensions) (the "Determination Date"), the Company
shall determine (i) the Distributed Tax Amount and (ii) the Tax Amount for such
taxable year.
With respect to each of the Company's taxable years, each of the
Stockholders hereby agrees to make a contribution of capital to the Company
(within 5 business days of the Determination Date) in an amount equal to such
Stockholder's allocable share of the excess, if any, of the Distributed Tax
Amount over the Tax Amount. A Stockholder's allocable share of the excess, if
any, of the Distributed Tax Amount over the Tax Amount is equal to the product
of (i) such excess and (ii) the Tax Amount distributed to such Stockholder for
the relevant year divided by the Tax Amounts distributed to all Stockholders for
such year.
<PAGE>
2. Amendments and Modification. This Agreement may only be amended in a
---------------------------
writing signed by the parties hereto; provided, that any such amendment must be
--------
approved by the consent of the holders of a majority in aggregate principal
amount outstanding of the 8% Senior Unsecured Subordinated Notes due 2006 of the
Company issued pursuant to the Indenture. Notwithstanding the foregoing, the
parties may, without the consent of any Holder of Notes, amend this Agreement to
cure any ambiguity, defect or inconsistency herein.
3. Notices. All notices, payments, requests, reports, information and
-------
other communications, as applicable, between the parties hereto shall be in
writing and shall be sufficiently given if made by hand delivery, by telecopier
or registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company:
Empress Entertainment, Inc.
P. O. Box 2789
Joliet, Illinois 60434
Attn: Chief Financial Officer
Fax: (815) 744-5818
if to the Stockholders:
c/o Peter Ferro, Jr.
19941 Manhattan Road
Elwood, Illinois 60421
Fax: (815) 726-5614
if to the Trustee:
U.S. Bank Trust National Association
180 East 5th Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Department
Fax: (612) 244-0711
4. Governing Law and Severability. The terms of this Agreement shall be
------------------------------
governed by and construed under the internal laws of the State of Illinois,
without giving effect to principles of conflicts of law. In the event any
provision of this Agreement shall be determined to be invalid, such provision
shall be severed from this Agreement and all remaining parts of this Agreement
shall continue in full force and effect in accordance with its terms as though
the invalid, illegal or unenforceable portion had never been part of this
Agreement.
2
<PAGE>
5. Interpretation. Whenever the provisions of this Agreement and the
--------------
provisions of the Indenture relating hereto shall be inconsistent, the
provisions of the Indenture shall govern. Whenever used herein, the singular
number shall include the plural, the plural, the singular, and the word
"Company" shall include its successors and assigns.
6. Entire Agreement. Other than as set forth in Section 5 above, this
----------------
Agreement contains the entire understanding of the parties hereto in respect of
the subject matter contained herein, and supersedes all prior agreements,
contracts or understandings between the parties with respect to the subject
matter hereof.
7. No Third Party Beneficiary Rights. This Agreement is not intended to
---------------------------------
and shall not be construed to give any person or entity other than the parties
signatory hereto and the Trustee on behalf of the holders of the Notes, any
interest or rights (including, without limitation, any third party beneficiary
rights) with respect to or in connection with any agreement or provision
contained herein or contemplated hereby.
8. Assignability and Binding Effect. No party hereto shall assign any of
--------------------------------
his or her rights under this Agreement without the prior written consent of each
of the other parties hereto. Subject to the provisions of the preceding
sentence, all the terms and conditions of this Agreement shall be binding upon
the parties hereto and their heirs, legatees, legal representatives, successors
and assigns, and shall inure to the benefit of all the foregoing.
9. Counterparts. This Agreement may be executed in counterparts and each
------------
such counterpart shall be deemed an original, irrespective of the date of its
execution and delivery, and said counterparts together shall constitute one and
the same instrument.
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
<TABLE>
<CAPTION>
EMPRESS ENTERTAINMENT, INC.
<S> <C>
By: /s/ Peter A. Ferro, Jr.
----------------------------------
Title: Chief Executive Officer
-------------------------------
STOCKHOLDERS:
/s/ Peter A. Ferro /s/ Robert W. Kegley, Sr.
- ------------------------------------- -------------------------------------
Peter A. Ferro, Jr. individually and as voting Robert W. Kegley, Sr.
trustee
/s/ Charles P. Hammersmith, Jr /s/ William J. McEnery
- ------------------------------------- -------------------------------------
Charles P. Hammersmith, Jr. William J. McEnery, individually and
as trustee
/s/ Thomas J. Lambrecht /s/ William J. Sabo
- ------------------------------------- -------------------------------------
Thomas J. Lambrecht William J. Sabo
_____________________________________ _____________________________________
Edward T. McGowan, individually and as Gayle M. Franzen
trustee
THE MELISSA KATE LAMBRECHT THE PAUL JOHN LAMBRECHT TRUST
TRUST U/T/A DATED MAY 3, 1993 U/T/A DATED MAY 3, 1993
/s/ William J. Sabo /s/ William J. Sabo
By:---------------------------------- By:----------------------------------
William J. Sabo, Co-Trustee William J. Sabo, Co-Trustee
By: /s/ Peter A. Ferro, Jr. By: /s/ Peter A. Ferro, Jr.
---------------------------------- -----------------------------------
Peter A. Ferro, Jr., Co-Trustee Peter A. Ferro, Jr., Co-Trustee
THE MATTHEW THOMAS LAMBRECHT
TRUST U/T/A DATED MAY 3, 1993
/s/ William J. Sabo /s/ Martin McNally
By:__________________________________ -------------------------------------
William J. Sabo, Co-Trustee Martin McNally
By: /s/ Peter A. Ferro, Jr.
----------------------------------
Peter A. Ferro, Jr., Co-Trustee
</TABLE>
4
<PAGE>
EXHIBIT 10.2
SENIOR SUBORDINATED GUARANTEE
-----------------------------
For value received, the undersigned hereby unconditionally guarantees
to the Holder of this Note the payments of principal of, premium, if any, and
interest on this Note in the amounts and at the time when due and interest on
the overdue principal, premium, if any, and interest, if any, of this Note, if
lawful, and the payment or performance of all other obligations of the Company
under the Indenture or the Notes, to the Holder of this Note and the Trustee,
all in accordance with and subject to the terms and limitations of this Note,
Article Thirteen of the Indenture and this Guarantee. This Guarantee will
become effective in accordance with Article Eleven of the Indenture and its
terms shall be evidenced therein. The validity and enforceability of any
Guarantee shall not be affected by the fact that it is not affixed to any
particular Note.
The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth in
Article Thirteen of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates. The Indebtedness evidenced by this
Guarantee is, to the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full in cash
of all Guarantor Senior Indebtedness as defined in the Indenture, and this
Guarantee is issued subject to such provisions. Each Holder of a Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee, on behalf of such Holder, to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such
Holder for such purpose; provided that such subordination provisions shall cease
to affect amounts deposited in accordance with the defeasance provisions of the
Indenture upon the terms and conditions set forth therein.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
EMPRESS CASINO HAMMOND
CORPORATION
By: /s/ Peter A. Ferro, Jr.
---------------------------------
Name: Peter A. Ferro, Jr.
----------------------------
Title: Chief Executive Officer
---------------------------
<PAGE>
EXHIBIT 10.3
SENIOR SUBORDINATED GUARANTEE
-----------------------------
For value received, the undersigned hereby unconditionally guarantees
to the Holder of this Note the payments of principal of, premium, if any, and
interest on this Note in the amounts and at the time when due and interest on
the overdue principal, premium, if any, and interest, if any, of this Note, if
lawful, and the payment or performance of all other obligations of the Company
under the Indenture or the Notes, to the Holder of this Note and the Trustee,
all in accordance with and subject to the terms and limitations of this Note,
Article Thirteen of the Indenture and this Guarantee. This Guarantee will
become effective in accordance with Article Eleven of the Indenture and its
terms shall be evidenced therein. The validity and enforceability of any
Guarantee shall not be affected by the fact that it is not affixed to any
particular Note.
The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth in
Article Thirteen of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates. The Indebtedness evidenced by this
Guarantee is, to the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full in cash
of all Guarantor Senior Indebtedness as defined in the Indenture, and this
Guarantee is issued subject to such provisions. Each Holder of a Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee, on behalf of such Holder, to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such
Holder for such purpose; provided that such subordination provisions shall cease
to affect amounts deposited in accordance with the defeasance provisions of the
Indenture upon the terms and conditions set forth therein.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
EMPRESS CASINO JOLIET CORPORATION
By: /s/ Peter A. Ferro, Jr.
--------------------------------
Name: Peter A. Ferro, Jr.
---------------------------
Title: Chief executive officer
--------------------------
<PAGE>
EXHIBIT 10.4
SENIOR SUBORDINATED GUARANTEE
-----------------------------
For value received, the undersigned hereby unconditionally guarantees
to the Holder of this Note the payments of principal of, premium, if any, and
interest on this Note in the amounts and at the time when due and interest on
the overdue principal, premium, if any, and interest, if any, of this Note, if
lawful, and the payment or performance of all other obligations of the Company
under the Indenture or the Notes, to the Holder of this Note and the Trustee,
all in accordance with and subject to the terms and limitations of this Note,
Article Thirteen of the Indenture and this Guarantee. This Guarantee will
become effective in accordance with Article Eleven of the Indenture and its
terms shall be evidenced therein. The validity and enforceability of any
Guarantee shall not be affected by the fact that it is not affixed to any
particular Note.
The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth in
Article Thirteen of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates. The Indebtedness evidenced by this
Guarantee is, to the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full in cash
of all Guarantor Senior Indebtedness as defined in the Indenture, and this
Guarantee is issued subject to such provisions. Each Holder of a Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee, on behalf of such Holder, to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such
Holder for such purpose; provided that such subordination provisions shall cease
to affect amounts deposited in accordance with the defeasance provisions of the
Indenture upon the terms and conditions set forth therein.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
EMPRESS RIVER CASINO FINANCE
CORPORATION
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR.
Title: PRESIDENT
<PAGE>
EXHIBIT 10.5
SENIOR SUBORDINATED GUARANTEE
-----------------------------
For value received, the undersigned hereby unconditionally guarantees
to the Holder of this Note the payments of principal of, premium, if any, and
interest on this Note in the amounts and at the time when due and interest on
the overdue principal, premium, if any, and interest, if any, of this Note, if
lawful, and the payment or performance of all other obligations of the Company
under the Indenture or the Notes, to the Holder of this Note and the Trustee,
all in accordance with and subject to the terms and limitations of this Note,
Article Thirteen of the Indenture and this Guarantee. This Guarantee will
become effective in accordance with Article Eleven of the Indenture and its
terms shall be evidenced therein. The validity and enforceability of any
Guarantee shall not be affected by the fact that it is not affixed to any
particular Note.
The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to the Guarantee and the Indenture are expressly set forth in
Article Thirteen of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates. The Indebtedness evidenced by this
Guarantee is, to the extent and in the manner provided in the Indenture,
subordinate and subject in right of payment to the prior payment in full in cash
of all Guarantor Senior Indebtedness as defined in the Indenture, and this
Guarantee is issued subject to such provisions. Each Holder of a Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee, on behalf of such Holder, to take such
action as may be necessary or appropriate to effectuate the subordination as
provided in the Indenture and (c) appoints the Trustee attorney-in-fact of such
Holder for such purpose; provided that such subordination provisions shall cease
to affect amounts deposited in accordance with the defeasance provisions of the
Indenture upon the terms and conditions set forth therein.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
HAMMOND RESIDENTIAL, L.L.C.
By: /s/ Peter A. Ferro, Jr
----------------------
Name: PETER A. FERRO, JR.
Title: CHIEF EXECUTIVE OFFICER
<PAGE>
EXHIBIT 10.6
AGREEMENT
---------
This Agreement is made and effective as of November 20, 1997, between Gas
City, Ltd. ("Supplier") and Empress Casino Joliet Corporation ("Company").
RECITALS
--------
WHEREAS, the Company operates a riverboat casino facility and desires to
purchase from the Supplier fuel and gasoline (the "Fuel") for the operation of
its riverboats; and
WHEREAS, the Supplier desires to supply such Fuel on the terms and
conditions specified below
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
AGREEMENT
---------
1. Purchase of Fuel. The Supplier shall sell to the Company, and the Company
shall buy from the Supplier, Fuel for use by the Company's riverboats. The
price, excluding the cost of Fuel, shall be .0305 per gallon which includes
the freight charge, pump charge and mark up. In addition, the Company shall
pay the Supplier its cost of Fuel obtained from the Supplier on the date of
delivery based upon the Chicago rack price per gallon paid on the date the
fuel was obtained. Upon delivery, the Supplier shall present the Company
with an invoice setting for the quantity of Fuel delivered, the date of
delivery, the price per gallon and the total price payable to the Supplier.
Payment terms for such invoices shall be the standard terms of the
Supplier. In the event that the Supplier offers to a third party prices
more favorable that the prices charged to the Company, the Supplier shall
make available such prices to the Company. The Supplier warrants and agrees
that under no circumstances shall the prices charged by it to the Company
exceed the fair market value for the Fuel and further agrees to reimburse
the Company for any amounts by which the actual prices paid by the Company
exceed the fair market value for the Fuel.
2. Term and Termination. This Agreement shall be effective as of November 20,
1997, and shall continue in force until such time as it is terminated by
either party. Either party may terminate this Agreement for any reason upon
written notice to the other party.
3. Not Exclusive. The Company shall not have any obligation to purchase any
Fuel from the Supplier and shall be free to purchase Fuel through other
suppliers as the Company in its sole discretion deems appropriate.
4. Independent Contractor. This Agreement shall not be construed as creating a
partnership or joint venture between the parties, and neither party shall
be liable for any debts or obligations of the other party. Neither party
shall in any way be considered as being an agent or
<PAGE>
representative of the other party in any dealings with any third party, and
neither party may act for, or bind, the other party in any such dealings.
5. Compliance with Laws. The Supplier shall comply with and abide by any
federal, state and municipal laws, ordinances and determinations pertaining
to its sale and delivery of the Fuel to the Company, including, without
limitation, the Illinois Riverboat Gambling Act and the regulations
promulgated thereunder (collectively, "Law"). If Supplier receives any
notice of a violation of any Law, it shall promptly notify the Company in
writing and furnish copies of such notice to the Company.
6. Miscellaneous. This Agreement may not be assigned by either party without
the written consent of the other party. This is the entire agreement
between the parties with respect to the subject matter contained in this
Agreement and shall replace and supersede all prior oral and written
agreements between the parties. This Agreement shall be governed by the
laws of the State of Illinois.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
GAS CITY, LTD. EMPRESS CASINO JOLIET CORPORATION
By: /s/ David F. Fendrick By: /s/ David F. Fendrick
--------------------------- ---------------------------
Its: V.P. Its: V.P./GM
___________________________ ____________________________
2
<PAGE>
EXHIBIT 10.7
LICENSE AGREEMENT
-----------------
This Agreement ("Agreement") is made as of the 30th day of June, 1997, by
and between EMPRESS CASINO HAMMOND CORPORATION, an Indiana corporation with its
principal offices located at 1111 Calumet Avenue, Hammond, Indiana 46320
("Licensee") and EMPRESS CASINO JOLIET CORPORATION, an Illinois corporation with
its principal offices located at 2300 Empress Drive, Joliet, Illinois 60436
("Licensor").
WHEREAS, Licensor is the owner of the trademarks and service marks and all
applications and registrations thereof known and identified on Exhibit A
attached to this Agreement (the "Marks"); and
WHEREAS, Licensee is desirous of using the Marks in connection with its
business; and
WHEREAS, the parties have agreed upon certain terms and conditions under
which Licensee will be entitled to use the Marks.
NOW THEREFORE in consideration of the foregoing and of the mutual promises
hereinafter set forth, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Grant of License. Licensor hereby grants to Licensee a non-exclusive,
----------------
non-transferrable license to use the Marks solely in connection with the
operation of a casino in Hammond, Indiana in the Territory specified in Exhibit
B in connection with providing casino services and such other goods and services
set forth opposite the Marks identified on Exhibit A. Licensee is prohibited
from using the Marks in the color blue and any use of the Marks in a color other
than black must be approved by Licensor.
2. License Fee. Licensee hereby agrees to pay Licensor the annual License
-----------
Fee set forth on Exhibit C for the Marks licensed pursuant to this Agreement.
3. Ownership of the Marks. Licensee acknowledges Licensor's exclusive
----------------------
right, title and interest in and to the Marks and any registrations and any
applications to register the Marks and any subsequent registrations which may
issue thereon, and will not do or cause to be done any act or thing in any way
impairing or tending to impair any part of such title and interest. In
connection with the use of the Marks, the Licensee shall not in any manner
represent that it has any ownership in the Marks or registrations thereof, and
the Licensee acknowledges that use of the Marks shall not create in the
Licensee's favor any right, title or interest in or to the Marks. All uses of
the Marks by the Licensee and all goodwill generated by Licensee's use of the
Marks shall inure to the benefit of the Licensor. Upon termination of this
Agreement in any manner
<PAGE>
provided herein, the Licensee will cease and desist from all use of the Marks in
any way (and will deliver to the Licensor, or its duly authorized
representatives, all materials upon which either of the Marks appear) and will
not attack or challenge the validity of the Marks or any applications or
registrations thereof, and the Licensee shall at no time adopt or use, without
the Licensor's prior written consent, any word or mark which is likely to be
similar to or confusing with either of the Marks.
4. Infringement Proceedings.
-------------------------
(a) Licensee agrees to notify Licensor promptly of any unauthorized use or
infringement of the Marks or of any claims by a third party regarding the use or
ownership by the parties hereunder of the Marks which comes to Licensee's
attention. Licensor agrees to notify Licensee promptly of any unauthorized use
or infringement of the Marks or of any claims by a third party regarding the use
or ownership by the parties hereunder of the Marks which comes to Licensor's
attention.
(b) Licensee may, at its sole discretion, and at a cost and expense to be
shared equally by Licensee and Licensor, take all action necessary to protect
the Marks from infringement and/or unauthorized use by others. In all claims,
disputes, and/or actions pursued by Licensee pursuant to this paragraph,
Licensee shall have the sole right to initiate, prosecute, negotiate and settle
such matters. If required by law, Licensee may name Licensor as a party
plaintiff to any suit filed by Licensee under this paragraph. Licensee shall
have the further right to select counsel of its choice in connection therewith.
In the event that Licensee elects not to pursue a claim or action with respect
to the infringement and/or unauthorized use by others, Licensor may, upon ten
days prior written notice to Licensee, take action against such third parties
and shall bear all costs and expenses of such action. If during such ten day
period Licensee shall elect to pursue a claim or action against such
infringement and/or unauthorized use, Licensor shall refrain from pursuing any
action against such party. Any net proceeds from the resolution of any matters
undertaken by Licensee pursuant to this paragraph shall be shared equally by the
parties. In the event that Licensee shall elect not to participate in any
action pursued by Licensor as permitted in this paragraph, Licensor shall be
permitted to retain any net proceeds from the resolution of such matter. All
expenses to be borne by Licensor pursuant to actions commenced by Licensee
pursuant to this paragraph or expenditures made by Licensee in defense of
actions or claims regarding Licensor's representations regarding the Marks or
component thereof may be offset against the annual license fee owing or to be
paid to Licensor.
5. Representation and Warranty. Each party represents and warrants to
---------------------------
the other that such party has taken all required corporate action to authorize
the execution and performance of this Agreement;
6. Term. This Agreement shall continue in full force and effect until
----
December 31, 1997, subject to automatic renewal through December 31, 2001,
unless (i) Licensee delivers 6
2
<PAGE>
months prior written notice to Licensor of its intent to terminate this
Agreement or (ii) this Agreement is otherwise terminated as provided in Section
10 below.
7. Quality of Goods and Services. Licensee agrees that the goods and
-----------------------------
services covered by this Agreement shall be of high standard and of such quality
as reasonably determined by Licensor to be adequate for the protection and
enhancement of each of the Marks and the good will pertaining thereto. Licensor
has reviewed the materials currently used by Licensee and has found them to
comply with this paragraph, and agrees that so long as Licensee maintains such
quality, Licensee's materials will comply with this paragraph. Licensee will
permit duly authorized representatives of the Licensor to review Licensee's
materials bearing any of the Marks at all reasonable times, for the purpose of
ascertaining or determining compliance with this paragraph.
8. Trademark Notice. Licensor shall use the symbol (R) when using the
----------------
Marks which are federally registered trademarks and the symbol (TM) when using
the Marks that are common law or state registered trademarks and the symbol_
when using the Marks that are common law or state registered service marks.
9. No Joint Venture. Nothing herein contained shall be construed to
----------------
place the parties in the relationship of partners or joint venturers, and
Licensee shall have no power to obligate or bind Licensor in any manner
whatsoever.
10. Termination. Licensor terminate this Agreement early upon written
-----------
notice to the Licensee upon the occurrence of (i) a material breach of this
Agreement and the failure of such other party to cure such breach within thirty
(30) days. Licensee may terminate this Agreement voluntarily upon thirty (30)
days written notice to the Licensor, and if so terminated Licensee shall not be
entitled to a refund of License Fees paid under this Agreement.
11. Governing Law. It is agreed that this Agreement shall be interpreted
-------------
according to the laws of the State of Illinois and the laws of the United States
of America. The parties agree that any controversy arising under this Agreement
shall be submitted to the courts located in Will County, Illinois and Licensee
consents to the jurisdiction and venue of such courts for such controversies.
12. Assignment. This Agreement shall not be assigned by Licensee without
----------
Licensor's written consent. Obligations of Licensee under this Agreement shall
be binding upon Licensee's successors and permitted assigns.
13. Registration. (a) Licensee has the right, in its name, to seek
------------
Indiana state or federal registration of the Marks if they are not the subject
of an existing federal or state trademark application or registration owned by
Licensor; provided, however, that at any time and for any reason, upon
Licensor's request, Licensee shall assign any such applications or registrations
of the Marks to Licensor.
3
<PAGE>
(b) Licensee shall provide to Licensor, its successors, assigns or other
legal representatives, cooperation and assistance at Licensor's request and
expense (including the execution and delivery of any and all affidavits,
declarations, oaths, samples, exhibits, specimens and other documentation as may
be reasonably required): (1) in the preparation and prosecution of any
application for registration or any application for renewal of a registration
covering any of the Marks; (2) in the prosecution or defense of any oppositions,
interferences, infringement suits or other proceedings that may arise in
connection with any of the Marks, including but not limited to, testifying as to
any facts relating to the Marks licensed herein and this Agreement; (3) in
obtaining any additional trademark protection for any of the Marks, that
Licensor may deem appropriate, that may be secured under the laws now or
hereafter in effect in the United States; and (4) in the implementation or
perfection of any assignment from Licensee to Licensor pursuant to this
Agreement.
14. Power of Attorney. Licensee hereby constitutes and appoints Licensor
-----------------
the true and lawful attorney or attorneys of Licensee with full power of
substitution, in the name of the Licensor or in the name of the Licensee, but by
and on behalf and for the sole benefit of Licensor, to do all such acts and
things and execute any instruments in relation thereto as Licensor shall deem
advisable in order to assert ownership, or receive, collect, assert or enforce
any right, title, benefit or interest of any kind in or to the Marks, including,
without limitation, any assignment of the Indiana state registrations of the
Marks or any federal registrations of the Marks containing the words "Hammond"
and/or "Indiana," from Licensee to Licensor, as provided under this Agreement.
Licensee agrees that the foregoing appointment made and the powers hereby
granted are coupled with an interest and shall be irrevocable by the Licensee.
15. Indemnification. Licensee agrees to indemnify, defend and hold
---------------
Licensor harmless from and against any and all loss, cost, damage or expense
(including, without limitation, court costs and attorney's fees) which Licensor
may incur as a consequence of Licensee's use of the Marks. Each of the parties
hereto hereby agrees to indemnify, defend and hold harmless the other party from
and against any and all loss, cost, damage or expense (including, without
limitation, court costs and attorney's fees) which it may incur as a consequence
of the breach by the indemnifying party of the terms and provisions of this
Agreement.
*****
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this License Agreement as of
the date and year first set forth above.
EMPRESS CASINO JOLIET EMPRESS CASINO HAMMOND
CORPORATION CORPORATION
By:_____________________________ By:_____________________________
Its:____________________________ Its:____________________________
5
<PAGE>
EXHIBIT A
---------
Federally Registered Marks:
- --------------------------
EMPRESS for casino services; not including dinner cruise ship services
THE EMPRESS for casino services; not including dinner cruise ship services
EMPRESSMILES for promoting casino services through the administration of
incentive award programs
Pending Federal Trademark and Service Mark Applications:
- -------------------------------------------------------
EMPRESS CLUB preferred customer program in the field of casino services
EMPRESS RIVER CASINO
and design (woman with extended hair) for casino services, not including
dinner cruise ship services
EMPRESS (stylized) for casino services, not including dinner cruise ship
services
EMPRESS CASINO for casino services
EMPRESS and design for perfume, metal money clips, metal key chains, metal
license plate frames, binoculars, magnets, a full line of
jewelry, watches, ashtrays of precious metals, pens,
pencils, photograph albums, playing cards, non-metal money
clips, non-metal key chains, non-metal license plate frames,
a full line of glassware, mugs, a full line of clothing,
hats, candy, ashtrays (not of precious metals)
EMPRESS for hotels
6
<PAGE>
EXHIBIT B
---------
Territory: Hammond, Indiana, with express permission to use intrastate and
interstate advertising and promotion of Licensee's gaming operation in Hammond,
Indiana.
7
<PAGE>
EXHIBIT C
---------
The annual Licensee Fee is $1,218,000
8
<PAGE>
Exhibit 10.8
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is entered into as of 1-1-98 by
and between Empress Casino Hammond Corporation, an Illinois corporation (the
"Company"), and William J. Sabo ("Consultant").
RECITALS:
The Company desires to engage Consultant to provide certain consulting
services to the Company, and Consultant desires to provide such services to the
Company, all on the terms and conditions set forth in this Agreement.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
set forth herein, the parties agree as follows:
1. Consulting Services.
a. On the terms and conditions hereinafter set forth, the Company
hereby retains Consultant to render consulting services and Consultant accepts
such consulting arrangement. In his capacity as a consultant, Consultant shall
be an independent contractor of the Company and shall not be an employee.
b. The term of Consultant's engagement as a consultant shall be for a
period of two (2) years beginning on the date hereof (the "Consulting Term").
c. The general scope of Consultant's obligations hereunder shall be to
serve in a consulting capacity for the Company and to perform such other duties
in accordance therewith as the Company may reasonably request, at such times and
places as may be agreed by the parties. Consultant shall report to, and be
subject to the direction of, the Company's Chief Executive Officer and Board of
Directors.
d. Consultant shall devote such time, attention and energy as may be
necessary to respond to reasonable and proper requests by the Company for
services hereunder.
e. During the Consulting Term, Consultant shall use his best efforts
to advance the business and welfare of the Company, and to discharge any other
duties assigned to him. He shall not intentionally take any action against the
best interests of the Company.
2. Consulting Fee. The Company agrees to pay or cause to be paid to Consultant
for all services hereunder during the Consulting Term an annual consulting fee
of Seventy-Five Thousand Dollars ($75,000), payable in equal bi-monthly
installments during the Consulting Term in accordance with the Company's
customery payroll practices. The Company agrees to reimburse Consultant in
accordance with the Company's policies for all reasonable business expenses,
including travel expenses, incurred by him in rendering consulting services
hereunder, upon receipt of appropriate supporting documentation. The Company
also shall provide Consultant with health insurance, at the Company's expense,
comparable to such insurance
<PAGE>
provided to the Company's executive employees generally, during the Consulting
Term. The Company shall also reimburse the Consultant during the term of this
Agreement for the use of an automobile including any maintenance, repair and
insurance expenses. Any expenses hereunder that would be shared expenses between
the Company and Empress Casino Joliet Corporation may be allocated between the
companies at the end of the calendar year.
3. Termination. Consultant's engagement as a consultant hereunder may be
terminated by the Company prior to the end of the Consulting Term only as
follows:
a. upon the death of Consultant;
b. if Consultant for any reason becomes unable to carry out all or
substantially all of his duties and remains so incapacitated for a period of 60
days in any 90-day period; or
c. for "cause", which shall be defined as (i) the commission of a
felony or of a crime involving moral turpitude, (ii) the material breach of his
obligation to provide consulting services hereunder which is not corrected
within a ten (10) day period following his receipt of written notice from the
Company specifying the nature of the breach, or (iii) the commission of a
willful act resulting in harm to the Company's business, reputation or
prospects.
In the event Consultant's engagement as a consultant is terminated pursuant to
this Section 3 prior to the end of the Consulting Term, the Company shall have
no further obligation to pay Consultant; provided that in the case of
Consultant's death, the Company shall continue payment of the consulting fee to
Consultant's estate for the remainder of the Consulting Term.
4. Covenants. Consultant covenants and agrees with each of the Corporations as
follows:
a. Non-Competition; Non-Solicitation. During the term of this Agreement
and continuing for a period of one (1) year thereafter (the "Restricted
Period"), Consultant shall not, directly or indirectly:
i. engage or participate, directly or indirectly, anywhere within a
200 mile radius of each of Hammond, Indiana and Joliet, Illinois (the
"Territory"), as an owner, partner, shareholder, consultant, director,
officer, employee, agent or otherwise, in any business which owns,
operates, manages or provides consulting services to a casino; or
ii. take any actions which are calculated to persuade any employee,
vendor or supplier of the Company to terminate or modify in any adverse
manner their association with the Company.
Consultant recognizes and agrees that the territorial, time and scope
limitations set forth in this Section 4(a) are reasonable and are required for
the protection of the Company and in the event that any such territorial, time
or scope limitation is deemed to be unreasonable by a court of competent
jurisdiction, the Company and the Consultant agree to the reduction of either or
any of said territorial, time or scope limitations to such an area, period or
scope as such court shall deem reasonable under the circumstances. The Company
agrees that the ownership by Consultant of publicly traded securities of a
corporation or other entity which owns, operates, manages or
<PAGE>
provides consulting services to a casino shall not be a violation of the
provisions of this Section 4(a).
iii. Confidentiality. Consultant will not use or disclose to any
person, entity, association, firm or corporation any Confidential
Information of the Company which came into his possession as a result of
his relationship with the Company, except as necessary to perform his
duties under this Agreement. The term "Confidential Information" means
information and data not generally known outside the Company (unless as a
result of Consultant's breach of any of the terms of this Agreement or the
duties imposed by any then existing statute, regulation, ordinance or
common law or the wrongful act of any third party about which Offeror knew
or reasonably should have known) concerning the Company's business and
technical information, and includes, without limitation, information
relating to: (i) the identities of the Company's patrons and their needs,
credit histories and other information; (ii) suppliers' and vendors' costs,
products, services, discounts, margins, contact personnel and other
information; and (iii) the Company's trade secrets, margins, discounts,
financial and marketing information, personnel and compensation information
and business plans. Consultant understands that this Section 4(b) applies
to computerized as well as written information and to other information,
whether or not in written form.
5. General Terms.
a. Consultant agrees that he will not delegate his duties as a
consultant hereunder without the prior written consent of the Company. The
parties hereto may amend, modify and supplement this Agreement in such manner as
may be agreed upon by them in writing. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
permitted assigns, heirs and legal representatives.
b. This instrument contains the entire agreement of the parties
hereto with respect to the subject matter hereof and supersedes all prior
understandings and agreements of the parties with respect to the subject matter
hereof.
c. This Agreement may be executed in any number of counterparts,
including facsimile counterparts, each of which shall be deemed an original.
d. This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois applicable to contracts made and to be
performed therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EMPRESS CASINO HAMMOND CORPORATION
____________________________________ By: ______________________________
WILLIAM J. SABO Peter A. Ferro, Jr.,
Chief Executive Officer
<PAGE>
EXHIBIT 10.9
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is entered into as of 1-1-98 by
and between Empress Casino Joliet Corporation, an Illinois corporation (the
"Company"), and William J. Sabo ("Consultant").
RECITALS:
The Company desires to engage Consultant to provide certain consulting
services to the Company, and Consultant desires to provide such services to the
Company, all on the terms and conditions set forth in this Agreement.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
set forth herein, the parties agree as follows:
1. Consulting Services.
a. On the terms and conditions hereinafter set forth, the Company
hereby retains Consultant to render consulting services and Consultant accepts
such consulting arrangement. In his capacity as a consultant, Consultant shall
be an independent contractor of the Company and shall not be an employee.
b. The term of Consultant's engagement as a consultant shall be for a
period of two (2) years beginning on the date hereof (the "Consulting Term").
c. The general scope of Consultant's obligations hereunder shall be to
serve in a consulting capacity for the Company and to perform such other duties
in accordance therewith as the Company may reasonably request, at such times and
places as may be agreed by the parties. Consultant shall report to, and be
subject to the direction of, the Company's Chief Executive Officer and Board of
Directors.
d. Consultant shall devote such time, attention and energy as may be
necessary to respond to reasonable and proper requests by the Company for
services hereunder.
e. During the Consulting Term, Consultant shall use his best efforts
to advance the business and welfare of the Company, and to discharge any other
duties assigned to him. He shall not intentionally take any action against the
best interests of the Company.
2. Consulting Fee. The Company agrees to pay or cause to be paid to Consultant
for all services hereunder during the Consulting Term an annual consulting fee
of Seventy-Five Thousand Dollars ($75,000), payable in equal bi-monthly
installments during the Consulting Term in accordance with the Company's
customery payroll practices. The Company agrees to reimburse Consultant in
accordance with the Company's policies for all reasonable business expenses,
including travel expenses, incurred by him in rendering consulting services
hereunder, upon receipt of appropriate supporting documentation. The Company
also shall provide Consultant with health insurance, at the Company's expense,
comparable to such insurance
<PAGE>
provided to the Company's executive employees generally, during the Consulting
Term. The Company shall also reimburse the Consultant during the term of this
Agreement for the use of an automobile including any maintenance, repair and
insurance expenses. Any expenses hereunder that would be shared expenses between
the Company and Empress Casino Hammond Corporation may be allocated between the
companies at the end of the calendar year.
3. Termination. Consultant's engagement as a consultant hereunder may be
terminated by the Company prior to the end of the Consulting Term only as
follows:
a. upon the death of Consultant;
b. if Consultant for any reason becomes unable to carry out all or
substantially all of his duties and remains so incapacitated for a period of 60
days in any 90-day period; or
c. for "cause", which shall be defined as (i) the commission of a
felony or of a crime involving moral turpitude, (ii) the material breach of his
obligation to provide consulting services hereunder which is not corrected
within a ten (10) day period following his receipt of written notice from the
Company specifying the nature of the breach, or (iii) the commission of a
willful act resulting in harm to the Company's business, reputation or
prospects.
In the event Consultant's engagement as a consultant is terminated pursuant to
this Section 3 prior to the end of the Consulting Term, the Company shall have
no further obligation to pay Consultant; provided that in the case of
Consultant's death, the Company shall continue payment of the consulting fee to
Consultant's estate for the remainder of the Consulting Term.
4. Covenants. Consultant covenants and agrees with each of the Corporations as
follows:
a. Non-Competition; Non-Solicitation. During the term of this Agreement
and continuing for a period of one (1) year thereafter (the "Restricted
Period"), Consultant shall not, directly or indirectly:
i. engage or participate, directly or indirectly, anywhere within a
200 mile radius of each of Hammond, Indiana and Joliet, Illinois (the
"Territory"), as an owner, partner, shareholder, consultant, director,
officer, employee, agent or otherwise, in any business which owns,
operates, manages or provides consulting services to a casino; or
ii. take any actions which are calculated to persuade any employee,
vendor or supplier of the Company to terminate or modify in any adverse
manner their association with the Company.
Consultant recognizes and agrees that the territorial, time and scope
limitations set forth in this Section 4(a) are reasonable and are required for
the protection of the Company and in the event that any such territorial, time
or scope limitation is deemed to be unreasonable by a court of competent
jurisdiction, the Company and the Consultant agree to the reduction of either or
any of said territorial, time or scope limitations to such an area, period or
scope as such court shall deem reasonable under the circumstances. The Company
agrees that the ownership by Consultant of publicly traded securities of a
corporation or other entity which owns, operates, manages or
<PAGE>
provides consulting services to a casino shall not be a violation of the
provisions of this Section 4(a).
iii. Confidentiality. Consultant will not use or disclose to any
person, entity, association, firm or corporation any Confidential
Information of the Company which came into his possession as a result of
his relationship with the Company, except as necessary to perform his
duties under this Agreement. The term "Confidential Information" means
information and data not generally known outside the Company (unless as a
result of Consultant's breach of any of the terms of this Agreement or the
duties imposed by any then existing statute, regulation, ordinance or
common law or the wrongful act of any third party about which Offeror knew
or reasonably should have known) concerning the Company's business and
technical information, and includes, without limitation, information
relating to: (i) the identities of the Company's patrons and their needs,
credit histories and other information; (ii) suppliers' and vendors' costs,
products, services, discounts, margins, contact personnel and other
information; and (iii) the Company's trade secrets, margins, discounts,
financial and marketing information, personnel and compensation information
and business plans. Consultant understands that this Section 4(b) applies
to computerized as well as written information and to other information,
whether or not in written form.
5. General Terms.
a. Consultant agrees that he will not delegate his duties as a
consultant hereunder without the prior written consent of the Company. The
parties hereto may amend, modify and supplement this Agreement in such manner as
may be agreed upon by them in writing. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
permitted assigns, heirs and legal representatives.
b. This instrument contains the entire agreement of the parties
hereto with respect to the subject matter hereof and supersedes all prior
understandings and agreements of the parties with respect to the subject matter
hereof.
c. This Agreement may be executed in any number of counterparts,
including facsimile counterparts, each of which shall be deemed an original.
d. This Agreement shall be governed by and construed in accordance
with the laws of the State of Illinois applicable to contracts made and to be
performed therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EMPRESS CASINO JOLIET CORPORATION
____________________________________ By: ______________________________
WILLIAM J. SABO Peter A. Ferro, Jr.,
Chief Executive Officer
<PAGE>
EXHIBIT 10.10
________________________________________________________________
HAMMOND RIVERBOAT GAMING PROJECT
DEVELOPMENT AGREEMENT
BY AND AMONG
CITY OF HAMMOND, INDIANA
CITY OF HAMMOND, DEPARTMENT OF REDEVELOPMENT
EMPRESS CASINO HAMMOND CORPORATION
________________________________________________________________
DATED AS OF JUNE 21, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RECITALS .................................................................. 1
AGREEMENT ................................................................. 3
ARTICLE I DEFINITIONS ........................................... 3
ARTICLE II SUBLEASE .............................................. 16
Section 2.01. Entry Into Sublease .................................. 16
Section 2.02. Terms of Sublease .................................... 16
Section 2.03. Nondisturbance ....................................... 16
Section 2.04. Consideration ........................................ 16
ARTICLE III DEMOLITION ............................................ 17
Section 3.01. Failure to Obtain License ............................ 17
Section 3.02. Termination of License or Non-Operation............... 17
Section 3.03. Demolition Bond....................................... 18
Section 3.04. Developer's Option to Preserve Project Facilities..... 18
Section 3.05. Maintenance of Project Pending Demolition............. 19
ARTICLE IV ACQUISITION OF LAND OR INTERESTS IN LAND............... 20
Section 4.01. GLM Parcels and GLM Condemnation...................... 20
Section 4.02. ILRED Parcels and ILRED Condemnation.................. 20
Section 4.03. CSX Parcel 26 and Parcel 6............................ 20
Section 4.04. Conrail Parcel 49..................................... 20
Section 4.05. EJ&E Parcels.......................................... 20
Section 4.06. NIPSCO Parcels B1 and B2.............................. 21
Section 4.07. NIPSCO Parcels 32 and 35.............................. 21
Section 4.08. NIPSCO Accretion Parcel............................... 22
Section 4.09. NIPSCO Overpass Parcels............................... 22
Section 4.10. NIPSCO Railway Parcel................................. 22
Section 4.11. Withdrawal from Classification........................ 22
ARTICLE V DEVELOPER PAYMENTS TO THE CITY OR FOR THE BENEFIT
OF THE CITY............................................ 24
Section 5.01. Annual Payment........................................ 24
Section 5.02. Accounting for Annual Payment......................... 25
Section 5.03. Parking Payment....................................... 26
Section 5.04. Accounting for Parking Payment........................ 26
Section 5.05. Incubator Program..................................... 27
Section 5.06. Not For Profit Contributions.......................... 27
Section 5.07. Housing Program....................................... 28
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Section 5.08. Security Payment....................................... 29
Section 5.09. Reimbursement of Expenses.............................. 29
Section 5.10. Late Fees.............................................. 29
Section 5.11. Nature of Payments..................................... 29
Section 5.12. Completion of Clipper Commitment....................... 30
ARTICLE VI CONSTRUCTION............................................ 31
Section 6.01. Overpass Facilities.................................... 31
Section 6.02. Change Orders to Overpass Plans and Specifications..... 31
Section 6.03. Completion of Overpass Facilities...................... 31
Section 6.04. Sewer Facilities....................................... 31
Section 6.05. Change Orders to Sewer Plans and Specifications........ 31
Section 6.06. Completion of Sewer Facilities......................... 32
Section 6.07. Parking Garage......................................... 32
Section 6.08. Change Orders to Parking Plans and Specifications...... 32
Section 6.09. Completion of Parking Facilities....................... 33
Section 6.10. Rail Relocation........................................ 33
Section 6.11. Plans and Specifications for Rail Relocation........... 33
Section 6.12. Completion of Rail Relocation.......................... 33
Section 6.13. Guest Facilities....................................... 33
Section 6.14. Change Orders to Guest Plans and Specifications........ 33
Section 6.15. Completion of Guest Facilities......................... 34
Section 6.16. Docking Facilities..................................... 34
Section 6.17. Plans and Specifications for Docking Facilities........ 34
Section 6.18. Completion of Docking Facilities....................... 35
Section 6.19. Hotel Facilities....................................... 35
Section 6.20. Approval for Hotel Facilities.......................... 35
Section 6.21. Completion of Hotel Facilities......................... 35
Section 6.22. Commercial Facilities.................................. 35
Section 6.23. Infrastructure Facilities.............................. 36
Section 6.24. Plans and Specifications for Infrastructure Facilities. 36
Section 6.25. Completion of Infrastructure Utilities................. 36
Section 6.26. Plans and Specifications for Helipad Facilities........ 36
Section 6.27. Completion of Helipad Utilities........................ 37
Section 6.28. Private Rights......................................... 37
Section 6.29. Dedication............................................. 37
Section 6.30. Alterations and Modifications to City Facilities....... 38
Section 6.31. Approval of Site Plan.................................. 38
Section 6.32. Approval of Signage Plan............................... 38
Section 6.33. Lakefront Improvements................................. 39
Section 6.34. Pedestrian Overpass.................................... 39
Section 6.35. Railroad Street........................................ 39
Section 6.36. Perimeter Road......................................... 39
ARTICLE VII PAYMENT FOR DELAYS IN CONSTRUCTION...................... 41
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Section 7.01. Delay Payments....................................... 41
Section 7.02. Nature of Damages.................................... 41
Section 7.03. Limitations on Delay Payments........................ 41
ARTICLE VIII ADDITIONAL COVENANTS OF THE
DEVELOPER CONCERNING CONSTRUCTION..................... 42
Section 8.01. Hazardous Materials; Environmental Matters........... 42
Section 8.02. Project Supervision and Direction.................... 43
Section 8.03. Project Partnership Committee........................ 43
Section 8.04. MBE/WBE.............................................. 43
Section 8.05. Areas Affected by Work............................... 44
Section 8.06. Project Documents.................................... 44
Section 8.07. Project Safety....................................... 44
Section 8.08. Drug Free Workplace.................................. 44
Section 8.09. Parking Demands...................................... 44
Section 8.10. Labor Objectives..................................... 45
Section 8.11. Permits and Compliance with Applicable Laws.......... 46
Section 8.12. Site Maintenance..................................... 46
Section 8.13. Construction Warranties.............................. 46
Section 8.14. Utility Services During Construction................. 46
Section 8.15. Erosion Control...................................... 46
Section 8.16. Access to Work....................................... 46
Section 8.17. Bond and Surety Requirements......................... 47
Section 8.18. Liens................................................ 47
Section 8.19. Insurance............................................ 47
ARTICLE IX REPRESENTATIONS AND WARRANTIES OF THE DEVELOPER
Section 9.01. Organization and Existence........................... 51
Section 9.02. Power and Authority.................................. 51
Section 9.03. Due Authorization.................................... 51
Section 9.04. Due Execution........................................ 51
Section 9.05. No Violation......................................... 51
Section 9.06. No Consents Required................................. 51
Section 9.07. Financial Information................................ 51
Section 9.08. No Material Non-Arm's-Length Transactions............ 52
Section 9.09. No Litigation........................................ 52
Section 9.10. All Material Information Supplied.................... 52
Section 9.11. Taxes................................................ 52
Section 9.12. Financial Capacity To Complete Project............... 53
Section 9.13. Survival of Representations and Warranties........... 53
ARTICLE X HAMMOND PORT AUTHORITY PROVISIONS..................... 54
Section 10.01. Entry into Port Agreement............................ 54
Section 10.02. Refinancing of Bonds................................. 54
Section 10.03. Passenger Payment.................................... 54
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Section 10.04. Slip Fees............................................. 54
Section 10.05. Marina Payments....................................... 54
ARTICLE XI REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE CITY.............................. 56
Section 11.01. Power and Authority................................... 56
Section 11.02. Due Authorization..................................... 56
Section 11.03. Due Execution......................................... 56
Section 11.04. No Violation.......................................... 56
Section 11.05. Operation of Project.................................. 57
Section 11.06. No Consents Required.................................. 57
Section 11.07. No Litigation......................................... 57
Section 11.08. Support of Developer.................................. 57
Section 11.09. Legal Conditions Precedent to City and Redevelopment
Commission Obligations................................ 58
Section 11.10. Survival of Representations and Warranties............ 58
Section 11.11. Eminent Domain........................................ 59
ARTICLE XII AFFIRMATIVE COVENANTS OF THE DEVELOPER................. 60
Section 12.01. Conduct of Business................................... 60
Section 12.02. Compliance with Applicable Laws, Sublease, and
Contracts............................................. 60
Section 12.03. Payment of Taxes and Claims........................... 60
Section 12.04. Site Visit............................................ 60
Section 12.05. Notice of Developments Affecting the Representations
and Warranties........................................ 60
Section 12.06. Financial and Other Information....................... 61
Section 12.07. Certificate of Suitability............................ 61
Section 12.08. Maintenance........................................... 61
Section 12.09. Vendors and Suppliers................................. 61
Section 12.10 Marketing............................................. 62
Section 12.11. Gamblers Addiction Program............................ 62
Section 12.12. Employment and Wages Following Construction........... 62
Section 12.13. Boat Safety Provisions and Emergency Preparedness..... 63
Section 12.14. Title Insurance and Surveys........................... 63
Section 12.15. Operation............................................. 63
Section 12.16. Maintenance........................................... 63
Section 12.17. Non-Competition....................................... 63
ARTICLE XII NEGATIVE COVENANTS OF THE DEVELOPER.................... 65
Section 13.01 Limit on Developer Assignment or Reorganization....... 65
Section 13.02. Prohibited Activities................................. 65
Section 13.03. Substitution of Boat.................................. 65
ARTICLE XIV AFFIRMATIVE COVENANTS OF THE CITY...................... 66
Section 14.01. Further Support....................................... 66
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Section 14.02. Notice of Developments Affecting
Representations and Warranties...................... 66
Section 14.03. Additional Burden................................... 66
Section 14.04. Empress Drive and Address........................... 66
Section 14.05. Waterworks Parcel................................... 66
Section 14.06. City Services....................................... 66
Section 14.07. Litigation Cooperation.............................. 67
ARTICLE XV CONDITIONS PRECEDENT.................................. 68
Section 15.01. Conditions Precedent................................ 68
Section 15.02. No Other Conditions Precedent....................... 68
ARTICLE XVI DEFAULT AND REMEDIES.................................. 69
Section 16.01. Events of Default................................... 69
Section 16.02. Extensions Upon Developer Default................... 69
Section 16.03. City Remedies....................................... 70
Section 16.04. Certain Events of Default Specified................. 70
Section 16.05. Preservation of Agreement Upon Certain
Developer Defaults.................................. 71
Section 16.06. City Default........................................ 71
Section 16.07. Extensions Upon City Default........................ 71
Section 16.08. Developer Remedies.................................. 72
Section 16.09. Preservation of Agreement Upon Certain
City Defaults....................................... 72
ARTICLE XVII TERM OF AGREEMENT AND TERMINATION..................... 73
ARTICLE XVIII MISCELLANEOUS......................................... 74
Section 18.01. No Agency, Partnership or Joint Venture............. 74
Section 18.02. Negotiated Document................................. 74
Section 18.03. Compliance with Laws................................ 74
Section 18.04. Force Majeure Events................................ 74
Section 18.05. Exhibits............................................ 74
Section 18.06. Captions............................................ 75
Section 18.07. Number and Gender................................... 75
Section 18.08. Notices............................................. 75
Section 18.09. Prior Agreements; Entire Agreement.................. 76
Section 18.10. Survival............................................ 76
Section 18.11. Counterparts........................................ 76
Section 18.12. Binding Effect...................................... 76
Section 18.13. Time of the Essence................................. 76
Section 18.14. Costs of Proceedings................................ 76
Section 18.15. Severability........................................ 77
Section 18.16. Non-Waiver.......................................... 77
Section 18.17. Governing Law....................................... 77
Section 18.18. No Third-Party Beneficiaries........................ 77
Section 18.19. Jurisdiction and Consent to Suit.................... 77
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Section 18.20. Confidentiality....................................... 78
Section 18.21. Standards for Consent................................. 78
ARTICLE XIX DISPUTE RESOLUTION AND TERMINATION...................... 79
Section 19.01. Alternative Dispute Resolution........................ 79
Section 19.02. Arbitration........................................... 79
Section 19.03. Actions During Pendency of Dispute.................... 80
ARTICLE XX DEVELOPER'S INDEMNIFICATION OBLIGATIONS................. 82
Section 20.01. Environmental indemnification......................... 82
Section 20.02. Construction Claims Indemnification................... 82
Section 20.03. Classification Withdrawal Indemnification............. 83
Section 20.04. Performance of Work Indemnification................... 83
Section 20.05. Erosion Control Indemnification....................... 83
Section 20.06. General Indemnification............................... 84
Section 20.07. Indemnification; Control and Counsel.................. 84
Section 20.08. Limitations on the Developer's Indeminification
Obligations........................................... 85
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HAMMOND RIVERBOAT GAMING PROJECT
DEVELOPMENT AGREEMENT
______________________________________
This HAMMOND RIVERBOAT GAMING PROJECT DEVELOPMENT AGREEMENT, made as of
this 21st day of June, 1996 (the "Agreement), by and among the City of Hammond,
Indiana, a municipal corporation (the "City"), the City of Hammond, Department
of Redevelopment (the "Redevelopment Commission"), and Empress Casino Hammond
Corporation (the "Developer"), WITNESSES THAT:
RECITALS
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A. The State of Indiana has authorized various gaming activities to take
place in and on duly licensed riverboats operating on Lake Michigan from
Hammond, Indiana, by adoption of the Riverboat Gambling Act, Indiana Code (S) 4-
33 et seq. (such Act, as more particularly defined in Article I below, is
hereinafter referred to as the "Act");
B. On or about August 26, 1993, the City issued a Request for
Qualifications seeking proposals from experienced and qualified developers for
the development of a riverboat gaming facility and related improvements to be
located on Lake Michigan and in Hammond, Indiana (the "'Request");
C. The Developer submitted a Response to a Request for Qualifications
dated September 8, 1993 (the "Response"), responding to the Request and was
thereafter interviewed through a competitive and comparative process by a
specialty constituted committee composed of citizens of Hammond, Indiana, and
the Mayor of the City (the "Mayor"), and representatives of the Mayor,
D. The City and the Developer entered into a letter of intent dated
September 20, 1993 (the "Letter Of Intent") concerning the proposed development
of a riverboat gaming facility and related improvements (such riverboat gaming
facility and related improvements, as more particularly defined in Article I
below, is hereinafter referred to as the "Project") to be located on Lake
Michigan and in Hammond, Indiana, and the Letter of Intent supplemented the
Response and summarized certain major features of the Project and the proposed
partnership for the development and sharing in the benefits of the Project;
E. The Developer submitted an application for an owner's license (such
license, particularly defined in Article I below, is hereinafter referred to as
the "License") to own a riverboat that operates on Lake Michigan from Hammond,
Indiana;
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F. The Developer has been awarded a Certificate of Suitability dated as of
November 17, 1995 (the "Certificate") by the Indiana Gaming Commission that
will result in the issuance of a License to the Developer upon the satisfaction
and completion of certain terms and conditions set forth in the Certificate;
G. The Letter of Intent contemplated that, in the event of and following
the award of the Certificate by the Indiana Gaming Commission, the City and the
Developer would enter into an agreement setting forth in a definitive way their
respective rights and obligations with respect to the development, ownership and
operation of the Project;
H. In accordance with Indiana Code (S) 36-7-14, the City has an
established Department of Redevelopment that is controlled by a board of five
members known as the Hammond Redevelopment Commission (the "Redevelopment
Commission");
I. The Redevelopment Commission has responsibility to investigate, study
and survey areas and promote the use of land in the manner that best serves
Hammond, Indiana, and has responsibility to cooperate with departments and
agencies of the City that best serves the redevelopment of Hammond, Indiana;
J. The Redevelopment Commission currently controls (or will hereafter
control) and has the right (or will hereafter acquire the right) to possess and
to make certain dispositions by lease of certain real estate located on the
waterfront of Lake Michigan in Hammond, Indiana, upon which the City and the
Developer desire to construct a portion of the Project;
K. The City has determined that it is in the best interests of the
citizens of Hammond, Indiana, for the Redevelopment Commission to be a party to
this Agreement; and
L. The City, the Redevelopment Commission and the Developer desire to
enter into this Agreement to provide for the development, ownership and
operation of the Project as contemplated by the Letter of Intent.
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AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants of the parties herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
City, the Redevelopment Commission and the Developer agree as follows:
ARTICLE I
---------
DEFINITIONS
-----------
The following terms when used in this Agreement with initial capital
letters shall have the following meanings:
"Act" means the Riverboat Gambling Act as established by Indiana Code (S)
4-33-1-1, et seq., and all amendments thereto and all rules and orders
-- ---
promulgated thereunder.
"Adjusted Gross Receipts" has the same meaning as in Indiana Code (S) 4-33-
2-2, except as may be modified for the purposes of calculating the Annual
Payment as set forth in Section 5.01 hereto.
"Affiliate of the Developer" means (a) any or all of the members, partners
and shareholders of the Developer, and (b) any limited liability company,
partnership, corporation or other entity in which the Developer, a wholly-owned
or partially-owned but controlled subsidiary of the Developer, any of the
members, partners or shareholders of the Developer, members of the families of
the Developer or any of the members, partners or shareholders of the Developer,
or a trustee for the benefit of such family members, or some, any or all of
them, directly or indirectly, own an interest, either singly or in the
aggregate, sufficient to effectively control such entity.
"Agreement" means this written Hammond Riverboat Gaming Project Development
Agreement.
"Applicable Laws" means all laws, rules, regulations, ordinances, codes,
administrative actions and/or orders of any court or governmental agency or
unit, whether federal, state or local, property exercising or having
jurisdiction with respect to or over the subject matter in question.
"Application" means the application for the License submitted by the
Developer to the Gaming Commission and all amendments, supplements,
modifications, exhibits and schedules thereto.
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"Boat" means the vessel named and known as Empress III, a riverboat gaming
-----------
casino owned or leased and to be operated by the Developer on Lake Michigan from
Hammond, Indiana, that may be further modified, improved, equipped and/or
replaced by the Developer from time to time as herein provided and that is more
particularly described and/or depicted on Exhibit A attached hereto and
incorporated herein by this reference.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday, and Friday
which is not a day on which banking institutions in Hammond, Indiana, are
authorized or obligated by law or executive order to close.
"Cash Bond" means (a) a bond provided to the City in which a surety
acceptable to the City guarantees to the City upon terms and conditions
acceptable to the City that certain work will be completed in accordance with
this Agreement, (b) a letter of credit issued by a financial institution
acceptable to the City naming the City as the beneficiary and entitling the City
to draw upon the letter of credit upon terms and conditions acceptable to the
City in the event that the Developer fails to complete certain work in
accordance with this Agreement, or (c) a cash deposit that is placed in escrow
with a financial institution acceptable to the City pursuant to the terms and
conditions of an escrow agreement that are acceptable to the City and that
requires the escrow agent to disburse the cash deposit to the City in the event
that the Developer fails to complete certain work in accordance with this
Agreement.
"Certificate" means the certificate set forth in Recital F. above, as
amended or restated from time to time.
"Certificate Date" means November 17, 1995, the date as of which the
Certificate was issued to the Developer by the Gaming Commission.
"City" means the municipal corporation of Hammond, Indiana; provided, that
it is expressly understood and agreed by the Developer that except as otherwise
expressly provided in this Agreement, any obligations of the City under this
Agreement may be fulfilled by the duly authorized and appropriate (as the
context so requires) subdivision, unit, agency, commission, department,
authority, instrumentality, Common Council, Mayor, other officer, executive or
representative, or any combination thereof, of the municipal corporation of
Hammond, Indiana.
"City Indemnified Parties" means the City, each subdivision, unit, agency,
commission, executive, department, authority and instrumentality of the City,
any City sponsored entity working with the City in pursuit of a riverboat gaming
operation in Hammond, Indiana, and any officer, employee, representative,
attorney, consultant and agent of any or all of the foregoing.
"City Project Inspector" means American Consulting Engineers, Inc., with
respect to the Overpass Facilities; Omni Engineering, Inc., with respect to the
Sewer Facilities;
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and the City of Hammond Building Commissioner, or a representative or designee
thereof, with respect to all other components of the Project.
"Clipper" means the vessel commonly known as the S.S. Milwaukee Clipper
which was previously moored in the Hammond Marina.
"Clipper Commitment" means the renovation and improvements that have been
made by the Developer to or with respect to the Clipper prior to the removal of
the Clipper from the Hammond Marina, the removal of the Clipper from the Hammond
Marina and the relocation of the Clipper to its final destination; provided,
that the Developer's obligation to relocate the Clipper to its final destination
shall expire and terminate on April 30, 1998.
"Commencement Date" means the date on which (a) the Boat is placed in
operation from the Hammond Marina and open to the public for gaming, and (b)
Substantial Completion of the construction of the Overpass Facilities has
occurred.
"Commercial Facilities" has the meaning set forth in Section 6.22 below.
"Common Council" means the Common Council of the City.
"Conrail" means Consolidated Rail Corporation.
"Conrail Agreement" means the Agreement dated August 10, 1995, by and
between Conrail and the City and all other agreements entered into pursuant to
such Agreement or otherwise pertaining to the acquisition of or entry upon
Conrail Parcel 49 in connection with the development of the Project; provided,
that the Developer and the City shall not execute, modify, amend or terminate
any such Agreement without the prior written consent of the other party.
"Conrail Parcel 49" means the real estate or interest in real estate that
is described and/or depicted on Exhibit B attached hereto and incorporated
herein by this reference.
"Construction License" means each and every license agreement entered into
by and between the City, the Port Authority or the Water Department and the
Developer pursuant to which the City, the Port Authority or the Water Department
shall grant the Developer a license to enter upon the Redevelopment Parcel or
specified portions thereof or property adjacent thereto for purposes of
performing and completing the construction of the Docking Facilities, Parking
Facilities and/or Guest Facilities.
"Construction Manager" means HBRW and each and every person, partnership,
limited liability company, corporation and other entity with whom the Developer
enters into an agreement to review, manage, administer or supervise the
performance of all or any portion of the Work or the construction of all or any
portion of the Project.
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"Contractor" means each and every person, partnership, limited liability
company, corporation and other entity with whom the Developer enters into an
agreement to provide or furnish labor, materials or equipment in connection with
the performance of any portion of the Work or the construction of all or any
portion of the Project.
"County" means Lake County, Indiana.
"County Sewer Agreement" means the Agreement dated November 2, 1995,
between the Park Board and the City pertaining to the construction of the Sewer
Improvements through land owned by the Park Board.
"CSX" means CSX Transportation, Inc.
"CSX Agreement" means the Construction Agreement dated December 7, 1995, by
and between CSX and the City, by and through its Department of Public Works, and
all other agreements entered into pursuant to such Agreement or otherwise
pertaining to the acquisition of or entry upon CSX Parcel 6 or CSX Parcel 26 in
connection with the Project; provided, that the Developer and the City shall not
execute, modify, amend or terminate any such Agreement without the prior written
consent of the other party.
"CSX Parcel 6" means the real estate or interest in real estate that is
described and/or depicted on Exhibit B attached hereto and incorporated herein
by this reference.
"CSX Parcel 26" means the real estate or interest in real estate that is
described and/or depicted on Exhibit B attached hereto and incorporated herein
by this reference.
"Design Professional" means each and every person, partnership, limited
liability company, corporation and other entity with whom the Developer enters
into an agreement to design, prepare or develop Plans and Specifications for the
performance of all or any portion of the Work or all or any portion of the
Project.
"Developer" means Empress Casino Hammond Corporation, an Indiana
corporation.
"DMS" means DMS of Hammond, Inc., and any subsequent holder of DMS of
Indiana, Inc.'s right, title or interest under the Ground Lease and the Port
Authority Lease.
"Docking Facilities" means the facilities and improvements for docking of
the Boat, separate from the Guest Facilities, to be constructed by the Developer
on the Redevelopment Parcel and in the Hammond Marina that are more particularly
described and/or depicted on Exhibit C attached hereto and incorporated herein
by this reference.
"EJ&E" means Elgin, Joliet and Eastern Railway Company.
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"EJ&E Agreement" means the Rail Relocation Agreement entered into or to be
entered into by and among EJ&E, the Developer (or an affiliate of the Developer)
and the Port Authority (or the most recent draft of such Agreement if such
Agreement is not entered into), and all other agreements entered into pursuant
to such Agreement or otherwise pertaining to the acquisition of or entry upon
the EJ&E Parcels in connection with the Project and/or the Rail Relocation;
provided, that the Developer and the City shall not execute, modify, amend or
terminate any such Agreement without the prior written consent of the other
party.
"EJ&E Parcels" means the real estate and interests in real estate that are
described and/or depicted on Exhibit B attached hereto and incorporated herein
by this reference.
"Final Completion" means the stage of construction where, in the reasonable
opinion of the City Project Inspector, the Project (or specified portion thereof
is completed in compliance with the terms of this Agreement bind the Plans and
Specifications therefor, if applicable, and to the extent that all components of
the Project (or specified portion thereof can be fully and safely occupied,
placed into full service and otherwise fully utilized. Final Completion shall
be evidenced by a certificate thereof issued by the City Project Inspector and
signed by the City and the Developer.
"Force Majeure Event" has the meaning set forth in Section 18.04.
"Gaming Commission" means the Indiana Gaming Commission as established
pursuant to the Act.
"Gaming Facilities" means, collectively, the Boat, the Docking Facilities
and the Guest Facilities.
"GLM Condemnation" means the condemnation action pending in the Superior
Court of Lake County, CMI Division, Room Number Five, Hammond, Indiana, as Cause
No. 45DO5-9504-00720, pertaining to the condemnation of the GLM Parcels.
"GLM Parcels" means the real estate and interests in real estate that are
subject to the GLM Condemnation.
"Gross Parking Revenues" means all rentals, revenues and receipts of every
kind received in cash or its equivalent by the Developer from users of the
Parking Garage for use of the Parking Garage for the calendar year or partial
calendar year in question, including, without limitation, the proceeds of any
insurance to the extent the same shall represent compensation for lost income or
revenues. In the event that the Developer offers valet parking or provides or
causes to be provided passes or other forms of complimentary parking to users of
the Gaming Facilities and parks the vehicles of such users in the Parking Garage
at a time when a charge is imposed for self-parking, the
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Developer shall include an amount equal to the then current charge for self-
parking in the Parking Garage in Gross Parking Revenues for such vehicle.
"Ground Lease" means the Ground Lease Agreement among the Port Authority,
as lessor, Hammond, as co-lessor, and DMS, as lessee, dated as of June 30, 1989,
as the same has been or may hereafter be amended or modified.
"Guest Facilities" means the guest center and staging facility to be
constructed by the Developer on the Redevelopment Parcel and adjacent property
that is more particularly described and/or depicted on Exhibit D attached hereto
and incorporated herein by this reference.
"Guest Plans and Specifications" means the drawings, plans, designs,
specifications, calculations and data for the construction of the Guest
Facilities, prepared by Linden Group, Inc., and all supplements, amendments and
additions thereto that are approved by the City Project Inspector as provided in
Section 6.14 below.
"Hammond Marina" means the marina and related improvements located on that
portion of Lake Michigan and the adjacent lake front that is more particularly
described and/or depicted on Exhibit B attached hereto and incorporated herein
by this reference.
"Hazardous Material" means any substance:
(a) The presence of which requires investigation, response, remediation or
other corrective action under the Resource Conservation and Recovery Act of 1976
(RCRA), 42 U.S.C. (S)(S) 690 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. (S)(S) 9601-9657, as
amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA); the
Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 6901 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. (S)(S) 1251 et seq.; the Clean
Air Act, 42 U.S.C. (S)(S) 741 et seq.; the Clean Water Act, 33 U.S.C. (S) 7401;
the Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601-2629; the Safe Drinking
Water Act, 42 U.S.C. (S)(S) 300f-300j; the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. (S)(S)11001 et seq.; or any amendments thereto; or
any similar federal, state or local environmental laws, statutes or ordinances,
or any regulations, orders or decrees now or hereafter promulgated thereunder,
or
(b) Which is defined as a "hazardous waste," "hazardous substances," "solid
waste," "infectious waste, "toxic substance," "radioactive waste," or is
otherwise regulated by the Resource Conservation and Recovery Act of 1976
(RCRA), 42 U.S.C. (S)(S) 690 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. (S)(S) 9601-9657, as
amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA); the
Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 6901 et MM.; the
Federal Water Pollution Control Act, 33 U.S.C. (S)(S) 1251 et seq.; the Clean
Air Act, 42 U.S.C. (S)(S) 741 et seq.; the Clean Water Act, 33 U.S.C.
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(S) 7401; the Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601-2629; the Safe
Drinking Water Act, 42 U.S.C. (S)(S) 300f-300j; the Atomic Energy Act, 42 U.S.C.
(S)(S) 2011, et seq.; the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. (S)(S)11001 et seq.; Indiana Code, Title 13-Environment; or any
amendments thereto; or any similar federal, state or local environmental laws,
statutes, ordinances, or any regulations, orders or decrees now or hereafter
promulgated thereunder.
"HBRW" means Hammond Bridge and Roadworks, LLC.
"HBRW Parcels" means the real estate and interests in real estate that are
described and/or depicted on Exhibit E attached hereto and incorporated herein
by this reference.
"Helipad Facilities" means the improvements and other facilities for
helicopter take-off and landing that may be constructed by the Developer.
"Hotel Facilities" means all hotel improvements, structures and facilities
to be constructed by the Developer pursuant to the Certificate or in the City of
Hammond, Indiana.
"Hotel Parcel" means the real estate that is described and/or depicted on
Exhibit B attached hereto and incorporated herein by this reference.
"HPA Parcels" means the real estate and interests in real estate that are
described and/or depicted on Exhibit B attached hereto and incorporated herein
by this reference.
"HPF" means the Hammond Parks Foundation.
"ILRED Condemnation" means the condemnation action pending in the United
States District Court for the Northern District of Indiana, Hammond Division, as
Cause No. 2:94-CV-244, pertaining to the condemnation of the ILRED Parcels.
"ILRED Parcels" means the real estate and interests in real estate that are
subject to the ILRED Condemnation.
"Infrastructure Facilities" means all pipelines, conduits, ducts, cables,
wires, manholes, vaults, tanks, tunnels or other manmade facilities or
structures, and any encasements containing such facilities, which have been or
will hereafter be installed for the purpose of furnishing, storing, removing or
transmitting electricity, gases, steam, liquid petroleum products, telephone or
other communications, cable television, computer signals or data, sewage,
drainage, traffic or other control systems, or water or other utilities or
services to the Project.
"INRF" means the Indiana National Resources Foundation.
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"Letter of Intent" has the meaning set forth in Recital D. above.
"License" means an owner's license as defined in Indiana Code (S) 4.33.2-15
that allows the Developer to own and operate a riverboat casino on Lake Michigan
from the City of Hammond, Indiana.
"License Date" means the date on which the License is issued to the
Developer by the Gaming Commission.
"Mayor" means the Mayor of the City or the duly authorized representative
of the Mayor of the City serving solely at the Mayor's pleasure and designated
by the Mayor to carry out or to cause to be carried out certain actions and
responsibilities required to be performed by the Mayor or the City hereunder.
"MBE" has the same meaning as Minority Business Enterprise in Indiana Code
(S) 4-33-14-3.
"Minimum Payment" means for a full calendar year $3,000,000, and for a
partial calendar year an amount equal to $3,000,000 multiplied by the fraction
the numerator of which is the number of days during the Term in such partial
calendar year and the denominator of which is 365.
"NIPSCO" means Northern Indiana Public Service Company.
"NIPSCO Accretion Parcel" means the real estate that is described and/or
depicted on Exhibit B attached hereto and incorporated herein by this reference.
"NIPSCO Agreement" means the Contract for Purchase and Sale of Real Estate
entered into or to be entered into by and between HBRW and NIPSCO (or the most
recent draft of such Agreement d such Agreement is not entered into), and all
other agreements entered Into pursuant to such Contract or otherwise pertaining
to the acquisition of or entry upon NIPSCO Parcel B1, NIPSCO Parcel B2, NIPSCO
Parcel 35, NIPSCO Parcel 32, NIPSCO Accretion Parcel, NIPSCO Railway Parcel
and/or NIPSCO Overpass Parcels in connection with the Project.
"NIPSCO Overpass Parcels" means the real estate and interests in real
estate that are described and/or depicted on Exhibit B attached hereto and
incorporated herein by this reference.
"NIPSCO Parcel B1" means the real estate that is described and/or depicted
on Exhibit B attached hereto and incorporated herein by this reference.
"NIPSCO Parcel B2" means the real estate that is. described and/or depicted
on Exhibit B attached hereto and incorporated herein by this reference.
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"NIPSCO Parcel 32" means the real estate that is described and/or depicted
on Exhibit 6 attached hereto and incorporated herein by this reference.
"NIPSCO Parcel 35" means the real estate that is described and/or depicted
on Exhibit B attached hereto and incorporated herein by this reference.
"NIPSCO Railway Parcel" means the real estate or interest in real estate
that is described and/or depicted on Exhibit B attached hereto and incorporated
herein by this reference.
"Overpass Facilities" means the alterations, changes, improvements,
structures, additions and work described in the Overpass Plans and
Specifications.
"Overpass License" means each and every license agreement entered into by
and between the City or the Port Authority and the Developer pursuant to which
the City or the Port Authority grants the Developer a license to enter upon the
Overpass Premises or specified portions thereof for purposes of performing and
completing the construction of the Overpass Facilities and/or the Rail
Relocation.
"Overpass Plans and Specifications" means the drawings, plans, designs,
specifications, calculations and data for the construction of the Overpass
Facilities prepared by American Consulting Engineers, Inc., and all supplements,
amendments and additions thereto that are approved by the City Project Inspector
as provided in Section 6.02 below.
"Overpass Promises" means the HBRW Parcels, ILRED Parcels, GLM Parcels,
Conrail Parcel 49, NIPSCO Overpass Parcels, HPA Parcels, EJ&E Parcels, CSX
Parcel 26 and CSX Parcel 6.
"Park Board" means the Lake County Park and Recreation Board.
"Parking Facilities" means the Parking Garage, surface level parking lots
and related facilities to be constructed by the Developer on the Redevelopment
Parcel that are more particularly described and/or depicted on Exhibit F
attached hereto and incorporated herein by this reference.
"Parking Garage" means the nine (9) story parking garage to be constructed
by the. Developer on the Redevelopment Parcel that is more particularly
described and/or depicted on Exhibit F attached hereto and incorporated herein
by this reference.
"Parking Parcels" means the real estate and interests in real estate
described and/or depicted on Exhibit K attached hereto and incorporated herein
by this reference.
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"Parking Plans and Specifications" means the drawings, plans, designs,
specifications, calculations and data for the construction of the Parking
Facilities prepared by J.W. Peters & Sons, Inc., and American Consulting
Engineers, Inc., and all supplements, amendments and additions thereto that are
approved by the City Project Inspector as provided in Section 6.08 below.
"Perimeter Road" means the real estate or interest in real estate that is
described and/or depicted on Exhibit J attached hereto and incorporated herein
by this reference.
"Plans and Specifications" shall mean all survey drawings, site plan
drawings, landscaping plans, architectural designs, layouts, elevation drawings
and plans, engineering drawings, calculations and data, and information relating
to the quantity, type, color and/or quality of materials and workmanship of the
project in question, in such detail as shall be reasonable and customary for
projects of similar scope and cost in the construction industry in Lake County,
Indiana, and all supplements, amendments and additions thereto that are approved
by the City Project Inspector as provided in Article VI below.
"Port Agreement" means the License Agreement entered into or to be entered
into by and between the Port Authority and the Developer concerning the
Developer's use of the Hammond Maringa.
"Port Authority" means the Hammond Port Authority.
"Port Authority Lease" means the Lease Agreement among the Port Authority,
as lessee, the City and DMS, as lessor, dated as of June 30, 1989, as the same
has been or may hereafter be amended or modified.
"Project" means (a) the acquisition, construction, equipping, ownership, if
applicable, and operation of the Boat, Overpass Facilities, Sewer Facilities,
Parking Facilities, Docking Facilities and Guest Facilities, (b) the Clipper
Commitment, (c) the Rail Relocation, (d) the installation of the Infrastructure
Facilities, (a) the construction of any pedestrian overpass that may be required
by Section 6.34, (f) the construction and provision of the landscaping and
improvements that may be required by Section 6.35, and (g) the construction and
provision of the improvements required by Section 6.36.
"Project Partnership Committee" means the committee described in Section
8.03 of this Agreement.
"Project Site" means the Hammond Marina, Redevelopment Parcel, Overpass
Premises and Sewer Premises and any property adjacent to any of the foregoing
upon which the Developer enters to perform the Work.
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"Rail Relocation" means the relocation and installation of the rail lines
and related improvements (including, without limitation, the construction of the
private grade crossing) contemplated by the EJ&E Agreement.
"Rail Relocation Plans and Specifications" means the drawings, plans,
designs, specifications, calculations and data for the Rail Relocation prepared
by American Consulting Engineers, Inc., and Alfred Beresch & Co., and all
supplements, amendments and additions thereto that are approved by EJ&E as
provided in Section 6.11 below.
"Railroad Signal and Maintenance Obligations" means (a) expenses incurred
by CSX or the City for monthly inspection, as required by federal law, of the
signals at the Lake Street and Calumet Avenue grade crossings as provided in the
CSX Agreement; (b) expenses incurred by CSX or the City for maintenance and
repairs of the Calumet Avenue and Lake Street grade crossings after the
completion of the Crossing Closing (as such term is defined in the CSX
Agreement) as provided in the CSX Agreement; (c) expenses incurred by EJ&E or
the City for the maintenance and repair of the private grade crossing that may
be constructed over the relocated rail line on Parcel No. 4 West of Calumet
Avenue as provided in the EJ&E Agreement; (d) expenses incurred by EJ&E or the
City for maintenance and repair of EJ&E's Calumet Avenue grade crossing as
provided in the EJ&E Agreement; and (e) expenses incurred by EJ&E or the City
for monthly inspection, as required by federal law, of the signals at the
Calumet Avenue grade crossing, Lake Street grade crossing and the private grade
crossing contemplated by the EJ&E Agreement as provided in the EJ&E Agreement.
"Redevelopment Commission" means the City of Hammond, Department of
Redevelopment and any reference to the City in this Agreement shall mean the
Redevelopment Commission if the context so requires.
"Redevelopment Parcel" means the real estate and interests in real estate
upon which the Parking Facilities, Guest Facilities and Docking Facilities will
be constructed and that are more generally described and/or depicted on Exhibit
G attached hereto and incorporated herein by this reference.
"Reimbursable Expenses" means all reasonable costs and expenses incurred by
or on behalf of the City or the Redevelopment Commission in meeting the
obligations of the City and/or the Redevelopment Commission hereunder and
otherwise working and cooperating with the Developer for the acquisition,
construction and equipping of the Project, including, without limitation, the
following: fees and expenses of counsel to the Redevelopment Commission, counsel
for the City and special counsel for the City; and all fees and expenses of
financial, governmental affairs and to other consultants which the Mayor, in his
sole discretion, may retain.
"Request" has the meaning set forth in Recital B. above.
"Response" has the meaning set forth in Recital C. above.
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"Sanitary District" means the Sanitary District of the City.
"Sewer Facilities" means the alterations, changes, lines, equipment,
improvements, structures, additions and work described in the Sewer Plans and
Specifications.
"Sewer License" means each and every license agreement entered into by and
between the Sanitary District and HBRW pertaining to the construction of the
Sewer Improvements through land owned by the Water Department, the Port
Authority and/or the Park Board.
"Sewer Plans and Specifications" means the drawings, plans, designs,
specifications, calculations and data for the construction of the Sewer
Facilities prepared by Omni Engineering, Inc., and all supplements, amendments
and additions thereto that have been approved by the City Project Inspector as
provided in Section 6.05 of this Agreement.
"Sewer Premises" means the real estate located in Lake County, Indiana,
upon which the Sewer Facilities have been installed and constructed by the
Developer.
"State" means the State of Indiana.
"Subcontractor" means each and every person, partnership, limited liability
company, corporation and other entity having an agreement with any Contractor or
with any other Subcontractor at the direct or indirect request of the Developer
to provide or furnish labor, materials or equipment for the performance of all
or any portion of the Work or the construction of all or any portion of the
Project.
"Sublease" means the lease entered into or to be entered into by and
between the Redevelopment Commission and the Developer pursuant to which the
Redevelopment Commission has subleased or will sublease the Redevelopment Parcel
to the Developer, as the same has been or may hereafter be amended.
"Substantial Completion" means the stage of construction where, in the
reasonable opinion of the City Project Inspector, the Project (or specified
portion thereof is sufficiently complete, In accordance with this Agreement, so
that the Project (or specified portion thereof can be safety occupied, placed
into service or otherwise utilized by the Developer, the City and/or the general
public, as the case may be, for the purposes for which it was intended.
Substantial Completion shall be evidenced by a certificate thereof issued by the
City Project Inspector with respect to the Sewer Facilities and the Overpass
Facilities, and issued by the architect of record with respect to the remaining
portions of the Project, which certificate shall also be signed by the City and
the Developer.
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"Supplier" means a laborer, manufacturer, fabricator, supplier,
distributor, materialman or vendor that is not a Construction Manager,
Contractor or Subcontractor and who performs or furnishes labor, materials or
equipment for the performance of all or any portion of the Work or the
construction or equipping of all or any portion of the Project at the direct or
indirect request of the Developer.
"Term" has the meaning set forth in Article XVII below.
"Trust Indenture" means the Trust Indenture among DMS, the Port Authority
and the Trustee, as Trustee, dated as of June 30, 1989, as the same has been or
may hereafter be amended.
"Trustee" means NBD Bank, NA (successor by merger to INB National Bank).
"Water Department" means the Department of Waterworks of the City.
"Water Department Lease" means the Lease Agreement entered into or to be
entered into between the Water Department and the Redevelopment Commission
pursuant to which the Redevelopment Commission has acquired or will acquire
certain rights with respect to the Perimeter Road.
"Water Department License" means the license entered into or to be entered
into between the Water Department and the Developer pursuant to which the
Developer has acquired or will acquire certain rights with respect to the
maintenance area defined and described therein.
"Work" means all labor, materials, supervision, equipment, appliances,
fixtures, construction equipment machinery, tools, utilities, taxes, fees,
licenses, permits, approvals and other facilities and services necessary to: (a)
perform and complete, in a good and workmanlike manner, the construction and
installation of the Overpass Facilities, Sewer Facilities, Parking Facilities,
Docking Facilities and Guest Facilities; (b) place the Boat in operation; (c)
perform and complete, In a good and workmanlike manner, the Clipper Commitment;
(d) perform and complete, in a good and workmanlike manner, the Rail Relocation;
(e) install, in a good and workmanlike manner, the Infrastructure Facilities;
(g) perform and complete, in a good and workmanlike manner, the construction and
installation of the Helipad Facilities, if any; (g) perform and complete, in a
good and workmanlike manner, the construction and installation of any other
facilities on the Project Site, if any; (h) perform and complete, in a good and
workmanlike manner, the construction of the pedestrian overpass that may be
required by Section 6.34; (i) perform and complete, in a good and workmanlike
manner, the construction and provision of the landscaping and improvements that
may be required by Section 6.35; and (i) perform and complete, in a good and
workmanlike manner, the construction and provision of the improvements required
by Section 6.36.
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ARTICLE II
SUBLEASE
Section 2.01. Entry Into Sublease. Subject to the conditions set forth in
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this Agreement, the Redevelopment Commission shall offer the Redevelopment
Parcel for lease pursuant to the provisions of IC 36-7-14, and as a requirement
for submitting a bid to lease the Redevelopment Parcel, a bidder must have
received a certificate of suitability from the Gaming Commission for operation
of a riverboat on Lake Michigan from Hammond, Indiana. The Redevelopment
Commission shall commence the proceedings for lease of the Redevelopment Parcel
as soon as practicable and in compliance with Indiana law, and shall exercise
its best efforts to have such lease proceedings completed by June 24, 1996.
Section 2.02. Terms of Sublease. The Sublease shall be in a form and
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content agreed to by the Redevelopment Commission and the Developer.
Section 2.03. Nondisturbance. The Redevelopment Commission shall
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reasonably cooperate and assist the Developer in its efforts to obtain a
nondisturbance and attornment agreement from the Port Authority and DMS with
respect to the Developer's rights under the Sublease in the event that the
Ground Lease and/or Port Authority Lease shall be terminated prior to the
expiration of the term of the Sublease.
Section 2.04. Consideration. The parties agree that the execution and
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delivery of this Agreement by the Developer and the performance by the Developer
of its obligations hereunder (including, without limitation, the making of the
payments required by Article V) are material inducements to the Redevelopment
Commission and consideration for the Redevelopment Commission's entering into
the Sublease.
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ARTICLE III
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DEMOLITION
----------
Section 3.01. Failure to Obtain License. Prior to the award of a License
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to the Developer but within twelve (12) months after the occurrence of: (a) the
date a certificate of suitability or a license to operate at the Hammond Marina
is awarded by the Gaming Commission to an entity other than the Developer and
the Developer has exhausted all reasonable appeals to the Gaming Commission and
courts of competent jurisdiction challenging the award of such certificate of
suitability or license to an entity other than the Developer; (b) the first
anniversary of the date a certificate of suitability or a license to operate at
the Hammond Marina is awarded by the Gaming Commission to an entity other than
the Developer; (c) the expiration of the term of the Sublease or earlier
termination of the Sublease; and (d) the expiration of the Term or earlier
termination of this Agreement; the City may elect (if the Developer does not
hold the License on the date of the City's election) to require the Developer,
at Developer's expense, to demolish and remove all or any portion of the Docking
Facilities, Guest Facilities and Parking Facilities and return the portions of
the Project Site affected thereby to a flat and level condition at the then
existing grade level; provided, that the Developer's obligations under this
Section with respect to any structural, below grade foundations shall be limited
to demolishing and removing all such foundations to a level at least two (2)
feet below the then existing grade level. In the event of any such election by
the City, the Developer shall, at its expense, demolish and remove all such
Docking Facilities, Guest Facilities and Parking Facilities and return the
portions of the Project Site affected thereby to a flat and level condition at
the then existing grade level within a time frame and in accordance with terms
and conditions which are reasonable under the circumstances. The Developer's
obligations under this Article III shall survive the expiration of the Term or
earlier termination of this Agreement.
Section 3.02. Termination of License or Non-Operation. After the License
------------ ---------------------------------------
has been awarded to the Developer, then within twelve (12) months after the
occurrence of: (a) the date the License is terminated, revoked or not renewed
and the Developer has exhausted all reasonable appeals to the Gaming Commission
and courts of competent jurisdiction challenging the termination, revocation or
non-renewal of the License; (b) the first anniversary of the date of
termination, renovation or non-renewal of the License; (c) the expiration of the
term of the Sublease or earlier termination of the Sublease; or (d) the
expiration of the Term or earlier termination of this Agreement, then the City
may elect (if the Developer does not hold a License on the date of the City's
election) to require the Developer, a its expense, to demolish and remove all or
any portion of the Docking Facilities, Guest Facilities and Parking Facilities
and return the portions of the Project Site affected thereby to a flat and level
condition at the then existing grade level; provided, that the Developer's
obligations under this Section with respect to any structural, below grade
foundations shall be limited to demolishing and removing all such foundations to
a level at least two (2) feet below the then existing grade level. In the event
of any such election by the City, the Developer shall, at its expense, demolish
and
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remove all such Docking Facilities, Guest Facilities and Parking Facilities and
portions of the Project Site affected thereby to a flat and level condition at
the existing grade level within a timeframe and in accordance with terms and
conditions which are reasonable under the circumstances. The Developer's
obligations under this Article III shall survive the expiration of the Term or
earlier termination of this Agreement,
Section 3.03. Demolition Bond. As of the date hereof the Developer has
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posted, and the Developer shall maintain a Cash Bond with the Gaming Commission
that guarantees, among other things, that the demolition and removal work
required by this Article III shall be performed in accordance with this Article
III.
Section 3.04. Developer's Option Preserve Project Facilities.
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Notwithstanding anything contained in Section 3.02 to the contrary, in the event
that the City elects to require the Developer to demolish and remove all or any
portion of the Docking Facilities, Guest Facilities and Parking Facilities
pursuant to Section 3.02 hereof, the Developer shall have a period of twelve
(12) months commencing on the date of the City's election (the "Rescission
Period") within which to cause the rescission of the City's election to require
the Developer to demolish and remove all or any portion of the Docking
Facilities, Guest Facilities and Parking Facilities pursuant to Section 3.02 by
causing each and every one of the following events to occur (a) a license to
operate at the Hammond Marina to be awarded by the Gaming Commission to an
entity other than the Developer (the "Replacement Operator"); (b) a written
undertaking to be executed by the Replacement Operator in favor of the City, the
Redevelopment Commission and the Port Authority whereby the Replacement Operator
agrees upon terms and conditions acceptable to the City, the Redevelopment
Commission and the Port Authority to cure and remedy all existing or thereafter
occurring monetary and non-monetary defaults under the Port Agreement, the
Sublease and/or this Agreement; and (c) a written assignment and assumption
agreement to be executed by the Replacement Operator whereby the Developer's
obligations under the Port Agreement, the Sublease and this Agreement are
assigned to and assumed by the Replacement Operator in accordance with the terms
of such agreements (collectively, the "Rescission Events"). In the event that
the Developer causes each and every one of the Rescission Events to occur within
the Rescission Period, the City's election to require the Developer to demolish
and remove all or any portion of the Docking Facilities, Guest Facilities and
Parking Facilities shall be deemed rescinded. The Developer shall give the City
written notice of its election to seek a Replacement Operator within thirty (30)
days after the City's election to require the Developer to demolish and remove
all or any portion of the Docking Facilities, Guest Facilities and Parking
Facilities and shall thereafter diligently pursue the same. In the event the
Developer falls to cause each and every one of the Rescission Events to occur
within the Rescission Period for any reason whatsoever, the Developer shall, at
the Developer's expense, demolish and remove all portions of the Docking
Facilities, Guest Facilities and Parking Facilities that were the subject of the
City's election and return the portions of the Project Site affected thereby to
a flat and level condition at the then existing grade level within a timeframe
after the expiration of the Rescission Period and in accordance with terms and
conditions which are reasonable under the circumstances.
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Section 3.05. Maintenance of Project Pending Demolition. The Developer
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shall maintain the Docking Facilities, Guest Facilities and Parking Facilities
in good condition and repair at all times during the Recession Period and the
twelve (12) month period within which the City has the right to exercise its
election to require the Developer to demolish and remove all or any portion of
the Docking Facilities, Guest Facilities and Parking Facilities pursuant to
Sections 3.01 and 3.02 hereof. If the City has not exercised its election to
require the Developer to demolish and remove any such Facilities within such
twelve (12) month period, then the Developer shall no longer have any obligation
to maintain such Facilities. The Developer's obligations under this Article III
shall survive the expiration of the Term or earlier termination of this
Agreement.
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ARTICLE IV
----------
ACQUISITION OF LAND OR INTERESTS IN LAND
----------------------------------------
Section 4.01. GLM Parcels and GLM Condemnation. The City agrees to
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actively pursue the GLM Condemnation. After a final and nonappealable decision
has been entered by a court of competent jurisdiction in the GLM Condemnation
and within thirty (30) days after the City's request therefor, the Developer, on
behalf of the City, shall pay to the City an amount necessary to pay the
defendants in the GLM Condemnation the total of all damages assessed in their
favor for the value of the real estate and interests in real estate taken
pursuant to the GLM Condemnation (the "GLM Taking Value"), judgments rendered in
their favor relating to the GLM Taking Value and all interests, costs, and
expenses awarded to such defendants relating to the GLM Taking Value. The City
shall pay all such amounts to such defendants within twenty-four (24) hours
after receipt of the same from the Developer.
Section 4.02. ILRED Parcels and ILRED Condemnation. The City agrees to
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actively pursue the ILRED Condemnation. After a final and nonappealable
decision has been entered by a court of competent jurisdiction in the ILRED
Condemnation and within thirty (30) days after the City's request therefor, the
Developer, on behalf of the City, shall pay to the City an amount necessary to
pay the defendants in the ILRED Condemnation the total of all damages assessed
in their favor for the value of the real estate and interests in real estate
taken pursuant to the ILRED Condemnation (the "ILRED Taking Value"), judgments
rendered in their favor relating to the ILRED Trading Value and all interests,
costs, and expenses awarded to such defendants relating to the ILRED Taking
Value. The City shall pay all such amounts to such defendants within twenty-four
(24) hours after receipt of the same from the Developer.
Section 4.03. CSX Parcel 26 and Parcel 6. The Developer shall acquire or
------------ --------------------------
cause an affiliate of the Developer to acquire CSX Parcel 26 and CSX Parcel 6
pursuant to the CSX Agreement. The Developer shall convey and gift or cause an
affiliate of the Developer to convey and gift CSX Parcel 26 to the City, and CSX
Parcel 6 to the CRY or its designee immediately upon the City's request
therefor. The Developer on behalf of the City, if applicable, shall pay or
cause an affiliate of the Developer to pay to CSX whatever additional amounts
are required to be paid by the Developer, any affiliate of the Developer or the
City to CSX pursuant to the CSX Agreement except for the Railroad Signal and
Maintenance Obligations.
Section 4.04. Conrail Parcel 49. The City, shall acquire Conrail Parcel 49
------------ -----------------
pursuant to the Conrail Agreement. The Developer, on behalf of the City, shall
pay to Conrail whatever amounts are required to be paid by the City to Conrail
pursuant to the Conrail Agreement.
Section 4.05. EJ&E Parcels. The Developer shall acquire or cause an
------------ ------------
affiliate of the Developer to acquire the EJ&E Parcels pursuant to the EJ&E
Agreement. The
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Developer shall convey or cause an affiliate of the Developer to convey the EJ&E
Parcels as provided in the EJ&E Agreement (or if no such EJ&E Agreement is
entered into, as specified by the City) immediately upon the City's request
therefor; provided, that the Developer shall exchange or cause an affiliate of
the Developer to exchange the EJ&E Parcels for real estate currently owned by
the Port Authority and then convey such real estate to EJ&E if requested by the
City or the Port Authority. The Developer, on behalf of the City or the Port
Authority, if applicable, shall pay or cause an affiliate of the Developer to
pay to EJ&E whatever amounts are required to be paid by the Developer, any
affiliate of the Developer, the City or the Port Authority to EJ&E pursuant to
the EJ&E Agreement except for the Railroad Signal and Maintenance Obligations.
In the event that EJ&E fails or refuses to enter into the EJ&E Agreement or
consummate the transactions contemplated thereby, the Developer shall reimburse
the City for the costs and expenses incurred by the City with respect to
condemning the EJ&E Parcels or portions thereof and for all damages assessed in
EJ&E's favor for the value of the real estate and interests in real estate taken
pursuant to such condemnation proceeding (the "EJ&E Taking Value"), attorneys'
fees relating to the EJ&E Taking Value and all interest, costs and expenses
awarded to EJ&E relating to the EJ&E Taking Value.
Section 4.06. NIPSCO Parcels Bl and B2. The Developer shall (a) cause
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NIPSCO Parcel Bl and NIPSCO Parcel B2 to be conveyed to the HPF pursuant to the
NIPSCO Agreement, and (b) pay to NIPSCO whatever amounts, if any, that are
required to be paid to NIPSCO pursuant to the NIPSCO Agreement as consideration
for the conveyance of NIPSCO Parcel BI and NIPSCO Parcel B2 to the HPF. The
City and the Developer agree that prior to the conveyance of NIPSCO Parcel BI
and NIPSCO Parcel B2 to the HPF, the Developer shall cause NIPSCO to (1) grant
or create a specific conservation easement in favor of the Indiana Natural
Resources Foundation and Indiana Department of Natural Resources across NIPSCO
Parcel B2 to be dedicated and maintained in perpetuity in a natural state so as
to continue to attract and nourish migratory birds (the "Conservation
Easement"), and (ii) to create a restrictive covenant enforceable by NIPSCO that
limits the use of NIPSCO Parcel B1 to "green space" uses (the "Restrictive
Covenant"). The Developer, on behalf of the City or the Port Authority, if
applicable, shall pay to NIPSCO whatever amounts are required to be paid by the
Developer, the City or the Port Authority to NIPSCO pursuant to the NIPSCO
Agreement. The City shall cause the Mayor to send a letter to the Gaming
Commission stating that it is the expressed intention of the City that NIPSCO
Parcel Bl shall never be used in violation of the Restrictive Covenant and
NIPSCO Parcel B2 shall be subject to the Conservation Easement in perpetuity.
Section 4.07. NIPSCO Parcels 32 and 35. The Developer shall either (a)
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cause NIPSCO Parcel 32 and NIPSCO Parcel 35 to be conveyed to the Port Authority
pursuant the NIPSCO Agreement or (b) acquire NIPSCO Parcel 32-and NIPSCO Parcel
35 pursuant to the NIPSCO Agreement. The Developer shall pay to NIPSCO whatever
amounts, if any, that are required to be paid to NIPSCO pursuant to the NIPSCO
Agreement as consideration for the conveyance of NIPSCO Parcel 32 and NIPSCO
Parcel 35. In the event that the Developer acquires NIPSCO Parcel 32 and NIPSCO
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Parcel 35 pursuant to the NIPSCO Agreement, the Developer shall convey and gift
NIPSCO Parcel 32 and NIPSCO Parcel 35 to the Port Authority immediately upon the
City's request therefore; provided, that the Developer shall exchange NIPSCO
Parcel 32 and NIPSCO Parcel 35 for real estate currently owned by the Port
Authority and then convey such real estate to EJ&E if requested by the City or
the Port Authority.
Section 4.08. NIPSCO Accretion Parcel. The Developer shall (a) cause the
------------ -----------------------
NIPSCO Accretion Parcel to be conveyed to the HPF pursuant to the NIPSCO
Agreement, and (b) pay to NIPSCO whatever amounts, if any, that are required to
be paid to NIPSCO pursuant to the NIPSCO Agreement as consideration fro the
conveyance of the NIPSCO Accretion Parcel to the HPF. The City and the
Developer agree that prior to the conveyance of the NIPSCO Accretion Parcel to
the HPF, the Developer and the City shall cause the HPF to agree that a portion
of the NIPSCO Accretion Parcel will be subjected to the Conservation Easement
upon the circumstances more particularly set forth in the NIPSCO Agreement.
Section 4.09. NIPSCO Overpass Parcels. The Developer shall (a) cause the
------------ -----------------------
NIPSCO Overpass Parcels to be conveyed to the City pursuant to the NIPSCO
Agreement, and (b) pay to NIPSCO whatever amounts, if any, that are required to
be paid to NIPSCO pursuant to the NIPSCO Agreement as consideration for the
conveyance of the NIPSCO Overpass Parcels to the City.
Section 4.10. NIPSCO Railway Parcel. The Developer shall (a) cause the
------------ ---------------------
NIPSCO Railway Parcel to be conveyed to EJ&E pursuant to the NIPSCO Agreement
and the EJ&E Agreement, and (b) pay to NIPSCO whatever amounts, if any, that are
required to be paid to NIPSCO pursuant to the NIPSCO Agreement as consideration
for the conveyance of the NIPSCO Railway Parcel to EJ&E.
Section 4.11. Withdrawal from Classification. The Developer and the City
------------ ------------------------------
acknowledge that all or portions of NIPSCO Parcel B1 and NIPSCO Parcel B2 are
classified as wildlife habitat and assessed as provided in IC 6-1.1-6.5 et seq.
The Developer and the City acknowledge and agree that (a) the HPF and b
grantee(s) shall have the right and option, in their sole discretion, to cause
all or such portions of NIPSCO Parcel B1 and NIPSCO Parcel B2, or portions
thereof, that are so classified and assessed to be withdraw from such
classification, and (b) the division, transfer and/or conveyance of NIPSCO
Parcel B1 and NIPSCO Parcel B2, or portions thereof, may cause such Parcels to
be withdrawn from such classification. The Developer agrees to pay any and all
amounts that relate to the real estate taxes for 1995 (payable in 1996) and/or
1996 (payable in 1997) and that become due and payable as a result of the
withdrawal of all or any portions of NIPSCO Parcel Bl and NIPSCO Parcel B2 from
the wildlife habitat classification as a result of or pursuant to IC 6-1.1-6.5-
18; provided, that an amount equal to that portion of any amount that the
Developer becomes obligated to pay pursuant to this Section 4.07 that the City
actually receives as part of its allocation of real property taxes assessed
against NIPSCO Parcel B1 and/or NIPSCO Parcel B2 shall be an offset to the
Annual Payment obligations of the Developer set forth in
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Section 5.01 hereof, and shall be credited against future installments of
the Annual Payment; provided further, that, except as hereinafter provided, the
amount credited against the obligations of the Developer to make the Annual
Payment pursuant to this Section 4.11 shall not exceed ten percent (10%) of any
such installment without the prior written approval of the City; and provided
further, that, except as hereinafter provided, the aggregate amount credited
against the obligations of the Developer to make the Annual Payment pursuant to
Sections 4.11, 5.02 and 10.05 of this Agreement shall not exceed twenty percent
(20%) of any such installment without the prior whiten approval of the City; and
provided further, that the Developer shall be entitled to increase the amount
credited against future installments of the Annual Payment pursuant to this
Section 4.11 to one hundred percent (100%) of any such installment from and
after the first anniversary of the date that the Developer makes any payment
pursuant to this Section 4.11 as a result of the withdrawal of all or any
portion of NIPSCO Parcel B1 and NIPSCO Parcel B2 from the wildlife habitat
classification.
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ARTICLE V
---------
DEVELOPER PAYMENTS TO THE CITY
OR FOR THE BENEFIT OF THE CITY
------------------------------
Section 5.01. Annual Payment. Commencing on the Commencement Date and
------------ --------------
continuing for each succeeding calendar year or partial calendar year of the
Term thereafter, the Developer shall pay to the City an annual payment ("Annual
Payment") equal to the greater of: (a) the Minimum Payment or (b) the aggregate
of: (i) Adjusted Gross Receipts for such calendar year or partial calendar year
that are less than or equal to One Hundred Twenty-Five Million Dollars
($125,000,000) multiplied by four percent (4%), plus (ii) Adjusted Gross
Receipts for such calendar year or partial calendar year greater than One
Hundred Twenty-Five Million Dollars ($125,000,000), but less than or equal to
Two Hundred Million Dollars ($200,000,000), multiplied by six percent (6%), plus
(iii) Adjusted Gross Receipts for such calendar year or partial calendar year
greater than Two Hundred Million Dollars ($200,000,000) multiplied by four
percent (4%), less any amounts credited to the Developer pursuant to Sections
4.11, 5.02, 10-05 and 16.08 hereof. For purposes of this Article V, Adjusted
Gross Receipts shall be calculated in the same manner set forth in IC 4-33-3-2,
provided that the amount of uncollectible gaming receivables described in
subsection (2)(B) thereof shall not exceed one-half percent (1/2%) of the total
of all cash and property received, whether collected or not, less the amount
paid out as winnings to patrons. For purposes of example only, if Adjusted Gross
Receipts for the calendar year in question are equal to Two Hundred Fifty
Million Dollars ($250,000,000), then the Annual Payment payable for such
calendar year shall be Eleven Million Five Hundred Thousand Dollars
($11,500,000) and computed as follows:
[$125,000,000 X 4%] + [$75,000,000 X 6%] + [$50,000,000 X 4%].
Concurrently with each payment of admissions taxes required to be made to the
State pursuant to IC 4-33-12, the Developer shall make a corresponding deposit
into an account established by the Developer and invested as directed by the
Hammond City Controller from time to time (the "Holding Account"). On the 1st
day of each month, the Developer shall transfer the entire Holding Account
balance, representing all daily deposits by the Developer for the immediately
preceding month plus interest accrued thereon, by wire transfer to an account
established by the City. On the 15th day of each month during the Term the
Developer shall deliver to the City a detailed statement setting forth the
calculation of Adjusted Gross Receipts and the installments of the Annual
Payments forth immediately preceding month (the"Monthly statement"). Each
Monthly Statement shall be prepared in accordance with generally accepted
accounting principles, consistently applied, and in accordance with the
requirements and definitions contained in this Agreement, and shall be certified
by a principal financial officer of the Developer to be true, correct and
complete and consistent with the pertinent information submitted to the Gaming
Commission on Form RG-1. In addition, at the time that the Annual Statement for
any calendar year or partial calendar year is submitted by the Developer to the
City pursuant to Section 5.02 hereof, the Developer shall make a final
installment
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of the Annual Payment in an amount equal to the difference between the total
Payment, as computed and stated in the Annual Statement, and the sum of the
installments of the Annual Payment made by the Developer to the City for such
calendar year or partial calendar year.
Any and all payments made to the City pursuant to this Section 5.01 shall
be paid to the City in care of the Hammond City Controller for deposit in a
special fund of the City and appropriation by the Hammond Common Council in
accordance with the provisions of Indiana law.
Section 5.02. Accounting for Annual Payment. The Developer shall keep and
------------ -----------------------------
make available to the City complete and accurate records of Adjusted Gross
Receipts for each calendar year and partial calendar year during the Term (in
the form and to the extent required to be supplied to or reviewed and audited by
the Gaming Commission). Commencing in the calendar year or partial calendar
year immediately following the calendar year or partial calendar year in which
the Boat is placed in operation and for each calendar year and partial calendar
year of the Term thereafter, the Developer shall submit a statement to the City
on or before the last day of the following March showing in detail the Adjusted
Gross Receipts for the immediately preceding calendar year or partial calendar
year and showing the computation of the Annual Payment for such immediately
preceding calendar year or partial calendar year (the "Annual Statement"). In
addition, the Developer shall submit to the City with the Annual Statement, any
audits or other reports required to be submitted by the Developer to the Gaming
Commission or prepared by or on behalf of the Gaming Commission and received by
the Developer relating to Adjusted Gross Receipts or the computation thereof
that constitute public records and records of any correction to Adjusted Gross
Receipts made by the Developer and reported to the Gaming Commission. Each
Annual Statement shall be prepared in accordance with generally accepted
accounting principles, consistently applied, and in accordance with the
requirements and definitions contained in this Agreement, and shall be certified
by a principal financial officer of the Developer to be true, correct and
complete. The City may, at any time on or before the later of three (3) years
after the end of a calendar year or three (3) years after receipt of an Annual
Statement and at the City's sole cost and expense, cause a comparison to be made
of the Annual Statement to the forms, reports and information published or
released by the Gaming Commission, including any corrections thereto, that
relate to the payment of admission taxes or the calculation of Adjusted Gross
Receipts. The Developer shall cooperate with the City and provide the City with
copies of all such forms, reports and information that are nonconfidential or
classified as public records. The City may cause such comparison to be made by
such persons as the City may determine in its sole discretion. If such
comparison shows that the Annual Payment shown on the Annual Statement is
understated, the Developer shall within seven (7) days pay the amount of such
understatement to the City. If such comparison shows that the Annual Payment
shown on the Annual Statement understates the actual Annual Payment by more than
three percent (3%) of such actual Annual Payment, then the fees and expenses for
such comparison shall be paid by the Developer. Otherwise, the fees or expenses
for such
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comparison shall be paid by the City. If such comparison shows that the Annual
Payment shown on the Annual Statement overstates the actual Annual Payment then
such overstated amount shall be an offset to the Annual Payment obligations of
the Developer set forth in Section 5.01, and shall be credited against future
installments of the Annual Payment or in the event there are no future
installments of the Annual Payment payable by the Developer, such overstated
amount shall be refunded to the Developer within seven (7) days after such
comparison is concluded.
Section 5.03. Parking Payment. The provisions of this Section shall apply
------------ ---------------
only in the event and with respect to such period of time, if any, that the
Developer collects a self-parking charge from users of the Parking Garage.
Commencing with the calendar year or partial calendar year in which the Parking
Garage is placed in operation, and continuing for each succeeding calendar year
or partial calendar of the Term thereafter, the Developer shall pay to the City
an annual parking payment ("Parking Payment") equal to twenty five percent (25%)
of the Gross Parking Revenues from the Parking Garage for such calendar year or
partial calendar year. The Parking Payment shall be due and payable daily and
shall be deposited by the Developer into the Holding Account established under
Section 5.01 and shall be invested and transferred in accordance therewith.
Any and all payments made to the City pursuant to this Section 5.03 shall
be paid to the City in care of the Hammond City Controller for deposit in a
special fund of the City and appropriation by the Hammond Common Council in
accordance with the provisions of Indiana law.
Section 5.04. Accounting for Parking Payment. The provisions of this
------------ ------------------------------
Section shall apply only in the event and with respect to such period of time,
if any, that the Developer is required to make a Parking Payment under Section
5.03 hereof. The Developer shall keep and make available to the City complete
and accurate records of Gross Parking Revenues for each calendar year and
partial calendar year during the Term. Commencing in the calendar year or
partial calendar year after the calendar year or partial calendar year in which
the Parking Garage is placed in operation and for each calendar year and partial
calendar year of the Term thereafter, the Developer shall submit a statement to
the City on or before the last day of the following January stating the Gross
Parking Revenues for the immediately preceding calendar year or partial calendar
year and showing the computation of the Parking Payment for such immediately
preceding calendar year or partial calendar year (the "Parking Statement"). Each
Parking Statement shall be certified by a principal financial officer of the
Developer to be true, correct and complete. The City may, at any time on or
before the later of thirteen (13) months after the end of a calendar year or one
(1) year after receipt of any Parking Statement and at the City's sole cost and
expense, cause an examination to be made of all financial books and records for
the calendar year or partial calendar year to which such Parking Statement
applies, provided the City shall notify the Developer not less than five (5)
days prior to commencing such examination. The City may cause such examination
of all such financial books and records relating to Gross Parking Revenues
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or the computation thereof to be made by such persons as the City may determine
in its sole discretion; provided, that in the event the City takes the position
that the Parking Payment has been understated in any Parking Statement, the
Developer may require that an audit be made by a nationally-recognized
accounting firm selected by the Developer, and the results of such audit shall
be conclusive. If such audit (or the examination if an audit is not required by
the Developer) shows that the Parking Payment shown in the Parking Statement is
understated, the Developer shall within seven (7) days pay the amount of such
understatement to the City. If such audit (or the examination if an audit is not
required by the Developer) shows that the Parking Payment shown in the Parking
Statement understates the actual Parking Payment (as determined by such audit or
examination, as the case may be) by more than three percent (3%) of such actual
Parking Payment, then the fees and expenses for such audit or examination, as
the case may be, shall be paid by the Developer as additional rent. Otherwise,
the fees and expenses for such audit or examination shall be paid by the City.
If such audit (or the examination of an audit is not required by the Developer)
shows that the Parking Payment shown on the Parking Statement overstates the
actual Parking Payment (as determined by, such audit or examination, as the case
may be), then such overstated amount shall be an offset to the Parking Payment
obligations of the Developer set forth in Section 5.03, and shall be credited
against future installments of the Parking Payment, or in the event there are no
future installments of the Parking Payment payable by the Developer, such
overstated amount shall be refunded to the Developer within forty-five (45) days
after such audit or examination is concluded.
Section 5.05. Incubator Program. The Developer shall contribute One
------------ -----------------
Million Dollars ($1,000,000) (the "Incubator Funds") to a program (the
"Program") for the creation of capacity of certified WBEs and MSEs consistent
with the Certificate. The investment, disbursement, and use of the Incubator
Funds shall be subject to the terms and conditions of an incubator plan (the
"Incubator Plan") prepared by the Developer and submitted to the City. The
Incubator Funds shall be contributed to a not-for-profit corporation or other
entity designated in the Incubator Plan (the "Incubator Entity") that is created
by the Developer solely for the purposes of operating the Program. The Mayor and
a designee of the Common Council shall each be a director or member of the
Incubator Entity.
Section 5.06. Not For Profit Contributions. The Developer shall contribute
------------ ----------------------------
One Million Four Hundred Twenty-Five Thousand Dollars ($1,425,000) (the
"Charitable and Social Betterment Funds") to a not-for-profit corporation
established by the City (the "Hammond NFP Corporation") for charitable and
social beneficial purposes and uses consistent with the requirements of Section
501(c)(3) of the Internal Revenue Code of 1986, as amended. The Investment,
disbursement and use of the Charitable and Social Betterment Funds shall be
subject to the terms and conditions of a charitable and social benefits plan
prepared by the Hammond NFP Corporation; provided, that the Charitable and
Social Betterment Funds shall not be used to pay administrative expenses or the
salaries of members or directors of the Hammond NFP Corporation; provided
further, that none of the Charitable and Social Betterment Funds shall be
required to be contributed
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to the Hammond NFP Corporation before the receipt of confirmation of the
501(c)(3) status of the Hammond NFP Corporation from the Internal Revenue
Service. Four (4) of the directors or members of the Hammond NFP Corporation
shall be appointed by the Mayor and the remaining three (3) directors or members
shall be appointed by the Mayor and the remaining three (3) directors or members
shall be appointed by the President of the Common Council. The Charitable and
Social Betterment Funds shall be contributed in four (4) equal installments of
Three Hundred Fifty-Six Thousand Two Hundred Fifty Dollars ($356,250) on October
1, 1996, January 1, 1997, April 1, 1997, and July 1, 1997.
Section 5.07. Housing Program. The Developer shall invest Five Million
------------ ---------------
Dollars ($5,000,000) in a program for the renovation of existing housing and
construction of new market rate housing in the Greater Hammond Area as required
in the Certificate (the "Housing funds"). For purposes of this Agreement, the
"Greater Hammond Area" means and is limited to the area within the corporate
boundaries of the City. The City and the Developer shall consult with each
other concerning the formation and preparation of a conceptual plan for the use
of Housing Funds and the implementation of such conceptual plan in order to
foster the harmonious and comprehensive development of housing within the City
(the "Development Program"). The investment, disbursement and use of the
Housing Funds shall be subject to the terms and conditions of the Development
Program. The Development Program may, among other things, establish a
demonstration project for the use of Indiana steel in residential construction
framing, establish private loan programs for owners and developers of
residential housing in the Greater Hammond Area, and be focused on both new
construction and renovation.
Section 5.08. Security Payment. The Developer shall pay to the City an
------------ ----------------
annual security payment (the "Security Payment") in the amount of One Million
Dollars ($1,000,000) (the "Security Funds"), with such payments to be made
monthly in equal installments on the first day of each month commencing on the
first day of the second full calendar month after the Commencement Date occurs.
The Security Payment shall be prorated for any partial calendar year during the
Term. The Security Funds shall be restricted to and only be used by the City
for the payment of direct and incidental costs associated with providing police,
fire, civil defense, ambulance and other public safety services in or
surrounding the Project Site; provided, that the parties hereby agree that all
costs and expenses of employing the full-time services at the Project of one (1)
around-the-clock emergency medical technologist shall be paid directly by the
Developer, provided, further, that the actual amount of such costs up to an
amount not to exceed One Hundred Thirty-One Thousand Four Hundred Dollars
($131,400) per year, as such amount may be increased by four percent (4%) on
each anniversary of the Commencement Date, shall be a credit in four (4) equal
installments against the amount of the Security Payment established under this
Section 5.08. The City agrees to consult semi-annually with the Developer and to
receive input as needed from the Developer regarding the particular public
safety needs in or surrounding the Proof Site. Any and all payments made to the
City pursuant to this Section 5.08 shall be paid to the City in care of the
Hammond City Controller for deposit in a special fund of the City and for
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appropriation by the Hammond Common Council in accordance with the provisions of
Indiana law for the purposes set forth in this Section 5.08.
Section 5.09. Reimbursement of Expenses. The Developer shall pay all
------------ -------------------------
Reimbursable Expenses or reimburse the City for all Reimbursable Expenses
incurred by the City implementing the arrangements contemplated hereunder for
the pursuit of the License and the Project through the later of (a) execution of
this Agreement and the Sublease or (b) the Commencement Date (the "Allocation
Date"). Except as provided in and subject to the provisions of Articles IV and
XX, all Reimbursable Expenses incurred by the City for implementing the
arrangements contemplated hereunder for the pursuit of the License and the
Project after the Allocation Date shall be paid as follows: (i) the Developer
shall pay Reimbursable Expenses or reimburse the City for Reimbursable Expenses
incurred by the City after the Allocation Date only to the extent, for such
purposes and according to such terms and conditions as may be expressly agreed
to by the Developer, and (ii) the City shall be responsible for the payment of
all Reimbursable Expenses incurred by the City after the Allocation Date. The
Mayor shall submit to the Developer invoices for Reimbursable Expenses which are
the obligation of the Developer hereunder and approved by the Mayor or, on
behalf of the Mayor, by the City Controller, and the Developer shall make direct
payment of such invoices for Reimbursable Expenses within thirty (30) days after
receipt of each such invoice. All invoices for Reimbursable Expenses incurred
prior to the Allocation Date shall be submitted by the City to the Developer
within thirty (30) days after the Allocation Date and the Developer shall have
no obligation to pay invoices for Reimbursable Expenses incurred prior to the
Allocation Date that are not submitted within thirty (30) days after the
Allocation Date. The Developer covenants and agrees that it has paid all
invoices for Reimbursable Expenses submitted by the City to the Developer prior
to the execution of this Agreement by the Developer. The City acknowledges that
the Developer has paid all Reimbursable Expenses for goods or services relating
to the Project provided through April 30, 1 996.
Section 5.10. Late Fees. Any amount required to be paid by the Developer
------------ ---------
under Sections 5.01, 5.03, 5.06, 5.08 or 5.09 of this Agreement and not paid on
the due date therefor and within thirty (30) days after notice from the City to
the Developer that such payment was not received shall bear interest from and
after the first day following the end of such thirty (30) day period until paid
in full at an annual rate equal to two percent (2%) above the prime interest
rate as announced from time to time by NBD Bank, N.A., or its successor
(determined as of the first day of each month to apply to any and all such
amounts remaining unpaid during any part of such month). The City acknowledges
that there are no amounts bearing interest pursuant to this Section 5.10 as of
the date of execution of this Agreement.
Section 5.11. Nature of Payments. All payments required to be paid by the
------------ ------------------
Developer under this Agreement shall be cumulative and in addition to any and
all other payment obligations of the Developer under the Act and further shall
be in addition to, and not in substitution for, any and all distributions of
funds or payments required or contemplated by the Act or by any other provision
of law, including, without limitation, any
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and all admission taxes, wagering taxes or other revenues received by the City
or any other governmental authority with respect to, or as a result of, the
Project. All payments by the Developer to the City or any agency, commission,
department, authority or instrumentality of the City under this Agreement shall
be non-refundable and the Developer shall have no recourse or rights against the
City or any affiliate of the City to recover any such payment or to recover or
be reimbursed for any payment made hereunder, except as expressly provided
herein, or for any payment previously made to or on behalf of the City under the
Letter of Intent except as expressly set forth in Section 10.03 of this
Agreement. All payments to the City or any agency, commission, department,
authority or instrumentality of the City pursuant to this Agreement shall be
paid without relief from valuation and appraisement laws.
Section 5.12. Completion or Clipper Commitment. The Developer shall
------------ --------------------------------
perform and complete the Clipper Commitment in accordance with: (a) the terms
and conditions of this Agreement; and (b) all Applicable Laws. The Developer's
obligation to relocate the Clipper to a final destination shall expire and
terminate on April 30, 1998.
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ARTICLE VI
----------
CONSTRUCTION
------------
Section 6.01. Overpass Facilities. The Developer shall cause Substantial
------------ -------------------
Completion of the construction of the Overpass Facilities to occur on or before
July 4, 1996, and Final Completion of the construction of the Overpass
Facilities to occur on or before December 31, 1996.
Section 6.02. Change Orders to Overpass Plans and Specifications. The
------------ --------------------------------------------------
Developer shall cause all modifications to the Overpass Plans and Specifications
to be set forth in written change orders and submitted to the City Project
Inspector for its review and approval. The City Project Inspector shall notify
the Developer in writing of its approval or disapproval of any such change order
within one (1) Business Day after submission thereof to the City Project
Inspector. If the City Project Inspector fails to notify the Developer of
approval or disapproval of any such change order within the foregoing time
period, such change order shall be deemed approved by the City Project
Inspector. If the City Project Inspector shall disapprove the whole or any part
of any such change order, a written disapproval describing specifically the
Items to which objection is registered and a statement of the reasons for such
disapproval shall be provided to the Developer. The City Project Inspector's
approval hereunder shall not be deemed to create any liability to the City or
any other entities. The Developer shall cause a change order that is disapproved
by the City Project Inspector to be revised and resubmitted to the City Project
Inspector for its approval. This procedure shall continue until such change
order has been approved by the City Project Inspector.
Section 6.03. Completion of Overpass Facilities. The Developer shall
------------ ---------------------------------
perform and complete the construction of the Overpass Facilities: (a) in
accordance with the terms and provisions of this Agreement, the EJ&E Agreement,
CSX Agreement, Conrail Agreement, NIPSCO Agreement and the Overpass Licenses(s);
(b) in accordance with all Applicable Laws; and (c) in accordance with the
Overpass Plans and Specifications and all change orders thereto that have been
approved by the City Project Inspector as provided in Section 6.02.
Section 6.04. Sewer Facilities. The Developer has caused Substantial
------------ ----------------
Completion of the construction of the Sewer Facilities to occur on or before
July 4, 1996, and shall cause Final Completion of the construction of the Sewer
Facilities to occur on or before December 31, 1996.
Section 6.05. Change Orders to Sewer Plans and Specifications. The
------------ -----------------------------------------------
Developer shall cause all modifications to the Sewer Plans and Specifications to
be set forth in written change orders and submitted to the City Project
Inspector for its review and approval. The City Project Inspector shall notify
the Developer in writing of its approval or disapproval of any such change order
within one (1) Business Day after submission thereof to the City Project
Inspector. If the City Project Inspector fails to notify the
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Developer of approval or disapproval of any such change order within the
foregoing time period, such change order shall be deemed approved by the City
Project Inspector. If the City Project Inspector shall disapprove the whole or
any part of any such change order, a written disapproval describing specifically
the items to which objection is registered and a statement of the reasons for
such disapproval shall be provided to the Developer. The City Project
Inspector's approval hereunder shall not be deemed to create any liability to
the City or any other entities. The Developer shall cause a change order that is
disapproved by the City Project Inspector to be revised and resubmitted to the
City Project Inspector for its approval. This procedure shall continue until
such change order has been approved by the City Project Inspector.
Section 6.06. Completion of Sewer Facilities. The Developer shall complete
------------ ------------------------------
the construction of the Sewer Facilities: (a) in accordance with the terms and
provisions of this Agreement, the Sewer License and the County Sewer Agreement;
(b) in accordance with all Applicable Laws; and (c) in accordance with the Sewer
Plans and Specifications and all change orders thereto that have been approved
by the City Project Inspector as provided in Section 6.05. In consideration of
constructing the Sewer Facilities with a capacity sufficient for use thereof by
the Port Authority and the payment of the sum of One Hundred Dollars ($100),
receipt of which is hereby acknowledged by the City, and to the extent permitted
by Applicable Laws, the City shall cause the Sanitary District to grant the
Developer a reservation during the term of this Agreement of the remaining
capacity of the Sewer Facilities for the exclusive future use by the Developer
as Developer's needs for such a capacity may arise from time to time in
connection with the operation of the Project. The Developer shall not have the
right to assign or transfer any portion of such reservation without the City's
and Sanitary District's prior written consent.
Section 6.07. Parking Garage. The Developer shall cause Substantial
------------ --------------
Completion of the Parking Garage to occur on or before July 4, 1996, and Final
Completion of the Parking Facilities to occur on or before December 31, 1996.
Section 6.08. Change Orders to Parking Plans and Specifications. The
------------ -------------------------------------------------
Developer shall cause all modifications to the Parking Plans and Specifications
to be set forth in written change orders and submitted to the City Project
Inspector for its review and approval. The City Project Inspector shall notify
the Developer in writing of its approval or disapproval of any such change order
within one (1) Business Day after submission thereof to the City Project
Inspector. If the City Project Inspector fails to notify the Developer of
approval or disapproval of any such change order within the foregoing time
period, such change order shall be deemed approved by the City Project
Inspector. If the City Project Inspector shall disapprove the whole or any part
of any such change order, a written disapproval describing specifically the
items to which objection is registered and a statement of the reasons for such
disapproval shall be provided to the Developer. The City Project Inspector's
approval hereunder shall not be deemed to create any liability to the City or
any other entities. The Developer shall cause a change order that is
disapproved by the City Project Inspector to be revised and resubmitted to the
City
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Project Inspector for its approval. This procedure shall continue until such
change has been approved by the City Project Inspector.
Section 6.09. Completion of Parking Facilities. The Developer shall
------------ --------------------------------
perform and complete the construction of the Parking Facilities: (a) in
accordance with the terms and conditions of this Agreement, the Sublease and the
Construction License(s); (b) in accordance with all Applicable Laws; (c) in
accordance with the Parking Plans and Specifications and all change orders
thereto that have been approved by the City Project Inspector as provided in
Section 6.08; and (d) the Approved Site Plan.
Section 6.10. Rail Relocation. The Developer has caused Substantial
------------ ---------------
Completion of the Rail Relocation to occur on or before July 4, 1996, and shall
cause Final Completion of the Rail Relocation to occur on or before December 31,
1996.
Section 6.11. Plans and Specifications for Rail Relocation. The Developer
------------ --------------------------------------------
acknowledges and covenants that it has obtained EJ&E's written approval of the
Rail Relocation Plans and Specifications. The Developer has obtained, and shall
continue to obtain, EJ&E's approval of all modifications to the Rail Relocation
Plans and Specifications.
Section 6.12 . Completion of Rail Relocation. The Developer shall perform
------------ -----------------------------
and complete the Rail Relocation: (a) in accordance with the terms and
conditions of this Agreement, the EJ&E Agreement and the Overpass License(s);
(b) in accordance with all Applicable Laws; and (c) in accordance with the Rail
Relocation Plans and Specifications and all modifications thereto that have been
approved by EJ&E .
Section 6.13. Guest Facilities. The Developer shall cause Substantial
------------ ----------------
Completion of the Guest Facilities to occur on or before October 1, 1996, and
Final Completion of the construction of the Guest Facilities to occur on or
before December 31, 1996.
Section 6.14. Change Orders to Guest Plans and Specifications. The
------------ -----------------------------------------------
Developer shall cause all modifications to the Guest Plans and Specifications
that affect the structural integrity or exterior appearance of the Guest
Facilities to be set forth in written change orders and submitted to the City
Project Inspector for its review and approval. The City Project Inspector shall
notify the Developer in writing of its approval or disapproval of any such
change order within one (1) Business Day after submission thereof to the City
Project Inspector. If the City Project Inspector fails to notify the Developer
of approval or disapproval of any such change order within the foregoing time
period, such change order shall be deemed approved by the City Project
Inspector. If the City Project Inspector shall disapprove the whole or any part
of any such change order, a written disapproval describing specifically the
items to which objection is registered and a statement of the reasons for such
disapproval shall be provided to the Developer. The City Project Inspector's
approval hereunder shall not be deemed to create any liability to the City or
any other entities. The Developer shall cause a change order that is
disapproved by the City Project Inspector to be revised and resubmitted to the
City
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Project Inspector for its approval. This procedure shall continue until such
change order has been approved by the City Project Inspector.
Section 6.15. Completion of Guest Facilities. The Developer shall perform
------------ ------------------------------
and complete the construction of the Guest Facilities: (a) in accordance with
the terms and conditions of this Agreement, the Sublease and the Construction
License(s); (b) in accordance with all Applicable Laws; (c) in accordance with
the Guest Plans and Specifications and all change orders thereto that have been
approved by the City Project Inspector as provided in Section 6.14; and (d) the
Approved Site Plan. To the extent permitted by Applicable Laws, the City shall
cause the appropriate governmental agency to issue a temporary or partial
occupancy permit for the Guest Facilities upon Substantial Completion of each
relevant portion thereof.
Section 6.16. Docking Facilities. The Developer shall cause Substantial
------------ ------------------
Completion of the construction of the Docking Facilities to occur on or before
July 4, 1996, and Final Completion of the construction of the Docking Facilities
to occur on or before December 31, 1996.
Section 6.17 . Plans and Specifications for Docking Facilities. Prior to
------------ -----------------------------------------------
commencing the construction of the Docking Facilities, the Developer shall
submit Plans and Specifications for the Docking Facilities to the City Project
Inspector for its review and approval. The Developer shall submit all
modifications to the Plans and Specifications previously submitted to the City
Project Inspector pursuant to this Section 6.17 to the City Project Inspector
for its review and approval. The City Project Inspector shall notify the
Developer in writing of its approval or disapproval of any Plans and
Specifications submitted to it pursuant to this Section 6.17 within five (5)
Business Days after submission thereof to the City Project Inspector. The City
Project Inspector shall notify the Developer in writing of its approval or
disapproval of any modifications to the Plans and Specifications submitted to it
pursuant to this Section 6.17 within one (1) Business Day after submission
thereof to the City Project Inspector. If the City Project Inspector fails to
notify the Developer of approval or disapproval of any such Plans and
Specifications or modifications thereto within the foregoing time periods, such
Plans and Specifications or modifications thereto shall be deemed approved by
the City Project Inspector. If the City Project Inspector shall disapprove the
whole or any part of such Plans and Specifications or modifications thereto, a
written disapproval describing specifically the items to which objection is
registered and a statement of the reasons for such disapproval shall be provided
by the City Project Inspector to the Developer. The Developer shall cause any
such Plans and Specifications or modifications thereto that are disapproved by
the City Project Inspector to be revised and resubmitted to the City Project
Inspector for Its approval. This procedure shall continue until such Plans and
Specifications or modifications thereto have been approved by the City Project
Inspector. The City Project Inspector's approval of any such Plans and
Specifications or modifications thereto shall not be deemed to create any
liability to the City or any other entities. Notwithstanding anything contained
in this Article VI to the contrary, the City Project Inspector's approval rights
under this Section 6.17 shall be limited to the approval
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of matters affecting the exterior appearance, structural integrity, function,
operability, and safety of the Docking Facilities.
Section 6.18. Completion of Docking Facilities. The Developer shall
------------ --------------------------------
perform and complete the construction of the Docking Facilities: (a) in
accordance with the terms and conditions of this Agreement, the Sublease and the
Construction License(s); (b) in accordance with all Applicable Laws; (c) in
accordance with the Plans and Specifications and all modifications thereto that
have been approved by the City Project Inspector as provided in Section 6.17;
and (d) the Approved Site Plan.
Section 6.19. Hotel Facilities. The Developer shall commence construction
------------ ----------------
of the Hotel Facilities after Final Completion of the Guest Facilities in
accordance with the Certificate.
Section 6.20. Approval for Hotel Facilities. The Developer shall obtain
------------ -----------------------------
the City's prior written approval of the location of all Hotel Facilities to be
constructed by the Developer on any real estate located in the City other than
the Hotel Parcel prior to commencing the construction or installation of any
such Hotel Facilities. Subject to Section 11.09 hereof and to the extent
permitted by Applicable Laws, the City shall support the development of any
Hotel Facilities on the Hotel Parcel or any other location approved by the City
pursuant to this Section 6.20, and shall support any necessary zoning approvals,
the issuance of permits and other land use and infrastructure approvals required
to develop and operate the Hotel Facilities to be developed on the Hotel Parcel
or any other location that is approved by the City pursuant to this Section
6.20.
Section 6.21. Completion of Hotel Facilities. The Developer shall perform
------------ ------------------------------
and complete the construction of the Hotel Facilities: (a) in accordance with
the terms and conditions of this Agreement; and (b) in accordance with all
Applicable Laws.
Section 6.22. Commercial Facilities. Other than with respect to the Hotel
------------ ---------------------
Facilities, Guest Facilities, Parking Facilities and Docking Facilities which
are subject to the other approvals set forth in this Agreement, the Developer
shall obtain the City's prior written approval of the concept, use and location
of all retail, commercial, amusement, shopping, entertainment, and service
facilities, structures and improvements to be constructed by the Developer in
the City of Hammond, Indiana (collectively, the "Commercial Facilities") prior
to commencing the construction or installation of any such Commercial
Facilities. In the event that the Developer provides the City with a site plan
depicting any proposed Commercial Facilities that have been approved by the City
pursuant to this Section 6.22, the City agrees to (a) cause such site plan to be
reviewed by the Department of Planning of the City, and (b) cause the Department
of Planning of the City to consult with the Developer to determine whether any
rezonings or variances are required under the City Zoning Ordinance to construct
the proposed Commercial Facilities as depicted on such site plan. Subject to
Section 11.09 hereof and to the extent permitted by Applicable Laws, the City
shall support the development of any Commercial Facilities approved by if
pursuant to this Section 6.22, and shall support any necessary
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zoning approvals, the issuance of permits and other land use and infrastructure
approvals required to develop those Commercial Facilities that are approved by
the City pursuant to this Section 6.22.
Section 6.23. Infrastructure Facilities. The Developer shall cause Final
------------ -------------------------
Completion of the Infrastructure Facilities to occur on or before December 31,
1996.
Section 6.24. Plans and Specifications for Infrastructure Facilities.
------------ ------------------------------------------------------
Prior to commencing the construction of any Infrastructure Facilities, the
Developer shall submit Plans and Specifications for any such Infrastructure
Facilities to the City Project Inspector for its review and approval. The
Developer shall submit all modifications to the Plans and Specifications
previously submitted to the City Project Inspector pursuant to this Section 6.24
to the City Project Inspector for its review and approval. The City Project
Inspector shall notify the Developer in writing of its approval or disapproval
of any Plans and Specifications submitted to it pursuant to this Section 6.24
within five (5) Business Days after submission thereof to the City Project
Inspector. The City Project Inspector shall notify the Developer in writing of
its approval or disapproval of any modifications to the Plans and Specifications
submitted to it pursuant to Section 6.17 within one (1) Business Day after
submission thereof to the City Project Inspector. If the City Project Inspector
fails to notify the Developer of approval or disapproval of any such Plans and
Specifications or modifications thereto within the foregoing time periods, such
Plans and Specifications or modifications thereto shall be deemed approved by
the City Project Inspector. If the City Project Inspector shall disapprove the
whole or any part of such Plans and Specifications or modifications thereto, a
written disapproval describing specifically the items to which objection is
registered and a statement of the reasons for such disapproval shall be provided
by the City Project Inspector to the Developer. The Developer shall cause any
such Plans and Specifications or modifications thereto that are disapproved by
the City Project Inspector to be revised and resubmitted to the City Project
Inspector for its approval. This procedure shall continue until such Plans and
Specifications or modifications thereto have been approved by the City Project
Inspector. The City Project Inspectors approval of any such Plans and
Specifications or modifications thereto shall not be deemed to create any
liability to the City or any other entities.
Section 6.25. Completion of Infrastructure Utilities. The Developer shall
------------ --------------------------------------
perform and complete the construction of the Infrastructure Facilities: (a) in
accordance with the terms and conditions of this Agreement; (b) in accordance
with all Applicable Laws; and (c) in accordance with the Plans and
Specifications and all modifications thereto that have been approved by the City
Project Inspector as provided in Section 6.24.
Section 6.26. Plans and Specifications for Helipad Facilities. Prior to
------------ -----------------------------------------------
commencing the construction of any Helipad Facilities, the Developer shall
submit Plans and Specifications for any such Helipad Facilities to the City
Project Inspector for its review and approval. The Developer shall submit all
modifications to the Plans and Specifications previously submitted to the City
Project Inspector pursuant to this
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Section 6.26 to the City Project Inspector for its review and approval. The City
Project Inspector shall notify the Developer in writing of its approval or
disapproval of any Plans and Specifications submitted to it pursuant to this
Section 6.26 within five (5) Business Days after submission thereof to the City
Project Inspector. The City Project Inspector shall notify the Developer in
writing of its approval or disapproval of any modifications to the Plans and
Specifications submitted to it pursuant to Section 6.17 within one (1) Business
Day after submission thereof to the City Project Inspector. If the City Project
Inspector fails to notify the Developer of approval or disapproval of any such
Plans and Specifications or modifications thereto within the foregoing time
periods, such Plans and Specifications or modifications thereto shall be deemed
approved by the City Project Inspector. If the City Project Inspector shall
disapprove the whole or any part of such Plans and Specifications or
modifications thereto, a written disapproval describing specifically the Plans
to which objection is registered and a statement of the reasons for such
disapproval shall be provided by the City Project Inspector to the Developer.
The Developer shall cause any such Plans and Specifications or modifications
thereto that are disapproved by the City Project Inspector to be revised and
resubmitted to the City Project Inspector for its approval. This procedure shall
continue until such Plans and Specifications or modifications thereto have been
approved by the City Project Inspector. The City Project Inspectors approval of
any such Plans and Specifications or modifications thereto shall not be deemed
to create any liability to the City or any other entities.
Section 6.27. Completion of Helipad Utilities. The Developer shall perform
------------ -------------------------------
and complete the construction of all Helipad Facilities, if any: (a) in
accordance with the terms and conditions of this Agreement; (b) in accordance
with all Applicable Laws; and (c) in accordance with the Plans and
Specifications and all modifications thereto that have been approved by the City
Project Inspector as provided In Section 6.26.
Section 6.28. Private Rights. The Developer shall procure or cause or
------------ --------------
require the entity performing any of the Work or specified portion thereof to
procure in a timely manner any and all approvals, consents, authorizations,
easements and entry rights that must or should be obtained from any private
individuals or landowners for the performance of any such Work. The City shall
cooperate with the Developer in obtaining all such rights to the extent
permitted by Applicable Laws and provided the C4 shall not be required to incur
any expense in satisfying this obligation or exercise Its rights of eminent
domain; provided, that the City, subject to Section 11.09 and to the extent
permitted by Applicable Laws, shall exercise its rights of eminent domain with
respect to the acquisition of the Overpass Promises and the real estate and
interests in real estate necessary to complete the Rail Relocation.
Section 6.29. Dedication. Upon Final Completion of the Overpass
------------ ----------
Facilities, the Developer shall cause the Overpass Facilities to be transferred,
conveyed and dedicated to and accepted by the City so as to constitute a part of
the public transportation system of the City of Hammond, Indiana. The Developer
shall post such bonds as the City may legally require and customarily imposes as
a condition to accepting the transfer,
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conveyance and dedication of the Overpass Facilities. The Developer shall, if it
desires immediate final approval of any such dedication to the City, post a cash
deposit as required by Section XI of Hammond Ordinance No. 2992; otherwise it
shall comply with the provisions of Section XII of such Ordinance. Upon Final
Completion of the Sewer Facilities, the Developer shall cause the Sewer
Facilities to be transferred, conveyed and dedicated and accepted by the
Sanitary District so as to constitute a part of the public sanitary sewer system
of the City of Hammond, Indiana. The Developer shall post such bonds as the
Sanitary District may legally require and customarily imposes as a condition to
accepting the transfer, conveyance and dedication of the Sewer Facilities.
Section 6.30. Alterations and Modifications to City Facilities. After the
------------ ------------------------------------------------
Final Completion of the Overpass Facilities and Sewer Facilities, the Developer
shall not make, construct or install any alterations, changes, replacements,
improvements or additions to all or any portion of such Facilities without the
prior written consent of the City. Any and all such alterations, changes,
replacements, improvements and additions that are approved by the City shall be
made and constructed in the same manner and subject to the same terms and
conditions that were applicable to the original construction of such Facilities,
including, without limitation, the City's approval of Plans and Specifications
therefor.
Section 6.31. Approval of Site Plan. The Developer agrees that attached
------------ ---------------------
hereto as Exhibit B is the site plan for the development of the Redevelopment
Parcel, which site plan is subject to the review and the approval of the Mayor
and Common Council. The Mayor's execution and the Common Council's adoption or
approval of this Agreement shall constitute approval of the site plan attached
hereto as Exhibit B. The City agrees to cause the site plan approved by the
Mayor and Common Council pursuant to this Section 6.31 (the "Approved Site
Plan") to be reviewed by the Department of Planning of the City, and (b) cause
the Department of Planning of the City to consult with the Developer to
determine whether any rezonings or variances are required under the City Zoning
Ordinance to develop the Redevelopment Parcel as depicted in the Approved Site
Plan. Subject to Section 11.09 hereof and to the extent permitted by Applicable
Laws, the City shall (a) support the development of the Redevelopment Parcel as
depicted in the Approved Site Plan, and (b) support the issuance of permits and
other land use approvals required to develop the Redevelopment Parcel as
depicted in the Approved Site Plan.
Section 6.32. Approval of Signage Plan. The Developer agrees to submit a
------------ ------------------------
signage plan for the Project to the Mayor on or before the Commencement Date,
which signage plan shall be subject to the review and approval of the Mayor.
The Mayor's execution of this Agreement shall constitute approval of the signage
plan submitted to him. The City agrees to (a) cause the signage plan approved
by the Mayor pursuant to this Section 6.32 (the "Approved Signage Plan") to be
reviewed by the Department of Planning of the City, and (b) cause the Department
of Planning of the City to consult with the Developer to determine whether any
variances are required under the City Zoning Ordinance to the Approved Signage
Plan. Subject to Section 11.09 hereof and to the
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extent permitted by Applicable Laws, the City shall (a) support the Approved
Signage Plan, (b) support the issuance of permits and other land use approvals
required to implement the Approved Signage Plan, and (c) use reasonable efforts
to cause the appropriate governmental agency to issue a license or encroachment
permit to the Developer (or its affiliate) to erect a temporary pylon sign for a
period of not less than one hundred twenty (120) days and a permanent pylon sign
as described in the Approved Signage Plan to be located in the areas depicted oh
Exhibit B attached hereto and incorporated herein by this reference.
Section 6.33. Lakefront Improvements. The Developer agrees to provide Two
------------ ----------------------
Hundred Thousand Dollars ($200,000) for the improvement of NIPSCO Parcel Bl,
NIPSCO Parcel B2 and NIPSCO Accretion Parcel to the specifications of the City,
together with such landscaping and other improvements as the City may direct for
other green spaces and beaches at or near the Project Site. Such payment shall
be made by the Developer to the City in four (4) equal installments of Fifty
Thousand Dollars ($50,000) each on the later of (a) the transfer of NIPSCO
Parcel Bl, NIPSCO Parcel B2, NIPSCO Parcel 32 and NIPSCO Parcel 35 by NIPSCO
pursuant to the NIPSCO Agreement and the third, sixth and ninth monthly
anniversary of such transfer date, or (b) October 1, 1996, January 1, 1997,
April 1, 1997, and July 1, 1997.
Section 6.34. Pedestrian Overpass. In the event and to the extent that the
------------ -------------------
City is obligated pursuant to the EJ&E Agreement, the Conrail Agreement or the
CSX Agreement to provide for pedestrian access to the Project as a result of
gaming or the Project, the Developer shall construct a pedestrian overpass to
the Project, all at the sole expense of the Developer and in accordance with
Plans and Specifications for such overpass that have been reviewed and approved
by the City in accordance with the same provisions as those set forth in this
Agreement for the review and approval of Plans and Specifications for the
Docking Facilities.
Section 6.35. Railroad Street. In the event that the City determines to
------------ ---------------
make Railroad Street a dead end street or to otherwise close or vacate all or
any portion of Railroad Street, the Developer, at its sole cost and expense,
agrees to (a) construct a turnaround to the normal and customary specifications
of the City, (b) landscape the north side of the currently existing Railroad
Street from the east side of Lake Street to Calumet Avenue in accordance with
the Linden Plan (a copy of which is attached hereto as Exhibit H), and (c)
construct a sidewalk along the north side of Railroad Street between Davis
Street and Calumet Avenue pursuant to the specifications of the City and, if
Conrail owns the affected real estate, with the consent of Conrail. The City
agrees to use its best efforts to cause Railroad Street from Calumet Avenue to
Davis Street to be closed to public traffic on or before the Commencement Date..
Section 6.36. Perimeter Road. The Developer shall prepare a plan (the
------------ --------------
"Perimeter Road Plan") for submission to, and prior approval by, the City with
respect to the condition, use, related landscaping and pedestrian access to the
Perimeter Road. The Perimeter Road Plan shall include, but shall not be limited
to, the following provisions:
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(i) appropriate assurances with respect to the continuous and secure access
Developer to the Project via such Perimeter Road; (ii) appropriate assurances to
the City and the Water Department with regard to the paving of and fencing and
landscaping related to the Perimeter Road; and (iii) appropriate public,
pedestrian access to the northeast comer of the peninsula via the Perimeter
Road. The Developer agrees that its use of the Perimeter Road shall be subject
to compliance with the approved Perimeter Road Plan. The City agrees that it
shall not seek any consideration for the use of the Perimeter Road other than
the consideration expressly set forth in this Agreement, the Water Department
License and the Water Department Lease.
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ARTICLE VII
-----------
PAYMENT FOR DELAYS IN CONSTRUCTION
----------------------------------
Section 7.01. Delay Payments. The Developer acknowledges and agrees that
------------ --------------
the City has entered into this Agreement, in part, in reliance upon the
Developer's agreement to construct those portions of the Project referred to in
Article VI in accordance with the respective time frames set forth in Article
VI. In furtherance thereof, the Developer agrees that, subject to the terms of
Sections 7.03 and 18.04, if the Commencement Date has not occurred on or before
July 4, 1996, the Developer shall pay to the City an amount equal to Thirty-Two
Thousand Eight Hundred Seventy-Seven Dollars ($32,877) for each day after July
4, 1996, until the Commencement Date (the "Delay Payments").
Section 7.02. Nature of Damages. In establishing the damage provisions
------------ -----------------
contained in Section 7.01, the parties understand and agree that the City will
incur substantial damages and losses which are and will hereafter be difficult
to quantify, ascertain and prove as actual damages for delays in the occurrence
of the Commencement Date. Such damages are foreseen to include, without
limitation, lost revenue, lost rent, extended or additional costs for
observation, inspection, engineering policies, insurance, administration, and
also indeterminate damages, including, without limitation, hindrance and
inconvenience to members of the public, and deprivation of use and operation.
The Developer acknowledges and agrees that the respective amounts of the Delay
Payments contained in Section 7.01 (a) are reasonable with due consideration for
the type, nature and extent of the Work and benefits expected from the
Project;(b) fairly approximate the nature and amount of actual damages which the
City may incur as a result of delayed completion; and (c) may be assessed and
recovered by the City without proof or evidence concerning the types or amounts
of such actual damages.
Section 7.03. Limitations on Delay Payments. The Mayor shall waive the
------------ -----------------------------
imposition of Delay Payments that would otherwise be imposed by the terms of
this Agreement if the Mayor determines, in his sole discretion, that the failure
to achieve the Commencement Date on or before July 4, 1996 is not due to any
action or omission or a lack of best efforts on the part of the Developer. If
the Delay Payments are imposed, then at such time as the Developer has made the
Delay Payments to the City in the amount of Twelve Million Dollars
($12,000,000), the Developer may terminate this Agreement and the obligations to
make further Delay Payments, as well as all other obligations under this
Agreement that do not survive the termination of this Agreement.
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ARTICLE VIII
------------
ADDITIONAL COVENANTS OF THE
DEVELOPER CONCERNING CONSTRUCTION
---------------------------------
Section 8.01. Hazardous Materials; Environmental Matters.
------------ ------------------------------------------
(a) Testing During Initial Construction. The Developer has caused Phase I
-----------------------------------
site assessments to be conducted by a professional engineer (the "Environmental
Engineer") over those portions of the Project Site being disturbed by the
Developer in connection with the initial construction of the Project. Where
Hazardous Materials were discovered or encountered and where recommended by the
Environmental Engineer, the Developer has caused the Environmental Engineer to
conduct follow-up studies, some of which consist of additional testing and some
of which consist of Phase II site assessments. The Developer represents and
covenants that copies of all of the Phase I site assessments and the follow-up
studies (collectively, the "Environmental Studies") have been delivered to the
City. The Developer represents and covenants that all Environmental Studies
were performed at the Developer's sole cost and expense and in accordance with
generally accepted standards for environmental studies of similar scope and
purpose. The Developer shall provide the City with a written letter from the
Environmental Engineer stating that the City may rely upon the statements,
recommendations and conclusions contained in the Environmental Studies.
(b) Remediation During Initial Construction. The Developer shall remediate
---------------------------------------
those portions of the Project Site recommended for remediation by the
Environmental Engineer pursuant to the terms of a letter dated January 16, 1996,
from the Developer to Ron Novack, the Director of the Department of Hammond
Environmental Management. In addition, the Developer shall remediate any
Hazardous Materials discovered, encountered or uncovered by the Developer, its
agents, employees or contractors at the Project Site during the performance of
the Work or the initial construction of the Project. Upon discovering,
encountering or uncovering any Hazardous Materials at the Project Site during
the performance of the Work or initial construction of the Project, the
Developer shall (i) notify the City, (ii) comply with all Applicable Laws In
connection with reporting, remediating and disposal of such Hazardous Materials,
and (iii) take whatever actions are reasonably necessary to protect the general
public and environment from immediate injury or damage resulting from such
Hazardous Materials. At the conclusion of the remediation and disposal required
under this Section 8.01, the Developer shall cause the Environmental Engineer to
Issue a statement to the City that all actions required by this Agreement or
Applicable Laws to be taken with respect to such Hazardous Materials have been
taken and completed and, to the knowledge of the Environmental Engineer after
reasonable investigation and inquiry, there is no violation of Applicable Laws
with respect to such Hazardous Materials.
(c) Construction and Operation of the Project. The Developer shall not
-----------------------------------------
cause or permit any Hazardous Materials to be brought upon, kept, used, stored,
discharged,
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the services of and procure goods and supplies from MBEs and WBEs at a level
consistent with the goal set forth above. The Developer agrees to maintain a
record of all relevant data with regard to compliance with this Section 8.06 and
to provide to the City, no less frequently than monthly until Final Completion
of the Project and, thereafter, no less frequently than semi-annually, such
information as may reasonably be requested with respect thereto.
Section 8.05. Areas Affected by Work. The Developer shall confine
------------ ----------------------
construction equipment, the storage of material and equipment and the operations
of workers performing Work to the Project Site, and to such other lands and
areas as are owned or controlled by the Developer. The City shall not be liable
or responsible for any damage to any land or area, and to the owner occupant of
any land or area, that results from the construction of the Project, the
performance of the Work or the performance or nonperformance of the Developer's
obligations under this Agreement.
Section 8.06. Project Documents. The Developer shall maintain in a safe
------------ -----------------
place at the Project Site one (1) set of all plans, specifications, drawings,
addenda, written amendments, shop drawings, change orders, work directive
changes, field orders and written interpretations and clarifications, in good
order and annotated to show all changes made during construction, relating to
the performance of the Work or construction of the Project or any component
thereof, which documents shall be available to the City Project Inspector and
the Mayor for such reference as may reasonably be required. Upon completion of
the construction of the Project, a copy of all "as built" and record drawings
shall be promptly delivered to the City of Hammond Building Commissioner.
Section 8.07. Project Safety. The Developer shall be responsible for
------------ --------------
initiating, maintaining and supervising all safety precautions and programs in
connection with the development, construction and operation of the Project and
performance of the Work. The Developer shall take all legally necessary
precautions for the safety of, and provide protection as reasonably necessary to
prevent damage, injury or loss to: (a) all workers and laborers providing labor
for the performance of the Work or construction of the Project, (b) all
materials and equipment incorporated in the Project, whether in storage or
located on the Project Site, and (c) other property at the Project Site or
adjacent or in proximity thereto, including trees, shrubs, lawns, walks,
pavements, roadways, structures, utilities and underground facilities not
designated for removal, relocation or replacement in the course of construction.
Section 8.08. Drug Free Workplace. The Developer agrees to undertake its
------------ -------------------
best efforts at all times to provide and maintain a drug-free workplace at the
Project Site.
Section 8.09. Parking Demands. The Developer shall provide, at its sole
------------ ---------------
expense, new parking spaces or one or more parking facilities, or both,
sufficient to satisfy the parking needs engendered by the Project, with the
design and location of parking spaces and facilities subject to the prior
approval of the City. In the event that the capacity of the Project or the
number of employees to be employed by the Developer at the Project is
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the services of and procure goods and supplies from MBEs and WBEs at a level
consistent with the goal set forth above. The Developer agrees to maintain a
record of all relevant data with regard to compliance with this Section 8.06 and
to provide to the City, no less frequently than monthly until Final Completion
of the Project and, thereafter, no less frequently than semi-annually, such
information as may reasonably be requested with respect thereto.
Section 8.05. Areas Affected by Work. The Developer shall confine
------------ ----------------------
construction equipment, the storage of material and equipment and the operations
of workers performing Work to the Project Site, and to such other lands and
areas as are owned or controlled by the Developer. The City shall not be liable
or responsible for any damage to any land or area, and to the owner occupant of
any land or area, that results from the construction of the Project, the
performance of the Work or the performance or nonperformance of the Developer's
obligations under this Agreement.
Section 8.06. Project Documents. The Developer shall maintain in a safe
------------ -----------------
place at the Project Site one (1) set of all plans, specifications, drawings,
addenda, written amendments, shop drawings, change orders, work directive
changes, field orders and written interpretations and clarifications, in good
order and annotated to show all changes made during construction, relating to
the performance of the Work or construction of the Project or any component
thereof, which documents shall be available to the City Project Inspector and
the Mayor for such reference as may reasonably be required. Upon completion of
the construction of the Project, a copy of all "as built" and record drawings
shall be promptly delivered to the City of Hammond Building Commissioner.
Section 8.07. Project Safety. The Developer shall be responsible for
------------ --------------
initiating, maintaining and supervising all safety precautions and programs in
connection with the development, construction and operation of the Project and
performance of the Work. The Developer shall take all legally necessary
precautions for the safety of, and provide protection as reasonably necessary to
prevent damage, injury or loss to: (a) all workers and laborers providing labor
for the performance of the Work or construction of the Project, (b) all
materials and equipment incorporated in the Project, whether in storage or
located on the Project Site, and (c) other property at the Project Site or
adjacent or in proximity thereto, including trees, shrubs, lawns, walks,
pavements, roadways, structures, utilities and underground facilities not
designated for removal, relocation or replacement in the course of construction.
Section 8.08. Drug Free Workplace. The Developer agrees to undertake its
------------ -------------------
best efforts at all times to provide and maintain a drug-free workplace at the
Project Site.
Section 8.09. Parking Demands. The Developer shall provide, at its sole
------------ ---------------
expense, new parking spaces or one or more parking facilities, or both,
sufficient to satisfy the parking needs engendered by the Project, with the
design and location of parking spaces and facilities subject to the prior
approval of the City. In the event that the capacity of the Project or the
number of employees to be employed by the Developer at the Project is
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increased beyond the Developer's initial estimates thereof, the number of new
parking spaces to be provided by the Developer will be increased commensurately,
subject, to the direction of the City.
Section 8.10. Labor Objectives.
------------ ----------------
(a) The Developer acknowledges that creation of construction jobs in the
City of Hammond, Indiana, Lake County, Indiana and the northeastern part of the
State, in particular, and other portions of the State, in general, is a
principal goal which the City wishes to achieve as a result of the Project. In
that regard, the Developer shall use its best efforts to engage Contractors and
Construction Managers for the Project with principal places of business first in
the City, second in the County, and third in other areas of the State, who in
turn shall be required to use their best efforts to engage Subcontractors and
Suppliers having their principal place of business first in the City, second in
the County, and third in other areas of the State. With regard to contracts or
other arrangements made after February 29,1996, and to the extent reasonably
available on a competitive basis (including the economic, quality, performance
and other relevant considerations), the Developer shall also require each
Contractor, Construction Manager, Subcontractor and Supplier to use its
respective best efforts (i) to hire non-supervisory labor and construction
workers that perform any of the Work, first from the City, second from the
County, and third from other areas of the State; (ii) to have at least a
majority of its non-supervisory laborers and construction workers that perform
any of the Work hired from such areas, with the priority set forth in (i) above;
and (iii) to have vendors or suppliers having places of business in such areas,
with the priority set forth in (i) above, constitute at least a majority of the
vendors and suppliers used by such Contractor, Construction Manager or
Subcontractor in connection with the Project.
(b) The Developer shall cause each laborer or mechanic of each Contractor,
Construction Manager and Subcontractor performing any of the Work to be paid a
wage equal to the union contract wage in the Hammond area existing on the
Certificate Date, regardless of any contractual relationship which may be
alleged to exist between any such Contractor, Construction Manager or
Subcontractor and such laborers or mechanics.
(c) The Developer shall not discriminate against any employee applicant for
employment, to be employed In the performance of this Agreement, with respect to
the employee's hire, tenure, terms, conditions or privileges of employment or
any manner directly or indirectly related to employment, because of the
employee's race, religion, color, sex, age, handicap, national origin, ancestry,
disabled veterans status, or Vietnam-era veterans status.
(d) The Developer agrees to maintain a record of all relevant data with
respect to compliance with this Section 8.10 and to provide to the City, no less
frequently than monthly until Final Completion of the Project and, thereafter,
no less frequently than semi-annually, the information set forth in Schedule I
attached hereto and incorporated herein by this reference with respect thereto.
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Section 8.11. Permits and Compliance with Applicable Laws. The Developer
------------ -------------------------------------------
shall be responsible for (a) giving all necessary notices to, and obtaining all
necessary perm, its, approvals, consents and authorizations of, the proper
governmental authorities having jurisdiction over the Work, and (b) complying
with all Applicable Laws and with all private restrictions, covenants and
conditions bearing on the performance of the Work and shall promptly notify the
City Project Inspector if any of the Plans and Specifications for the Work are
at variance therewith. The City shall cooperate with the Developer in obtaining
all such permits, approvals, consents and authorizations to the extent permitted
by Applicable Laws, and provided that the City shall not be required to incur
any expense in satisfying this obligation.
Section 8.12. Site Maintenance. During the performance of the construction
------------ ----------------
of the Project, the Developer shall keep the Project Site free from
accumulations of waste materials, rubbish and other debris resulting from such
construction in amounts beyond those typically accumulated in a well-managed and
well-maintained construction project of comparable scope. Upon Final Completion
of the Work or any specified portion thereof, the Developer shall cause all
refuse, debris, tools, construction equipment, machinery and surplus materials
to be removed from that portion of the Project Site upon which the Work or
specified portion thereof has been completed.
Section 8.13. Construction Warranties. The Developer shall assign all
------------ -----------------------
warranties, whether expressed, implied, or created by statute, which are given
by any Design Professional, Contractor, Subcontractor, Construction Manager or
Material Supplier for any portion of the Work to the City immediately upon the
City request therefor, and further agrees to assign any and all such claims
relating to the construction of the Work against any such Design Professional,
Contractor, Subcontractor, Construction Manager or Material Supplier to the City
immediately upon the City's request therefor.
Section 8.14. Utility Services During Construction. The Developer, at its
------------ ------------------------------------
expense and in compliance with applicable rules and regulations of relevant
utility companies and government agencies, shall be responsible for (a)
arranging for provision to the Project Site during the construction phase of the
Project of such water, electrical, waste disposal and other utility services as
are reasonably required for completion of such construction in the time and
manner contemplated by this Agreement, and (b) payment for all such services.
Section 8.15. Erosion Control. The City shall not be responsible for
----------- ---------------
taking any actions required under Applicable Laws for prevention, control or
abatement of erosion, siltation or water pollution resulting from the
performance of the Work and/or the construction of the Project.
Section 8.16. Access to Work. Prior to Final Completion of the Work, the
------------ --------------
City Project Inspector and all governmental agencies having legal jurisdiction
there over shall be afforded such access to the Work and the Project Site as may
reasonably be necessary for their observation, inspection and testing of the
Work. The Developer shall
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provide proper and safe conditions for such access, and advise persons with such
access of the Developer's site safety procedures and programs so that they may
comply therewith as applicable.
Section 8.17. Bond and Surely Requirements. If the surety on any Cash Bond
------------ ----------------------------
or other bond furnished by the Developer, Contractor, Construction Manager or
Subcontractor becomes a party to a supervision, liquidation, rehabilitation or
other similar action, or if its right or lawful authority to do business in the
State is terminated, the Developer or such other party furnishing such Cash Bond
or other bond shall, within thirty (30) days of receiving notice thereof,
substitute another Cash Bond or other bond and surety, both of which must be
approved by the City (which approval may not unreasonably be withheld);
provided, however, that in the event such substitution cannot reasonably be
accomplished within such thirty (30) day period and the Developer shall have
undertaken actions within such period reasonably designed to effect such
substitution and shall diligently pursue the same, then the failure to
accomplish such substitution within such period shall not be grounds for
declaring the Developer in default.
Section 8.18. Liens. The Developer agrees that no lien shall attach to the
------------ -----
Project Site or any interests therein or to any improvements now existing or to
be constructed thereon or any interests therein by reason of the performing of
any labor or work or providing any services, machinery, tools, equipment,
supplies or materials under or pursuant to this Agreement or in connection with
the performance of the Work.
Section 8.19. Insurance.
------------ ---------
(a) The Developer shall purchase and maintain insurance at all times during
the Term of this Agreement that provides the following types of coverage and has
specified limits of liability equal to the greater of those specified below or
those required by Applicable Laws:
(i) Insurance for damage to or loss of the Parking
Facilities, Guest Facilities or Docking
Facilities, including contents and related
equipment [Including all Risk Coverage, including
perils of flood and earthquake); Agreed Value
Provision (no coinsurance); Replacement Cost
Coverage (no deduction for depreciation); Blanket
Limit of Liability (for all locations); Coverage for
Debris Removal (after a loss); and Coverage for Full Replacement
Demolition and Increased Cost of Construction]. Cost
(ii) Crime Insurance (Including coverage for theft,
Employee Dishonesty, Forgery, Alteration of Checks
and Counterfeit Currency or Gaming Equipment or Amounts required by
Supplies] Gaming Commission
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(iii) Loss of Income [Including Coverage for Business Amounts required by
Interruption (gross earnings) and Extra Expense] Gaming Commission
(iv) Hull Insurance covering the Boat and all equipment,
property and contents needed for use and operation
of the Boat as a gaming ship [Including coverage for Replacement cost
Strikes, Riots, and Civil Commission; Perils of value; agreed value
Capture or Seizure; and Acts of War and Terrorism] (no coinsurance)
(v) Marine Pollution Liability covering damages, costs
and expenses incurred in the removal of oil, fuel
and other pollutants as a result of a release $5,000,000 per
from the Boat occurrence
(vi) Liquor Liability [Including Loss of Means of Support-
coverage must not be restricted by the venue where $1,000,000 per
suit is brought]. occurrence
(vii) Worker's compensation:
State statutory
Applicable Federal statutory
Marine statutory
Employer's liability $1,000,000 each
occurrence
$1,000,000 each
occurrence disease/
$1,000,000
aggregate disease
(viii) Comprehensive General Liability [Including Premises
Operation (including explosion, collapse and
underground coverage); Independent Contractor's
Protective; Products and Completed Operations;
Personal Injury and Advertising Injury; Medical $1,000,000 per
Payments; and Board Form Property Damage] occurrence
Bodily Injury and Property Damage $2,000,000
aggregate
Medical Payments $5,000
Products and Completed Operations $2,000,000 per
occurrence
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(ix) Railroad Protective Liability covering liability $1,000,000 per
under the occurrence/
Federal Employees Liability Act $2,000,000
aggregate
(x) Protection and Indemnity Insurance and Marine
Third Party Liability (Including coverage for
Bodily Injury and Property Damage (including $1,000,000 each
collision damage) caused by Operations; and accident or
Owner's Indemnity Liability and Contractual occurrence
Liability]
(xi) Umbrella and/or Excess Liability providing
excess third party liability coverage over the
following underlying insurance with terms and
conditions at least as broad
as underlying coverage:
.Comprehensive General Liability
.Marine (Protections and lndemnity Policy)
.Liquor License
.Comprehensive Automobile Liability $10,000,000 each
.Crime Insurance occurrences/
aggregate excess of
Policy Limit the schedule of the
underlying
insurance
(xii) United States Longshoreman and Harborworkers Act Amounts required by
Coverage Gaming Commission
(xiii) Jones Act (Maritime Liability) Coverage Amounts required by
Gaming Commission
(xiv) Voluntary Maritime Liability Coverage Amounts required by
Gaming Commission
(b) The Developer shall provide copies of all policies for the insurance
required by the foregoing subparagraph (a), including all forms and
endorsements, to the City and the ' Gaming Commission prior to commencing any
activities that are intended to be covered by such policies, but in all events
prior to the Commencement Date; and copies of all replacement policies for the
insurance required by the foregoing subparagraph (a) at least sixty (60) days
prior to the termination, lapse or non-renewal of any such policy (or
replacement of any such policy).
(c) All policies for the insurance required by the foregoing subparagraph
(a) shall specify that the coverages afforded under such policies will not be
modified, canceled or not renewed until sixty (60) days after written notice of
modification,
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cancellation or non-renewal has been received by the City and the Gaming
Commission by a delivery which requires return of a written receipt.
(d) Each Insurer issuing any of the policies for the insurance required by
the foregoing subparagraph (a) must quality for an A.M. Best Rating of a VII or
higher and must be authorized to do business in the State of Indiana, unless
otherwise approved by the Gaming Commission.
(e) Each policy of insurance providing the coverage specified in
subparagraphs (a) (v), (a)(vi), (a) (viii), (a) (ix), (a) (x) and (a) (xi) shall
name the City, the Redevelopment Commission, the Port Authority and the Water
Department and their respective agents and employees and the Gaming Commission
and its employees as additional insureds.
(f) Each policy of insurance providing the coverage specified in
subparagraph (a) (i) of this Section 8.19 shall name the City, the Redevelopment
Commission, the Port Authority and the Water Department and their respective
agents and employees as additional insureds and the City as the loss payee.
(g) Each policy of insurance providing the coverage specified in
subparagraph (a) (viii) shall contain coverage terms equal to or broader than
ISO CGOOI (10/93).
(h) Each policy of insurance providing the coverage specified in
subparagraph (a) (x) shall provide coverage that is no less broad than the
standard P&I form SP-23.
(i) Each policy of insurance providing the coverage specified in
subparagraph (a) (iv) shall be on a policy form equal to or broader than the
American Institute Hull Clause 6/2/77.
(j) In the event that the Act or the Gaming Commission requires the
Developer to maintain insurance that is in addition to or different from the
insurance required to be maintained by the Developer pursuant to this Section
8.19, the Developer shall purchase and maintain such additional and/or
different insurance.
(k) The Developer shall obtain and maintain or cause the Contractors to
obtain and maintain in force buildees risk Insurance in an amount equal to one
hundred percent (100%) of the Insurable value of the Work protecting the City,
the Developer and each Contractor (to the extent of their respective interests)
against risks of physical loss of the Work. Such insurance shall Insure against
the perils of fire, extended coverage, vandalism and malicious mischief. The
Developer shall furnish the City with a certificate of insurance showing
coverage of such risks.
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ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF THE DEVELOPER
-----------------------------------------------
The Developer makes the following representations and warranties, which
representations and warranties are true and correct on the date hereof:
Section 9.01. Organization and Existence. The Developer is a corporation
------------ --------------------------
duly organized, validly existing and in good standing under the laws of the
State of Indiana. The Developer has all requisite corporate power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted and as contemplated under this Agreement.
Section 9.02. Power and Authority. The Developer has all requisite
------------ -------------------
corporate power and authority to enter into this Agreement and to perform Its
obligations under this Agreement.
Section 9.03. Due Authorization. All corporate acts and other proceedings
------------ -----------------
required to be taken by the Developer to authorize the execution, delivery and
performance of this Agreement have been duly and properly taken.
Section 9.04. Due Execution. This Agreement has been duly executed and
------------ -------------
properly delivered by the Developer and constitutes the valid and binding
obligation of the Developer, enforceable against the Developer in accordance
with its terms, subject to (i) bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights generally heretofore or
hereafter enacted and (ii) to the exercise of judicial discretion in accordance
with the general principles of equity.
Section 9.05. No Violation. The execution and delivery of this Agreement
------------ ------------
by the Developer does not, and the consummation of the transactions contemplated
hereby and compliance with the terms hereof will not, (a) conflict with or
result In a violation of (i) its Certificate of Incorporation or By-laws; (ii)
any judgment, order, writ, injunction, decree, statute, law, ordinance, rule or
regulation applicable to the Developer, or (iii) Applicable Laws; or (b)
conflict with, or result In or cause any material breach, violation of or
default under, any material contract, agreement, other Instrument, commitment,
arrangement or understanding to which the Developer is a party or which
otherwise applies to the Developer.
Section 9.06. No Consents Required. Except as expressly set forth in this
------------ --------------------
Agreement, no authorization, consent or approval of, or filing with or notice
to, any person (including any governmental authority or body) is required in
connection with the execution or delivery of this Agreement by the Developer.
Section 9.07. Financial Information. The financial information about the
------------ ---------------------
Developer submitted to the City, or submitted to the Gaming Commission as part
of the Application,
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is true, accurate and complete in all material respects and does not omit any
material facts necessary to make such information not misleading.
Section 9.08. No Material Non-Arm's-Length Transactions. Since the date of
------------ -----------------------------------------
the Response, the Developer has not entered into any transaction or agreement
with any Affiliate of the Developer on other than commercially reasonable terms
which transaction or agreement could have a materially adverse effect on the
Developer's ability to perform its obligations under this Agreement.
Section 9.09. No Litigation. There is no court, administrative, regulatory
------------ -------------
or similar proceeding (whether civil, quasi-criminal), arbitration or other
dispute settlement procedure, investigation or inquiry by any governmental body,
or any similar matter or proceeding (collectively, "proceeding") against or
involving the Developer or any Affiliate of the Developer (whether in progress
or to the best knowledge of the Developer threatened) which, if determined
adversely to the Developer or any Affiliate of the Developer would materially
adversely affect the Developer's business, property, financial condition or
prospects or Its ability to perform any of the provisions of this Agreement, or
which purports to affect the legality, validity or enforceability of this
Agreement; to the Developer's knowledge, no event has occurred which might give
rise to any such proceedings; and there is no judgment, decree, injunction,
rule, award or order of any governmental authority or body outstanding against
the Developer or any Affiliate of the Developer which has or may have a material
adverse affect on the Developers business, property, financial condition or
prospects.
Section 9.10. All Material Information Supplied. In the materials filed
------------ ---------------------------------
with the City, and in the materials filed with the Gaming Commission, the
Developer has provided to the City all material information requested by the
City relating to the financial condition, organization, management, business and
prospects (including forecasts and budgets) of the Developer, the Affiliates of
the Developer and the Project. All such information provided is true, accurate
and complete in all material respects and when submitted did not omit any
material fact necessary to make such information not misleading and since such
information was submitted and through the date of execution of this Agreement by
the Developer and the City there have been no material changes which have not
been disclosed to the City in writing.
Section 9.11. Taxes. The Developer has (a) delivered or caused to be
------------ -----
delivered all necessary tax returns to all appropriate governmental authorities
and bodies; (b) paid and discharged all taxes payable by it; and (c) withheld
and collected all taxes to be withheld and collected by it and remitted such
taxes to the appropriate governmental authority or body; provided, however, that
(i) none of the foregoing shall apply as to any taxes if (A) it is being
actively and diligently contested in good faith by appropriate proceedings; (B)
reserves considered adequate by the Developer and its accountants shall have
been set aside; and (C) such taxes shall not have resulted in a lien, all
enforcement proceedings have been stayed and appropriate security shall have
been given, if required, to prevent the commencement or continuation of
proceedings; and
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(ii) no violation of this representation and warranty shall constitute a default
under this Agreement unless such violation has a materially adverse affect on
the Developer's ability to perform its obligations under this Agreement. As far
as the Developer is aware, there is no assessment, appeal or claim being
asserted or processed with respect to such taxes that could in any case have a
materially adverse effect on the Developer's ability to perform its obligations
under this Agreement.
Section 9.12. Financial Capacity To Complete Project. As of the date
------------ --------------------------------------
hereof, the Developer has sufficient assets or has otherwise secured all
financing necessary to carry out and complete its obligations under this
Agreement. The Developer shall make available for inspection to representatives
of the City, under such conditions of confidentiality as may be appropriate,
such evidence as to the truth and accuracy of the foregoing representation and
warranty as is reasonably satisfactory to the City.
Section 9.13. Survival of Representations and Warranties. The Developer
------------ ------------------------------------------
covenants that the representations and warranties made by it in this Agreement
shall be true and correct on each day that this Agreement remains in full force
and effect, with the same effect as if such representations and warranties had
been made and given on and as of such day; except that d any such representation
and warranty is specifically given in respect of a particular date or particular
period of time and relates only to such date or period of time, then such
representation and warranty shall continue to be given only as of such date or
for such period of time.
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ARTICLE X
---------
HAMMOND PORT AUTHORITY PROVISIONS
---------------------------------
Section 10.01. Entry into Port Agreement. The City shall use its best
------------- -------------------------
efforts to cause the Port Authority to enter into the Port Agreement with the
Developer. The Port Agreement shall be in a form and content agreed to by the
Port Authority and the Developer.
Section 10.02. Refinancing of Bonds. The Developer agrees to cooperate
------------- --------------------
with the City and the Port Authority to refinance the certificates of
participation issued and outstanding pursuant to the Trust Indenture in the
event the City and the Port Authority determines to refinance such certificates
of participation; provided, that the refinancing will not create any additional
financial burden to the Developer or result in material cost or expense to the
Developer.
Section 10.03. Passenger Payment. Commencing with the calendar year or
------------- -----------------
partial calendar year in which the Boat is placed in operation, and continuing
for each succeeding calendar year or partial calendar year of the Term
thereafter, the Developer shall pay to the Port Authority an annual passenger
payment ("Passenger Payment") in an amount equal to One Dollar ($1.00)
multiplied by the number of passengers that enter and exit the Boat during such
calendar year or partial calendar year ("Embarking Passengers"). For purposes
of this Section 10.03, the number of Embarking Passengers shall be determined in
the same manner that the number of persons is determined for purposes of
computing the admission tax imposed upon licensed owners pursuant to IC 4-33-12-
1, et seq. The terms and conditions of the Passenger Payment described in this
Section 10.03 are set forth in greater detail In the Port Agreement and in any
event shall replace and supersede the per capita embarkation fee set forth in
Section 2.03(b) of the Lease Agreement dated as of February 9, 1993, by and
between the Port Authority and the Developer.
Section 10.04. Slip Fees. The Developer shall pay the "Slip Rentals" as
------------- ---------
contemplated by paragraph 5(b) of the Memorandum of Understanding and Consent
between the Port Authority and DMS dated October 13, 1995, In accordance with
paragraph 2 of the Agreement Respecting the S/S Milwaukee Clipper dated March
20, 1996, by and between the Developer and the Port Authority.
Section 10.05. Marina Payments. The Developer shall pay to the Port
------------- ---------------
Authority, for deposit with the Trustee, any and all certified shortfalls, if
any, from time to time in the debt service owed and payable for the certificates
of participation issued and outstanding pursuant to the Trust Indenture;
provided, that the Developer shall have no obligation to pay (i) any amounts
which may be necessary to cure any other default under the Trust Indenture or
(ii) any shortfall created as a result of any payment of or portion of the
Passenger Payment to the Water Department by the Port Authority. The terms and
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conditions of the payment of all such certified shortfalls for the time period
beginning on the execution of this Agreement by the Developer and the City and
continuing thereafter are set forth in greater detail in the Port Agreement. Any
payment made by the Developer prior to the execution of this Agreement by the
Developer and the City pursuant to Section 4(l) of the Letter of Intent shall be
credited against the obligations of the Developer to make the Annual Payment
pursuant to Section 5.01 of this Agreement, provided, that, except as
hereinafter provided, the amount credited against the obligations of the
Developer to make the Annual Payment pursuant to this Section 10.05 shall not
exceed ten percent (10%) of any such installment without the prior written
approval of the City; provided further, that, except as hereinafter provided,
the aggregate amount credited against the obligations of the Developer to make
the Annual Payment pursuant to Sections 4.11, 5.02 and 10.05 of this Agreement
shall not exceed twenty percent (20%) of any such installment without the prior
written approval of the City; and provided further, that the Developer' shall be
entitled to increase the amount credited against future installments of the
Annual Payment pursuant to this Section 10.05 to one hundred percent (100%) of
any such installment from and after the first anniversary of the execution of
this Agreement by the Developer and the City until the Developer has received
credits against the Annual Payment equal to the total of all payments made by
the Developer prior to the execution of this Agreement by the Developer and the
City pursuant to Section 4(l) of the Letter of Intent.
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ARTICLE XI
----------
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE CITY
-------------------------
The City makes the following representations and warranties, which
representations and warranties are true and correct on the date hereof, and
makes the following covenants and agreements:
Section 11.01. Power and Authority. The City has all requisite corporate
------------- -------------------
power and authority to enter into this Agreement and, subject to Section 11.09
hereof, to perform Its obligations under this Agreement.
Section 11.02. Due Authorization. Subject to Section 1 1.09 hereof and
------------- -----------------
except as otherwise set forth herein, all acts and other proceedings required to
be taken by the City to authorize the execution, delivery and performance of
this Agreement have been duly and property taken.
Section 11.03. Due Execution. Subject to Section 11.09 hereof, this
------------- -------------
Agreement has been duly executed and promptly delivered by the City and
constitutes the valid and binding obligation of the City, enforceable against it
in accordance with this Agreement's terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights generally heretofore or hereafter enacted; (ii) the exercise of judicial
discretion In accordance with the general principles of equity; (iii) the valid
exercise of the constitutional powers of the City, the State and the United
States of America; and (iv) public policy of the State and the United States of
America.
Section 11.04. No Violation. The execution and delivery of this
------------- ------------
Agreement by the City does not, and the consummation by the City of the
transactions contemplated hereby and compliance by the City with the terms
hereof will not:
(a) conflict with or result in a violation of (i) any provision of any
instrument governing the City (including, without limitation, the State
Constitution, any City, and any state enabling legislation) or (ii) any
judgment, order, writ, injunction, decree, statute, law, ordinance, rule or
regulation applicable to the City; or
(b) conflict with or result in or cause any material breach, violation of
or default under any material contract, agreement, other instrument, commitment,
arrangement, or understanding, or grant to which the City is a party or which is
otherwise applicable to the City, including, without limitation, the terms of
all bond indentures, resolutions or other similar documentation, arising from or
in any way related to the planning, development, construction and maintenance of
the Project.
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Section 11.05. Operation of Project. There is no law, ordinance,
------------- --------------------
regulation or rule of the City enacted or, to the best knowledge of the City,
proposed, that would prohibit the Developer from fully utilizing the Project on
a 24-hours-a-day, seven-days-a-week basis in the manner currently contemplated.
Section 11.06. No Consents Required. Except as expressly set forth or
------------- --------------------
referenced elsewhere In this Agreement, no authorization, consent or approval
of, or filing with or notice to, any person (including any governmental
authority or body) is required in connection with the execution or delivery of
this Agreement by the City.
Section 11.07. No Litigation. There is no proceeding (as defined in
------------- -------------
Section 9.09) against or involving the City (whether in progress or to the best
of knowledge of the City threatened) which, if determined adversely to the City
would materially adversely affect its ability to perform any of the provisions
of this Agreement or which purports to affect the legality, validity and
enforceability of this Agreement, to the City's knowledge, no event has occurred
which might give rise to any proceeding; and there is no judgment, decree,
Injunction, rule, award or order of any governmental body outstanding against
the City which has or may have a material adverse affect on its ability to
perform any of the provisions of this Agreement or which purports to affect the
legality, validity and enforceability of this Agreement.
Section 11.08. Support of Developer. (a) Except as hereinafter provided in
------------- --------------------
this Section 11.08 and for so long as the Developer is (i) not in default of its
obligations hereunder, (ii) maintains the License in good standing; (iii)
operates the Project in a reasonable and prudent manner in accordance with the
requirements of the Gaming Commission and consistent with established practices
in the gaming industry; and (iv) has not provided the City with notice of the
Developer's determination not to seek to renew or extend the License in
accordance with Article XVII hereof, the City:
(A) shall not induce, solicit, encourage, attract or support the efforts of
any other party to engage in riverboat gaming activities in Hammond,
Indiana, or enter into any agreement with any other parties which
contemplates the conduct of riverboat gaming activities by such
parties; and
(B) shall support the Developer in Its efforts to renew or extend the
License.
(b) If the Developer and the City determine that it is in the best interest
of the Developer and the City to operate a second riverboat at the Project, then
the Developer shall utilize its best and diligent efforts to obtain a license to
operate a second riverboat at the Project, with such efforts to include, without
limitation, seeking appropriate legislative and administrative authority and
approvals for such license to be held by and in the name of the Developer.
(c) Notwithstanding the foregoing provisions of this Section 11.08, in the
event that an additional riverboat owner's license (in addition to the License)
is legally permitted
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under the Act to be awarded for a riverboat to be operated from Hammond, or
"Additional License"), and the Developer is not legally permitted to obtain such
Additional License or the Developer is legally permitted to obtain such
Additional License but does not actively seek such Additional License, then the
City shall not be prohibited from endorsing or supporting another entity
pursuing such Additional License or entering into an agreement with another
entity regarding the operation of a riverboat gaming operation from Hammond,
Indiana.
(d) In the event that an Additional License is legally permitted and the
Developer is legally permitted to obtain the Additional License and for as long
as the Developer actively seeks the Additional License, the City shall support
the Developer in Its efforts to obtain the Additional License.
(e) The City and the Developer agree that it is in the best interest of the
parties that they create circumstances to maximize the gross and net revenues
from the Project within the parameters set forth in this Agreement. In that
regard, to the extent permitted by Applicable Laws, the City agrees not to
support any law, ordinance or resolution that would relate or In practical
effect apply solely to the Developer and have a material adverse impact on the
Developer's ability to attract patrons to the Project or maintain its
profitability. In addition, to the extent permitted by Applicable Laws, the City
shall not hereafter support any law, ordinance or resolution that would allow an
adult entertainment use, a recycling facility, a waste incinerator, a hazardous
or special waste handling or storage facility, a sanitary landfill, a penal or
criminal institution, a halfway house or a similar facility for convicted
criminals, an auto wrecking or junkyard facility, a scrap processing facility, a
sewer disposal facility to operate on real estate located within the area that
is located In the City and North of 129th Street. The City shall use reasonable
efforts to provide the Developer with written notice of any request that the
City receives after the date of the execution of this Agreement by the Developer
and the City for a zoning change or other land use approval that would allow any
such use within such area.
Section 11.09. Legal Conditions Precedent to City and Redevelopment
------------- ----------------------------------------------------
Commission Obligations. The Developer acknowledges that the City and the
- ----------------------
Redevelopment Commission must take future actions to implement various
obligations of each party under this Agreement; that the representations,
covenants and agreements of the City and the Redevelopment Commission hereunder
are subject to and contingent upon compliance with and completion of any and all
applicable statutory procedures, including, without limitation, those set forth
on Exhibit I, attached hereto and incorporated herein.
Section 11.10. Survival of Representations and Warranties. The City
------------- ------------------------------------------
covenants that the representations and warranties made by ft In this Agreement
shall be true and correct on each day that this Agreement remains in force and
effect, with the same effect as if such representations and warranties had been
made and given on and as of such day; except that if any such representation and
warranty is specifically given in respect
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of a particular date or particular period of time and relates only to such date
or period of time, then such representation and warranty shall continue to be
given only as of such date or for such period of time.
Section 11.11. Eminent Domain. To the extent permitted by Applicable Laws,
------------- --------------
during the term of this Agreement, the City shall not utilize any power of
eminent domain or of the sovereign to take from the Developer any of its rights
in the Redevelopment Parcel.
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ARTICLE XII
-----------
AFFIRMATIVE COVENANTS OF THE DEVELOPER
--------------------------------------
The Developer covenants and agrees as follows:
Section 12.01. Conduct of Business. The Developer shall do or cause to be
------------- -------------------
done all things necessary or desirable to maintain its corporate existence (and
maintain such corporate existence) and maintain its qualifications to do
business in the State, to maintain its organizational power and capacity to own
its properties and assets and to carry on its businesses in a commercially
reasonable manner in accordance with normal Industry standards.
Section 12.02. Compliance with Applicable Laws, Sublease, and Contracts.
------------- --------------------------------------------------------
The Developer shall comply in all material respects with the requirements of (i)
all Applicable Laws, including but not limited to the Act and any regulations
adopted by the Gaming Commission, (ii) the Sublease, (iii) the Port Agreement,
and (iv) the Water Department License. In addition, the Developer shall comply
in all material respects with all obligations, Insurance policies and contracts
to which it Is a party and which, if contravened, could have a material adverse
effect on the Developer's business, property, financial condition or prospects
and its ability to perform its obligations under this Agreement.
Section 12.03. Payment of Taxes and Claims. The Developer shall (i) pay
------------- ---------------------------
and discharge all lawful claims for labor, material and supplies; (ii) pay and
discharge all taxes payable by it; and (iii) withhold and collect all taxes
required to be withheld and collected by it and remit such taxes to the
appropriate governmental body at the time and in the manner required; provided,
however, that no such claim or taxes need be paid, collected or remitted it (A)
it is being actively and diligently contested in good faith by appropriate
proceedings; (B) reserves considered adequate by the Developer and its
accountants shall have been set aside; and (C) such claim or taxes shall not
have resulted in a lien and all enforcement proceedings have been stayed and
appropriate security shall have been given, if required, to prevent the
commencement or continuation of proceedings.
Section 12.04. Site Visit. Except to the extent prohibited by Applicable
------------- ----------
Laws or as may be necessary to protect the Developer's proprietary information,
the Developer shall permit the City and its authorized employees,
representatives and agents: (i) upon giving at least 24 hours' prior notice, to
visit and inspect the Gaming Facilities during normal business hours and to
discuss with the Developer's senior management the current and future operation
and financial results of the Project.
Section 12.05. Notice of Developments Affecting the Representations and
------------- --------------------------------------------------------
Warranties. The Developer shall, as soon as practicable after it shall become
- ----------
aware of the same, give notice to the City of any development that, if it
existed as of the date
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hereof, would make any of its representations and warranties in Article IX of
this Agreement untrue or inaccurate in any material respect.
Section 12.06. Financial and Other Information.
------------- -------------------------------
(a) The Developer shall provide copies to the City, without charge, of (i)
all materials, excepting confidential materials, submitted to or filed with the
Gaming Commission and pertaining to the various Developer payments to the City
or obligations on behalf of the City set forth in Article V hereof; (ii) all
other non-confidential materials submitted to or filed with the Gaming
Commission; and (iii) all materials submitted to or filed with the Securities
and Exchange Commission; within seven (7) days after submission or filing of
such materials.
(b) Until Final Completion of the Project, immediately after receiving
written request from the City, the Developer shall provide copies of any and all
maps, drawings, surveys, title insurance commitments and/or policies,
environmental and other reports, or any other document relating to the
construction, development, or operation of the Project.
(c) To the fullest extent permitted by law, the City shall preserve the
confidentiality of all written materials submitted to the City and clearly
designated as "confidential" by the Developer.
Section 12.07. Certificate of Suitability. The Developer shall comply with
------------- --------------------------
all of the terms and conditions of the Certificate awarded by the Gaming
Commission as if such provisions were material provisions of this Agreement.
Section 12.08. Maintenance. The Developer, at its sole expense, shall
------------- -----------
provide cleaning and maintenance services consisting of debris and trash pickup,
street cleaning and snow removal for the Redevelopment Parcel, including,
without limitation, all streets, sidewalks parking areas and other areas located
on or within the real estate and real estate interests that comprise the
Redevelopment Parcel. Cleaning and maintenance of streets, sidewalks, parking
areas and other public areas belonging to the City shall be subject to the
supervisory approval of the City. It is acknowledged by the Developer that the
success of the entire development contemplated by this Agreement on a long-term
basis mandates high standards of maintenance normally and customarily applicable
in each industry contemplated by this Agreement. Each component of the
Redevelopment Parcel shall be maintained in such manner.
Section 12.09. Vendors and Suppliers. Contingent In each case upon the
------------- ----------------------
ability of any vendor or supplier to provide in timely fashion at competitive
prices the quantity and quality of materials or goods the Developer requires,
the Developer shall use its best reasonable efforts to procure goods and
services, during the operation of the Boat and Guest Facilities after
Substantial Completion and Final Completion, from vendors and suppliers having a
principal place of business in the City. Such "best reasonable efforts" shall
mean things such as periodic and regular vendor and supplier fairs, regular
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published notices of construction and procurement opportunities, and a public
designation of the person or persons employed by the Developer responsible for
and responsive to the obligations of the Developer under this Section 12.09.
The Developer agrees to maintain a record of all relevant data with respect to
compliance with this Section 12.09 and to provide to both the Mayor and the
Common Council, no less frequently than monthly until Final Completion of the
Project and, thereafter, no less frequently than semiannually, such information
set forth in Schedule 11 attached hereto and incorporated herein by this
reference with respect thereto.
Section 12.10. Marketing. The Developer shall work with the City and its
------------- ---------
merchants in developing a marketing plan to promote the tourism and hospitality
industry in the City.
Section 12.11. Gambler's Addiction Program. The Developer shall establish
------------- ---------------------------
a gambling addiction behavior program or cause a gambling addiction behavior
program to be established.
Section 12.12. Employment and Wages Following Construction. The Developer
------------- -------------------------------------------
agrees to provide opportunities for jobs for residents of the City, the County
and other areas of the State. To such end, the Developer reasonably expects
that at least one thousand two hundred (1,200) new jobs will be created by
November 1, 1996, as a result of the operation of the Project, which one
thousand two hundred (1,200) new jobs shall have an average annual wage
(including gratuities and benefits) for full-time jobs of approximately Thirty
Thousand Dollars ($30,000), and at least seventy-five percent (75%) of such one
thousand two hundred (1,200) new jobs will qualify for the benefits provided to
full-time employees. To such end, the Developer also has established goals to
hire at least seventy-five percent (75%) of its employees for the Project as of
the first anniversary of the Commencement Date from qualified residents of the
following designated areas, giving preference in the following order first, the
City; second, the County; and third, other areas of the State; and to hire at
least fifty percent (50%) of its employees for the Project as of the first
anniversary of the Commencement Date from residents of the City. To such end,
the Developer shall use reasonable efforts to hire qualified and competent
management personnel at customary compensation levels for such positions for the
Project In accordance with the preferences stated above. The Developer shall, at
its sole expense, conduct at least one "job fair" to be held in Hammond,
Indiana, at which representatives of the Developer and the City shall be present
to discuss opportunities for employment at the Project. The City and the
Developer shall be co-sponsor of any such job fairs. The Developer shall, at its
sole expense, provide casino training for potential casino employees from the
County so as to enable them to qualify for casino employment at the Project, and
for that purpose shall open a casino training school within the City of Hammond,
Indiana. The Developer agrees to maintain a record of all relevant data with
respect to compliance with this Section 12.12 and to provide to both the Mayor
and the Common Council, no less frequently than monthly until Final Completion
of the Project and, thereafter, no less
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frequently than semi-annually, the information set forth in Schedule III
attached hereto and incorporated herein by this reference with respect thereto.
Section 12.13. Boat Safety Provisions and Emergency Preparedness. The
------------- -------------------------------------------------
Developer shall provide adequate fire and casualty measures for the safety of
the Developers passengers on the Boat consistent with applicable U.S. Coast
Guard requirements. Prior to the opening of the Project or operation of the
Boat, the Developer shall develop and implement, in consultation with the City
and other relevant governmental authorities, an emergency preparedness and
disaster response plan that complies with all provisions of Applicable Laws as
to operation of the Project (including, without limitation, operation of the
Boat).
Section 12.14. Title Insurance and Surveys. The Developer, at its cost
------------- ---------------------------
and expense, has provided the City with title insurance commitments for ALTA
owner's policies of title insurance issued by Chicago Title Insurance Company
covering and insuring title to the Overpass Premises, NIPSCO Parcel Bl, NIPSCO
Parcel B2, NIPSCO Parcel 32, NIPSCO Parcel 35, NIPSCO Overpass Parcels, NIPSCO
Railway Parcel, Redevelopment Parcel, EJ&E Parcels, and CSX Parcel 6. The
Developer shall, simultaneously upon the conveyance of NIPSCO Parcel Bl, NIPSCO
Parcel B2, NIPSCO Parcel 32, NIPSCO Parcel 35, NIPSCO Overpass Parcels and
NIPSCO Railway Parcel, pay (or cause NIPSCO to pay) all premiums required to
cause Chicago Title Insurance Company to issue ALTA owners policies of title
insurance to the grantees, in such amounts, subject to such exceptions and with
such endorsements as are reasonable under the circumstances. The Developer, at
its cost and expense and within ninety (90) days after the execution of this
Agreement, shall provide the City with surveys of NIPSCO Parcel B1, NIPSCO
Parcel B2, NIPSCO Parcel 32, NIPSCO Parcel 35, NIPSCO Accretion Parcel, NIPSCO
Overpass Parcels and NIPSCO Railway Parcel, conforming to the Minimum Standard
Detail Requirements for Indiana Land Title Surveys, certified as of a current
date by an Indiana registered land surveyor acceptable to the City and in all
other respect acceptable to the City.
Section 12.15. Operation. Commencing on the Commencement Date and at all
------------- ---------
times thereafter that the Developer holds the License, the Developer shall
operate the Gaming Facilities and its business therein in a first class manner
and maintain operating hours that are commercially reasonable and customary in
the riverboat gaming industry.
Section 12.16. Maintenance of License. The Developer shall take all
------------- ----------------------
actions, and not fall to take any actions, required to maintain the License in
effect at all times during the term of the License.
Section 12.17. Non-Competition. The Developer shall comply with the
------------- ---------------
Declaration of Non-Competition dated November 2, 1995, delivered to the Gaming
Commission, and the Developer shall cause each signatory to the Declaration of
Non-Competition to comply therewith. The Developer will not make application to
the Gaming Commission for, or
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seek the issuance of, a license for riverboat gaming operations with respect to
any location other than the Hammond Marina location contemplated hereunder.
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ARTICLE XIII
------------
NEGATIVE COVENANTS OF THE DEVELOPER
-----------------------------------
The Developer covenants and agrees as follows:
Section 13.01. Limit on Developer Assignment or Reorganization. The
------------- -----------------------------------------------
Developer shall not assign, sell, transfer or convey this Agreement or any
interest herein (a "Transfer") without the prior written consent of the Gaming
Commission; provided, that in no event shall the Developer assign, sell,
transfer or convey this Agreement or any interest herein to any person or entity
that does not hold a License in accordance with the Act; and provided further,
that the Developer shall not Transfer this Agreement to any person or entity
that has not executed a written assignment and assumption agreement whereby the
Developer's obligations under this Agreement, the Sublease, the Port Agreement
and the Water Department License are assigned to and assumed by such person or
entity upon terms reasonably acceptable to the City, the Commission, the Port
Authority and the Water Department. Any assignment or transfer by operation of
law (voluntary or involuntary), merger, conversion or reorganization, any
assignment or transfer to a receiver or trustee in any federal or state
bankruptcy, insolvency or other proceeding or any change in control of the
Developer or of any entity controlling the Developer shall constitute a Transfer
for purposes of this Agreement. For purposes of this Section 13.01, "control"
means the power to direct the management and policies of the Developer, directly
or indirectly, whether through the ownership or control of fifty percent (50%)
or more of the shares or other equity or beneficial Interest or power to vote
the same, or by the partnership or trust agreement or other instrument or
contract or otherwise; and the term "controlling" has the meaning correlative to
the foregoing. The Developer shall provide the City with at least one hundred
twenty (120) days' written notice prior to malting any request to the Gaming
Commission to make a Transfer and provide the City with a reasonable opportunity
to present b position (including allocation of time to the City In any
presentation or public hearing before the Gaming Commission) concerning any such
request to the Gaming Commission. The Developer shall not mortgage, pledge,
hypothecate, collaterally assign or otherwise encumber this Agreement.
Section 13.02. Prohibited Activities. The Developer shall not engage in
------------- ---------------------
any activities which may result In the License being suspended or revoked.
Section 13.03. Substitution of Boat. The Developer shall not
------------- --------------------
substantially after or substitute for the Boat without the prior written consent
of the Gaming Commission. The Developer shall provide the City with at least
ninety (90) days' written notice prior to making any request to the Gaming
Commission to substantially after or substitute for the Boat and provide the
City with a reasonable opportunity to present its position (including allocation
of time to the City in any presentation or public hearing before the Gaming
Commission) concerning any such request to the Gaming Commission.
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ARTICLE XIV
-----------
AFFIRMATIVE COVENANTS OF THE CITY
---------------------------------
The City covenants and agrees as follows:
Section 14.01. Further Support. From and after the issuance of the License
------------- ---------------
to the Developer, and subject to the provisions of Section 11.09 and Section
18.03 of this Agreement, the Mayor shall, to the extent permitted by Applicable
Laws, support the Developer in its efforts to obtain all changes in zoning and
to obtain (and keep in full force and effect during the Term) other regulatory
or governmental approvals, licenses, and permits required for the performance of
the Work and the acquisition, construction, equipping and operation of the
Project by the Developer.
Section 14.02. Notice of Developments Affecting Representations and
------------- ----------------------------------------------------
Warranties. The City shall, as soon as practicable after it shall become aware
- ----------
of the same, give notice to the Developer of any development that, if it existed
as of the date hereof, would make any of its representations and warranties in
Article XI untrue or inaccurate in any material respect.
Section 14.03. Additional Burden. In the event that at any time during the
------------- -----------------
Term the State of Indiana, pursuant to new or amended public laws, statutes or
regulations, imposes additional taxes or fees upon the Developer solely related
to or because of its gaming activities or assets, Including but not limited to
increases in the admission taxes under IC 4-33-12 or In the wagering taxes under
IC 4-33-13, then the City shall consult with the Developer regarding the effect
of the imposition of such additional taxes or fees upon the Developer.
Notwithstanding the foregoing, the City shall not be obligated to modify or
amend any of the terms of this Agreement, Including specifically the payments to
be made by the Developer to the City set forth in Article V hereof.
Section 14.04. Empress Drive and Address. Subject to Section 11.09
------------- -------------------------
hereof, the City shall (a) support the naming of the Overpass as "Empress Drive"
for so long as this Agreement is in full force and effect and (b) support the
address of 0825 Empress Driven for the Guest Facilities.
Section 14.05. Waterworks Parcel. The City shall use reasonable efforts
------------- -----------------
to cause the Water Department to (a) enter into an agreement with the Developer
for the licensing or leasing of the property located adjacent to the
Redevelopment Parcel that is depicted and/or described as the Maintenance Area
on Exhibit B attached hereto (the maintenance Areas).
Section 14.06. City Services. Upon the request of the Developer, the City
------------- -------------
agrees to provide services to it Project that it provides to other businesses
located in the City upon the same terms and conditions and at the same charge
that it provides such services to such other businesses. The City shall not
assess or charge the Developer
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for utilities, tap-in rights, hook-ups, refuse
pick-up or any other charge for City services or City owned services which are
not consistent with the charges charged to any other business in the City.
Section 14.07. Litigation Cooperation. In the event that any litigation
------------- ----------------------
is filed to stop the Project or in the event that the Developer or an Affiliate
of the Developer files litigation against a third party to facilitate the
completion of the Project (all such litigation is collectively referred to as
the "Litigation"), the parties shall, subject to the agreement of the parties as
to the terms and conditions of such cooperation, cooperate with each other to
facilitate a prompt resolution of such Litigation as soon as possible,
including, without limitation, sharing of information, consultation and
cooperation with each other concerning prosecution and settlement of the
Litigation.
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ARTICLE XV
----------
CONDITIONS PRECEDENT
--------------------
Section 5.01. Conditions Precedent. Notwithstanding anything to the
------------ --------------------
contrary herein, the Developer's performance of the Work and construction and
operation of the Project and payment of any amounts to the City, as provided
herein (except for such Performance, including, without limitation, the making
of any required payments, that is specifically contemplated to be undertaken
prior to the issuance of a License to the Developer), are expressly subject to
the issuance to the Developer of the License by the Gaming Commission.
Section 15.02. No Other Conditions Precedent. Except for the conditions
------------- -----------------------------
precedent set forth in Section 15.01, no other conditions shall release the
Developer from complying with the terms and conditions of the Agreement;
provided, however, that this Section 15.02 shall not be deemed or construed to
require continued performance of this Agreement in the event of an Event of
Default by the City as described in Section 16.06, or otherwise to relieve the
City from its obligations to comply with the provisions of this Agreement.
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ARTICLE XVI
-----------
DEFAULT AND REMEDIES
--------------------
Section 16.01. Events of Default. Each of the following events, if not
------------- -----------------
remedied as hereinafter provided, shall be deemed an "Event of Default":
(a) The occurrence of any event set forth in Section 16.04., as therein
provided; or
(b) The Developer's failure to pay any payment due hereunder when the same
becomes due, and the failure continues for ninety (90) days after receipt of
written notice thereof from the City; or
(c) An Event of Default by the Developer occurs under the Port Agreement;
or
(d) An Event of Default by the Developer occurs under the Sublease
Agreement; or
(e) A breach or default by the Developer under the terms of the Water
Department License and the expiration of any applicable grace or cure period set
forth in the Water Department License; or
(f) The Developer's License shall either (a) have expired and not be
renewed and the Developer shall not have notified the City of its determination
not to renew or extend the License as and when required by Article XVII, or (b)
have been revoked and not reinstated after the earlier of (i) the exhaustion of
all appeals to the Gaming Commission by the Developer, or (ii) three (3) months
after initial revocation of the License; or
(g) The Developer's failure to perform any other covenant or agreement
herein on the Developer's part to be kept or performed which Is not an Event of
Default under paragraphs (a), (b), (c). (d), (e) or (o of this Section 16.01 and
the continuance of such failure for a period of thirty (30) days after notice in
writing to the Developer from the City specifying the nature of such failure.
Section 16.02. Extensions Upon Developer Default. If the City gives
------------- ---------------------------------
notice at any time of a default of a nature that cannot be cured within the
thirty (30) day period provided in Section 16.01 (g), then such default shall
not be deemed an Event of Default so long as the Developer, following notice
from the City, proceeds to cure the default as soon as reasonably possible and
continues to take all reasonable steps necessary to complete the same within a
period of time which, under all prevailing circumstances, shall be reasonable.
In addition, no Event of Default shall be deemed to have occurred if and so long
as the Developer shall be delayed in or prevented from curing the same within
the applicable cum period by Force Majeure Events.
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Section 16.03. City Remedies. Upon the occurrence of any Event of Default
------------- -------------
pursuant to subparagraphs (a), (b), (c), (d), (e) or (g) of Section 16.01, or at
any time thereafter so long as the same is not cured, the City may (a) cure any
such Event of Default and collect the cost thereof from the Developer upon
demand, (b) seek, obtain and enforce a Judgment for specific performance or
other declaratory relief against the Developer for the performance of any
agreement or covenant contained in this Agreement on the Developer's part to be
kept or performed where equitable relief is appropriate, and/or (c) seek, obtain
and enforce a judgment for monetary damages resulting from any such Event of
Default.
Upon the occurrence of any Event of Default under subparagraph (f) of
Section 16.01, or at any time thereafter, the City may, at its option and in
addition to and without prejudice to any other rights and remedies the City
shall have under this Agreement or at law or in equity, give to the Developer a
written notice of its election to terminate this Agreement upon a date specified
In such notice, which date shall be not less than fortyfive (45) days after the
date of delivery to the Developer of such notice by the City.
In addition to any and all other remedies of the City, the Developer
acknowledges that it shall be liable for substantial penalties, including
actual, consequential and punitive damages, In the event that the Developer
abandons the pursuit of the License or, after execution of this Agreement,
abandons the Project.
Section 16.04. Certain Events of Default Specified. If during the Term:
------------- -----------------------------------
(a) The Developer shall be adjudicated a bankrupt or adjudged to be
insolvent;
(b) A receiver or trustee shall be appointed for the Developer's property
and affairs, unless such appointment shall be vacated within ninety (90) days of
its entry;
(c) The Developer shall make an assignment for the benefit of creditors;
(d) A petition shall be filed proposing the adjudication of the Developer
as a bankrupt or insolvent or the reorganization of the Developer or an
arrangement by the Developer with its creditors whether pursuant to the United
States Bankruptcy Code or any similar federal or state proceedings, unless such
petition is filed by a party other than the Developer and is withdrawn or is
dismissed within ninety (90) days after the date of filing; or
(e) Any execution or attachment shall be issued against the Developer or
any of the Developer's property, whereby the Developer's property shall be taken
or occupied or attempted to be taken or occupied by someone other than the
Developer, unless such attachment is a prejudgment attachment that is set aside
within ninety (90) days after the issuance of the same;
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then, subject to Section 16.05, an Event of Default by the Developer
hereunder shall be deemed to have occurred so that the provisions of Sections
16.01, 16.02, 16.03 and 16.04 hereof shall have become effective.
Section 16.05. Preservation of Agreement Upon Certain Developer Defaults.
------------- ---------------------------------------------------------
Notwithstanding anything to the contrary contained in Sections 16.01, 16.02, or
16.03, upon the occurrence of an Event of Default by the Developer pursuant to
Section 16.04, then d all amounts due and payable hereunder shall continue to be
paid and the other covenants and agreements of this Agreement on the Developer's
part to be kept and performed shall continue to be kept and performed, no Event
of Default by the Developer shall be deemed to have occurred and the provisions
of Sections 16.01, 16.02, 16.03 and 16.04 shall not become effective.
Section 16.06. City Default. Each of the following events, if not
------------- ------------
remedied as hereinafter provided, shall be deemed an 'Event of Default' by the
City:
(a) The occurrence of any event set forth In Section 16.04(a), 16.04(b),
16.04(c) or 16.04(d) on the part of the City; or
(b) The City's failure to pay any payment required to be paid to the
Developer hereunder when the same becomes due, and the failure continues for
ninety (90) days after receipt of written notice therefrom from the Developer,
or
(c) The City failure to perform any other material covenant or agreement
herein on the City's part to be kept or performed which is not an Event of
Default by the City under Paragraphs (a), (b), (d) or (e) of this Section 16.06
and the continuance of such failure for a period of thirty (30) days after
notice in writing to the City from the Developer specifying the nature of such
failure; or
(d) An Event of Default by the Redevelopment Commission occurs under the
Sublease and the Sublease is terminated by the Developer, or
(e) An Event of Default by the Port Authority occurs under the Port
Agreement and the Port Agreement Is terminated by the Developer.
Section 16.07. Extensions Upon City Default. If the Developer gives
------------- ----------------------------
notice at any time of a default of a nature that cannot be cured within the
thirty (30) day period provided in Section 16.06(c), then such default shall not
be deemed an Event of Default by the City so long as the City, following notice
from the Developer, proceeds to cure the default as soon as reasonably possible
and continues to take all reasonable steps to complete the same within a period
of time which, under all prevailing circumstances, shall be reasonable. In
addition, no Event of Default by the City shall be deemed to have occurred if
and so long as the City shall be delayed in or prevented from curing the same
within the applicable cum period by Force Majeure events.
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Section 16.08. Developer Remedies. Upon the occurrence of any Event of
------------- ------------------
Default by the City pursuant to Section 16.06, or at any time thereafter so long
as the same is not cured, the Developer may (a) cure any such Event of Default
by the City and collect the costs thereof from the City upon demand, (b) seek,
obtain and enforce a judgment for specific performance or other declaratory
relief against the City for the performance of any agreement or covenant
contained in this Agreement on the City's part to be kept or performed where
equitable relief is appropriate, and/or (c) seek, obtain and enforce a judgment
for monetary damages resulting from any such Event of Default by the City;
provided, that the specific remedies under this Section 16.08 shall be the sole
and exclusive remedies of the Developer, and provided further, that the
Developer agrees not to offset any such costs or monetary damages against
amounts required to be paid by the Developer to the City under this Agreement
unless such costs and damages are reduced to a final judgment entered by a court
of competent jurisdiction.
Section 16.09. Preservation of Agreement Upon Certain City Defaults.
------------- ----------------------------------------------------
Notwithstanding anything to the contrary contained in Sections 16.06, 16.07 or
16.08, upon the occurrence of an Event of Default by the City pursuant to
Section 16.04(a), 16.04(b), 16.04(c) or 16.04(d) on the part of the City, then
if all amounts due and payable hereunder shall continue to be paid and the
other covenants and agreements of this Agreement on the City's part to be kept
and performed shall continue to be kept and performed, no Event of Default by
the City shall be doomed to have occurred and the provisions of Sections 16.06,
16.07 and 16.08 shall not become effective.
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ARTICLE XVII
------------
TERM OF AGREEMENT AND TERMINATION
---------------------------------
The term ("Term") of this Agreement, and its effectiveness, shall commence
upon execution of this Agreement by each of the parties hereto and shall
continue in full force and effect until the earlier of (a) the termination by
the City of this Agreement in accordance with and as provided in Article XVI, or
(b) the date that the License expires; provided, that in the event the Developer
determines not to renew or extend the License, the Developer shall so notify the
City in writing of any such determination on the earlier of (i) the date of such
determination by the Developer or (ii) one hundred twenty (120) days prior to
the expiration date of the term of the then-current License. The Developer
acknowledges that it shall be liable for substantial penalties, including
actual, consequential and punitive damages, in the event the License is not
renewed or extended and the Developer failed to provide the City with notice of
its determination not to renew or extend the License as and when provided by
this Article XVII.
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ARTICLE XVIII
-------------
MISCELLANEOUS
-------------
Section 18.01. No Agency, Partnership or Joint Venture. Nothing contained
------------- ---------------------------------------
in this Agreement nor any act of the City or the Developer, or any other person,
shall be deemed or construed by any person to create any relationship of third-
party beneficiary, or if principal and agent, limited or general partnership, or
joint venture between the City and the Developer.
Section 18.02. Negotiated Document. The Developer and the City acknowledge
------------- -------------------
that the provisions and the language of this Agreement have been negotiated at
arms, length and agree that no provision of this Agreement shall be construed
against either the Developer or the City by reason of either party having
drafted such provision of this Agreement.
Section 18.03. Compliance with Laws. The Developer and the City each
------------- --------------------
acknowledge that the obligations of the City described In this Agreement,
including without limitation any obligation to acquire property, or to sell,
lease or dispose of any interest in property owned by the City, may involve
certain and various legally required proceedings and/or approvals, and any and
all such obligations or undertakings of the City described herein are
accordingly subject to compliance with such proceedings and all other Applicable
Laws to which the City may be subject.
Section 18.04. Force Majeure Events. Notwithstanding anything contained
------------- --------------------
in this Agreement to the contrary, if the Developer or the City is delayed,
hindered, or prevented in the performance of any act or the achievement of any
deadline required under this Agreement (other than the payment of money) by
reason of fire, casualty, strikes, lockout, labor troubles, inability to procure
materials or supplies, failure of power, Gaming Commission or other governmental
authority, weather, riots, insurrection, war, or other reasons of like nature,
or failure of timely performance by or acts 'of the other party ("Force Majeure
Events"), and such delays, hindrances, or prevention of performance are not
within the reasonable control of the party obligated to perform, the party
affected by such delay shall promptly give notice thereof to the other parties
and thereupon performance of such act shall be excused for the period of delay
and/or such deadline extended for a period equal to the period of delay. Such
excusal and/or extension of time shall be, however, predicated upon the
Developer's (i) notifying the City in writing of the delays and reasons causing
the delay within thirty (30) days upon learning of the same by the Developer,
and (ii) taking all reasonable steps to avoid the delay and all reasonable steps
to remove and address the condition(s) causing the delay.
Section 18.05. Exhibits. All Exhibits identified in or attached to this
------------- --------
Agreement are incorporated herein and made part hereof by this reference.
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Section 18.06. Captions. The captions, headings and arrangements in this
------------- --------
Agreement are for convenience only and do not in any way define, limit or modify
the terms or provisions hereof.
Section 18.07. Number and Gender. Whenever the singular number is used in
------------- -----------------
this Agreement, the same shall include the plural where appropriate and words of
any gender shall include the other gender where appropriate.
Section 18.08. Notices. No notice, approval, consent or other
------------- -------
communication authorized or required by this Agreement shall be effective unless
the same shall be in writing. Any such communication shall be effective (i)
upon receipt if it is hand delivered, with signed receipt therefor obtained,
(ii) seventy two (72) hours after it is sent postage prepaid by United States
registered or certified mail, return receipt requested, (iii) twenty four (24)
hours after it is deposited with a national courier for overnight delivery, or
(iv) twenty four (24) hours after it is sent by telefax, with written
confirmation therefor obtained, directed or addressed in each case set forth in
(i) through (iv) above to the other party at its address (or telefax number) set
forth below.
The addresses and telefax numbers for notices are:
To the City: Mayor
City of Hammond
5925 Calumet Avenue
Hammond, Indiana 46320
Telefax No. 219-931-0831
President
Hammond Common Council
5925 Calumet Avenue
Hammond, Indiana 46320
Telefax No. 219-____________
To the Developer. Empress Casino Hammond Corporation
825 Empress Drive
Hammond, Indiana 46320
Attention: General Manager
Telefax No. 219-473-0388
Any party may, In substitution of the foregoing, designate a different address
and addresses (and/or telefax number or numbers) within the continental United
States for purposes of this Section by written notice delivered to all other
parties in the manner prescribed in this Section 18.08 at least ten (10) days in
advance of the date upon which such change of address is to be effective.
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Section 18.09. Prior Agreements: Entire Agreement. The Letter of Intent,
------------- ----------------------------------
the Supplemental Subscription dated September 2, 1993, and the Assurance
Agreement of September 21, 1993, are expressly merged into this Agreement and
are terminated and have no further force or effect. The Developer and the City
acknowledge and agree that (a) there are no oral proposals, understandings or
agreements between them, and (b) all prior oral proposals, understandings and
agreements between the Developer and the City are set forth in written documents
executed by the Developer and the City, and (c) the obligations of the Developer
and the City hereunder represent all of the respective obligations between them
and neither party shall be bound as against the other to perform additional
obligations hereunder. The City shall not seek from the Developer any
additional obligations, including but not limited to financial obligations, with
respect to the Project not expressed in this Agreement. This Agreement
constitutes the entire agreement of the parties hereto with rasped to the
subject matter hereof, except as may otherwise be expressly provided herein.
This Agreement may not be modified or amended except by a written instrument
signed by the Mayor, the Developer and the Redevelopment Commission.
Section 18.10. Survival. All representations, warranties and indemnities
------------- --------
set forth in this Agreement shall survive the execution and termination hereof.
Section 18.11. Counterparts. This Agreement may be executed in a number
------------- ------------
of identical counterparts and, if so executed, each such counterpart is deemed
an original for all purposes, and all such counterparts shall collectively
constitute one Agreement.
Section 18.12. Binding Effect. The rights of the Developer and the City
------------- --------------
under this Agreement shall inure to the Developer and the City, respectively,
and upon their respective successors and permitted assigns. The obligations of
the Developer and the City under this Agreement shall be binding upon the
Developer and the City, respectively, and on their respective successors and
permitted assigns. However, the respective obligations of the Developer and the
City under this Agreement shall not extend to their shareholders, officers,
directors, office holders, employees, agents, consultants, contractors, members,
partners, joint venturers or Affiliates of the Developer.
Section 18.13. Time of the Essence. Time is of the essence in the
------------- -------------------
performance of this Agreement and each and every provision contained herein.
Section 18.14. Costs of Proceedings. In the event of the institution of
------------- --------------------
any proceeding relating to the performance of this Agreement, the parties agree
that costs and expenses, including reasonable attorneys' fees and expenses,
incurred by the prevailing party (as defined herein) in connection with such
proceeding, will be paid or reimbursed by the non-prevailing party. For
purposes of this Section, "prevailing party" shall be defined as (i) the party
which ultimately is awarded an amount (net of any offsets or counterclaims
awarded to
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the other party) in excess of the last settlement offer made in writing by the
other party, or (ii) the party which made the last settlement offer in writing,
the amount ultimately awarded (not of any offsets or counterclaims awarded to
the other party) is less than such last settlement offer, or (iii) the party
which ultimately is awarded an amount, regardless of sum, if no settlement offer
was ever made in writing by the other party, or (iv) d no amount is awarded, but
instead equitable relief is granted, the party in whose favor such equitable
relief is granted.
Section 18.15. Severability. If and in the event any provision of this
------------- ------------
Agreement is determined to be invalid for any reason, it shall be severed and
all other provisions not determined invalid shall continue with full force and
effect; provided, however, that if (i) such declaration of Invalidity relieves a
party of a material obligation to the other, or eliminates a material benefit to
a party, and (ii) the effect of either of the foregoing is to deprive the other
party of substantially all of the benefits to such party of the transactions
contemplated by this Agreement, then the adversely affected party shall have the
right to terminate this Agreement, by giving notice of such termination to the
other party.
Section 18.16. Non-Waiver. No failure by either party hereto, at any
------------- ----------
time, to require the performance by the other of any term of this Agreement,
shall in any way affect the right of either party to enforce such terms, nor
shall any waiver by either party of any term hereof be taken or held to be a
waiver of any other provision of this Agreement. No waiver of any term or
provision of this Agreement shall be effective unless the same is in writing,
signed by the parties hereto.
Section 18.17. Governing Law. This Agreement is entered into in the State
------------- -------------
of Indiana and shall be governed by and construed (and all of the rights and
obligations hereunder shall be determined) in accordance with the internal laws
of the State of Indiana, without reference to the choice of law principles
thereof.
Section 18.15. No Third-Party Beneficiaries. Nothing in this Agreement
------------- ----------------------------
shall be construed as creating any rights of entitlement that inure to the
benefit of any person or entity not a party of this Agreement, other than the
City Indemnified Parties solely with respect to the provisions of Article XX
hereof and the Port Authority and the Water Department solely with to the
provisions of Section 8.19 hereof.
Section 18.19. Jurisdiction and Consent to Suit. Subject to the
------------- --------------------------------
provisions of Article XIX, each of the City and the Developer hereby agrees and
consents to be subject to the exclusive personal and subject matter jurisdiction
of the Circuit or Superior Court of Lake County, Indiana, in connection with any
claim, cause of action or other dispute by either of them against the other
arising out of or relating to the terms, obligations and conditions of this
Agreement,, provided, however, that each party shall retain any rights it may
have under Applicable Laws then in effect to so& a change of judge in any
proceeding before such designated Court. The City covenants that it shall not
assert in any such action, as a defense to any claim by the Developer for breach
or violation by the City of this Agreement, any defense of sovereign or
governmental immunity to which the City might otherwise claim to be entitled
under Applicable Laws then in effect.
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Section 18.20. Confidentiality. The parties acknowledge that the Agreement
------------- ---------------
shall be subject to public disclosure under the laws of the State, if, as and
when it is executed and becomes effective.
Section 18.21. Standards for Consent. Where any provision of this
------------- ---------------------
Agreement requires the consent or approval of either party, each party agrees
that it will not unreasonably withhold, condition, or delay such consent or
approval, except as otherwise expressly provided in this Agreement, and the
reasonableness of each party's determination shall be evaluated in accordance
with any particular standards governing such particular consent or approval as
expressly set forth in this Agreement, or if no standards are expressly set
forth, then in accordance with all relevant facts and circumstances. Where any
provision of this Agreement requires one party to do anything to the abstraction
of the other party, the other party agrees that it will not unreasonably refuse
to state its satisfaction with such action. Any dispute over the reasonableness
of either party withholding or conditioning its consent or satisfaction shall be
resolved pursuant to Article XIX of this Agreement.
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ARTICLE XIX
-----------
DISPUTE RESOLUTION AND TERMINATION
----------------------------------
Section 19.01. Affirmative Dispute Resolution. If a dispute arises
------------- ------------------------------
between the Developer and the City relating to this Agreement, the Developer and
the City, to the fullest extent permitted by applicable law, agree to use the
following procedure to resolve the dispute:
(a) A meeting shall be held promptly between the parties, attended by
individuals with decision-making authority regarding the dispute, to attempt in
good faith to negotiate a resolution of the dispute;
(b) If, within fourteen (14) days after that meeting, the parties have not
succeeded in negotiating a resolution to the dispute, they hereby agree to
submit the dispute to mediation in accordance with the Commercial Mediation
Rules of the American Arbitration Association and to bear equally the costs of
the mediation,
(1) The parties will jointly appoint a mutually acceptable mediator,
seeking assistance in this regard from the American Arbitration Association
if they are unable to agree upon this appointment within twenty-one (21)
days from the conclusion of the negotiation period; and
(2) The parties agree to participate in good faith in the mediation
and negotiation related thereto for a period of thirty (30) days. If the
parties are not successful in resolving the dispute through the mediation,
the parties agree that, to the fullest extent permitted by law, the dispute
shall be settled by binding arbitration In accordance with the procedures
set forth below.
Section 19.02. Arbitration. If any dispute cannot be settled in
------------- -----------
accordance with the procedures set forth in Section 19.01 above, to the fullest
extent permitted by Applicable Laws, then:
(a) Any party may request arbitration of the dispute by giving the other
parties written notice that specifies the matter sought to be arbitrated and
designating a person to act as arbitrator, provided such person must be
independent and qualified as an arbitrator by the American Arbitration
Association.
(b) Within ten (10) business days after receipt of the notice described in
subparagraph a) above, the Developer or the City, as the case may be, shall send
written notice to the party requesting arbitration acknowledging the request for
arbitration and designating a second person lo act as arbitrator;
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(c) Within ten (10) business days after receipt of the notice described in
subparagraph (b) above of the second arbitrator, the two arbitrators, by mutual
agreement, shall designate a third arbitrator. If the time provided in
subparagraph (b) above expires before the written notice described in
subparagraph (b) is sent to the party requesting arbitration, the first
arbitrator shall designate the two additional arbitrators;
(d) Promptly after the third arbitrators designation, but in no event later
than thirty (30) days thereafter, at a date to be set by the arbitrators, an
arbitration hearing shall be held in Indianapolis, Indiana. The Commercial
Arbitration Rules of the American Arbitration Association shall apply at the
arbitration hearing, and the three arbitrators shall allow the City and the
Developer to each present, in the presence of the other party, its case,
including opening statement, evidence, witnesses, if any, and summation. The
arbitrators shall render their decision within thirty (30) days of the hearing;
and
(e) During the arbitration proceedings. all parties shall be entitled to
all discovery which is available under the Federal Rules of Civil Procedure for
the Northern District of Indiana. All parties shall have an opportunity to
present witnesses and evidence before the arbitrators. The arbitrators shall
use their best efforts to make a decision within thirty (30) days of the date of
the hearing. The decision and award, N any, of the majority of the arbitrators
shall be doomed the decision of all three arbitrators. The parties shall use
their best efforts to expedite the arbitration proceedings.
(f) The arbitrators may award costs to the prevailing party in accordance
with the guidelines set forth in Section 18.14 of this Agreement if the
arbitrator determines that the non-prevailing party failed to negotiate in good
faith the matter that is the subject of the arbitration.
(g) The arbitrators shall limit their decision to (i) the matter identified
as being in dispute and (ii) any counterclaims properly brought during the
course of the arbitration proceedings.
(h) If the award rendered by the arbitrators is an award of Two Hundred
Fifty Thousand Dollars ($250,000.00) or less or requires performance equivalent
in value to a sum which is Two Hundred Fifty Thousand Dollars ($250,000) or less
(inclusive of any costs awarded by the arbitrator) (collectively, the
"Arbitration Threshold"), said award shall be final, binding and unappealable as
to the parties with respect to matters decided by the arbitrators within the
arbitrator's jurisdiction. If the arbitrators' award is greater than the
Arbitration Threshold, said award shall be appealable by either party for a
mistake of law or fact but only to a court of competent jurisdiction in
accordance with the provisions of Section 18.19 of this Agreement.
Section 19.03. Actions During Pendency of Dispute. If a dispute arises
------------- ----------------------------------
between the Developer and the City relating to this Agreement and such dispute
is being negotiated in good faith or submitted to the affirmative dispute
resolution provisions of Section 19.01 or the arbitration provisions of Section
19.02, then the City shall not take
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any action to revoke requisite licenses, permits or approvals nor, unless the
activity on the part of Developer shall cause the City immediate and irreparable
harm that cannot be remedied by the payment of monetary damages, seek to enjoin
the activity of the Developer. However, if an Event of Default by the City
occurs with respect to the provisions of Section 11.08 [Support of Developer],
Developer shall have the right to seek to enjoin the City from such activities,
It being agreed that it will be difficult to ascertain the extent of Developers
monetary damages in such circumstances. Further, during the pendency of any
dispute which is being negotiated in good faith or which has been submitted to
the alternative dispute resolution provisions of Section 19.01 or the
arbitration provisions under Section 19.02, each party shall continue to perform
it other obligations under the Agreement not related to the dispute.
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ARTICLE XX
----------
DEVELOPER'S INDEMNIFICATION OBLIGATIONS
---------------------------------------
Section 20.01. Environmental Indemnification. The Developer agrees, at
------------- -----------------------------
the Developer's sole cost and expense, to protect, defend, indemnify and save
harmless the City Indemnified Parties from and against any and all liabilities,
obligations, claims, damages, penalties, causes of action, response and clean up
costs, and other costs and expenses (including, without limitation, reasonable
attorneys'' fees, the cost of any remedial action. consultant fees,
investigation and laboratory fees, court costs and litigation expenses), imposed
upon or incurred by or asserted against any of the City Indemnified Parties by
reason of: (a) the presence, disposal, escape, seepage, leakage, spillage.
discharge, emission, release or threatened release of any Hazardous Materials
on, from or affecting the Project Site to the extent the Developer had or has an
obligation to remediate the same under the terms of Section 8.01 (b) of this
Agreement or to the extent the Developer breaches the terms of Section 8.01 (c)
of this Agreement; (b) any personal Injury (including wrongful death) or
property damage (real or personal) to the extent caused by a breach by the
Developer of the terms of Sections 8.01 (b) or 8.01 (c) of this Agreement; (c)
any lawsuit brought, settlement reached in accordance with Section 20.07 of this
Agreement or otherwise with the approval of the Developer, or government order
imposed to the extent the same relate to a breach by the Developer of the terms
of Sections 8.01 (b) or 8.01 (c) of this Agreement; (d) any violation of laws,
orders, regulations, requirements or demands of Federal, State or Local
governmental authorities, to the extent the same arise as a result of or due to
a breach by the Developer of the terms of Sections 8.01(b) or 8.01(c) of this
Agreement; or (e) the presence, disposal, escape, seepage, leakage, spillage,
discharge, emission, release or threatened release of any Hazardous Materials
on, from or affecting the HBRW Parcels; provided, however, that the Developers
obligations under this Section 20.01 shall not extend to claims relating to any
Hazardous Materials to the extent the same are (i) the direct result of the acts
of the City Indemnified Parties or (ii) for Hazardous Materials first introduced
to areas outside of the Redevelopment Parcel after the dedication and acceptance
of the Sewer Promises and the Overpass Promises as provided in Section 6.30.
Section 20.02. Construction Claims Indemnification. The Developer agrees,
------------- -----------------------------------
at the Developer's sole cost and expense, to protect. defend, indemnify and save
harmless the City Indemnified Parties from and against any and all liabilities,
obligations, claims, damages, penalties, causes of action, and other costs and
expenses (including, without limitation, reasonable attorneys'' fees, court
costs and litigation expenses), imposed upon or incurred by or assessed against
any of the City Indemnified Parties by reason of or on account of damages to
property or injuries to person alleged to have been sustained in connection with
the performance of the Work or the initial construction of the Project. The
Developer agrees, at the Developer's sole cost and expense, to protect, defend,
indemnify and hold the City Indemnified Parties harmless from and against all
costs, expenses, losses and liabilities (including, but not limited to,
attorneys' fees) arising from
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any notice of intention to hold a lien or lien or encumbrance which may be
placed against any property or improvements as a result of labor performed or
work. services, materials. supplies, tools, equipment or machinery furnished by
or an behalf of the Developer or in connection with the performance of the Work.
The Developer shall have the right to cause any such notice of intention to hold
a lien or encumbrance to be insured against or discharged of record by posting a
bond or by any other means permitted by Applicable Laws.
Section 20.03. Classification Withdrawal Indemnification. The Developer
------------- -----------------------------------------
agrees, at the sole cost and expense of the Developer, to protect, defend,
indemnify and save harmless the City Indemnified Parties from and against any
and all penalties, claims, damages, costs, and expenses (including, without
limitation, reasonable attorneys' fees) incurred by or asserted against any of
the City Indemnified Parties as a result of or in connection with the
Developer's failure to make any tax payment required by Section 4.07 of this
Agreement.
Section 20.04. Performance of Work Indemnification.
------------- -----------------------------------
(a) The Developer agrees, at the sole cost and expense of the Developer, to
protect, defend, indemnify and save harmless the City Indemnified Parties from
and against any and all claims, damages, penalties, causes of action, and other
costs and expenses, direct, Indirect or consequential (including, without
limitation, any claims based on or with regard to death or injury to a person or
persons or damages to property, attorneys' fees, court costs, litigation
expenses, fees and charges of engineers, architects, attorneys and other
professionals, and court arbitration costs) (hereinafter "Claims") arising out
of or resulting from the performance of any of the Work or from the initial
construction of the Project, regardless whether or not the Claim arises by or is
Imposed by law or regulation.
(b) In any and all Claims against the City Indemnified Parties by any
employee of the Developer or any Design Professional, Contractor, Construction
Manager, Subcontractor, Supplier or any person or organization directly or
indirectly employed by any of them to perform or furnish any of the Work or
anyone for whose acts any of them may be liable, the Developer's indemnification
obligation under this Agreement shall not be limited in any way by any
limitation on the amount or type of damages. compensation or benefits payable by
or for the Developer, Design Professional, Contractor, Construction Manager,
Subcontractor or any Supplier or other person or organization under workers' or
workmen's compensation acts, disability benefit acts or other employee benefit
acts.
Section 20.05. Erosion Control Indemnification. The Developer agrees, at
------------- -------------------------------
the sole cost and expense of the Developer, to protect, defend, indemnify, and
save harmless the City Indemnified Parties from and against any and all
penalties, claims, damages, costs and expenses (including, without limitation,
reasonable attorneys'' fees, court costs and litigation expenses) incurred by or
asserted against any of the City Indemnified Parties as a result of or in
connection With the Developer's failure to take any action required
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under or comply with Applicable Laws for prevention, control, or abatement of
erosion, siltation, or water pollution resulting from the performance of the
Work and/or the construction of the Project.
Section 20.06. General Indemnification. In addition to any other
------------- -----------------------
obligations of the developer to Indemnify the City Indemnified Parties under
this Agreement. the Developer agrees, at the sole cost and expense of the
Developer, to protect, defend, indemnify and save harmless the City Indemnified
Parties from and against any and all liabilities, obligations. claims, damages,
penalties, causes of action, and other costs and expenses (including, without
limitation, reasonable attorneys, fees, reasonable compensation for preparing
and attending depositions or serving as a witness where not named as a
defendant, court costs and litigation expenses), imposed upon or incurred by or
asserted against any of the City Indemnified Parties by reason of, arising out
of or pertaining to (a) the application for, pursuit of, and issuance of, the
License (to the extent asserted, Incurred or imposed upon the City Indemnified
Parties as a result of conduct, acts or omissions that occurred prior to the
issuance of the License to the Developer); (b) the actions or omissions of the
Developer in connection with the operation of the Project (including the
operation of the Boat); or (c) the occurrence of an Event of Default by the
Developer.
Section 20.07. Indemnification: Control and Counsel. In any circumstance
------------- ------------------------------------
where the Developer is obligated under this Agreement to indemnify the City
Indemnified Parties, the Developer shall have the right to undertake, conduct,
and control, through counsel of its choosing, reasonably acceptable to the City
Indemnified Parties, and at the sole expense of the Developer, the conduct and
settlement of such matter, and the City Indemnified Parties shall cooperate
therewith; provided, however, that (w) the Developer shall not thereby permit to
exist any lien, encumbrance, or other adverse change upon the assets of the City
Indemnified Parties, (x) the Developer shall not thereby consent to the
imposition of any injunction against the City Indemnified Parties without the
consent of such person or persons, (y) the Developer shall permit the City
Indemnified Parties to participate in such dispute or the settlement thereof
through counsel chosen by the City Indemnified Parties, but the fees and
expenses of such counsel shall be borne solely by the City Indemnified Parties,
and (z) the Developer shall agree promptly to reimburse the City Indemnified
Parties for the full amount of the obligations due hereunder. If the City
Indemnified Parties reasonably believes that counsel selected by the Developer
has a conflict of interest by reason of asserting or threatening to assert a
limitation on or defense to the Indemnification obligations of the Developer or
otherwise or a conflict of interest arises between the Developer and the City
Indemnified Parties, then the City Indemnified Parties may select now,
independent counsel, reasonably acceptable to the Developer, who shall represent
the City Indemnified Parties at the sole cost and expense of the Developer, The
Developer shall specify any claimed limitations an or defenses to its
Indemnification obligation upon the City Indemnified Parties' request therefor.
So long as the Developer is contesting any such matter In good faith and the
operations or assets of the City Indemnified Parties are not in any way
Impaired, the City Indemnified Parties may not pay or settle any such action or
suit without the consent of the Developer unless
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it chooses to waive its rights to reimbursement and Indemnification hereunder.
Notwithstanding the foregoing, the City Indemnified Parties shall have the right
to pay or settle any such action or suit, provided that in such event the City
Indemnified Parties shall waive any right to indemnity therefore. However, if
the Developer is obligated, but ceases to contest such matter in good faith,
then the City Indemnified Parties may pay or settle such action or suit and
obtain reimbursement from the Developer.
Section 20.08. Limitations on the Developer's Indemnification Obligations.
----------------------------------------------------------
(a) Notwithstanding anything contained in this Agreement to the contrary,
none of the indemnity and save harmless obligations of the Developer under this
Agreement shall not apply to (i) a particular matter to the extent that, with
respect to a matter which is the subject of the indemnity and save harmless
obligation, any of the City Indemnified Parties against whom Claims (as such
term Is defined in Section 20.04) are made receive Insurance benefits or
proceeds for costs of defense or payment or settlement of Claims from any
applicable insurance, or (ii) a criminal prosecution brought against any of the
City Indemnified Parties by a federal, state or local prosecuting attorney or
governmental authority.
(b) Notwithstanding anything contained in this Agreement to the contrary,
the indemnity and save harmless obligations of the Developer under this
Agreement shall not require the Developer to pay (and the Developer shall have
no obligation to pay): (i) any damages that are awarded to a claimant in a civil
action as a result of any conduct by (A) any of the City Indemnified Parties
that is determined by a final decision of a court of competent jurisdiction to
have been criminal or to constitute willful misconduct, intentional
misrepresentation or fraud or (B) any of the City Indemnified Parties that is an
individual and determined by a final decision of a court of competent
jurisdiction to have been clearly outside the scope of that individual's
employment or calculated by such individual to directly benefit such Individual
personally (ii) that portion of any and all punitive damages awarded to
claimants by final judgments of courts of competent jurisdiction In civil
actions as a result of any conduct by any of the City Indemnified Parties that
is not a governmental entity, public employee or public office holder in excess
of one-half (1/2) of the total of all such awards In the aggregate up to and
including total awards of Seven Hundred Fifty Thousand Dollars ($750,000); or
(iii) that portion of any and all punitive damages awarded to claimants by final
judgments of courts of competent jurisdiction in civil actions as a result of
any conduct by any of the City Indemnified Parties that is not a governmental
entity, public employee or public office holder that are individually or in the
aggregate in excess of Seven Hundred Fifty Thousand Dollars ($750,000).
-85-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above, to be effective on the Effective Date of this
Agreement.
CITY OF HAMMOND, INDIANA
By: /s/ Duane W. Dedelow
--------------------------------------
Duane W. Dedelow, Jr., Mayor
EMPRESS CASINO HAMMOND CORPORATION
By: /s/ Thomas J. Lambrecht
--------------------------------------
Printed: THOMAS J. LAMBRECHT
---------------------------------
Title: CHAIRMAN OF THE BOARD
-----------------------------------
ATTEST:
By: /s/ William J. Sabo
-------------------------------
Printed: William J. Sabo
--------------------------
Title: PRESIDENT
----------------------------
-86-
<PAGE>
The City of Hammond, Department of Redevelopment hereby executes this
Agreement as of the day and year first written above solely for the purposes of
(i) making and agreeing to the covenants and agreements contained in Article 11
of this Agreement and (ii) accepting performance by Developer of all of its
obligations hereunder.
CITY OF HAMMOND, DEPARTMENT
OF REDEVELOPMENT
By: /s/ James Davis Sr.
-------------------------------------
Printed: JAMES DAVIS SR.
--------------------------------
Title: PRESIDENT
----------------------------------
ATTEST:
By: /s/ Ruben Roque
------------------------------
Printed: RUBEN ROQUE
-------------------------
Title: SECRETARY
---------------------------
-87-
<PAGE>
EXHIBIT LIST
EXHIBIT DESCRIPTION
- ------- -----------
A Description of the Boat
B Plan F indicating:
- Conrail Parcel 49
- CSX Parcel 6
- CSX Parcel 26
- EJ&E Parcels
- "Hammond Marina"
- HPA Parcels
- HBRW Parcels
- NIPSCO Parcels (B1, B2, 32, 35, Accretion,
Overpass and Railway)
- Location of Pylon Signs
- Hotel Parcel
- Maintenance Area
C Description of Docking Facilities
D Description of Guest Facilities
E Legal Description of HBRW Parcels
F Description of Parking Facilities and Parking Garage
G Legal Description of Redevelopment Parcel
H Linder Plan
I City's Timetable
J Legal Description of Perimeter Road
K Legal Description of Parking Areas
-88-
<PAGE>
SCHEDULE LIST
-------------
Schedule Description
- -------- -----------
I Information Concerning Labor Objectives ((P)8.10)
II Information Concerning Vendors and Suppliers ((P)12.09)
III Information Concerning Employment and Wages ((P)12.12)
-89-
<PAGE>
Exhibit A
DESCRIPTION OF THE BOAT
<TABLE>
<S> <C>
Length: 228 feet
Width: 76 feet
Height: 75 feet
Engines: 2 Caterpillar main engines at 1200 horse power each
2 Caterpillar side thrusters at 600 horse power each
Capacity: 2,700 people (2,400 patrons and 300 employees)
Total Proposed Gaming 1,500
Positions:
Gaming Space: 34,167 square feet (gaming footage only)
</TABLE>
<PAGE>
Exhibit B (page 1 of 3)
[MAP OF CASINO LOCATION]
<PAGE>
Exhibit B (page 2 of 3)
[MAP OF CASINO LOCATION]
<PAGE>
Exhibit B (page 3 of 3)
[MAP OF CASINO LOCATION]
<PAGE>
EXHIBIT C
DESCRIPTION OF DOCKING FACILITIES
---------------------------------
The boarding ramp is 16 feet wide, two stories high, and glazed in all
elevations to the lake. There is an observation deck at the third floor level of
the terminal building over the boarding ramp. The entire length is approximately
90 feet and the last 25 feet of boarding ramp houses a glass vault with views of
the sky and lakefront.
<PAGE>
Exhibit D
DESCRIPTION OF GUEST FACILITY
-----------------------------
Size: 107,000 square feet
Height: 65 feet (four stories)
Restaurants: Harbor Side Steak House
Empressive Buffet
Waves
Lounge: Blue Water Lounge
<PAGE>
EXHIBIT E
---------
HBRW PARCELS
Parcel 45
- ---------
Part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West of
the Second Principal Meridian, in the City of Hammond, Lake County, Indiana,
more particularly described as follows: commencing at a point on the
Southwesterly line of Indianapolis Boulevard, which is 300 feet Northwesterly
measured along the Southwesterly line of said Boulevard from the Northwest piles
of the bridge built by Lake County over the arm or outlet of Wolf Lake; thence
Southwesterly at right angles 115 feet to the point of beginning; thence
Northwesterly 100 feet; thence Southwesterly 25 feet, thence Southeasterly 100
feet; thence Northeasterly 25 feet to the point of beginning.
Parcel 51
- ---------
A PART OF THE NORTHEAST QUARTER OF SECTION 1, TOWNSHIP 37 NORTH, RANGE 10 WEST
OF THE SECOND PRINCIPAL MERIDIAN, IN LAKE COUNTY, INDIANA, BEING BOUNDED AND
DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF THE SOUTHEAST QUARTER OF SECTION 1,
TOWNSHIP 37 NORTH, RANGE 10 WEST OF THE SECOND PRINCIPAL MERIDIAN. THENCE NORTH
01 DEGREES 01 03 SECONDS WEST (ASSUMED BEARING) 2,195.00 FEET ALONG THE EAST
LINE OF SAID SECTION I TO ITS POINT OF INTERSECTION WITH THE CENTERLINE OF
INDIANAPOLIS BOULEVARD (100 FOOT WIDE RIGHT-OF-WAY); THENCE NORTH 40 DEGREES 07
MINUTES 55 SECONDS WEST 2,718.21 FEET ALONG THE CENTERLINE OF INDIANAPOLIS
BOULEVARD TO A POINT BEING NORTH 49 DEGREES 52 05 SECONDS EAST (PERPENDICULAR TO
THE OF INDIANAPOLIS BOULEVARD) OF THE SOUTHWESTERN CORNER OF THE INTERSECTION OF
INDIANAPOLIS BOULEVARD AND 112TH STREET (80 FOOT WIDE RIGHT-OF-WAY); THENCE
SOUTH 49 DEGREES 52 MINUTES 05 SECONDS WEST 50.00 FEET PERPENDICULAR TO THE
CENTERLINE OF INDIANAPOLIS BOULEVARD TO THE SOUTHWESTERN CORNER OF THE SECTION
OF Indianapolis BOULEVARD AND 112TH AND THE POINT OF BEGINNING OF THE
DESCRIPTION OF THE 0.933 ACRE TRACT OF LAND ("PARCEL A") DESCRIBED IN "EXHIBIT
A" OF THE WARRANTY DEED RECORDED AS INSTRUMENT #413692 IN LAKE COUNTY, INDIANA,
THENCE NORTH 40 DEGREES 07 55 SECONDS WEST 200.00 FEET ALONG THE NORTHEASTERN
BOUNDARY OF SAID 0.933 ACRE TRACT OF LAND TO ITS NORTHWESTERN CORNER AND THE
POINT OF BEGINNING OF THIS DESCRIPTION; THENCE SOUTH 49 DEGREES 52 MINUTES 05
SECONDS WEST 250.00 FEET ALONG THE NORTHWESTERN BOUNDARY OF SAID 0.933 ACRE
TRACT OF LAND, THROUGH ITS SOUTHWESTERN CORNER WHICH IS THE NORTHWESTERN CORNER
OF THE 0.261 ACRE TRACT OF LAND ("PARCEL B") DESCRIBED IN
<PAGE>
"EXHIBIT A" OF SAID WARRANTY DEED AND ALONG THE NORTHWESTERN BOUNDARY OF SAID
0.261 ACRE TRACT OF LAND TO ITS SOUTHWESTERN CORNER; THENCE 40 DEGREES 07
MINUTES 55 SECONDS EAST 239.71 FEET ALONG THE SOUTHWESTERN BOUNDARY OF SAID
0.261 ACRE TRACT OF LAND TO ITS SOUTHWEST CORNER; THENCE SOUTH 40 DEGREES 07
MINUTES 55 SECONDS EAST 239.71 FEET ALONG THE SOUTHWESTERN BOUNDARY OF SAID
0.261 ACRE TRACT OF LAND TO ITS SOUTHEASTERN CORNER ON THE NORTHWESTERN
RIGHT-OF-WAY LINE OF 112TH STREET; THENCE SOUTH 33 DEGREES 23 MINUTES 13 SECONDS
WEST 427.46 FEET ALONG THE NORTHWESTERN RIGHT-OF-WAY LINE OF 112TH STREET TO THE
SOUTHEASTERN CORNER OF THE 1.419 ACRE TRACT OF LAND DESCRIBED IN THE WARRANTY
DEED RECORDED AS INSTRUMENT #507068 IN LAKE COUNTY INDIANA; THENCE NORTH 12
DEGREES 28 MINUTES 49 SECONDS EAST 227.01 FEET; THENCE NORTH 37 DEGREES 46
MINUTES 22 SECONDS WEST 43.83 FEET TO A POINT ON A NON-TANGENT CURVE CONCAVE TO
THE NORTHEAST, SAID POINT BEING SOUTH 29 DEGREES 31 MINUTES 17 SECONDS WEST
346.48 FEET FROM THE RADIUS POINT OF SAID CURVE; THENCE NORTHWESTERLY 181.42
FEET ALONG SAID CURVE TO A POINT BEING SOUTH 59 DEGREES 31 MINUTES 16 SECONDS
WEST 346.48 FEET FROM THE RADIUS POINT OF SAID CURVE; THENCE NORTH 25 DEGREES 05
MINUTES 29 SECONDS WEST 122.46 FEET; THENCE NORTH 04 DEGREES 57 MINUTES 52
SECONDS WEST 125.93 FEET; THENCE NORTH 10 DEGREES 57 MINUTES 16 SECONDS EAST
132.22 FEET; THENCE NORTH 35 DEGREES 22 MINUTES 41 SECONDS EAST 136.323 FEET;
THENCE NORTH 49 DEGREES 51 MINUTES 34 SECONDS EAST 155.37 FEET TO THE
SOUTHWESTERN RIGHT-OF-WAY LINE OF INDIANAPOLIS BOULEVARD; THENCE SOUTH 40
DEGREES 07 MINUTES 55 SECONDS EAST 337.63 FEET ALONG THE SOUTHWESTERN RIGHT-OF-
WAY LINE OF INDIANAPOLIS BOULEVARD TO THE POINT OF BEGINNING.
ALSO A PART OF THE NORTHEAST QUARTER OF SECTION 1, TOWNSHIP 37 NORTH RANGE 10
WEST OF THE SECOND PRINCIPAL MERIDIAN, IN LAKE COUNTY, INDIANA, BEING BOUNDED
AND DESCRIBED AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF THE SOUTHEAST QUARTER OF SECTION 1,
TOWNSHIP 37 NORTH, RANGE 10 WEST OF THE SECOND PRINCIPAL MERIDIAN, THENCE NORTH
01 DEGREES 01 MINUTES 03 SECONDS WEST (ASSUMED BEARING) 2,195.00 FEET ALONG THE
EAST LINE OF SAID SECTION 1 TO ITS POINT OF INTERSECTION WITH THE CENTERLINE OF
INDIANAPOLIS BOULEVARD (100 FOOT WIDE RIGHT-OF-WAY; THENCE NORTH 40 DEGREES 07
MINUTES 55 SECONDS WEST 2,538.21 FEET ALONG THE CENTERLINE OF INDIANAPOLIS
BOULEVARD TO A POINT BEING NORTH 9 DEGREES 52 MINUTES 02 SECONDS EAST
(PERPENDICULAR TO THE CENTERLINE OF INDIANAPOLIS BOULEVARD) OF THE NORTHWESTERN
CORNER OF THE 0.080 ACRE TRACT OF LAND DESCRIBED IN THE AFFIDAVIT RECORDED AS
INSTRUMENT $608372, IN LAKE COUNTY, INDIANA; THENCE SOUTH 49 DEGREES 52 MINUTES
05 SECONDS WEST 50.00 FEET PERPENDICULAR TO THE CENTERLINE OF INDIANAPOLIS
BOULEVARD TO THE NORTHWESTERN CORNER OF SAID 0.080 ACRE TRACT OF LAND; THENCE
SOUTH 49 DEGREES 52 MINUTES 05 SECONDS WEST 140.00 FEET
-2-
<PAGE>
ALONG THE NORTHWESTERN BOUNDARY OF SAID 0.080 ACRE TRACT OF LAND TO ITS
SOUTHWESTERN CORNER AND THE POINT OF BEGINNING OF THIS DESCRIPTION; THENCE SOUTH
32 DEGREES 48 MINUTES 43 SECOND WEST 11.40 FEET; THENCE SOUTH 40 DEGREES 28
MINUTES 42 SECONDS EAST 12.00 FEET TO A POINT OF A NON-TANGENT CURVE CONCAVE TO
THE NORTHWEST, SAID POINT BEING SOUTH 40 DEGREES 28 MINUTES 42 SECONDS EAST
336.48 FEET FROM THE RADIUS POINT OF SAID CURVE; THENCE SOUTHWESTERLY AND
WESTERLY 186.19 FEET ALONG SAID CURVE TO A POINT ON THE SOUTHEASTERN RIGHT-OF-
WAY LINE OF 112TH STREET (80 FOOT WIDE RIGHT-OF-WAY), SAID BEING SOUTH 08
DEGREES 46 MINUTES 24 SECONDS EAST 336.48 FEET FROM THE RADIUS POINT OF SAID
CURVE; THENCE NORTH 33 DEGREES 23 MINUTES 13 SECONDS EAST 196.02 FEET ALONG THE
SOUTHEASTERN RIGHT-OF-WAY LINE OF 112TH STREET TO THE SOUTHWESTERN BOUNDARY OF
THE 0.057 ACRE TRACT OF LAND DESCRIBED IN WARRANTY DEED RECORDED AS INSTRUMENT
#10315 IN LAKE COUNTY, INDIANA; THENCE SOUTH 40 DEGREES 07 MINUTES 55 SECONDS
EAST 89.41 FEET ALONG THE SOUTHWESTERN BOUNDARY OF SAID 0.057 ACRE TRACT OF LAND
TO THE POINT OF BEGINNING.
-3-
<PAGE>
Exhibit F
DESCRIPTION OF PARKING GARAGE AND PARKING FACILITIES
----------------------------------------------------
Parking Garage 1,200 vehicles (estimated)
Surface Parking Facilities 1,200 vehicles and buses
(estimated)
<PAGE>
Page 1 of ?
EXHIBIT G
LAND DESCRIPTION
Redevelopment Commission Sublease
Parcel 1A
version 1
15MAY96
A part of the Northwest Quarter of Section 6, Township 37 North, Range 9 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed hearing) 4,209.68 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West; thence South
41 degrees 13 minutes 34 seconds East 61.96 feet; thence South 41 degrees 13
minutes 34 seconds East 90.30 feet to the point of curvature of a curve to the
left, said point of curvature being South 48 degrees 46 minutes 26 seconds West
2,814.93 feet from the radius point of said curve; thence southeasterly 229.77
feet along said curve to a point being South 44 degrees 05 minutes 50 seconds
West 2,814.93 feet from the radius point of said curve; thence North 35 degrees
17 minutes 10 seconds East 17.84 feet to the POINT OF BEGINNING of this
description; thence North 35 degrees 17 minutes 10 seconds East 813.45 feet;
thence North 79 degrees 22 minutes 58 seconds East 71.38 feet; thence South 54
degrees 36 minutes 55 seconds East 100.48 feet; thence South 35 degrees 23
minutes 05 seconds West 90.00 feet; thence North 54 degrees 36 minutes 55
seconds West 110.00 feet; thence South 35 degrees 17 minutes 10 seconds West
780.38 feet; thence North 46 degrees 40 minutes 28 seconds West 40.40 feet to
the POINT OF BEGINNING containing 0.995 acres, more or less.
<PAGE>
[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
<PAGE>
Page 1 of ?
LAND DESCRIPTION
Redevelopment Commission Sublease
Parcel 2
version 1
29 AUG 94
A part of the Northwest Quarter of Section 6, Township 37 North, Range 9 West,
located in North Township, Lake County, Indiana, being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,209.68 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West; thence South
41 degrees 13 minutes 34 seconds East 61.96 feet, thence South 41 degrees 13
minutes 34 seconds East 90.30 feet to the point of curvature of a curve to the
left, said point of curvature being South 48 degrees 46 minutes 26 seconds West
2,814.93 feet from the radius point of said curve; thence southeasterly 229.76
feet along said curve to a point being South 44 degrees 05 minutes 50 seconds
West 2,814.93 feet from the radius point of said curve; thence North 35 degrees
17 minutes 10 seconds East 831.29 feet; thence North 79 degrees 22 minutes 58
seconds East 71.38 feet; thence South 54 degrees 36 minutes 55 seconds East
100.48 feet to the POINT OF BEGINNING of this description; thence continuing
South 54 degrees 36 minutes 55 seconds East 146.67 feet, thence South 35 degrees
16 minutes 41 seconds West 523.46 feet; thence North 54 degrees 35 minutes 11
seconds West 236.35 feet; thence South 35 degrees 15 minutes 53 seconds West
349.92 feet; thence North 46 degrees, 40 minutes 28 seconds West 20.88 feet;
thence North 35 degrees 17 minutes 10 seconds East 780.38 feet; thence South 54
degrees 36 minutes 55 seconds East 110.00 feet; thence North 35 degrees 23
minutes 05 seconds East 90.00 feet to the POINT OF BEGINNING, containing 3.024
acres, more or less.
<PAGE>
[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
<PAGE>
LAND DESCRIPTION
Redevelopment Commission Sublease
Ingress & Egress Access to Parking
version 1
28 MAY 96
A part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way), thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right, said
point of curvature being North 36 degrees 00 minutes 00 seconds West 326.48 feet
from the radius point of said curve; thence northeasterly and easterly 176.71
feet along said curve to a point being North 04 degrees 59 minutes 19 seconds
West 326.48 feet from the radius point of said curve and to the POINT OF
BEGINNING of this description; thence North 48 degrees 49 minutes 21 seconds
East 35.00 feet; thence South 41 degrees 10 minutes 39 seconds East 625.56 feet;
thence South 41 degrees 14 minutes 09 seconds East 34.87 feet to a point on a
non-tangent curve concave to the northeast (said curve hereinafter referred to
as "Curve #1"), said point of curvature being South 48 degrees 38 minutes 51
seconds West 5,682.15 feet from the radius point of said curve; thence
southeasterly 150.03 feet along Curve #1 to & point being South 47 degrees 08
minutes 05 seconds West 5,682.15 feet from the radius point of Curve # 1; thence
North 48 degrees 45 minutes 56 seconds East 96.78 feet; thence South 41 degrees
14 minutes 04 seconds East 100.00 feet; thence South 48 degrees 45 minutes 56
seconds West 128.09 feet to a point on a non-tangent curve concave to the
northeast (said curve is concentric with Curve #1), said point being South 46
degree 08 minutes 30 seconds West 5,717.15 feet from the radius point of said
curve; thence northwesterly 250.02 feet along said curve to a point being South
48 degrees 38 minutes 51 seconds West 5,717.15 feet from the radius point of
said curve; thence North 41 degree 14 minutes 09 seconds West 34.96 feet; thence
North 41 degrees 10 minutes 39 seconds West 625.58 feet to the POINT OF
BEGINNING containing 0.950 acres, more or less.
<PAGE>
[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
LAND DESCRIPTION
Redevelopment Commission Sublease
Ingress & Egress Access to Parking
version 1
28 MAY 96
A part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way), thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right, said
point of curvature being North 36 degrees 00 minutes 00 seconds West 326.48 feet
from the radius point of said curve; thence northeasterly and easterly 176.71
feet along said curve to a point being North 04 degrees 59 minutes 19 seconds
West 326.48 feet from the radius point of said curve and to the POINT OF
BEGINNING of this description; thence North 48 degrees 49 minutes 21 seconds
East 35.00 feet; thence South 41 degrees 10 minutes 39 seconds East 625.56 feet;
thence South 41 degrees 14 minutes 09 seconds East 34.87 feet to a point on a
non-tangent curve concave to the northeast (said curve hereinafter referred to
as "Curve #1"), said point of curvature being South 48 degrees 38 minutes 51
seconds West 5,682.15 feet from the radius point of said curve; thence
southeasterly 150.03 feet along Curve #1 to & point being South 47 degrees 08
minutes 05 seconds West 5,682.15 feet from the radius point of Curve # 1; thence
North 48 degrees 45 minutes 56 seconds East 96.78 feet; thence South 41 degrees
14 minutes 04 seconds East 100.00 feet; thence South 48 degrees 45 minutes 56
seconds West 128.09 feet to a point on a non-tangent curve concave to the
northeast (said curve is concentric with Curve #1), said point being South 46
degree 08 minutes 30 seconds West 5,717.15 feet from the radius point of said
curve; thence northwesterly 250.02 feet along said curve to a point being South
48 degrees 38 minutes 51 seconds West 5,717.15 feet from the radius point of
said curve; thence North 41 degree 14 minutes 09 seconds West 34.96 feet; thence
North 41 degrees 10 minutes 39 seconds West 625.58 feet to the POINT OF
BEGINNING containing 0.950 acres, more or less.
<PAGE>
[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
<PAGE>
[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
<PAGE>
LAND DESCRIPTION
Redevelopment Commission Sublease
Parcel 4
version 2
28 MAY 96
A part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West
and a part of Section 36, Township 38 North, Range 10 West located in North
Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way); thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right, said
point of curvature being North 36 degrees 00 minutes 00 seconds West 326.48 feet
from the radius point of said curve; thence northeasterly and easterly 118.22
feet along said curve to the southwestern boundary of the 21.255 acre tract of
land described in the QUITCLAIM DEED recorded as instrument #910181 on April 17,
1991 in the office of the Recorder of Lake County, Indiana, said point being
North 15 degrees 15 minutes 10 seconds West 326.48 feet from the radius point of
said curve, the next seven (7) courses are along the boundary of said 21.255
acre tract of land; 1) thence North 41 degrees 15 minutes 08 seconds West
1,700.29 feet to the POINT OF BEGINNING of this description; 2) thence North 41
degrees 15 minutes 08 seconds West 1,539.62 feet to the point of curvature of a
curve to the right, said point of curvature being South 48 degrees 44 minutes 52
seconds West 24,828.52 feet from the radius point of said curve; 3) thence
northwesterly 281.79 feet along said curve to its point of tangency, said point
of tangency being South 49 degrees 23 minutes 53 seconds West 24,828.52 feet
from the radius point of said curve; 4) thence North 40 degrees 36 minutes 07
seconds West 1.474.75 feet to the Indiana/Illinois State Line; 5) thence North
00 degrees 52 minutes 04 seconds West 138.52 feet along the Indiana/Illinois
State Line; 6) thence South 48 degrees 50 minutes 29 seconds East 279.19 feet;
7) them South 41 degrees 14 minutes 04 seconds East 2,051.13 feet to the
northwestern corner of the tract of land described in the QUITCLAIM DEED
recorded in Deed Record 1219, page 31 on November 5, 1962 in said Recorder's
office, said comer being on "Eggers' Fence Line"; thence South 87 degrees 40
minutes 04 seconds East 11.27 feet along the northern boundary of said tract of
land which is also along "Eggers' Fence Line"; thence South 41 degrees 12
minutes 09 seconds East 139.21 feet; thence
<PAGE>
South 40 degrees 14 minutes 07 seconds East 154.35 feet to a point on a non-
tangent curve concave to the southwest, said point being North 51 degrees 42
minutes 18 seconds East 1,514.88 feet from the radius point of said curve;
thence southeasterly 141.95 feet along said curve to a point being North 57
degrees 04 minutes 25 seconds East 1,514.88 feet from the radius point of said
curve; thence South 30 degrees 59 minutes 10 seconds East 154.35 feet, thence
South 30 degrees 01 minute 09 seconds East 186.88 feet; thence South 30 degrees
59 minutes 24 seconds East 155.62 feet to a point on a non-tangent curve concave
to the northeast, said point being South 57 degrees 04 minutes 25 seconds West
1,539.88 feet from the radius point of said curve; thence southeasterly 143.63
feet to a point being South 51 degrees 43 minutes 47 seconds West 1,539.88 feet
from the radius point of said curve; thence South 48 degrees 44 minutes 52
seconds West 29.89 feet to the POINT OF BEGINNING containing 9.760 acres, more
or less.
ALSO, a part of the Northeast Quarter of Section 1, Township 37 North, Range 10
West and a part of Section 36, Township 38 North, Range 10 West located in North
Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Comer of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way); thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right (said
curve hereinafter referred to as "Curve #1), said point of curvature being North
36 degrees 00 minutes 00 seconds West 326.48 feet from the radius point of Curve
#1; thence northeasterly and easterly 176.71 feet along Curve #1 to a point
being North 04 degrees 59 minutes 19 seconds West 326.48 feet from the radius
point of Curve #1 and to the POINT OF BEGINNING of this description; thence
North 41 degrees 10 minutes 39 seconds West 1,372.17 feet to the point of
curvature of a curve to the right, said point of curvature being South 48
degrees 49 minutes 21 seconds West 474.78 feet from the radius point of said
curve; thence northwesterly 58.94 feet along said curve to its point of
tangency, said point of tangency being South 55 degrees 56 minutes 06 seconds
West 474.78 feet from the radius point of said curve; thence North 34 degrees 03
minutes 54 seconds West 45.58 feet to point of curvature of curve to the left,
said point of curvature being North 55 degrees 56 minutes 06 seconds East 729.28
feet from the radius point of said curve; thence northwesterly 90.62 feet along
said curve to its point of tangency, said point of tangency being North 48
degrees 48 minutes 55 seconds East 729.28 feet from the radius point of said
curve; thence North 41 degrees 11 minutes 05 seconds West 8.90 feet; thence
North 40 degrees 12 minutes 29 seconds West 154.34 feet to a point on a non-
<PAGE>
tangent curve concave to the northeast, said point being South 51 degrees 45
minutes 03 seconds West 1,500.05 feet from the radius point of said curve;
thence northwesterly 138.44 feet along said curve to a point being South 57
degrees 02 minutes 18 seconds West 1,500.05 from the radius point of said curve;
thence North 31 degrees 00 minutes 10 seconds West 154.34 feet; thence North 30
degrees 01 minute 34 seconds West 170.82 feet to the point of curvature of curve
to the right, said point of curvature being South 59 degrees 58 minutes 26
seconds West 1,420.19 feet from the radius point of said curve; thence
northwesterly and northerly 273.83 feet along said curve to its point of
tangency, said point of tangency being South 71 degrees 01 minute 16 seconds
West 1,420.19 feet from the radius point of said curve; thence North 18 degrees
58 minutes 44 seconds West 56.31 feet to a point on the northwesterly extension
of the southwestern boundary of the 16.039 acre tract of land describe in the
WARRANTY DEED recorded in Deed Record 1218, page 592 on November 9, 1962 in the
office of the Recorder of Lake County, Indiana; thence South 41 degrees 14
minutes 04 seconds East 2,501.08 feet along the northwesterly extension of the
southwestern boundary of said 16.039 acre tract of land and along the
southwestern boundary of said 16.039 acre tract of land to a point being North
48 degrees 49 minutes 21 seconds East of the point of beginning; thence South 48
degrees 49 minutes 21 seconds West 193.47 feet to the POINT OF BEGINNING
containing 9.452 acres, more or less.
EXCEPTING AND EXCLUDING THE FOLLOWING FROM THE ABOVE-DESCRIBED PARCELS:
A parcel of real estate that is two hundred (200) feet wide (measured from east
to west) and fifty (50) feet in depth (measured from north to south) and located
in the northeasternmost corner of the above-described parcels.
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[TEXT ILLEGIBLE]
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[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
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[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
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[MAP OF LINDEN GROUP INC. APPEARS HERE]
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EXHIBIT I
CITY OF HAMMOND, INDIANA
PRELIMINARY TIMETABLE AND CHECKLIST
Date Action
---- ------
X 9/11/95 (PA-1) Appraisers appointed by BPW to appraise CSX parcels to be
acquired by condemnation.
X 9/28/95 (SE-1) Lake County Parks and Recreation Board (the "LCPRB")
authorizes temporary license agreement for construction of
sewage improvements to Empress Casino Corporation Hammond,
d/b/a Hammond Bridge and Road Works, LLC ("ECCH").
X 9/29/95 (PA-2) Appraisers for BPW submit appraisals for CSX property to be
acquired by condemnation.
X 10/2/95 (PA-3) ECCH deeds ACE Parcels to City of Hammond.
X 10/3/95 (SE-2) Port Authority meeting to adopt resolution granting
temporary license agreement to the Hammond Sanitary District
(the "Sanitary District") and authorizing temporary license
agreement from Sanitary District to ECCH.
X 10/5/95 (PA-4) City of Hammond Board of Public Works ("BPW") meeting to
initiate condemnation proceedings by adopting resolution and
authorizing good faith offers for:
1. Air rights (construction access to ACE Parcel 26) (from
CSX).
2. Fee to ACE Parcel 67 (from CSX).
X 10/11/95 (SE-3) Water Department meeting to adopt resolution granting
easement to the Sanitary District and authorizing temporary
license agreement from Sanitary District to ECCH.
X 10/11/95 (PA-5) Water Department meeting to adopt [preliminary] resolution
authorizing intergovernmental transfer of property to
Redevelopment Commission.
X 10/12/95 (LP-1) Obtain legal description and survey for non-patented
waterworks property and submit survey to Lake County
Surveyor.
X 10/13/95 (PA-6) BPW makes good faith offers on CSX properties to be
acquired by condemnation.
<PAGE>
X 10/13/95 (PA-7) Redevelopment Commission meeting to adopt [preliminary]
resolution authorizing intergovernmental transfers from BPW,
Port Authority and Water Department.
X 10/16/95 (LP-2) Receive certified survey for non-patented waterworks
property from Lake County Surveyor.
X 10/16/95 (PA-8) Port Authority meeting to adopt [preliminary] resolution
authorizing intergovernmental transfer of property to
Redevelopment Commission.
X 10/17/95 (LP-3) Water Department applies to State of Indiana, through
Department of Natural Resources or State Land Office (the
"DNR") for (fill permit and) land patent on non-patented
waterworks property.
X 10/17/95 (SE-4) Sanitary District meeting to adopt resolution accepting
grant of temporary licenses from LCPRB and Port Authority
and grants of easements from LCPRB and Water Department and
authorizing temporary license agreement to ECCH.
X 11/14/95 (SE-5) LCPRB meeting to adopt resolution granting easement to
Sanitary District and authorizing temporary license
agreement from Sanitary District to ECCH.
X 11/20/95 (RA-1) Hammond Redevelopment Commission (the "Redevelopment
Commission") prepares (or revises, if necessary)
redevelopment plan for the area (the "Redevelopment Plan"),
and causes to be prepared maps and plats, lists of owners of
parcels to be acquired, and cost estimates relating to the
proposed riverboat gaming development (the "Project").
X 11/21/95 (RA-2) Redevelopment Commission meeting to introduce resolution
declaring the area to be a blighted area, approving
Redevelopment Plan, and submitting such resolution to Plan
Commission (Declaratory Resolution).
X 12/4/95 (A-1) Water Department submits petition to City of Hammond,
Indiana, requesting annexation ordinance.
X 12/5/95 (RA-3) Redevelopment Commission meeting to amend Development Plan.
X 12/5/95 (CA-1) Port Authority meeting to adopt resolution granting
temporary construction access agreement from Port Authority
to LMC.
X 12/6/95 (SE-6) Sanitary District delivers temporary license to LMC.
-2-
<PAGE>
X 12/7/95 (CA-2) BPW meeting to adopt resolution granting temporary
construction access agreement to LMC.
X 12/11/95 (A-2) Common Council meeting to conduct first and second readings
of annexation ordinance.
X 12/13/95 (CA-3) Water Department meeting to adopt resolution granting
temporary construction access agreement to LMC.
X 12/15/95 (CA-4) Northern Indiana Public Service Company, EJ&E Railroad,
Conrail and CSX grant temporary construction access
agreements to LMC.
X 12/18/95 (RA-4) Plan Commission meeting to issue written order approving
the Declaratory Resolution and Redevelopment Plan.
X 1/8/96 (A-3) Common Council meeting to conduct third reading and to adopt
annexation ordinance.
X 1/19/96 (A-4) City Clerk publishes the annexation ordinance pursuant to IC
5-3-1.
X 2/2/96 (CA-6) Lake County (or City of Hammond) issues conditional building
permits to ECCH.
X 2/8/96 (ZA-1) Plan Commission publishes notice of meeting and hearing on
proposed amendment to zoning ordinance to add new gaming
classification.
X 2/12/96 (PA-9) Common Council meeting to authorize acquisition of property.
X 2/12/96 (RA-5) Common Council meeting to adopt resolution approving order
of Plan Commission approving Declaratory Resolution and
amended Redevelopment Plan.
X 2/20/96 (ZA-2) Plan Commission meeting to hold hearing regarding proposed
amendment to zoning ordinance and to adopt resolution
recommending to Common Council approval of proposed
amendment to zoning ordinance.
X 2/21/96 (ZA-3) Plan Commission certifies proposed amendment to zoning
ordinance (with favorable recommendation) to Common Council.
X 2126/96 (ZA-4) Common Council meeting to conduct first and second readings
of amendment to zoning ordinance.
X 2/29/96 (CA-5) BPW, Port Authority and Water Department deliver temporary
construction licenses to LMC for docking, gaming and parking
facilities.
-3-
<PAGE>
X 3/22/96 (A-5) City Clerk files annexation ordinance (60 days after
publication of annexation ordinance) with the Lake County
Auditor, the Lake County Circuit Court Clerk, the Board of
Registration of Lake County, and the Indiana State Board of
Tax Commissioners, and records the annexation ordinance in
the office of the Lake County Recorder.
X 4/8/96 (ZA-5) Common Council meeting to conduct third reading and to adopt
amendment to zoning ordinance.
X 4/26/96 (Z-1) Property owners (Redevelopment Commission, Port Authority
and Water Department) submit petition to Plan Commission
requiring rezoning of Site.
x 4/28/96 (RA-6) Redevelopment Commission publishes and files notice of
public hearing on the Project.
X 5/9/96 (Z-2) Plan Commission (or petitioners on behalf thereof) sends
notice of meeting and hearing to surrounding property
owners.
X 5/10/96 (Z-3) Plan Commission (or petitioners on behalf thereof) publishes
notice of meeting and hearing on rezoning of Site.
X 5/20/96 (Z-4) Plan Commission meeting to hold hearing regarding rezoning
of Site and adopt resolution recommending to Common Council
approval of proposed zoning ordinance.
X 5/21/96 (RA-7) Redevelopment Commission meeting to conduct public hearing
on the Project, receive remonstrances and objections, and
adopt resolution confirming or modifying and confirming the
Declaratory Resolution (the "Confirmatory Resolution").
X 5/22/96 (RA-8) Redevelopment Commission publishes and files notice of
public hearing on the expanded area (to include newly
annexed waterworks department property) .
5/27/96 (Z-5) Plan Commission certifies proposed zoning ordinance on
rezoning of Site (with favorable recommendation) to Common
Council.
5/31/96 (RL-1) Redevelopment Commission obtains two appraisals for real
estate and prepares offering sheet (offering prices may not
be less than the average of the two appraisals), and maps
and plats showing size and location of real estate to be
offered.
5/31/96 (RL-2) Draft of Development Agreement and Site Plan distributed to
Common Council, Redevelopment Commission, and Port
Authority.
-4-
<PAGE>
5/31/96 (RL-3) Redevelopment Commission publishes notice that it will
receive and open and consider written offers for the lease
of real estate (also publishes one week later --6/8/96).
6/3/96 (RA-9) Last day to file remonstrance against Confirmatory
Resolution with the clerk of the Circuit or Superior Court.
6/3/96 (Z-6) Common Council special meeting to conduct first and second
readings of ordinance on rezoning of Site.
6/3/96 (PA-10) Port Authority publishes notice that it will receive bids
for Port Authority Agreement (also publishes one week later-
6/10/96).
6/3/96 (RL-4) Draft of Sublease distributed to Redevelopment Commission.
6/3/96 (RL-5) Draft of Port Authority Agreement distributed to Port
Authority.
6/4/96 (PA-10) Redevelopment Commission meeting to conduct public hearing
on the expanded area, receive remonstrances and objections,
and adopt resolution amending the area.
6/7/96 (RL-6) Mayor approves Development Agreement Site Plan, and Signage
Plan.
6/10/96 (Z-7) Common Council meeting to conduct third reading and to adopt
ordinance on rezoning of Site, and adopt resolution
approving Development Agreement, Site Plan, and Signage
Plan.
6/1 2/96 (PA- 11) Water Department meeting to adopt final resolution
authorizing intergovenunental transfer of property to
Redevelopment Commission (including access easement).
6/15/96 (LP-4) DNR issues authority to fill permit land patent to Water
Department for waterworks property.
6/17/96 (RA-11) Last day to file remonstrance against resolution amending
the area.
6/17/96 (PA-12) Port Authority meeting to adopt full resolution authorizing
intergovernmental transfer of property to Redevelopment
Commission, execution of lease with Redevelopment
Commission, and accepts bids and awards Port Authority
Agreement with ECCH.
6/18/96 (PA- 13) Redevelopment Commission meeting to adopt final resolution
authorizing intergovernmental transfers from Port Authority
and Water Department.
-5-
<PAGE>
6/18/96 (RL-7) Redevelopment Commission meeting to receive and open Offers
award lease of real estate to highest and best bidder,
authorize entry into, lease with developer, and approve
(ratify) Development Agreement with developer.
6/18/96 (SE-7) Sanitary District meeting to accept dedication of sewer
improvements and approve reservation of sewer capacity in
favor of LMC.
-6-
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[TEXT ILLEGIBLE]
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[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
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[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
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Page 1 of ?
EXHIBIT K
---------
LAND DESCRIPTION
Redevelopment Commission Sublease
Ingress & Egress Access to Parking
version 1
28 MAY 96
A part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way), thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right, said
point of curvature being North 36 degrees 00 minutes 00 seconds West 326.48 feet
from the radius point of said curve; thence northeasterly and easterly 176.71
feet along said curve to a point being North 04 degrees 59 minutes 19 seconds
West 326.48 feet from the radius point of said curve and to the POINT OF
BEGINNING of this description; thence North 48 degrees 49 minutes 21 seconds
East 35.00 feet; thence South 41 degrees 10 minutes 39 seconds East 625.56 feet;
thence South 41 degrees 14 minutes 09 seconds East 34.87 feet to a point on a
non-tangent curve concave to the northeast (said curve hereinafter referred to
as "Curve #1"), said point of curvature being South 48 degrees 38 minutes 51
seconds West 5,682.15 feet from the radius point of said curve; thence
southeasterly 150.03 feet along Curve #1 to & point being South 47 degrees 08
minutes 05 seconds West 5,682.15 feet from the radius point of Curve # 1; thence
North 48 degrees 45 minutes 56 seconds East 96.78 feet; thence South 41 degrees
14 minutes 04 seconds East 100.00 feet; thence South 48 degrees 45 minutes 56
seconds West 128.09 feet to a point on a non-tangent curve concave to the
northeast (said curve is concentric with Curve #1), said point being South 46
degree 08 minutes 30 seconds West 5,717.15 feet from the radius point of said
curve; thence northwesterly 250.02 feet along said curve to a point being South
48 degrees 38 minutes 51 seconds West 5,717.15 feet from the radius point of
said curve; thence North 41 degree 14 minutes 09 seconds West 34.96 feet; thence
North 41 degrees 10 minutes 39 seconds West 625.58 feet to the POINT OF
BEGINNING containing 0.950 acres, more or less.
<PAGE>
[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
LAND DESCRIPTION
Redevelopment Commission Sublease
Ingress & Egress Access to Parking
version 1
28 MAY 96
A part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way), thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right, said
point of curvature being North 36 degrees 00 minutes 00 seconds West 326.48 feet
from the radius point of said curve; thence northeasterly and easterly 176.71
feet along said curve to a point being North 04 degrees 59 minutes 19 seconds
West 326.48 feet from the radius point of said curve and to the POINT OF
BEGINNING of this description; thence North 48 degrees 49 minutes 21 seconds
East 35.00 feet; thence South 41 degrees 10 minutes 39 seconds East 625.56 feet;
thence South 41 degrees 14 minutes 09 seconds East 34.87 feet to a point on a
non-tangent curve concave to the northeast (said curve hereinafter referred to
as "Curve #1"), said point of curvature being South 48 degrees 38 minutes 51
seconds West 5,682.15 feet from the radius point of said curve; thence
southeasterly 150.03 feet along Curve #1 to & point being South 47 degrees 08
minutes 05 seconds West 5,682.15 feet from the radius point of Curve # 1; thence
North 48 degrees 45 minutes 56 seconds East 96.78 feet; thence South 41 degrees
14 minutes 04 seconds East 100.00 feet; thence South 48 degrees 45 minutes 56
seconds West 128.09 feet to a point on a non-tangent curve concave to the
northeast (said curve is concentric with Curve #1), said point being South 46
degree 08 minutes 30 seconds West 5,717.15 feet from the radius point of said
curve; thence northwesterly 250.02 feet along said curve to a point being South
48 degrees 38 minutes 51 seconds West 5,717.15 feet from the radius point of
said curve; thence North 41 degree 14 minutes 09 seconds West 34.96 feet; thence
North 41 degrees 10 minutes 39 seconds West 625.58 feet to the POINT OF
BEGINNING containing 0.950 acres, more or less.
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[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
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[MAP OF AMERICAN CONSULTING ENGINEERS, INC. APPEARS HERE]
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Page 1 of 3
LAND DESCRIPTION
Redevelopment Commission Sublease
Parcel 4
version 2
28 MAY 96
A part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West
and a part of Section 36, Township 38 North, Range 10 West located in North
Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way); thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right, said
point of curvature being North 36 degrees 00 minutes 00 seconds West 326.48 feet
from the radius point of said curve; thence northeasterly and easterly 118.22
feet along said curve to the southwestern boundary of the 21.255 acre tract of
land described in the QUITCLAIM DEED recorded as instrument #910181 on April 17,
1991 in the office of the Recorder of Lake County, Indiana, said point being
North 15 degrees 15 minutes 10 seconds West 326.48 feet from the radius point of
said curve, the next seven (7) courses are along the boundary of said 21.255
acre tract of land; 1) thence North 41 degrees 15 minutes 08 seconds West
1,700.29 feet to the POINT OF BEGINNING of this description; 2) thence North 41
degrees 15 minutes 08 seconds West 1,539.62 feet to the point of curvature of a
curve to the right, said point of curvature being South 48 degrees 44 minutes 52
seconds West 24,828.52 feet from the radius point of said curve; 3) thence
northwesterly 281.79 feet along said curve to its point of tangency, said point
of tangency being South 49 degrees 23 minutes 53 seconds West 24,828.52 feet
from the radius point of said curve; 4) thence North 40 degrees 36 minutes 07
seconds West 1.474.75 feet to the Indiana/Illinois State Line; 5) thence North
00 degrees 52 minutes 04 seconds West 138.52 feet along the Indiana/Illinois
State Line; 6) thence South 48 degrees 50 minutes 29 seconds East 279.19 feet;
7) them South 41 degrees 14 minutes 04 seconds East 2,051.13 feet to the
northwestern corner of the tract of land described in the QUITCLAIM DEED
recorded in Deed Record 1219, page 31 on November 5, 1962 in said Recorder's
office, said comer being on "Eggers' Fence Line"; thence South 87 degrees 40
minutes 04 seconds East 11.27 feet along the northern boundary of said tract of
land which is also along "Eggers' Fence Line"; thence South 41 degrees 12
minutes 09 seconds East 139.21 feet; thence
<PAGE>
Page 2 of 3
South 40 degrees 14 minutes 07 seconds East 154.35 feet to a point on a non-
tangent curve concave to the southwest, said point being North 51 degrees 42
minutes 18 seconds East 1,514.88 feet from the radius point of said curve;
thence southeasterly 141.95 feet along said curve to a point being North 57
degrees 04 minutes 25 seconds East 1,514.88 feet from the radius point of said
curve; thence South 30 degrees 59 minutes 10 seconds East 154.35 feet, thence
South 30 degrees 01 minute 09 seconds East 186.88 feet; thence South 30 degrees
59 minutes 24 seconds East 155.62 feet to a point on a non-tangent curve concave
to the northeast, said point being South 57 degrees 04 minutes 25 seconds West
1,539.88 feet from the radius point of said curve; thence southeasterly 143.63
feet to a point being South 51 degrees 43 minutes 47 seconds West 1,539.88 feet
from the radius point of said curve; thence South 48 degrees 44 minutes 52
seconds West 29.89 feet to the POINT OF BEGINNING containing 9.760 acres, more
or less.
ALSO, a part of the Northeast Quarter of Section 1, Township 37 North, Range 10
West and a part of Section 36, Township 38 North, Range 10 West located in North
Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Comer of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way); thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right (said
curve hereinafter referred to as "Curve #1), said point of curvature being North
36 degrees 00 minutes 00 seconds West 326.48 feet from the radius point of Curve
#1; thence northeasterly and easterly 176.71 feet along Curve #1 to a point
being North 04 degrees 59 minutes 19 seconds West 326.48 feet from the radius
point of Curve #1 and to the POINT OF BEGINNING of this description; thence
North 41 degrees 10 minutes 39 seconds West 1,372.17 feet to the point of
curvature of a curve to the right, said point of curvature being South 48
degrees 49 minutes 21 seconds West 474.78 feet from the radius point of said
curve; thence northwesterly 58.94 feet along said curve to its point of
tangency, said point of tangency being South 55 degrees 56 minutes 06 seconds
West 474.78 feet from the radius point of said curve; thence North 34 degrees 03
minutes 54 seconds West 45.58 feet to point of curvature of curve to the left,
said point of curvature being North 55 degrees 56 minutes 06 seconds East 729.28
feet from the radius point of said curve; thence northwesterly 90.62 feet along
said curve to its point of tangency, said point of tangency being North 48
degrees 48 minutes 55 seconds East 729.28 feet from the radius point of said
curve; thence North 41 degrees 11 minutes 05 seconds West 8.90 feet; thence
North 40 degrees 12 minutes 29 seconds West 154.34 feet to a point on a non-
<PAGE>
Page 3 of 3
tangent curve concave to the northeast, said point being South 51 degrees 45
minutes 03 seconds West 1,500.05 feet from the radius point of said curve;
thence northwesterly 138.44 feet along said curve to a point being South 57
degrees 02 minutes 18 seconds West 1,500.05 from the radius point of said curve;
thence North 31 degrees 00 minutes 10 seconds West 154.34 feet; thence North 30
degrees 01 minute 34 seconds West 170.82 feet to the point of curvature of curve
to the right, said point of curvature being South 59 degrees 58 minutes 26
seconds West 1,420.19 feet from the radius point of said curve; thence
northwesterly and northerly 273.83 feet along said curve to its point of
tangency, said point of tangency being South 71 degrees 01 minute 16 seconds
West 1,420.19 feet from the radius point of said curve; thence North 18 degrees
58 minutes 44 seconds West 56.31 feet to a point on the northwesterly extension
of the southwestern boundary of the 16.039 acre tract of land describe in the
WARRANTY DEED recorded in Deed Record 1218, page 592 on November 9, 1962 in the
office of the Recorder of Lake County, Indiana; thence South 41 degrees 14
minutes 04 seconds East 2,501.08 feet along the northwesterly extension of the
southwestern boundary of said 16.039 acre tract of land and along the
southwestern boundary of said 16.039 acre tract of land to a point being North
48 degrees 49 minutes 21 seconds East of the point of beginning; thence South 48
degrees 49 minutes 21 seconds West 193.47 feet to the POINT OF BEGINNING
containing 9.452 acres, more or less.
EXCEPTING AND EXCLUDING THE FOLLOWING FROM THE ABOVE-DESCRIBED PARCELS:
A parcel of real estate that is two hundred (200) feet wide (measured from east
to west) and fifty (50) feet in depth (measured from north to south) and located
in the northeasternmost corner of the above-described parcels.
<PAGE>
SCHEDULE I
INFORMATION CONCERNING LABOR OBJECTIVES
Section 8.10
Reporting Period
----------------
Date
----
1. Contractors and Construction Managers with offices in the following areas:
Hammond and Whiting _______
Lake County (excluding Hammond and Whiting) _______
Indiana (excluding Lake County) _______
Outside of Indiana _______
2. Subcontractors and Suppliers with offices in the following areas:
Hammond and Whiting _______
Lake County (excluding Hammond and Whiting) _______
Indiana (excluding Lake County) _______
Outside of Indiana _______
3. Contractors, Construction Managers, Subcontractors and Suppliers -- Labor
and Non-supervisory Labor with offices in the following areas:
Hammond and Whiting _______
Lake County (excluding Hammond and Whiting) _______
Indiana (excluding Lake County) _______
Outside of Indiana _______
4. Contractors, Construction Managers, Subcontractors and Suppliers -- Vendors
and Suppliers with offices in the following areas:
Hammond and Whiting _______
Lake County (excluding Hammond and Whiting) _______
Indiana (excluding Lake County) _______
Outside of Indiana _______
<PAGE>
SCHEDULE II
INFORMATION CONCERNING VENDORS AND SUPPLIERS
Section 12.09
Reporting Period
----------------
Date
----
Providers of non-gaming goods and services with offices in the following areas:
Hammond _______
Lake County (excluding Hammond) _______
Indiana (excluding Lake County) _______
Outside of Indiana _______
Total Purchases =======
<PAGE>
SCHEDULE III
INFORMATION CONCERNING EMPLOYMENT AND WAGES
Section 12.12
Reporting Period
----------------
Date
----
1. Current Total Employees plus Total Job Openings equals
Total Available Jobs.................... _____
2. Percentage of Full-Time Employees:
Existing full-time employees plus openings
for full-time employees x 100 = %
------------------------------------------ -----
Total Available Jobs
3. Average annual wage including gratuities and
benefits _____
4. Qualified employees from the following areas:
Hammond _____
Lake County (excluding Hammond) _____
Indiana (excluding Lake County) _____
Outside of Indiana _____
Total =====
<PAGE>
EXHIBIT 10.11
LEASE
BY AND BETWEEN
CITY OF HAMMOND, DEPARTMENT OF REDEVELOPMENT
EMPRESS CASINO HAMMOND CORPORATION
DATED AS OF JUNE 19, 1996
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RECITALS.......................................................................1
ARTICLE I DEFINITIONS..........................................................2
ARTICLE II LEASED PROPERTY.....................................................8
Section 2.01. Leased Property..............................................8
Section 2.02. Leasehold Title..............................................8
Section 2.03. Covenant of Quiet Enjoyment..................................9
Section 2.04. AS IS Condition..............................................9
ARTICLE III THE COMMISSION'S RESERVED RIGHTS...................................9
Section 3.01. Access Rights................................................9
Section 3.02. Water Department Easement...................................10
Section 3.03. Access to Perimeter Road....................................10
Section 3.04. Port Authority Easement and Rights..........................10
ARTICLE IV TERM...............................................................11
Section 4.01. Term........................................................11
Section 4.02. Extension of Term...........................................11
Section 4.03. Holding Over................................................11
ARTICLE V RENT................................................................11
Section 5.01. Base Rent...................................................11
Section 5.02. Additional Consideration....................................11
ARTICLE VI USE OF REDEVELOPMENT PARCEL........................................12
Section 6.01. Permitted Uses..............................................12
Section 6.02. Compliance with Laws, Insurance Policies....................12
Section 6.03. Compliance with Ground Lease, etc...........................13
Section 6.04. Negative Covenants..........................................13
Section 6.05. Hazardous Substances........................................13
ARTICLE VII IMPROVEMENTS......................................................14
Section 7.01. Commencement and Completion of Construction.................14
Section 7.02. Governmental Approvals......................................14
Section 7.03. Title to Improvements.......................................15
Section 7.04. Status Meetings.............................................15
ARTICLE VIII ASSIGNMENT AND ENCUMBRANCES......................................15
Section 8.01. Assignment and Subleases....................................15
Section 8.02. Encumbrances................................................16
Section 8.03. General.....................................................16
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ARTICLE IX TAXES AND UTILITY EXPENSES................................................16
Section 9.01. Payment of Taxes and Utility Expenses..............................16
Section 9.02. Proration of Real Estate Taxes.....................................17
Section 9.03. Right to Contest...................................................17
Section 9.04. Distribution of Overpayment........................................18
Section 9.05. Separate Assessments...............................................18
ARTICLE X MAINTENANCE, REPAIRS AND ALTERATIONS.......................................18
Section 10.01. Maintenance and Repair by the Tenant...............................18
Section 10.02. Alterations........................................................18
ARTICLE XI MECHANICS' LIENS: INDEMNIFICATION.........................................19
Section 11.01. Mechanics' Liens...................................................19
Section 11.02. Indemnification by the Tenant......................................19
ARTICLE XII INSURANCE................................................................20
Section 12.01. Liability Insurance................................................20
Section 12.02. Proof of Insurance.................................................20
Section 12.03. Adjustment in Insurance............................................21
Section 12.04. Waiver of Subrogation..............................................21
Section 12.05. Insurance Proceeds.................................................21
Section 12.06. General Provisions.................................................22
ARTICLE XIII DESTRUCTION.............................................................22
Section 13.01. The Tenant's Obligation to Repair..................................22
Section 13.02. No Abatement.......................................................22
ARTICLE XIV CONDEMNATION.............................................................22
Section 14.01. Total Condemnation.................................................22
Section 14.02. Proceeds of Total Condemnation.....................................22
Section 14.03. Partial Condemnation...............................................23
Section 14.04. Restoration........................................................23
Section 14.05. Temporary Condemnation.............................................24
Section 14.06. Rights to Appear...................................................24
ARTICLE XV MORTGAGES.................................................................24
Section 15.01. Fee Title Not Subordinated.........................................24
Section 15.02. Leasehold Mortgages................................................25
ARTICLE XVI TENANT'S RIGHT TO CURE THE COMMISSION'S DEFAULT UNDER THE HPA
FOOTPRINT SUBLEASE, THE HPA PARKING LEASE AND THE WATER DEPARTMENT LEASE..........25
ARTICLE XVII DEFAULTS................................................................26
Section 17.01. Events of Default by the Developer.................................26
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Section 17.02. Extensions.................................................26
Section 17.03. Remedies...................................................27
Section 17.04. Default by the Commission..................................27
ARTICLE XVIII BANKRUPTCY AND INSOLVENCY.......................................28
Section 18.01. Certain Events of Default Specified........................28
Section 18.02. Preservation of Leasehold Estate...........................28
ARTICLE XIX SPECIFIC PERFORMANCE..............................................29
ARTICLE XX SURRENDER..........................................................29
Section 20.01. Surrender of Leased Premises...............................29
Section 20.02. Removal of Certain Property................................29
Section 20.03. Personal Property Not Removed..............................30
Section 20.04. Grant of Reciprocal Easements..............................30
Section 20.05. Survival of Terms..........................................30
ARTICLE XXI NO WAIVER.........................................................30
ARTICLE XXII THE COMMISSION'S LIABILITY.......................................31
Section 22.01. Assignment by the Commission...............................31
Section 22.02. Limitation on Right of Recovery............................31
ARTICLE XXIII FORCE MAJEURE...................................................32
ARTICLE XXIV NOTICES..........................................................32
ARTICLE XXV CERTIFICATES......................................................34
ARTICLE XXVI GENERAL..........................................................34
Section 26.01. Governing Law..............................................34
Section 26.02. Partial Invalidity.........................................35
Section 26.03. Memorandum of Lease........................................35
Section 26.04. Remote Vesting.............................................35
Section 26.05. Interpretation.............................................35
Section 26.06. Modification...............................................35
Section 26.07. Parties....................................................35
Section 26.08. Construction of Agreement..................................35
Section 26.09. Attorneys' Fees............................................36
Section 26.10. Authority..................................................36
Section 26.11. Standards for Consent......................................36
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ARTICLE XXVII DISPUTE RESOLUTION AND TERMINATION..............................36
Section 27.01. Alternative Dispute Resolution.............................36
Section 27.02. Arbitration................................................37
Section 27.03. Action During Pendency of Dispute..........................38
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<PAGE>
LEASE
-----
THIS LEASE is entered into this 19th day of June, 1996, by and between City
of Hammond, Department of Redevelopment (the "Commission"), and Empress Casino
Hammond Corporation, an Indiana corporation (the "Tenant").
RECITALS
--------
WHEREAS, the Commission, acting pursuant to its authority under Indiana
Code 36-7-1-14 et seq., has created the Hammond Marina Development Area for the
purpose of carrying out in such area a redevelopment project and, on May 21,
1996, adopted a resolution confirming the Amended Hammond Marina Area
Development Plan relating to the redevelopment project (the "Development Plan");
WHEREAS, by its Resolution No.______, adopted on _____________, 1996, the
Commission authorized the issuance of a request for proposals for the leasing of
the real estate and interests in real estate (the "Redevelopment Parcel");
WHEREAS, pursuant to Indiana Code 36-7-14-22, the Commission published a
notice to bidders with respect to such proposed lease;
WHEREAS, on June 18, 1996, the Tenant submitted a proposal for
redevelopment to the Commission stating the terms and conditions on which it
would redevelop the Redevelopment Parcel (as such term is hereinafter defined);
WHEREAS, at its public meeting on June 18, 1996, the Commission determined
that the proposal submitted by the Tenant was the highest and best proposal for
the Redevelopment Parcel;
WHEREAS, the city of Hammond, Indiana, the Commission and the Tenant are
entering into a Development Agreement for the purpose of, among other things,
carrying out redevelopment of the Redevelopment Parcel pursuant to the Tenant's
proposal and the Development Plan; and
WHEREAS, the Commission and the Tenant desire to set forth their agreement
with respect to the leasing of the Redevelopment Parcel, the construction of new
improvements thereon and certain other matters affecting the Redevelopment
Parcel and such improvements.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
contained herein, the Commission and the Tenant agree as follows:
<PAGE>
ARTICLE I
---------
DEFINITIONS
-----------
The following terms, when used in this Lease with initial capital letters,
have the following respective meanings:
"Act" means the Riverboat Gambling Act as established by Indiana Code (S)
4-33-1-1, et seq. and all amendments thereto and all rules and orders promulgate
thereunder.
"Affiliate" means (a) any or all of the member, partners and shareholders
of the Tenant, and (b) any limited liability company, partnership, corporation
or other entity in which the Tenant, a wholly-owned or partially-owned but
controlled subsidiary of the Tenant, any of the members, partners or
shareholders of the Tenant, members of the families of the Tenant or any of the
members, partners or shareholders of the Tenant, or a trustee for the benefit of
such family members, or some, any or all of them, directly or indirectly, own an
interest, either singly or in the aggregate, sufficient to effectively control
such entity.
"Applicable Laws" means all laws, rules, regulations, ordinances, codes,
administrative actions and/or orders of any court or governmental agency or
unit, whether federal, state or local, properly exercising or having
jurisdiction with respect to or over the subject matter in question.
"Base Rent" has the meaning set forth in Section 5.01.
"Boat" means the vessel named and known as Empress III, a riverboat casino
owned or leased and to be operated by the Tenant on Lake Michigan from Hammond,
Indiana, that may be further modified, improved, equipped and/or replaced by the
Tenant from time to time as provided in the Development Agreement.
"City" means the municipal corporation of Hammond, Indiana.
"Commencement Date" has the meaning set forth in Section 4.01.
"Commission" means the City of Hammond Redevelopment Commission; provided,
that it is expressly understood and agreed by the Tenant that any obligations of
the Commission under this Lease may be fulfilled by any subdivision, unit,
agency, commission, department, authority, instrumentality, officer or
representative, or any combination thereof, of the City.
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"Condemnation Proceeds" means the total aggregate award, or settlement in
lieu thereof, including any award (or settlement) for the Commission's fee
simple title, in the event of a total taking or Constructive Total Taking of the
Redevelopment Parcel and the Improvements.
"Constructive Total Taking" means a taking of such scope that the remaining
portion of the Redevelopment Parcel and the Improvements is insufficient to
permit the restoration of the Improvements so as to be suitable for the use
primary permitted by Section 6.01.
"Development Agreement" means the Hammond Riverboat Gaming Project
Development Agreement entered into or to be entered into by and among the City,
the Commission, and the Tenant, as the same has been or may hereafter be amended
or modified.
"DMS" means DMS of Hammond, Inc., and any subsequent holder of DMS of
Indiana, Inc.'s right, title or interest under the Ground Lease and the Port
Authority Lease.
"Docking Facilities" has the meaning set forth in the Development
Agreement.
"Environmental Complaint" has the meaning set forth in Section 6.05.
"Environmental Laws" means federal, state and local laws, statutes,
ordinances, rules or regulations, effective on or after the date of execution of
this Lease, relating to pollution or protection of the environment, including
laws or regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment (including, without
limitation, ambient air, surface water, ground water or land) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances or imposing standards of
conduct or liability concerning underground storage tanks. Such laws shall
include, but not be limited to, the Resource Conservation and Recover Act of
1976 (RCRA), 42 U.S.C. (S)(S) 690 et seq. the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. (S)(S)
9601-9657, as amended by the Superfund Amendments and Reauthorization Act of
1986 (SARA); the Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 6901
et seq.; the Federal Water Pollution Control Act, 33 U.S.C. (S)(S) 1251 et seq.;
the Clean Air Act, 42 U.S.C. (S)(S) 741 et seq.; the Clean Air Act, 33 U.S.C.
(S) 7401; the Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601-2629; the Safe
Drinking Water Act, 42 U. S.C. (S)(S) 300f-300j; the Atomic Energy Act, 42
U.S.C. (S)(S) 2011, et seq.; the Emergency Planning and Community Right-to-Know
Act, 42 U.S.C. (S)(S) 11001 et seq.; Indiana Code, Title 13 - Environment; or
any amendments thereto; or any similar
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federal, state or local environmental laws, statutes, ordinances, or any
regulations, orders or decrees now or hereafter promulgated thereunder.
"Event of Default" has the meaning set forth in Section 17.01.
"Extension Term" has the meaning set forth in Section 4.02.
"Gaming Commission" means the Indiana Gaming Commission as established
pursuant to the Act.
"Ground Lease" means the Ground Lease Agreement among the Port Authority,
as lessor, Hammond, as co-lessor, and DMS, as lessee, dated as of June 30, 1989,
as the same has been or may hereafter be amended or modified.
"Guest Facilities" has the meaning set forth in the Development Agreement.
"Hammond" means the City of Hammond, Indiana, a municipal corporation.
"Hammond Marina" means the marina and related improvements located on that
portion of Lake Michigan and the adjacent lake front that are subject to the
Port Authority's jurisdiction and generally described and/or depicted on Exhibit
A to, the Development Agreement.
"Hazardous Discharge" has the meaning set forth in Section 6.05.
"Hazardous Substances" means any substance:
(a) The presence of which requires investigation, response, remediation or
other, corrective action under the Resource Conservation and Recovery Act of
1976 (RCRA), 42 U.S.C. (S)(S) 690 et seq.; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. (S)(S)
9601-9657, as amended by the Superfund Amendments and Reauthorization Act of
1986 (SARA); the Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 6901
et seq.; the Federal Water Pollution Control Act, 33 U.S.C. (S)(S) 1251 et seq.;
the Clean Air Act, 42 U.S.C. (S)(S) 741 et seq.; the Clean Water Act, 33 U.S.C.
(S)7401; the Toxic Substances Control Act, 15 U.S.C. (S)(S)2601-2629; the Safe
Drinking Water Act, 42 U.S.C. (S)(S) 300f-300j; the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. (S)(S) 11001 et seq.; or any amendments
thereto; or any similar federal, state or local environmental laws, statutes or
ordinances, or any regulations, orders or decrees now or hereafter promulgated
thereunder; or
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(b) Which is defined as "hazardous waste," "hazardous substance," "solid
waste," "infectious waste," "toxic substance," "radioactive waste," or is
otherwise regulated by the Resource Conservation and Recover Act of 1976 (RCRA),
42 U.S.C. (S)(S) 690 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. (S)(S) 9601-9657, as
amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA); the
Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 6901 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. (S)(S) 1251 et seq.; the Clean
Air Act, 42 U.S.C. (S)(S) 741 et seq.; the Clean Air Act, 33 U.S.C. (S) 7401;
the Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601-2629; the Safe Drinking
Water Act, 42 U.S. C. (S)(S) 300f-300j; the Atomic Energy Act, 42 U.S.C. (S)(S)
2011, et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
(S)(S) 11001 et seq.; Indiana Code, Title 13 - Environment; or any amendments
thereto; or any similar federal, state or local environmental laws, statutes,
ordinances, or any regulations, orders or decrees now or hereafter promulgated
thereunder.
"HPA Footprint Sublease" means the Sublease between the Port Authority, as
landlord, and the Commission, as tenant, dated as of October 13, 1995, as the
same has been or may hereafter be amended.
"HPA Parking Lease" means the Intergovernmental Lease Agreement and Grant
of Easement between the Port Authority, as landlord, and the Commission, as
tenant, dated as of June 11, 1996, as the same has been or may hereafter be
amended.
"Improvements" means all buildings and related improvements (including,
without limitation, the Docking Facilities, the Guest Facilities, the Parking
Facilities, any Infrastructure Facilities, landscaping, driveways, walkways,
surface parking lots, and docking, mooring and marina facilities) that are
hereafter located or constructed by the Tenant (a) on the Redevelopment Parcel
or (b) in the Hammond Marina in the vicinity of the Redevelopment Parcel to the
extent the Commission has any interest therein.
"Infrastructure Facilities" means all pipelines, conduits, ducts, cables,
wires, manholes, vaults, tanks, tunnels or other manmade facilities or
structures, and any encasements containing such facilities, which have been or
will hereafter be installed for the purpose of furnishing, storing, removing or
transmitting electricity, gases, steam, liquid petroleum products, telephone or
other communications, cable television, computer signals or data, sewage
drainage, traffic or other control systems, or water or other utilities or
services to the Improvements.
"Initial Term" has the meaning set forth in Section 4.01.
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"License" means an owner's license as defined in Indiana Code (S) 4-33-2-15
that allows the Tenant to own and operate a riverboat casino on Lake Michigan
from the City of Hammond, Indiana.
"License Date" means the date on which the License is issued to the Tenant
by the Gaming Commission.
"Parcel 1A" means the real estate or interest in real estate described,
and/or depicted in Exhibit B attached hereto and incorporated herein by this
reference.
"Parcel 2" means the real estate or interest in real estate described
and/or depicted in Exhibit C attached hereto and incorporated herein by this
reference.
"Parking Access Parcel" means the real estate or interest in real estate
described and/or depicted in Exhibit D attached hereto and incorporated herein
by this reference.
"Parking Parcels" means the real estate that is described and/or depicted
in Exhibit E attached hereto and incorporated herein by this reference.
"Parking Facilities" has the meaning set forth in the Development
Agreement.
"Parking Garage" has the meaning set forth in the Development Agreement.
"Perimeter Road Parcel" means the real estate described and/or depicted in
Exhibit F attached hereto and incorporated herein by this reference.
"Port Authority" means the Hammond Port Authority.
"Port Authority Lease" means the Lease Agreement among the Port Authority,
as lessee, Hammond and DMS, as lessor, dated as of June 30, 1989, as the same
has been or may hereafter be amended or modified.
"Project Agreement" has the meaning set forth in the Recitals.
"Real Estate Taxes" means and includes all ad valorem real property taxes
and assessments levied upon or with respect to (or, if any such levy is upon or
with respect to a parcel of real estate and improvements thereon of which the
Redevelopment Parcel is a part, then the portion thereof properly allocable and
relating to) the Redevelopment Parcel and the Improvements, or any interest
therein or any part thereof, and all taxes, levies and charges which may be
levied or imposed by any
-6-
<PAGE>
governmental authority in replacement of, in lieu of, or in addition to ad
valorem real property taxes, in whole or in part, including but not limited to a
state or local option tax designed for property tax relief purposes, or a
license or franchise fee measured by rents received from the Redevelopment
Parcel and the Improvements, or otherwise measured or based upon Tenant's or the
Commission's interests in the Redevelopment Parcel and the Improvements.
"Redevelopment Parcel" has the meaning set forth in Section 2.01.
"Rent" has the meaning set forth in Section 5.01.
"Reserved Rights" means the rights, privileges and easements respecting the
Redevelopment Parcel expressly reserved to the Commission pursuant to Article
III.
"Taxes" means all Real Estate Taxes, personal property taxes, special and
general assessments, water and sewer service charges, licenses and permit fees,
and other governmental impositions and charges of every kind and nature
whatsoever, extraordinary as well as ordinary, which may be assessed, levied, or
become due and payable with respect to, or become a lien on, the Redevelopment
Parcel or the Improvements, or any interest therein or any part thereof.
"Term" means the Initial Term together with all Extension Terms.
"Trust Indenture" means the Trust Indenture among DMS, the Port Authority
and the Trustee, as Trustee, dated as of June 30, 1989, as the same has been or
may hereafter be amended or modified.
"Trustee" has the meaning set forth in the Development Agreement.
"Utility Expenses" means and includes all charges relating to the providing
of water, steam, heat, cooling, gas, electricity, light, sewer, telephone,
television, telecommunications, trash collection and other similar services
furnished to all or any part of the Redevelopment Parcel and the Improvements
during the Term.
"Water Department" means the Department of Waterworks of the City of
Hammond, Indiana.
"Water Department Lease" means the Lease between the Water Department, as
landlord, and the Commission, as tenant, dated as of June 11, 1996, as the same
has been or may hereafter be amended.
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"Water Department Resolution" means the Resolution of the Board of
Directors of the Department of Waterworks of the City of Hammond Authorizing The
Transfer of Certain Property To The City of Hammond Acting By And Through the
Hammond Redevelopment Commission, And Establishing The Terms And Conditions Of
Such Transfer dated October 11, 1995, as modified, amended and supplemented by
the Resolution of the Board of Directors of The Department of Waterworks Of The
City of Hammond Regarding The Grant of Lease To The City of Hammond, Department
of Redevelopment, The Authorization Of The Execution Of A License Agreement and
Intergovernmental Agreement And Other Matters dated June 18, 1996.
ARTICLE II
LEASED PROPERTY
Section 2.01. Leased Property. The Commission hereby leases to the Tenant
and the Tenant hereby leases from the Commission, upon and subject to the terms,
conditions, covenants and provisions hereof, all of the Commission's now
existing or hereafter acquired rights, title and interests in and to Parcel 1A,
Parcel 2, the Parking Parcels, the Parking Access Parcel and the Perimeter Road
Parcel and all improvements now or hereafter located thereon (including, without
limitation, the Improvements), and all rights, interests, and easements in any
way now or hereafter appurtenant thereto, excluding and reserving, however, to
the Commission and its successors and assigns the Reserved Rights (the leased
property and such appurtenant rights, interests and easements are hereafter
referred to collectively as the "Redevelopment Parcel").
Section 2.02. Leasehold Title. The leasehold estate created by this Lease
and the Tenant's rights hereunder are subject to the following:
(a) The lien of all Real Estate Taxes, all general and special
assessments and all other governmental dues, charges and impositions not
delinquent;
(b) The lien, terms, conditions, and provisions of the Trust Indenture
as to Parcel 1A;
(c) The terms, conditions, and provisions of the Ground Lease as to
Parcel 1A;
(d) The terms, conditions and provisions of the Port Authority Lease
as to Parcel 1A;
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(e) The terms, conditions and provisions of the HPA Footprint Sublease
as to Parcel 1A;
(f) The terms, conditions and provisions of the HPA Parking Lease as
to the Parking Parcels and the Parking Access Parcel;
(g) The terms, conditions and provisions of the Water Department Lease
as to the Perimeter Road Parcel;
(h) The terms, conditions and provisions of the Water Department
Resolution as to Parcel 2;
(i) All easements, restrictions, agreements, covenants and other
matters of record;
(j) All rights, title and interests of the public, the State of
Indiana and any political subdivision of the State of Indiana (including,
without limitation, counties and municipalities) but excluding the
Commission;
(k) All applicable zoning, building and land use and other
governmental restrictions, laws, ordinances, rules and regulations; and
(l) the Reserved Rights.
Section 2.03. Covenant of Quiet Enjoyment. The Commission covenants
and agrees that the Tenant, upon paying the Rent to be paid by it as herein
provided and upon keeping, observing and performing all other covenants and
agreements to be kept, observed or performed by it hereunder, shall at all times
during the Term have the peaceable and quiet enjoyment and possession of the
Redevelopment Parcel, without hindrance from the Commission or anyone claiming
by, through or under the Commission, subject to matters to which this Lease is
subject as provided in the foregoing Section 2.02 and to the Commission's
Reserved Rights as provided in the following Article III. The Commission agrees
to perform all obligations of the Commission under the HPA Footprint Sublease,
the HPA Parking Lease and the Water Department Lease except for those the
Developer is expressly required to perform or discharge by the terms of this
Lease. In the event an adverse claim is made against the Redevelopment Parcel by
someone not claiming by, through or under the Commission or included within the
matters to which this Lease is subject as provided in the foregoing Section
2.02, the Commission shall not be in default hereunder if it cooperates with the
developer in the defense of such adverse claim and takes all reasonable
affirmative action to preserve the Tenant's rights hereunder if the Tenant
agrees to reimburse the Commission for costs and expenses incurred by it in
connection therewith.
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Section 2.04. AS IS Condition. The Tenant's acceptance of the
Redevelopment Parcel is "AS IS, WHERE IS" and without warranty of any kind as to
condition, fitness for the Tenant's purposes or otherwise.
ARTICLE III
THE COMMISSION'S RESERVED RIGHTS
Section 3.01. Access Rights. The Tenant shall permit the Commission,
its authorized representatives and its successors and assigns, upon reasonable
prior notice, to enter upon those portions of the Redevelopment Parcel and the
Improvements which are not required under Applicable Laws or sound business
practices to be restricted access for purposes of maintaining confidentially or
used for the handling or storage of money or similar tokens for the purpose of
(a) inspecting the same, or (b) performing any work in, on or to the
Redevelopment Parcel and Improvements that may be necessary by reason of the
Tenant's failure to perform any such work. Nothing herein shall imply any duty
on the part of the Commission to do any such work, and performance thereof by
the Commission shall not constitute a waiver of the Tenant's default in failing
to perform the same. The Commission shall not be liable for inconvenience,
annoyance, disturbance, loss of business or other damage to the Tenant or any
subtenant by reason of performing any such work and the obligations of the
Tenant under this Lease shall not be affected thereby.
Section 3.02. Water Department Easement. The Commission hereby
reserves an easement in and to the Redevelopment Parcel for the benefit of the
Water Department for purposes of access to, maintenance of, and repairs of the
City of Hammond Water Utility, if necessary. The Tenant acknowledges and agrees
that, provided that the Water Department provides reasonable notice to the
Tenant prior to any entry on the Redevelopment Parcel and does not unreasonably
interfere with the business operations of the Tenant, the Water Department will
not be liable for damages of any kind, direct, consequential, or otherwise, to
the Tenant for any interruption of gaming activities occasioned by and/or
through the maintenance and use of the aforementioned easement by the Water
Department, its employees, agents and/or independent contractors. The Commission
hereby reserves, for the benefit of the Water Department, the right to expand
the Water Department's Waterworks facilities into the Perimeter Road Parcel, as
more particularly set forth in Section 10 of the Water Department Lease. The
Tenant agrees to abide by the provisions of Section 10 of the Water Department
Lease in the event that the Water Department so expands its waterworks
facilities.
Section 3.03. Access to Perimeter Road. The Commission hereby
reserves the nonexclusive right for itself, the Water Department and their
respective
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officers, employees, invitees and guests to use the Drive from its southern
terminus north to the second gate.
Section 3.04. Port Authority Easement and Rights.
(a) The Commission hereby reserves for itself, the Port Authority and
their respective officers, employees, invitees and guests and members of
the public the nonexclusive right to use all driveways, roadways and
walkways now or hereafter located on or within the Parking Access Parcel
for purposes of vehicular and pedestrian access.
(b) Tenant agrees that the Port Authority has reserved for itself, its
officers, employees, invitees, and guests, the City and members of the
public certain rights in the Parking Parcels, as more fully set out in the
HPA Parking Lease.
ARTICLE IV
TERM
Section 4.01. Term. The initial term of this Lease (the "Initial
Term") shall commence on June 19, 1996 (the "Commencement Date") and shall
end at 11:59 p.m. Hammond time on the fifth (5th) anniversary of the
License Date, unless sooner terminated as provided in this Lease.
Section 4.02. Extension of Term. The term of this Lease shall be
automatically extended for periods equal to each renewal period of the
License granted to the Tenant by the Gaming Commission (each such extension
period being referred to herein as an "Extension Period"); provided, that
the total Term shall not exceed seventy-five (75) years.
Section 4.03. Holding Over. In the event the Tenant shall remain in
possession of the Redevelopment Parcel with the prior written consent of
the Commission after the expiration or earlier expiration of the Initial
Term or any Extension Term, the Tenant shall be deemed to be occupying the
Redevelopment Parcel as a tenant from month-to-month subject to all of the
covenants, terms and conditions of this Lease in so far as the same shall
be applicable to a month-to-month tenancy. Such tenancy shall be terminable
by either party upon thirty (30) days prior written notice to the other.
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ARTICLE V
RENT
Section 5.01. Base Rent. The Tenant shall pay to the Commission as
base rent (the "Base Rent") for the Redevelopment Parcel the sum of One Dollar
($1.00) per year. The Commission acknowledges receipt of Seventy-Five Dollars
($75.00), which amount represents the Base Rent for the Term.
Section 5.02. Additional Consideration. As additional consideration
for the leasing of the Redevelopment Parcel, the Tenant shall:
(a) construct the Parking Garage on the Redevelopment Parcel in
accordance with and pursuant to the terms and conditions of the Development
Agreement and transfer and convey all rights, title and interests in and to
the Parking Garage to the Commission as provided in subsection (b) of
Section 7.03 of this Lease by written documents reasonably acceptable to
the Commission and the Tenant; and
(b) execute and perform the obligations under the Development
Agreement, including, but not limited to, the payments required under
Article V of the Development Agreement, all in a form reasonably acceptable
to the Commission, the Tenant and the City.
ARTICLE VI
USE OF REDEVELOPMENT PARCEL
Section 6.01. Permitted Uses. To the extent permitted by Applicable
Laws, the Tenant shall use and occupy the Redevelopment Parcel for the purposes
of (a) constructing the Docking Facilities, the Guest Facilities, the Parking
Facilities and related Infrastructure Facilities in accordance with and as
required by the Development Agreement, (b) the use and operation of such
Improvements for the purposes for which such Improvements were designed, and (c)
all other uses permitted by the S-3 zoning classification as the same is in
effect on the Commencement Date; provided that, the Parking Parcels may not be
used in a manner inconsistent with the HPA Parking Lease. No other uses of the
Redevelopment Parcel or Improvements shall be permitted without the prior
written consent of the Commission. The Tenant shall cause the gaming and other
related facilities operated from the Redevelopment Parcel to be operated as
first-class facilities.
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Section 6.02. Compliance with Laws, Insurance Policies. During the
Term, the Tenant, at its expense, shall, with respect to the development, use
and operation of the Redevelopment Parcel and the Improvements, observe and
comply with all Applicable Laws, and with all orders, rules and regulations of
the National Board of Fire Underwriters, the Indiana Board of Fire Underwriters,
or any other body or bodies exercising similar functions, affecting the
Redevelopment Parcel, or any part thereof; and the Tenant shall pay all costs,
expenses, liabilities, losses, damages, fines, penalties, claims and demands
that may be necessary to achieve such compliance or imposed because of any
failure of compliance by the Tenant. The Tenant, at its expense, shall have the
right to contest by appropriate legal proceedings, the validity or application
of any Applicable Law, order, rules or regulation of the nature referred to in
this Section 6.02. If compliance with any such Applicable Law, order, rules or
regulation legally may be delayed pending the prosecution of any such
proceeding, the Tenant may delay such compliance until a final determination of
such proceeding.
Section 6.03. Compliance with Ground Lease, etc. The Tenant shall
perform and hereby assumes all of the lessee's obligations under the Ground
Lease, all of the sublessee's obligations under the Port Authority Lease, all of
the Commission's obligations under the HPA Footprint Sublease, the HPA Parking
Lease and the Water Department Lease in each case to the extent that such
agreements expressly require the Tenant hereunder to perform and/or assume the
performance of such obligations.
Section 6.04. Negative Covenants. The Tenant shall not (a) commit or
permit any waste to the Redevelopment Parcel or the Improvements, (b) cause or
permit any nuisance (public or private) to occur or exist in or on the
Redevelopment Parcel or Improvements, (c) permit the use of the Redevelopment
Parcel or Improvements for any lewd or lascivious purpose, (d) commit any act or
take any action that would constitute a breach of or default under the Ground
Lease, the Port Authority Lease, the HPA Footprint Sublease, the HPA Parking
Lease, the Water Department Lease or the Trust Indenture or (e) place any
vending machine or similar equipment in or on the Parking Facilities.
Section 6.05. Hazardous Substances.
(a) The Commission represents and warrants to the Developer that as of
the date hereof, the Commission has not received written notice from any
governmental authority concerning the presence of (i) Hazardous Substances on,
under or about the Redevelopment Parcel or (ii) any contamination of the soil,
surface water or ground water on, under or about the Redevelopment Parcel by
Hazardous Substances.
(b) The Tenant shall not place or install any underground storage
tanks on or in the Redevelopment Parcel or the Improvements. The Tenant shall
not
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permit any Hazardous Substances to be placed, held, located, disposed of or
released in or on the Redevelopment Parcel or the Improvements, other than (i)
Hazardous Substances of a nature and in amounts normally present in or on, or
used in connection with the operation of, commercial and retail facilities of
the type constructed on the Redevelopment Parcel, and (ii) to the extent
permitted by and in compliance with Applicable Laws. To the extent any Hazardous
Substances permitted to be placed, held, or located on or in the Redevelopment
Parcel or the Improvements are regulated by any Environmental Laws, the Tenant
shall place, hold, locate or dispose of such Hazardous Substances in strict
compliance with any and all such Environmental Laws.
(c) If the Tenant has knowledge of or receives any notice of (i) the
release, spill, discharge or emission of any Hazardous Substance from, on, in or
about the Redevelopment Parcel or the Improvements or otherwise into the
environment (including, without limitation, ambient air, surface water,
groundwater or land)(a "Hazardous Discharge") or (ii) any inquiry, complaint,
order, citation or notice with regard to the presence of any Hazardous
Substances on or under the Redevelopment Parcel or a Hazardous Discharge from
the Redevelopment Parcel (an "Environmental Complaint") from any person or
entity, including, without limitation, the United States Environmental
Protection Agency and the Indiana Department of Environmental Management or any
successor agency, the Tenant shall give immediate notice thereof to the
Commission disclosing full details of the Hazardous Discharge or Environmental
Complaint, as applicable.
(d) In the event that any Hazardous Substances are leaked, spilled,
disposed of or released from, on or in the Redevelopment Parcel or the
Improvements during the Term as a result of the acts or omissions of the
Developer or any employee, guest, invitee, supplier, vendor, contractor or agent
of the Developer, the Developer shall (i) notify the Commission,(ii) report,
remediate and dispose of such Hazardous Substances to the extent required by and
in compliance with all Applicable Laws, and (iii) take whatever actions are
reasonably necessary to protect the general public and environment from
immediate injury or damage resulting from such Hazardous Substances. At the
conclusion of the remediation and disposal required under this Section 6.04, the
Developer shall cause an environmental engineer acceptable to the Commission to
issue a statement to the Commission that all actions required by this Agreement
or Applicable Laws to be taken with respect to such Hazardous Substances have
been taken and completed and, to the knowledge of the environmental engineer
after reasonable investigation and inquiry, there is no violation of Applicable
Laws with respect to such Hazardous Substances.
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ARTICLE VII
IMPROVEMENTS
Section 7.01. Commencement and Completion of Construction. The Tenant
shall construct the Docking Facilities, Guest Facilities, Parking Facilities and
any Infrastructure Facilities upon the Redevelopment Parcel in accordance with
and upon and subject to all the terms and conditions of the Development
Agreement. The Tenant shall construct the Drive in accordance with and upon and
subject to all the terms and conditions of the Water Department Lease. The
Tenant is prohibited from making or constructing (and shall not make or
construct) any improvements, structures or facilities on the Redevelopment
Parcel other than the Docking Facilities, Guest Facilities, Parking Facilities,
the Drive and any Infrastructure Facilities as currently agreed to and for which
governmental permits and approvals have already been obtained or applied for
without the City's and the Commission's prior written consent.
Section 7.02. Governmental Approvals. The Tenant shall, at its
expense, timely procure all approvals, permits or consents required to be
obtained for the construction of the Improvements from all governmental
authorities having jurisdiction in the matter. The Tenant shall have the right
to make any necessary applications for zoning approvals or variances in
connection with the construction, operation and use of the Improvements and the
Commission hereby consents to the filing of such approvals by the Developer.
Section 7.03. Title to Improvements.
(a) All Improvements on the Redevelopment Parcel other than the
Parking Garage (which shall become the property of the Commission as
hereafter provided) and the Drive (which shall become the property of the
Commission as hereafter provided) shall be the property of the Tenant
during the Term, but shall become the property of the Commission upon the
expiration of the Term or earlier termination of this Lease; and
(b) The Parking Garage shall become the property of the Commission
immediately upon Substantial Completion (as such term is defined in the
Development Agreement) of the construction of the Parking Facilities and
the Commission's acceptance thereof. The Drive shall become the property of
the Commission as it is constructed.
Section 7.04. Status Meetings. The Tenant agrees to meet with the
Redevelopment Commission no less than quarterly in the first year of the
Term and annually thereafter until the end of the Term to report and update
the Commission on the status of the construction of Improvements on the
Redevelopment Parcel as well as
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any and all other matters which may be of mutual concern to the Commission and
the Tenant.
ARTICLE VIII
ASSIGNMENT AND ENCUMBRANCES
Section 8.01. Assignment and Subleases. Except as hereafter
expressly provided in this Section 8.01, the Tenant shall not assign, sell or
transfer this Lease or any interest in the Redevelopment Parcel or title to the
Improvements or any interest therein or sublease all or any part of the
Redevelopment Parcel and/or Improvements (a "Transfer") without the prior
written consent of the Gaming Commission; provided, that in no event shall the
Tenant assign, sell or transfer this Lease or any interest in the Redevelopment
Parcel or title to the Improvements or any interest therein or sublease all or
any part of the Redevelopment Parcel and/or Improvements to any person or entity
that does not hold a License in accordance with the Act; and provided further,
that the Tenant shall not assign, sell or transfer this Lease or any interest in
the Redevelopment Parcel or any title to the Improvements or any interest
therein or sublease all or any part of the Redevelopment Parcel and/or
Improvements to any person or entity that has not executed a written assignment
and assumption agreement whereby the Tenant's obligations under this Lease, the
Development Agreement and the Port Authority Agreement are assigned to and
assumed by such person or entity upon terms reasonably acceptable to the
Commission, the City and the Port Authority. Any assignment or transfer by
operation of law (voluntary or involuntary), merger, conversion or
reorganization, any assignment or transfer to a receiver or trustee in any
federal or state bankruptcy, insolvency or other proceeding or any change in
control of the Tenant or of any entity controlling the Tenant shall constitute a
Transfer for purposes of this Lease. For purposes of this Section 8.01,
"control" means the power to direct the management and policies of the Tenant,
directly or indirectly, whether through the ownership or control of fifty
percent (50%) or more of the shares or other equity or beneficial interest or
power to vote the same, or by the partnership or trust agreement or other
instrument or contract or otherwise; and the term "controlling" has the meaning
correlative to the foregoing. The Tenant shall provide the Commission with at
least one hundred twenty (120) days written notice prior to making any request
to the Gaming Commission to make a Transfer. Notwithstanding the foregoing, the
Tenant shall be entitled to sublease restaurant and retail space in the
Improvements in the ordinary course of business without the prior written
consent of the Commission or the Gaming Commission.
Section 8.02. Encumbrances. The Tenant shall have no right to
mortgage, pledge, hypothecate or otherwise encumber this Lease or its rights or
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interest under this Lease or in the Redevelopment Parcel or title to or
interests in the Improvements or any part thereof.
Section 8.03. General. Any purported Transfer in violation of this
Article VIII shall be void and of no force and effect. In the event of a
permitted Transfer in accordance with the provisions of this Article VIII and
the corresponding assumption by such assignee of all duties and obligations to
be performed or observed by the Tenant hereunder, the assignor shall no longer
be responsible for the future performance or observance of such duties or
obligations.
ARTICLE IX
TAXES AND UTILITY EXPENSES
Section 9.01. Payment of Taxes and Utility Expenses. The Tenant
shall pay and discharge punctually, as and when the same shall become due and
payable (except as otherwise provided in Section 9.02):
(a) all Taxes which are assessed with respect to the Redevelopment
Parcel and the Improvements, or any interest therein or any part thereof,
or any appurtenances or equipment thereon owned by or leased to the Tenant
for any calendar year (or part thereof) within the Term, together with all
interest and penalties thereon;
(b) all Taxes which are payable on or with respect to the Tenant's
personal property and the Tenant's business or operations; and
(c) all Utility Expenses commencing with the first day of the Term.
The Tenant shall be deemed to have complied with the covenants of this
Section 9.01 if payment of Taxes and Utility Expenses shall have been made
either within any period allowed by applicable law before the same shall become
a lien upon the Redevelopment Parcel or Improvements; or, if the Tax or Utility
Expense constitutes a lien before it is due and payable, then, before any
penalty or interest is assessed with respect thereto. The Tenant shall furnish
the Commission with satisfactory evidence of payment of Real Estate Taxes and
any other payment hereunder within thirty (30) days after payment is due or made
whichever event first occurs.
Notwithstanding anything in this Section 9.01 to the contrary, in the
event the Redevelopment Parcel and Improvements (or any part thereof) are
assessed for Real Estate Tax purposes as part of a larger parcel that is owned
by the Commission,
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the tenant shall pay to the Commission on or before ten (10) days prior to the
date the Real Estate Taxes with respect to such larger parcel are due and
payable by the Commission (i) the Tenant's proportionate share (determined on
the basis of acreage) of the Real Estate Taxes assessed for land with respect to
such larger parcel for land and (ii) the Real Estate Taxes assessed with respect
to the Improvements; and the Commission shall, following receipt of such payment
from the Tenant, pay the Real Estate Taxes for such larger parcel.
Section 9.02. Proration of Real Estate Taxes. Real Estate Taxes
assessed for the calendar years in which the Term commences and ends shall be
paid by the Tenant. The Tenant shall pay on the date of termination of this
Lease all Real Estate Taxes due and payable during the calendar year in which
the Term ends and its prorata share of all Real Estate Taxes assessed for the
calendar year in which the Term ends based upon the number of days of the Term
in such calendar year. If the amount of such Real Estate Taxes is not then
determined, the most recently available tax rates and assessed valuations shall
be used in determining the amount to be paid under this Section 9.02.
Section 9.03. Right to Contest. The Tenant shall have the right to
contest all Taxes and Utility Expenses referred to in Section 9.01 by
appropriate legal proceedings, or in such other manner as it may deem
appropriate. Such legal proceedings shall include any and all appropriate
appeals or other proceedings and appeals from orders, judgments or decrees so
long as the same are sufficient to prevent a foreclosure sale. The Tenant shall
conduct all such proceedings at its expense. The Commission shall execute all
documents reasonably required for such proceedings. The Tenant shall reimburse
the Commission for any costs or expenses incurred by the Commission in
connection therewith. Notwithstanding the foregoing, the Tenant shall pay any
such Taxes or Utility Expenses prior to the time the Redevelopment Parcel or
Improvements (or any part thereof) shall become subject to sale upon foreclosure
of the lien therefor.
Section 9.04. Distribution of Overpayment. If there shall be any
refunds or rebates on account of Taxes or Utility Expenses paid by the Tenant
under the provisions of this Lease, such refund or rebate shall belong to the
Tenant, whether or not received by the Commission during or after the Term;
provided, however, that in the event of a refund or rebate resulting from the
contest of Real Estate Taxes, the Commission shall be entitled to its
proportionate share of such refund or rebate if the Real Estate Taxes were
assessed on a larger parcel owned by the Commission of which the Redevelopment
Parcel and/or Improvements are a part. Any refunds so received by the Commission
shall, be deemed to be received by the Commission in trust for the Tenant and
shall be paid to the Tenant as its interest appears within ten (10) days of
receipt. The Commission will, upon request of the Tenant, sign any receipts
which may be necessary to secure the payment of any such refund or rebate.
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Section 9.05. Separate Assessments. If the Redevelopment Parcel is
part of a larger parcel that is owned by the Commission, upon request of the
Tenant at any time, the Commission will make application individually, or will
join in the Tenant's application, and will execute such instruments as may be
necessary or appropriate to obtain separate tax assessments for portions of the
Redevelopment Parcel and/or Improvements. The Tenant shall pay to the Commission
any costs or expenses incurred or to be incurred by the Commission in connection
therewith.
ARTICLE X
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MAINTENANCE, REPAIRS AND ALTERATIONS
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Section 10.01. Maintenance and Repair by the Tenant. The Tenant shall
at all times during the Term, at its expense, keep and maintain or cause to be
kept and maintained the Redevelopment Parcel and Improvements in a first-class,
clean and safe condition and repair and in compliance with all Applicable laws
including, without limitation, the making of all necessary structural repairs
and replacements. The Commission shall not be required to furnish any services
or facilities or to make any improvements, repairs or alterations in or to the
Redevelopment Parcel or the Improvements during the Term.
Section 10.02. Alterations. After the initial construction of the
Improvements other than the Parking Garage and the Drive, the Developer shall
not make, construct or install any alterations, changes, replacements,
improvements or additions to all or any portion of such Improvements that affect
the structural integrity or exterior appearance of such Improvements without the
prior written consent of the City and the Commission. Notwithstanding the
preceding sentence, after the initial construction of the Parking Garage and the
Drive, the Developer shall not make, construct or install any alterations,
changes, replacements, improvements or additions to all or any portion of the
Parking Garage or the Drive without the prior written consent of the City and
the Commission.
ARTICLE XI
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MECHANICS' LIENS: INDEMNIFICATION
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Section 11.01. Mechanics' Liens. The Tenant shall promptly after the
filing thereof discharge of record, bond over or insure over, at the Tenant's
expense, any mechanics', materialmen's or other lien, or notice of intention to
file any such lien, filed against the Redevelopment Parcel or Improvements or
any part thereof or interest therein; provided that the Tenant shall have the
right to contest the validity of any such
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lien in any manner permitted by law so long as the Tenant (a) shall provide to
the Commission title insurance, an indemnity, bond or other assurance or
security reasonably satisfactory to the Commission; and (b) shall thereafter
diligently proceed to cause such lien or notice of intention to file a lien to
be removed and discharged. If the Tenant shall fail to so discharge, or to seek
to discharge, any such lien or notice of intention to file a lien, then the
Commission may, but shall not be obligated to, discharge the same, either by
paying the amount claimed to be due, or by procuring the discharge of such lien
by depositing in court a bond for the amount claimed or in such other manner as
is or may be permitted by law, and the Tenant shall reimburse and indemnify the
Commission in respect thereto.
Section 11.02. Indemnification by the Tenant. The Developer agrees, at
the sole cost and expense of the Developer, to protect, defend, indemnify and
save harmless the Commission from and against any and all liabilities,
obligations, claims, damages, penalties, causes of action, and other costs and
expenses (including, without limitation, reasonable attorneys' fees, reasonable
compensation for preparing and attending depositions or serving as a witness
where not named as a defendant, court costs and litigation expenses), imposed
upon or incurred by or asserted against the Commission by reason of, arising out
of or pertaining to: (a) the Tenant's possession, use or control of the
Redevelopment Parcel or the Improvements or any part thereof during the Term,
(b) the condition of the Redevelopment Parcel or the Improvements or any part
thereof during the Term, (c) any Event of Default, or (d) any willful or
negligent act or omission of the Tenant, or any of its agents, contractors,
licensees, subtenants or its or their employees, customers or invitees. In any
circumstance where the Tenant is obligated under this Lease to indemnify the
Commission, the Tenant shall have the right to undertake, conduct, and control,
through counsel of its choosing, reasonably acceptable to the Commission, and at
the sole expense of the Tenant, the conduct and settlement of such matter, and
the Commission shall cooperate therewith; provided, however, that (w) the Tenant
shall not thereby permit to exist any lien, encumbrance, or other adverse change
upon the assets of the Commission, (x) the Tenant shall not thereby consent to
the imposition of any injunction against the Commission without the consent of
such person or persons, (y) the Tenant shall permit the Commission to
participate in such dispute or the settlement thereof through counsel chosen by
the Commission, but the fees and expenses of such counsel shall be borne solely
by the Commission, and (z) the Tenant shall agree promptly to reimburse the
Commission for the full amount of the obligations due hereunder. If the
Commission reasonably believes that counsel selected by the Tenant has a
conflict of interest by reason of asserting or threatening to assert a
limitation on or defense to the indemnification obligation of the Tenant or
otherwise or a conflict of interest arises between the Tenant and the
Commission, then the Commission may select new, independent counsel, reasonably
acceptable to the Tenant, who shall represent the Commission at the sole cost
and expense of the Tenant. The Tenant shall specify any claimed limitations on
or defenses to its indemnification obligation upon the Commission' request
therefor. So
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long as the Tenant is contesting any such matter in good faith and the
operations or assets of the Commission are not in any way impaired, the
Commission may not pay or settle any such action or suit without the consent of
the Tenant unless it chooses to waive its rights to reimbursement and
indemnification hereunder. Notwithstanding the foregoing, the Commission shall
have the right to pay or settle any such action or suit, provided that in such
event the Commission shall waive any right to indemnity therefore. However, if
the Tenant is obligated, but ceases to contest such matter in good faith, then
the Commission may pay or settle such action or suit, and obtain reimbursement
from the Tenant.
The Tenant's indemnification obligations hereunder shall be in addition to
any and all other obligations the Tenant may have to the Commission under any
other agreement, at law or in equity and shall survive the expiration of the
Term or earlier termination of the Lease and any transfer by the Commission of
its interests in Redevelopment Parcel or the Improvements.
ARTICLE XII
INSURANCE
Section 12.01. Liability Insurance. The Tenant shall maintain and keep in
force at all times during the Term, at its sole cost and expense, the insurance
required to be maintained by the Tenant pursuant to the Development Agreement.
The Tenant shall name the Water Department and Port Authority as additional
insureds under the insurance policy to be maintained by the Tenant under
subsection 8.19 (a) (viii) and (xi) of the Development Agreement.
Section 12.02. Proof of Insurance. The Tenant shall deliver copies of the
insurance policies showing the insurance required by this Article XII to the
Commission on or before the date of execution of this Lease, and thereafter a
copy of each replacement policy shall be provided not less than sixty (60) days
prior to the expiration of the policy being replaced. Each such policy referred
to in this Article XII shall contain a provision providing that the policy shall
not be cancelled, not renewed or materially amended without sixty (60) days
prior written notice to the Commission.
Section 12.03. Adjustment in Insurance. If after the Initial Term and no
more frequently than every five years thereafter, by reason of changed
conditions or by reason of experience the Commission reasonably determines that
the insurance amounts referred to in the foregoing Section 12.01 are inadequate,
the Tenant shall, at the request of the Commission, increase the amounts of such
insurance carried to the extent appropriate for like facilities under like
circumstances. In the event that it shall become customary for lessees of
similar premises to maintain types or coverages of
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insurance other than those required to be maintained by the Tenant under this
Article XII, the Tenant shall maintain such other types of coverages of
insurance upon written request of the Commission so long as such types or
coverages of insurance can be obtained by the Tenant at reasonable cost.
Section 12.04. Waiver of Subrogation. The Tenant and the Commission waive
all rights against each other and against those for whom the other is legally
liable for all losses covered by insurance provided under this Article XII to
the extent the limits of such insurance are adequate to cover such losses, it
being the intent of this provision to allocate all risk of such loss to such
insurance; provided, however, that this waiver shall not be effective if it
would preclude or prejudice the right of the Commission or the Tenant to recover
under such insurance policy. If the policies of insurance provided for under
this Article XII require an endorsement to provide for continued coverage where
there is a waiver of subrogation, the Tenant shall cause such policies to be so
endorsed.
Section 12.05. Insurance Proceeds. The proceeds of all policies of
insurance on the Improvements maintained pursuant to Section 12.02 shall be used
as a trust fund toward the repair, replacement or rebuilding of the
Improvements. Accordingly, all insurance proceeds for damage to the
Improvements paid to the Tenant and/or the Commission under such policies shall
be held by or delivered to the Developer in trust for the payment of the costs
of repairing, replacing and rebuilding the Improvements. If such insurance
proceeds shall exceed the cost of repairing, replacing or rebuilding the
Improvements, the balance remaining after payment of such costs shall be the
property of and shall be retained by the Tenant.
The Commission shall cooperate fully with the Tenant in collecting such
insurance proceeds and shall execute and deliver, as requested by the Tenant,
any and all proofs, receipts, releases and other instruments as may be
appropriate for such purpose.
Section 12.06. General Provisions. In the event the Tenant shall fail or
refuse to obtain any insurance required by this Article XII, the Commission, in
addition to any other rights the Commission may have under this Lease or at law
or in equity, shall have the option to obtain such insurance. The cost of such
insurance shall constitute additional rent payable by the Tenant to the
Commission immediately upon demand.
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ARTICLE XIII
DESTRUCTION
Section 13.01. The Tenant's Obligation to Repair. If at any time during
the Term the Improvements shall be destroyed or damaged by fire or other cause,
the Tenant shall cause the same to be repaired, replaced or rebuilt within a
period of time which, under all prevailing circumstances, shall be reasonable.
In the repair, replacement or rebuilding of any the Improvements hereunder, the
Tenant shall repair, replace or rebuild the Improvements so damaged or destroyed
to their condition immediately before such damage or destruction, subject to all
then Applicable Laws. If the net insurance proceeds payable in respect of any
such damage or destruction shall be insufficient to pay the entire cost of such
repair, replacement or rebuilding, the Tenant shall provide for the deficiency.
In such event, the time within which the Tenant shall be required to commence
and complete its obligations hereunder shall include a reasonable time to obtain
and close the necessary commitments for equity financing to cover the
deficiency.
Section 13.02. No Abatement. In no event shall Rent or other charges due
hereunder abate in the event of such damage or destruction.
ARTICLE XIV
CONDEMNATION
Section 14.01. Total Condemnation. If at any time during the Term there
shall be a total taking or a Constructive Total Taking of the Redevelopment
Parcel and the Improvements in condemnation proceedings or by any right of
eminent domain or by a conveyance in lieu thereof, this Lease shall terminate on
the date of such taking.
Section 14.02. Proceeds of Total Condemnation. In the event of any such
total taking or Constructive Total Taking and the termination of this Lease, the
Condemnation Proceeds shall be apportioned and paid, to the extent available, in
the following order of priority:
(a) First, to the payment of costs and expenses, including (without
limitation) court costs and reasonable attorneys' fees, incurred by the
Commission and the Tenant in connection with such taking;
(b) Second, to the Commission in an amount equal to the fair market
value of the Parking Garage;
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(c) Third, to the Tenant in an amount equal to the fair market value
of all other Improvements on the Redevelopment Parcel,
(d) Fourth, to the Developer in an amount equal to the remaining
balance multiplied by a fraction, the numerator of which is a number
determined by subtracting the number of full or partial calendar years that
have passed between the Commencement Date and the date that possession of
the Improvements are delivered to the condemning authority from twenty-five
(25) and the denominator of which is twenty-five (25); and
(e) Any remaining balance shall be paid to the Commission.
Nothing herein contained shall impair the right of the Tenant to the full award,
compensation or damages payable as an award for loss of business or for moving
expenses, as long as such award shall not reduce the amount of the award
otherwise recoverable by the Commission from the condemning authority.
Section 14.03. Partial Condemnation. In the event of a taking that is
less than a Constructive Total Taking, this Lease shall not terminate. The
Condemnation Proceeds in such event shall be apportioned and paid, to the extent
available, in the following order of priority:
(a) First, to the payment of costs and expenses, including (without
limitation) reasonable attorneys' fees, incurred by the Commission and the
Tenant in connection with such taking;
(b) The balance of the Condemnation Proceeds shall be paid in trust
to Tenant to be disbursed and used for payment of the costs of repairing,
replacing or rebuilding the Improvements in the manner then reasonably
feasible as required by Section 14.04; and
(c) The Condemnation Proceeds, if any, remaining after repair,
replacement or rebuilding shall be paid to the Commission.
Section 14.04. Restoration. In the event of a taking that is less than a
Constructive Total Taking, the Tenant shall proceed with due diligence to
repair, replace or rebuild the remaining the Improvements to their former
condition as nearly as may be reasonably possible and in compliance with the
requirements of the Development Agreement for the performance of the Work (as
such term is defined in the Development Agreement). If the Condemnation
Proceeds are insufficient to pay the entire cost of such repair, replacement or
rebuilding, the Tenant shall pay any such deficiency.
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Section 14.05. Temporary Condemnation. If, at any time during the Term,
the whole or any part of the Redevelopment Parcel or the Improvements or the
Tenant's interest therein under this Lease shall be taken in condemnation
proceedings or by any right of eminent domain for temporary use or occupancy,
the foregoing provisions of this Article shall not apply, and, except to the
extent that the Tenant may be prevented from so doing pursuant to the terms of
the order of the condemning authority, the Tenant shall perform and observe all
of the other terms, covenants, conditions and obligations hereof to be performed
and observed by it, as though such taking had not occurred. In the event of any
such taking of the character referred to in this Section 14.05, the Tenant shall
be entitled to receive the entire amount of the Condemnation Proceeds paid for
such taking, whether paid by way of damages, rent, costs of moving or
restoration or otherwise, unless such period of temporary use or occupancy shall
extend beyond the Term, in which case the Condemnation Proceeds shall be
apportioned between the Commission and the Tenant as of the date of termination
of this Lease. Upon the expiration of any such period of temporary use or
occupancy during the Term, the Tenant shall, at its expense, restore the
Improvements as nearly as may be reasonably possible to the condition in which
the same were immediately prior to such taking. If such period of temporary use
or occupancy shall extend beyond the expiration of the Term, any portion of the
Condemnation Proceeds received by the Tenant as compensation for the cost of
restoration of the Improvements shall be paid by the Tenant to the Commission on
the date of termination of this Lease, and the Tenant shall be thereby relieved
of the obligation to perform such restoration.
Section 14.06. Rights to Appear. The Commission and the Tenant shall have
the right to participate in any condemnation proceeding for the purpose of
protecting their rights hereunder, and in this connection, specifically and
without limitation, to introduce evidence to establish the value of or damage to
the Redevelopment Parcel and the Improvements or any part thereof.
ARTICLE XV
MORTGAGES
Section 15.01. Fee Title Not Subordinated. Nothing herein shall be deemed
to constitute a subordination of the Commission's rights, title or interests in
the Redevelopment Parcel or the Improvements to any mortgage or to require the
Commission to execute any mortgage or agreement or instrument or take any action
to effect any such subordination.
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Section 15.02. Leasehold Mortgages. The Tenant shall not mortgage
pledge, hypothecate or otherwise encumber its interests under this Lease or in
the Redevelopment Parcel and/or its interests in or title to the Improvements or
any part thereof.
ARTICLE XVI
TENANT'S RIGHT TO CURE THE COMMISSION'S
DEFAULT UNDER THE HPA FOOTPRINT SUBLEASE,
THE HPA PARKING LEASE AND THE WATER DEPARTMENT LEASE
The Commission shall give the Tenant notice of each notice of default
given to the Commission under the HPA Footprint Sublease, the HPA Parking Lease
or the Water Department Lease. The Tenant shall have the right to remedy or
cause to be remedied the default which is the basis of any such notice; and the
Commission shall instruct the Port Authority and the Water Department to accept
performance by the Tenant as performance by the Commission. Nothing herein
contained shall require the Tenant to cure or undertake to cure any default of
the Commission under the HPA Footprint Sublease, the HPA Parking Lease or the
Water Department Lease. The Commission shall use its best efforts to require the
Port Authority and the Water Department to provide direct notices of the
Commission's defaults to the Tenant. The Commission hereby represents that there
are no uncured defaults or matters which, with the passage of time or the giving
of notice, would ripen into defaults with respect the HPA Parking Lease or the
Water Department Lease and that it has not received any written notice of
default with respect to the HPA Footprint Sublease. The Commission shall use its
best efforts to obtain agreements of non-disturbance from the Port Authority and
the Water Department under which such entities agree not to disturb the Tenant
so long as it is not in default hereunder in the event that any of the foregoing
agreements are terminated by legal proceedings or otherwise.
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ARTICLE XVII
DEFAULTS
Section 17.01. Events of Default by the Developer. Each of the
following events, if not remedied as hereinafter provided, shall be deemed an
"Event of Default":
(a) The occurrence of any event set forth in Article XVIII, as
therein provided; or
(b) The Tenant's failure to pay any Rent of the due date thereof, and
such failure continues for sixty-(60) days after receipt of written notice
thereof from the Commission; or
(c) The Tenant's failure to perform any other covenant or agreement
herein on the Tenant's part to be kept or performed which is not an Event
of Default under paragraphs (a), (b), (d), (e), (f) or (g) of this Section
17.01 and the continuance of such failure for a period of thirty (30) days
after notice in writing to the Tenant from the Commission specifying the
nature of such failure; or
(d) An Event of Default by the Tenant occurs under the Development
Agreement; or
(e) An Event of Default by the Tenant occurs under the Port Authority
Agreement; or
(f) The Tenant dies not receive a License on or before December 31,
1996; or
(g) The occurrence of an Event of Default pursuant to subparagraph
(f) of Section 16.01 of the Development Agreement.
Section 17.02. Extensions. If the Commission gives notice at any time
of a default of a nature that cannot be cured within the thirty (30) day period
provided in Section 17.01(c), then such default shall not be deemed an Event of
Default so long as the Tenant, following notice from the Commission, proceeds to
cure the default as soon as reasonably possible and continues to take all
reasonable steps necessary to complete the same within a period of time which,
under all prevailing circumstances, shall be reasonable. In addition, no Event
of Default shall be deemed to have occurred if and so long as the Tenant shall
be delayed in or prevented from curing the same within the applicable cure
period by Unavoidable Delay.
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Section 17.03. Remedies. Upon the occurrence of any Event of Default
pursuant to subparagraphs (a), (b), (c), (d) or (e) of Section 17.01, or at any
time thereafter so long as the same is not cured, the Commission may (a) cure
any such Event of Default and collect the cost thereof from the Tenant upon
demand, (b) seek, obtain and enforce a judgment for specific performance or
other declaratory relief against Tenant for the performance of any agreement or
covenant contained in this Lease in the Tenant's part to be kept or performed,
and/or (c) seek, obtain and enforce a judgment for monetary damages resulting
from any such Event of Default.
Upon the occurrence of any Event of Default under subparagraphs (f) or
(g) of this Section 17.01, or at any time thereafter, the Commission may, at its
option and in addition to and without prejudice to any other rights and remedies
the Commission shall have under this Lease or at law or in equity, give to the
Tenant a written notice of its election to end the Term of this Lease and
terminate this Lease upon a date specified in such notice, which date shall be
not less than forty-five (45) days after the date of delivery to the Tenant of
such notice by the Commission.
Section 17.04. Default by the Commission. The Commission's failure or
refusal to perform any provision of this Lease which it is obligated to perform
or the breach of any covenant herein shall be a default by the Commission. In
the event of a default by Landlord, Tenant may:
(a) In an Emergency Situation, as hereinafter defined, if the default
is not cured after reasonable notice to (or attempts to notify) the
Commission, Tenant may cure the default, provided that such cure is not
more extensive than is reasonably necessary under the circumstances; and
(b) In a non-Emergency Situation, if the default is not cured within
thirty (30) days of written notice from Tenant to the Commission (or if
such default is of such a nature as to not be extended so long as the
Commission commences its efforts to cure within said thirty (30) day period
and thereafter diligently pursues the same to completion), Tenant may cure
the default;
If Tenant incurs any sum because of the Commission's default, the
reasonable sums paid by Tenant shall be due from the Commission to Tenant upon
demand and Tenant may recover such sums as provided at law; provided, that
Tenant shall not offset or credit any such sums against Tenant's payment or the
obligations hereunder. "Emergency Situation" as used in this Section means a
situation which threatens the physical well-being of persons in or on the
Redevelopment Parcel or which threatens immediate and material damage to
Tenant's property located on or in the Redevelopment Parcel.
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ARTICLE XVIII
BANKRUPTCY AND INSOLVENCY
Section 18.01. Certain Events of Default Specified. If during the
Term:
(a) The Tenant shall be adjudicated a bankrupt or adjudged to be
insolvent;
(b) A receiver or trustee shall be appointed for the Tenant's
property and affairs, unless such appointment shall be vacated within
ninety (90) days of its entry;
(c) The Tenant shall make an assignment for the benefit of creditors;
(d) A petition shall be filed proposing the adjudication of the
Tenant as a bankrupt or insolvent or the reorganization of the Tenant or an
arrangement by the Tenant with its creditors whether pursuant to the United
States Bankruptcy Code or any similar federal or state proceedings, unless
such petition is filed by a party other than the Tenant and is withdrawn or
is dismissed within ninety (90) days after the date of filing; or
(e) Any execution or attachment shall be issued against the Tenant or
any of the Tenant's property, whereby the Redevelopment Parcel or the
Improvements shall be taken or occupied or attempted to be taken or
occupied by someone other than the Tenant, unless such attachment is a
prejudgment attachment that is set aside within ninety (90) days after the
issuance of the same;
then, subject to Section 18.02, an Event of Default hereunder shall be deemed to
have occurred so that the provisions of Article XVII hereof shall become
effective; and the Commission shall have the rights and remedies provided for
therein in addition to all other legal remedies available to the Commission.
Section 18.02. Preservation of Leasehold Estate. Notwithstanding
anything to the contrary contained in Article XVII, upon the occurrence of an
Event of Default pursuant to this Article XVIII, then if the Rent due and
payable hereunder shall continue to be paid and the other covenants and
agreements of this Lease on the Tenant's part to be kept and performed shall
continue to be kept and performed, no Event of Default shall be deemed to have
occurred and the provisions of Article XVII shall not become effective.
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ARTICLE XIX
SPECIFIC PERFORMANCE
In addition to any other rights that the Tenant or the Commission may
have under this Lease, if the other fails or refuses to execute, acknowledge and
deliver any instrument or instruments or to take any other action (other than an
action solely involving the payment of any sum of money) required to effectuate
the provisions of this Lease within the time period required by this Lease or,
if no time period therefor is specified in this Lease, within any reasonable
time period specified in any request from the other party, then from and after
the date fifteen (15) days after the date of delivery of a written demand to
the other party requesting such execution, acknowledgment and delivery or other
action, the requesting party shall be entitled to specific performance,
declaratory relief, or such other remedies at law or equity which may be
appropriate to effectuate the provisions of this Lease; provided, that the
Commission shall not be entitled to terminate this Lease except in accordance
with the terms and provisions of Article XVII.
ARTICLE XX
SURRENDER
Section 20.01. Surrender of Leased Premises. The Tenant shall
surrender the Redevelopment Parcel and the Improvements to the Commission at the
expiration of the Term or earlier termination of the Lease or of the Tenant's
right to possession hereunder, without delay, in good order, condition and
repair except for reasonable wear and tear after the last necessary repair,
replacement, or rebuilding made by Tenant, with all leasehold improvements
necessary for the continued operation of the Improvements for the purposes for
which such Improvements were designed, free and clear of all liens and
encumbrances except the liens for taxes and assessments not then due and
payable, and without any payment or allowance whatever by the Commission for the
Improvements made by the Tenant. The Improvements, if not already the property
of the Commission, shall become the property of the Commission upon such
expiration or termination. For purposes of this Section 20.01 leasehold
improvements shall include (without limitation) floor coverings (excluding area
rugs), wall coverings, ceilings, lighting systems and fixtures, plumbing
fixtures and other mechanical systems, equipment and facilities and built-in
installations. Leasehold improvements do not include trade fixtures; trade
equipment, kitchen equipment, furniture, inventory and similar movable personal
property.
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Section 20.02. Removal of Certain Property. All furniture, trade
fixtures, and other personal property may be removed by or on behalf of the
Tenant at or prior to the expiration of the Term or other termination of this
Lease or of the Tenant's rights of possession hereunder, but only if, and to the
extent, that the removal thereof will not cause physical injury or damage to the
Redevelopment Parcel or the Improvements or necessitate changes or repairs to
the same. The Tenant shall pay or cause to be paid to the Commission the cost of
repairing or restoring any injury or damage to the Redevelopment Parcel or the
Improvements arising from such removal so as to return the Redevelopment Parcel
and the Improvements to its condition immediately prior to such removal.
Section 20.03. Personal Property Not Removed. Any personal property
of the Tenant which shall remain in or upon the Redevelopment Parcel or the
Improvements as of the date the Tenant has surrendered possession of the
Redevelopment Parcel and the Improvements shall be deemed to have been abandoned
by the Tenant, and at the option of the Commission, such property: (a) shall be
retained by the Commission as its property; (b) shall be disposed of by the
Commission in such manner as it shall determine, without accountability to any
person; or (c) shall be promptly removed by the Tenant, at the Tenant's expense,
upon written request from the Commission. The Commission shall not be
responsible for any loss or damage occurring to any property owned by the Tenant
or any licensee or sublessee of the Tenant.
Section 20.04. Grant of Reciprocal Easements. In the event that, at
the time of the expiration of the Lease or earlier termination of the Lease, the
Tenant or an Affiliate of the Tenant owns real estate adjacent to the
Redevelopment Parcel on which are constructed driveways or walkways providing
access to any Improvements or any other facilities essential to the reasonable,
economic use of the Improvements, the Tenant shall grant or cause its Affiliate
to grant the Commission such easements appurtenant to the Redevelopment Parcel
as the Commission shall reasonably request providing for the continued use of
such driveways, walkways and/or facilities in connection with the Improvements
in the manner the same were used prior to the expiration or earlier termination
of the Term. Such easements may require the Commission to contribute to the cost
of maintenance and repair of such driveways, walkways and/or facilities upon
terms reasonable and appropriate under the prevailing circumstances.
Section 20.05. Survival of Terms. The terms of this Article XX shall
survive any termination of this Lease.
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ARTICLE XXI
NO WAIVER
Failure of the Commission or the Tenant to complain of any act or
omission on the part of the other party, however long the same may continue,
shall not be deemed to be a waiver by said party of any of its rights hereunder.
No waiver by Commission or the Tenant at any time, express or implied, of any
breach of any provision of this Lease shall be deemed a waiver of a breach of
any other provision of this Lease or a consent to any subsequent breach of the
same or any other provision. No acceptance by the Commission of any partial
payment shall constitute an accord or satisfaction, and such partial payment
shall only be deemed a part payment on account.
ARTICLE XXII
THE COMMISSION'S LIABILITY
Section 22.01. Assignment by the Commission. The Commission may
transfer or assign this Lease or any interests herein or title to or interests
in the Redevelopment Parcel or the Improvements to any governmental entity with
the power to perform the duties and obligations and the authority to grant the
rights set forth in this Lease without the requirement of any consent by the
Tenant. No other transfer, assignment or sublease shall be allowed without the
consent of Tenant. In the event of any such transfer or assignment by the
Commission and the assumption by such transferee or assignee of all duties and
obligations to be performed or observed by the Commission hereunder with respect
thereto, only the transferee or assignee shall be responsible for the
performance or observance of such covenants or agreements. It Is the intent of
this Section 22.01 that the provisions of this Lease shall be binding on the
Commission, its successors and assigns, only during and in respect of their
respective periods of ownership.
Section 22.02. Limitation on Right of Recovery. Notwithstanding
anything to the contrary contained in this Lease, there shall be absolutely no
personal liability on the Commission, or any successor, assign, member, officer,
employee, agent or attorney of the Commission, with respect to the terms,
covenants and provisions of this Lease, and the Tenant shall look solely to the
interest of the Commission, its successors and assigns, in the Redevelopment
Parcel for the satisfaction of each and every remedy of the Tenant in the event
of any breach by the Commission (or by such successor or assign) of any of the
terms, covenants and provisions of this Lease to be observed or performed by the
Commission hereunder, such exculpation of personal liability to be absolute and
without any exception whatsoever. Notwithstanding anything
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to the contrary contained in this Agreement, there shall be absolutely no
personal liability attributed to any member, director, shareholder, officer,
employee, agent, or attorney of the Tenant with respect to the terms, covenants,
and provisions of this Lease, such exculpation of personal liability being
absolute and without any exception whatsoever.
ARTICLE XXIII
FORCE MAJEURE
Notwithstanding anything contained in this Lease to the contrary, if
the Tenant or the Commission is delayed, hindered, or prevented in the
performance of any act or the achievement of any deadline required under this
Agreement (other than the payment of money) by reason of fire, casualty,
strikes, lockout, labor troubles, inability to procure materials or supplies,
failure of power, Gaming Commission or other governmental authority, weather,
riots, insurrection, war, or other reasons of like nature, or failure of timely
performance by or acts of the other party ("Force Majeure Events"), and such
delays, hindrances, or prevention of performance are not within the reasonable
control of the party obligated to perform, the party affected by such delay
shall promptly give notice thereof to the other parties and thereupon
performance of such act shall be excused for the period of delay and/or such
deadline extended for a period equal to the period of delay. Such excusal and/or
extension of time shall be, however, predicated upon the party subject to the
Force Majeure Event (i) notifying the other party in writing of the delay and
reasons causing the delay within thirty (30) days upon learning of the same; and
(ii) taking all reasonable steps to avoid the delay and all reasonable steps to
remove and address the condition(s) causing the delay.
ARTICLE XXIV
NOTICES
No notice, approval, consent or other communication authorized or
required by this Lease shall be effective unless the same shall be in writing.
Any such communication shall be deemed given when either (a) hand delivered,
with signed receipt obtained therefor, (b) sent postage prepaid by United States
registered or certified mail, return receipt requested, directed or addressed in
each case to the other party at its address set forth below, or such other
address as either party may designate by notice given from time to time in
accordance with this Article XXIV, or (c) sent by nationally recognized
overnight courier service with all charges prepaid or billed to sender, directed
or addressed in each case to the other party at its address set
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forth below, or such other address as either party may designate by notice given
from time to time in accordance with this Article XXIV.
The addresses and telefax numbers for notices are:
<TABLE>
<CAPTION>
<S> <C>
To the Commission: Hammond Redevelopment Commission
649 Conkey Street
Hammond, Indiana 46320
Attention: Rocharda Moore-Morris
With copies to: Mayor Duane W. Dedelow, Jr.
City of Hammond
5925 Calumet Avenue
Hammond, Indiana 46320
McHie, Meyers, McHie & Ensien
53 Muenich Court
Hammond, Indiana 46320
Attention: Carol M. Green
Baker & Daniels
300 North Meridian Street
Suite 2700
Indianapolis, Indiana 46204
Attention: David L. Johnson
To the Tenant: Empress Casino Hammond Corporation
825 Empress Drive
Hammond, Indiana 46320
Attention: General Manager
With a copy to: Empress Casino Joliet Corporation
2300 Empress Avenue
Joliet, Illinois 60436
Attention: Michael W. Hansen
Ice Miller Donadio & Ryan
One American Square
Box 82001
Indianapolis, Indiana 46282-0002
Attention: Phillip L. Bayt
</TABLE>
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All such communications shall be deemed received on day after the date sent
via any of the enumerated means, except for those sent by personal delivery,
which notices shall be deemed received only when actually received by the other
party.
ARTICLE XXV
CERTIFICATES
Either party shall, without charge, at any time and from time to time
hereafter, within thirty (30) days after written request of the other, certify
by written instrument duly executed and acknowledged to any person, firm or
corporation specified in such request:
(a) As to whether this Lease has been supplemented or amended, and if so,
the substance and manner of such supplement or amendment;
(b) As to whether this Lease has been assigned, transferred or sublet, and
if so, the substance and manner of such assignment, transfer or sublet;
(c) As to the validity and force and effect of this Lease, in accordance
with its tenor as then constituted;
(d) As to the existence of any default hereunder on the part of the other
party to this Lease;
(e) As to the existence of any offsets, counterclaims or defenses thereto
on the part of such other party;
(f) As to the commencement and expiration dates of the Term; and
(g) As to any other matters as may reasonably be so requested.
Any certificate referred to in this Article XXV may be relied upon by the
party requesting it and any other person, firm or corporation to whom the same
may be exhibited or delivered, and the contents of such certificate shall be
binding on the party executing same.
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ARTICLE XXVI
GENERAL
Section 26.01. Governing Law. This Lease and the performance hereof shall
be governed, interpreted, construed and enforced by and in accordance with the
laws of the State of Indiana.
Section 26.02. Partial Invalidity. If any term, covenant, condition or
provision of this Lease, or the application thereof to any person or
circumstance, shall at any time or to any extent be held invalid, illegal or
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid, illegal or unenforceable, shall not be affected thereby, and this Lease
shall be construed as if the invalid, illegal or unenforceable provision was not
included herein.
Section 26.03. Memorandum of Lease. The parties shall, at the request of
either of them, promptly execute and deliver duplicate originals of an
instrument, in recordable form, which will constitute a memorandum of this
Lease, setting forth a description of the Redevelopment Parcel, the Term of this
Lease and any other portions thereof.
Section 26.04. Remote Vesting. This Lease and all rights and interests
created hereby are intended to comply in all respects with applicable common or
statutory law, including the common law Rule Against Perpetuities or analogous
statutory restrictions. Therefore, any provision of this Lease that shall be
construed by a final, non-appealable judicial determination to create or permit
to arise any interest in the Redevelopment Parcel that may vest in the future in
any person shall be deemed to prohibit the creation of such interest from and
after the date that is twenty-one (21) years after the death of the survivor of
the now living lawful descendants of any of the persons who are attorneys
practicing with the firm of Baker & Daniels in Indianapolis, Indiana, as of the
date of this Lease.
Section 26.05. Interpretation. Wherever herein the singular number is
used, the same shall include the plural, and the masculine gender shall include
the feminine and neuter genders, and vice versa, as the context shall require.
The section headings used herein are for reference and convenience only and
shall not enter into the interpretation hereof. This Lease may be executed in
several counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
Section 26.06. Modification. This Lease may not be modified except by a
written instrument signed by the Tenant and the Commission and neither party
shall have additional benefits for itself or impose additional burdens on the
other party
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without the mutual agreement of the parties hereto, memorialized by a writing
signed by both Tenant and the Commission.
Section 26.07. Parties. Except as herein otherwise expressly provided, the
covenants, conditions and agreements contained in this Lease shall bind and
inure to the benefit of the Commission and the Tenant and their respective
successors and assigns.
Section 26.08. Construction of Agreement. The Commission and the Tenant
have participated fully in the negotiation and preparation of this Lease.
Accordingly, this Lease shall not be construed more strictly against any one of
the parties hereto.
Section 26.09. Attorneys' Fees. The Tenant shall pay the costs and
attorneys' fees incurred by the Commission in obtaining possession of the
Redevelopment Parcel after default of the Tenant or upon the expiration or
earlier termination of the Term. The nonprevailing party shall pay the
reasonable costs and attorneys' fees incurred by the prevailing party in
successfully enforcing against the nonprevailing party any covenant or agreement
of this Lease.
Section 26.10. Authority. The Commission and the Tenant each represent and
warrant to the other, respectively, that (a) such party has the power and
authority to execute and deliver this Lease and to observe and perform the
respective covenants to be observed by them hereunder, (b) that the undersigned
person executing this Lease on such party's behalf has been fully empowered and
duly authorized by all necessary action of such party to execute and deliver
this Lease for and on behalf of such party, and (c) this Lease is the legal,
valid and binding obligation of such party.
Section 26.11. Standards for Consent. Where any provision of this Lease
requires the consent or approval of either party, each party agrees that it will
not unreasonably withhold, condition, or delay such consent or approval, except
as otherwise expressly provided in this Lease, and the reasonableness of each
party's determination shall be evaluated in accordance with any particular
standards governing such particular consent or approval as expressly set forth
in this Lease, or if no standards are expressly set forth, then in accordance
with all relevant facts and circumstances. Where any provision of this Lease
requires one party to do anything to the satisfaction of the other party, the
other party agrees that it will not unreasonably refuse to state its
satisfaction with such action. Any dispute over the reasonableness of either
party withholding or conditioning its consent or satisfaction shall be resolved
pursuant to Article XXVII of this Lease.
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ARTICLE XXVII
DISPUTE RESOLUTION AND TERMINATION
Section 27.01. Alternative Dispute Resolution. If a dispute arises between
the Tenant and the Commission relating to this Lease, the Tenant and the
Commission, to the fullest extent permitted by applicable law, agree to use the
following procedure to resolve the dispute:
(a) A meeting shall be held promptly between the parties, attended by
individuals with decision-making authority regarding the dispute, to attempt in
good faith to negotiate a resolution of the dispute;
(b) If, within fourteen (14) days after that meeting, the parties have not
succeeded in negotiating a resolution to the dispute, they hereby agree to
submit the dispute to mediation in accordance with the Commercial Mediation
Rules of the American Arbitration Association and to bear equally the costs of
the mediation,
(1) The parties will jointly appoint a mutually acceptable mediator,
seeking assistance in this regard from the American Arbitration Association
if they are unable to agree upon this appointment within twenty-one (21)
days from the conclusion of the negotiation period; and
(2) The parties agree to participate in good faith in the mediation
and negotiation related thereto for a period of thirty (30) days. If the
parties are not successful in resolving the dispute through the mediation,
the parties agree that, to the fullest extent permitted by law, the dispute
shall be settled by binding arbitration in accordance with the procedures
set forth below.
Section 27.02. Arbitration. If any dispute cannot be settled in accordance
with the procedures set forth in Section 27.02 above, to the fullest extent
permitted by Applicable Laws, then:
(a) Any party may request arbitration of the dispute by giving the other
parties written notice that specifies the matter sought to be arbitrated and
designating a person to act as arbitrator, provided such person must be
independent and qualified as an arbitrator by the American Arbitration
Association.
(b) Within ten (10) business days after receipt of the notice described in
subparagraph (a) above, the Tenant or the Commission, as the case may be, shall
send written notice to the party requesting arbitration acknowledging the
request for arbitration and designating a second person to act as arbitrator;
-38-
<PAGE>
(c) Within ten (10) business days after receipt of the notice described in
subparagraph (b) above of the second arbitrator, the two arbitrators, by mutual
Lease, shall designate a third arbitrator. If the time provided in subparagraph
(b) above expires before the written notice described in subparagraph (b) is
sent to the party requesting arbitration, the first arbitrator shall designate
the two additional arbitrators;
(d) Promptly after the third arbitrator's designation, but in no event
later than thirty (30) days thereafter, at a date to be set by the arbitrators,
an arbitration hearing shall be held in Indianapolis, Indiana. The Commercial
Arbitration Rules of the American Arbitration Association shall apply at the
arbitration hearing, and the three arbitrators shall allow the Commission and
the Tenant to each present, in the presence of the other party, its case,
including opening statement, evidence, witnesses, if any, and summation. The
arbitrators shall render their decision within thirty (30) days of the hearing;
and
(e) During the arbitration proceedings, all parties shall be entitled to
all discovery which is available under the Federal Rules of Civil Procedure for
the Northern District of Indiana. All parties shall have an opportunity to
present witnesses and evidence before the arbitrators. The arbitrators shall use
their best efforts to make a decision within thirty (30) days of the date of the
hearing. The decision and award, if any, of the majority of the arbitrators
shall be deemed the decision of all three arbitrators. The parties shall use
their best efforts to expedite the arbitration proceedings.
(f) The arbitrators may award costs to the prevailing party if the
arbitrator determines that the non-prevailing party failed to negotiate in good
faith the matter that is the subject of the arbitration.
(g) The arbitrators shall limit their decision to (i) the matter identified
as being in dispute and (ii) any counterclaims properly brought during the
course of the arbitration proceedings.
(h) If the award rendered by the arbitrators is an award of Two Hundred
Fifty Thousand Dollars ($250,000.00) or less or requires performance equivalent
in value to a sum which is Two Hundred Fifty Thousand Dollars ($250,000) or less
(inclusive of any costs awarded by the arbitrator) (collectively, the
"Arbitration Threshold"), said award shall be final, binding and unappealable as
to the parties with respect to matters decided by the arbitrators within the
arbitrators' jurisdiction. If the arbitrators' award is greater than the
Arbitration Threshold, said award shall be appealable by either party for a
mistake of law or fact but only to a court of competent jurisdiction.
-39-
<PAGE>
Section 27.03. Actions During Pendency of Dispute. If a dispute arises
between the Tenant and the Commission relating to this Lease and such dispute is
being negotiated in good faith or submitted to the alternative dispute
resolution provisions of Section 27.01 or the arbitration provisions of Section
27.02, then the Commission shall not take any action to revoke requisite
licenses, permits or approvals nor, unless the activity on the part of Tenant
shall cause the Commission immediate and irreparable harm that cannot be
remedied by the payment of monetary damages, seek to enjoin the activity of the
Tenant. Further, during the pendency of any dispute which is being negotiated in
good faith or which has been submitted to the alternative dispute resolution
provisions of Section 27.01 or the arbitration provisions under Section 27.02,
each party shall continue to perform its other obligations under the Lease not
related to the dispute.
-40-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
day and year first above written.
THE CITY OF HAMMOND,
DEPARTMENT OF REDEVELOPMENT
By: /s/ JAMES DAVIS SR.
------------------------------------
Printed Name: James Davis Sr.
--------------------------
Title: President of the City of
Hammond Redevelopment Commission
Attest:
By: /s/ RUBEN ROQUE
-----------------------------
Printed Name: Ruben Roque
-------------------
Title: Secretary of City of Hammond Redevelopment Commission
EXPRESS CASINO HAMMOND
CORPORATION, an Indiana
Corporation
By: /s/ THOMAS J. LAMBRECHT
------------------------------------
Printed Name: Thomas J. Lambrecht
--------------------------
Title: Chairman of the Board
Attest:
By: /s/ WILLIAM J. SABO
-----------------------------
Printed Name: William J. Sabo
-------------------
Title: President
-41-
<PAGE>
EXHIBIT LIST
------------
EXHIBIT "A"
-----------
"Hammond Marina"
(Article I)
EXHIBIT "B"
-----------
"Parcel IA"
(Article I)
EXHIBIT "C"
-----------
"Parcel 2"
(Article I)
EXHIBIT "D"
-----------
"Parking Access Parcel"
(Article I)
EXHIBIT "E"
-----------
Parking Parcels
(Article I)
EXHIBIT "F"
-----------
"Perimeter Road Parcel"
(Article I)
-42-
<PAGE>
EXHIBIT B
93486DA7.DOC Page 1 of 1
Hammond Marina 9EAST-C
LAND DESCRIPTION
Redevelopment Commission Sublease
Parcel 1A
version 1
15 MAY 96
As part of the Northwest Quarter of Section 6, Township 37 North, Range 9 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,209.68 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West; thence South
41 degrees 13 minutes 34 seconds East 61.96 feet; thence South 41 degrees 13
minutes 34 seconds East 90.30 feet to the point of curvature of a curve to the
left, said point of curvature being South 48 degrees 46 minutes 26 seconds West
2,814.93 feet from the radius point of said curve; thence southeasterly 229.77
feet along said curve to a point being South 44 degrees 05 minutes 50 seconds
West 2,814.93 feet from the radius point of said curve; thence North 35 degrees
17 minutes 10 second East 17.84 feet to the POINT OF BEGINNING of this
description; thence North 35 degrees 17 minutes 10 seconds East 813.45 feet;
thence North 79 degrees 22 minutes 58 seconds East 71.38 feet; thence South 54
degrees 36 minutes 55 seconds East 100.48 feet; thence South 35 degrees 23
minutes 05 seconds West 90.00 feet; thence North 54 degrees 36 minutes 55
seconds West 110.00 feet; thence South 35 degrees 17 minutes 10 seconds West
780.38 feet; thence North 46 degrees 40 minutes 28 seconds West 40.40 feet to
the POINT OF BEGINNING containing 0.995 acres, more or less.
<PAGE>
[MAP APPEARS HERE]
- --------------------------------------------------------------------------------
AMERICAN CONSULTING ENGINEERS, INC.
4165 Millersville Road
INDIANAPOLIS INDIANA
(317) 547-5580 (C) Copyright 1996 46205-2998
DATE: May 15, 1996
DRAWN BY: CMM
JOB NO. 94-290
SHEET NO. 2 of 2
<PAGE>
EXHIBIT C
LAND DESCRIPTION
Redevelopment Commission Sublease
Parcel 2
version 1
29 AUG 94
A part of the Northwest Quarter of Section 6, Township 37 North, Range 9 West,
located in North Township, Lake County, Indiana, being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,209.68 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West; thence South
41 degrees 13 minutes 34 seconds East 61.96 feet; thence South 41 degrees 13
minutes 34 seconds East 90.30 feet to the point of curvature of a curve to the
left, said point of curvature being South 48 degrees 46 minutes 26 seconds West
2,814.93 feet from the radius point of said curve; thence southeasterly 229.76
feet along said curve to a point being South 44 degrees 05 minutes 50 seconds
West 2,814.93 feet from the radius point of said curve; thence North 35 degrees
17 minutes 10 seconds East 831.29 feet; thence North 79 degrees 22 minutes 58
seconds East 71.38 feet; thence South 54 degrees 36 minutes 55 seconds East
100.48 feet to the POINT OF BEGINNING of this description; thence continuing
South 54 degrees 36 minutes 55 seconds East 146.67 feet; thence South 35 degrees
16 minutes 41 seconds West 523.46 feet; thence North 54 degrees 35 minutes 11
seconds West 236.35 feet; thence South 35 degrees 15 minutes 53 seconds West
349.92 feet; thence North 46 degrees 40 minutes 28 seconds West 20.88 feet;
thence North 35 degrees 17 minutes 10 seconds East 780.38 feet; thence South 54
degrees 36 minutes 55 seconds East 110.00 feet; thence North 35 degrees 23
minutes 05 seconds East 90.00 feet to the POINT OF BEGINNING, containing 3.024
acres, more or less.
<PAGE>
Exhibit A (page 1 of 3)
[MAP APPEARS HERE]
- --------------------------------------------------------------------------------
EXHIBIT
AMERICAN CONSULTING ENGINEERS, INC.
<PAGE>
Exhibit A (page 2 of 3)
[MAP APPEARS HERE]
- --------------------------------------------------------------------------------
EXHIBIT
AMERICAN CONSULTING ENGINEERS, INC.
<PAGE>
Exhibit A (page 3 of 3)
[MAP APPEARS HERE]
- --------------------------------------------------------------------------------
EXHIBIT
AMERICAN CONSULTING ENGINEERS, INC.
<PAGE>
[MAP APPEARS HERE]
- --------------------------------------------------------------------------------
AMERICAN CONSULTING ENGINEERS, INC.
4165 Millersville Road
INDIANAPOLIS INDIANA
(317) 547-5580 (C) Copyright 1996 46205-2998
DATE: May 15, 1996
DRAWN BY: CMM
JOB NO. 94-290
SHEET NO. 2 of 2
<PAGE>
EXHIBIT D
LAND DESCRIPTION
Redevelopment Commission Sublease
Ingress & Egress Access to Parking
version 1
28 AUG 96
A part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way); thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right, said
point of curvature being North 36 degrees 00 minutes 00 seconds West 326.48 feet
from the radius point of said curve; thence northeasterly and easterly 176.71
feet along said curve to a point being North 04 degrees 59 minutes 19 seconds
West 326.48 feet from the radius point of said curve and to the POINT OF
BEGINNING of this description; thence North 48 degrees 49 minutes 21 seconds
East 35.00 feet; thence South 41 degrees 10 minutes 39 seconds East 625.56 feet;
thence South 41 degrees 14 minutes 09 seconds East 34.87 feet to a point on a
non-tangent curve concave to the northeast (said curve hereinafter referred to
as "Curve #1"), said point of curvature being South 48 degrees 38 minutes 51
seconds West 5,682.15 feet from the radius point of said curve; thence
southeasterly 150.03 feet along Curve #1 to a point being South 47 degrees 08
minutes 05 seconds West 5,682.15 feet from the radius point of Curve #1; thence
North 48 degrees 45 minutes 56 seconds East 96.78 feet; thence South 41 degrees
14 minutes 04 seconds East 100.00 feet; thence South 48 degrees 45 minutes 56
seconds West 128.09 feet to a point on a non-tangent curve concave to the
northeast (said curve is concentric with Curve #1), said point being South 46
degrees 08 minutes 30 seconds West 5,717.15 feet from the radius point of said
curve; thence northwesterly 250.02 feet along said curve to a point being South
48 degrees 38 minutes 51 seconds West 5,717.15 feet from the radius point of
said curve; thence North 41 degrees 14 minutes 09 seconds West 34.96 feet;
thence North 41 degrees 10 minutes 39 seconds West 625.58 feet to the POINT OF
BEGINNING containing 0.950 acres, more or less.
<PAGE>
[MAP APPEARS HERE]
LAND DESCRIPTION
Redevelopment Commission Sublease
Ingress & Egress Access to Parking
version 1
28 MAY 96
A part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way); thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right, said
point of curvature being North 36 degrees 00 minutes 00 seconds West 326.48 feet
from the radius point of said curve; thence northeasterly and easterly 176.71
feet along said curve to a point being North 04 degrees 59 minutes 19 seconds
West 326.48 feet from the radius point of said curve and to the POINT OF
BEGINNING of this description; thence North 48 degrees 49 minutes 21 seconds
East 35.00 feet; thence South 41 degrees 10 minutes 39 seconds East 625.56 feet;
thence South 41 degrees 14 minutes 09 seconds East 34.87 feet to a point on a
non-tangent curve concave to the northeast (said curve hereinafter referred to
as "Curve #1"), said point of curvature being South 48 degrees 38 minutes 51
seconds West 5,682.15 feet from the radius point of said curve; thence
southeasterly 150.03 feet along Curve #1 to a point being South 47 degrees 08
minutes 05 seconds West 5,682.15 feet from the radius point of Curve #1; thence
North 48 degrees 45 minutes 56 seconds East 96.78 feet; thence South 41 degrees
14 minutes 04 seconds East 100.00 feet; thence South 48 degrees 45 minutes 56
seconds West 128.09 feet to a point on a non-tangent curve concave to the
northeast (said curve is concentric with Curve #1), said point being South 46
degrees 08 minutes 30 seconds West 5,717.15 feet from the radius point of said
curve; thence northwesterly 250.02 feet along said curve to a point being South
48 degrees 38 minutes 51 seconds West 5,717.15 feet from the radius point of
said curve; thence North 41 degrees 14 minutes 09 seconds West 34.96 feet;
thence North 41 degrees 10 minutes 39 seconds West 625.58 feet to the POINT OF
BEGINNING containing 0.950 acres, more or less.
- --------------------------------------------------------------------------------
AMERICAN CONSULTING ENGINEERS, INC.
4165 Millersville Road
INDIANAPOLIS INDIANA
(317) 547-5580 (C) Copyright 1995 46205-2998
- --------------------------------------------------------------------------------
DATE: May 28, 1995
DRAWN BY: CMM
JOB NO. 94-290
SHEET NO. 1 of 3
DWC FILE: 93\484\83486083 EDIT DATE: 05/28/96 DOSC FILE: 83486083.DOC
PLOT SCALE: 1" = 100' EDITED BY: CWW
<PAGE>
[MAP APPEARS HERE]
- --------------------------------------------------------------------------------
AMERICAN CONSULTING ENGINEERS, INC. DATE: MAY 28, 1996 SHEET NO.
4165 Millersville Road DRAWN BY: CMM 2
INDIANAPOLIS INDIANA JOB NO. 94-290 of
(317) 547-5580 (C) Copyright 1996 46205-2998 3
- --------------------------------------------------------------------------------
<PAGE>
[MAP APPEARS HERE]
- --------------------------------------------------------------------------------
AMERICAN CONSULTING ENGINEERS, INC.
4165 Millersville Road
INDIANAPOLIS INDIANA
(317) 547-5580 (C) Copyright 1996 46205-2998
DATE: May 28, 1996
DRAWN BY: CMM
JOB NO. 94-290
SHEET NO. 3 of 3
<PAGE>
EXHIBIT E
LAND DESCRIPTION
Redevelopment Commission Sublease
Parcel 4
version 2
28 MAY 96
A part of the Northeast Quarter of Section 1, Township 37 North, Range 10 West
and a part of Section 36, Township 38 North, Range 10 West located in North
Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way); thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 5.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.75 feet to the point of curvature of a curve to he right, said
point of curvature being North 36 degrees 00 minutes 00 seconds West 326.48 feet
from the radius point of said curve; thence northeasterly and easterly 118.22
feet along said curve to the southwestern boundary of the 21.255 acre tract of
land described in the QUITCLAIM DEED recorded as instrument #910181 on April 17,
1991 in the office of the Recorder of Lake County, Indiana, said point being
North 15 degrees 15 minutes 10 seconds West 326.48 feet from the radius point of
said curve, the next seven (7) courses are along the boundary of said 21.255
acre tract of land; 1) thence North 41 degrees 15 minutes 08 seconds West
1,700.29 feet to the POINT OF BEGINNING of this description; 2) thence North 41
degrees 15 minutes 08 seconds West 1,539.62 feet to the point of curvature of a
curve to the right, said point of curvature being South 48 degrees 44 minutes 52
seconds West 24,828.52 feet from the radius point of said curve; 3) thence
northwesterly 281.79 feet along said curve to its point of tangency, said point
of tangency being South of 49 degrees 23 minutes 53 seconds West 24,828.52 feet
from the radius point of said curve; 4) thence North 40 degrees 36 minutes 07
seconds West 1,474.75 feet to the Indiana/Illinois State Line; 5) thence North
00 degrees 52 minutes 04 seconds West 138.52 feet along the Indiana/Illinois
State Line; 6) thence South 48 degrees 50 minutes 29 seconds East 279.19 feet;
7) thence South 41 degrees 14 minutes 04 seconds East 2,051.13 feet to the
northwestern corner of the tract of land described in the QUITCLAIM DEED
recorded in Deed Record 1219, page 31 on November 5, 1962 in said Recorder's
office, said corner bing on "Eggers' Fence Line"; thence South 87 degrees 40
minutes 04 seconds East 11.27 feet along the northern boundary of said tract of
land which is also along "Eggers' Fence Line"; thence South 41 degrees 12
minutes 09 seconds East 139.21 feet; thence
<PAGE>
South 40 degrees 14 minutes 07 seconds East 154.35 feet to a point on a non-
tangent curve concave to the southwest, said point being North 51 degrees 42
minutes 18 seconds East 1,514.88 feet from the radius point of said curve;
thence southeasterly 141.95 feet along said curve to a point being North 57
degrees 04 minutes 25 seconds East 1,514.88 feet from the radius point of said
curve; thence South 30 degrees 59 minutes 10 seconds East 154.35 feet; thence
South 30 degrees 01 minute 09 seconds East 186.88 feet; thence South 30 degrees
59 minutes 24 seconds East 155.62 feet to a point on a non-tangent curve concave
to the northeast, said point being South 57 degrees 04 minutes 25 seconds West
1,539.88 feet from the radius point of said curve; thence southeasterly 143.63
feet to a point being South 51 degrees 43 minutes 47 seconds West 1,539.88 feet
from the radius point of said curve; thence South 48 degrees 44 minutes 52
seconds West 29.89 feet to the POINT OF BEGINNING containing 9.760 acres, more
or less.
ALSO, a part of the Northeast Quarter of Section 1, Township 37 North, Range 10
West and a part of Section 36, Township 38 North, Range 10 West located in North
Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 2,195.00 feet along the East Line of said Section 1 to
its point of intersection with the centerline of Indianapolis Boulevard (100
foot wide right-of-way); thence North 40 degrees 07 minutes 55 seconds West
3,007.99 feet along the centerline of Indianapolis Boulevard; thence North 49
degrees 52 minutes 05 seconds East 50.00 feet perpendicular to the centerline of
Indianapolis Boulevard to the northeastern right-of-way line of Indianapolis
Boulevard; thence North 40 degrees 07 minutes 55 seconds West 190.50 feet along
the northeastern right-of-way line of Indianapolis Boulevard; thence North 51
degrees 02 minutes 14 seconds East 290.22 feet; thence South 60 degrees 14
minutes 57 seconds East 49.35 feet; thence North 54 degrees 00 minutes 00
seconds East 528.73 feet to the point of curvature of a curve to the right (said
curve hereinafter referred to as "Curve #1"), said point of curvature being
North 36 degrees 00 minutes 00 seconds West 326.48 feet from the radius point of
Curve #1; thence northeasterly and easterly 176.71 feet along Curve #1 to a
point being North 04 degrees 59 minutes 19 seconds West 326.48 feet from the
radius point of Curve #1 and to the POINT OF BEGINNING of this description;
thence North 41 degrees 10 minutes 39 seconds West 1,372.17 feet to the point of
curvature of a curve to the right, said point of curvature being South 48
degrees 49 minutes 21 seconds West 474.78 feet from the radius point of said
curve; thence northwesterly 58.94 feet along said curve to its point of
tangency, said point of tangency being South 55 degrees 56 minutes 06 seconds
West 474.78 feet from the radius point of said curve; thence North 34 degrees 03
minutes 54 seconds West 45.58 feet to point of curvature of curve to the left,
said point of curvature being North 55 degrees 56 minutes 06 seconds East 729.28
feet from the radius point of said curve; thence northwesterly 90.62 feet along
said curve to its point of tangency, said point of tangency being North 48
degrees 48 minutes 55 seconds East 729.28 feet from the radius point of said
curve; thence North 41 degrees 11 minutes 05 seconds West 8.90 feet; thence
North 40 degrees 12 minutes 29 seconds West 154.34 feet to a point on a non-
<PAGE>
tangent curve concave to the northeast, said point being South 51 degrees 45
minutes 03 seconds West 1,500.05 feet from the radius point of said curve;
thence northwesterly 138.44 feet along said curve to a point being South 57
degrees 02 minutes 18 seconds West 1,500.05 from the radius point of said curve;
thence North 31 degrees 00 minutes 10 seconds West 154.34 feet; thence North 30
degrees 01 minute 34 seconds West 170.82 feet to the point of curvature of curve
to the right, said point of curvature being South 59 degrees 58 minutes 26
seconds West 1,420.19 feet from the radius point of said curve; thence
northwesterly and northerly 273.83 feet along said curve to its point of
tangency, said point of tangency being South 71 degrees 01 minute 16 seconds
West 1,420.19 feet from the radius point of said curve; thence North 18 degrees
58 minutes 44 seconds West 56.31 feet to a point on the northwesterly extension
of the southwestern boundary of the 16.039 acre tract of land describe in the
WARRANTY DEED recorded in Deed Record 1218, page 592 on November 9, 1962 in the
office of the Recorder of Lake County, Indiana; thence South 41 degrees 14
minutes 04 seconds East 2,501.08 feet along the northwesterly extension of the
southwestern boundary of said 16.039 acre tract of land and along the
southwestern boundary of said 16,039 acre tract of land to a point being North
48 degrees 49 minutes 21 seconds East of the point of beginning; thence South
48 degrees 49 minutes 21 seconds West 193.47 feet to the POINT OF BEGINNING
containing 9.452 acres, more or less.
EXCEPTING AND EXCLUDING THE FOLLOWING FROM THE ABOVE-DESCRIBED PARCELS:
A parcel of real estate that is two hundred (200) feet wide (measured from east
to west) and fifty (50) feet in depth (measured from north to south) and located
in the northeasternmost corner of the above-described parcels.
<PAGE>
EXHIBIT F
LAND DESCRIPTION
Redevelopment Commission Sublease
Water Department Perimeter Road
version 2
24 MAY 96
A 32.00 foot-wide strip of land being a part of the Northwest Quarter of Section
6, Township 37 North, Range 9 West located in North Township, Lake County,
Indiana the centerline of which is described as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,091.63 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West to a point on
a non-tangent curve concave to the northeast, said point being South 38 degrees
59 minutes 01 second West 1,637.02 feet from the radius point of said curve;
thence southeasterly 62.23 feet along said curve to its point of tangency, said
point of tangency being South 36 degrees 48 minutes 21 seconds West 1,637.02
feet from the radius point of said curve; thence South 53 degrees 11 minutes 39
seconds East 650.47 feet to the point of curvature of a curve to the left, said
point of curvature being South 36 degrees 48 minutes 21 seconds West 2,864.79
feet from the radius point of said curve; thence southeasterly 84.09 feet along
said curve to its point of tangency, said point of tangency being South 35
degrees 07 minutes 27 seconds West 2,864.79 feet from the radius point of said
curve; thence South 54 degrees 52 minutes 33 seconds East 325.80 feet to the
point of curvature of a curve to the left, said point of curvature being South
35 degrees 07 minutes 27 seconds West 55.00 feet from the radius point of said
curve; thence southeasterly, easterly, northeasterly, northerly, and
northwesterly 142.07 feet along said curve to its point of tangency, said point
of tangency being North 67 degrees 07 minutes 27 seconds East 55.00 feet from
the radius point of said curve; thence North 22 degrees 52 minutes 33 seconds
West 53.74 feet to the point of curvature of a curve to the right, said point of
curvature being South 67 degrees 07 minutes 27 seconds West 55.00 feet from the
radius point of said curve; thence northwesterly, northerly, and northeasterly
56.62 feet along said curve to its point of tangency, said point of tangency
being North 53 degrees 53 minutes 40 seconds West 55.00 feet from the radius
point of said curve; thence North 36 degrees 06 minutes 20 seconds East 15.67
feet to the POINT OF BEGINNING of this centerline description; thence North 36
degrees 06 minutes 20 seconds East 254.64 feet to the point of curvature of a
curve left, said point of curvature being South 53 degrees 53 minutes 40 seconds
East 40.00 feet from the radius point of said curve; thence northeasterly,
northerly, and northwesterly 63.49 feet along said curve to its point of
tangency, said point of tangency being North 35 degrees 09 minutes 56 seconds
East 40.00 feet from the radius point of said curve; thence North 54 degrees 50
minutes 04 seconds West 117.95 feet to the point of curvature of a curve to the
right, said point of curvature being South 35 degrees 09 minutes 56 seconds West
40.00 feet from the radius point of said curve; thence northwesterly, northerly,
and northeasterly 60.84 feet along said curve to its point of tangency, said
point of tangency being North 57 degrees 40 minutes 52 seconds West 40.00 feet
from the radius point of said curve; thence North 32 degrees 19 minutes 08
seconds East 330.68 feet to the point of curvature of a curve to the left, said
point of curvature being South 57 degrees 40 minutes 52 seconds East 40.00 feet
from the radius point of said curve; thence northeasterly, northerly, and
northwesterly 60.76 feet along said curve to its point of tangency, said point
of tangency being North 35 degrees 17 minutes 10 seconds East 40.00 feet from
the radius point of said curve; thence North 54 degrees 42 minutes 50 seconds
West 227.88 feet to the TERMINUS of this centerline description. Containing
0.820 acres, more or less.
<TABLE>
<CAPTION>
CURVE #1 CURVE #2 CURVE #3
-------- -------- --------
<S> <C> <C>
/\ = 02/o/10'41" /\ = 01/o/40'54" /\ = 148/o/00'00"
R = 1637.02' R = 2864.79' R = 55.00'
T = 31.12' T = 42.05' T = 191.81'
L = 62.23' L = 84.09' L = 142.07'
C = S52/o/06'19"E-62.22' C = S54/o/02'06"E-84.08' C = N51/o/07'27"E-105.74'
CURVE #4 CURVE #5 CURVE #6
-------- -------- --------
/\ = 58/o/58'53" /\ = 90/o/56'23" /\ = 87/o/09'12"
R = 55.00' R = 40.00' R = 40.00'
T = 31.11' T = 40.66' T = 38.06'
L = 56.62' L = 63.49' L = 60.84'
C = N06/o/36'53"E-54.15' C = N09/o/21'52"W-57.03' C = N11/o/15'28"W-55.15'
CURVE #7
--------
/\ = 87/o/01'58"
R = 40.00'
T = 37.98'
L = 60.76'
C = N11/o/11'51"W-55.09'
</TABLE>
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AMERICAN CONSULTING ENGINEERS, INC.
4165 Millersville Road
INDIANAPOLIS INDIANA
(317) 547-5580 (C) Copyright 1996 46205-2998
DATE: May 28, 1996
DRAWN BY: CMM
JOB NO. 94-290
SHEET NO. 1 of 3
<PAGE>
[MAP APPEARS HERE]
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AMERICAN CONSULTING ENGINEERS, INC. DATE: MAY 28, 1996 SHEET NO.
4165 Millersville Road DRAWN BY: CMM 2
INDIANAPOLIS INDIANA JOB NO. 94-290 of
(317) 547-5580 (C) Copyright 1996 46205-2998 3
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT 10.12
- --------------------------------------------------------------------------------
LICENSE
AGREEMENT
BY AND BETWEEN
HAMMOND PORT AUTHORITY
EMPRESS CASINO HAMMOND CORPORATION
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DATED AS OF JUNE 21, 1996
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C> <C>
RECITALS..................................................................... 1
ARTICLE I DEFINITIONS........................................................ 1
ARTICLE II GRANT............................................................. 6
Section 2.01. Rights Granted........................................... 6
Section 2.02. Parking.................................................. 7
Section 2.03. Rights Limited........................................... 7
Section 2.04. Nature of Rights Granted to the Developer................ 7
Section 2.05. "AS IS" Condition........................................ 7
Section 2.06. Enjoyment................................................ 8
ARTICLE III PORT AUTHORITY'S RESERVED RIGHTS................................. 8
Section 3.01. General.................................................. 8
ARTICLE IV TERM.............................................................. 8
Section 4.01. Term..................................................... 8
Section 4.02. Extension Periods........................................ 8
Section 4.03. Holding Over............................................. 9
ARTICLE V CONSIDERATION...................................................... 9
Section 5.01. Passenger Payment........................................ 9
Section 5.02. Accounting for Passenger Payment......................... 10
Section 5.03. Marina Payments.......................................... 11
Section 5.04. Slip Fees................................................ 11
Section 5.05. Compliance with Development Agreement.................... 13
ARTICLE VI USE............................................................... 13
Section 6.01. Permitted Uses........................................... 13
Section 6.02. Compliance with Laws, Insurance Policies................. 13
Section 6.03. Negative Covenants....................................... 14
Section 6.04. Hazardous Substances..................................... 14
ARTICLE VII IMPROVEMENTS..................................................... 15
Section 7.01. Commencement and Completion of Construction.............. 15
Section 7.02. Governmental Approvals................................... 15
Section 7.03. Title to Improvements.................................... 15
Section 7.04. Refinancing of Bonds..................................... 15
ARTICLE VIII ASSIGNMENT AND ENCUMBRANCES..................................... 16
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 8.01. Assignments and Subleases............................... 16
Section 8.02. Encumbrances............................................ 16
Section 8.03. General................................................. 17
ARTICLE IX TAXES AND UTILITY EXPENSES........................................ 17
Section 9.01. Payment of Taxes and Utility Expenses................... 17
Section 9.02. Proration of Real Estate Taxes.......................... 17
Section 9.03. Right to Contest........................................ 18
Section 9.04. Distribution of Overpayment............................. 18
ARTICLE X MAINTENANCE, REPAIRS AND ALTERATIONS............................... 18
Section 10.01. Maintenance and Repair by the Developer................. 18
Section 10.02. Alterations............................................. 18
ARTICLE XI MECHANICS' LIENS; INDEMNIFICATION................................. 19
Section 11.01. Mechanics' Liens........................................ 19
Section 11.02. Indemnification by the Developer........................ 19
ARTICLE XII INSURANCE........................................................ 20
Section 12.01. Liability Insurance..................................... 20
Section 12.02. Proof of Insurance...................................... 20
Section 12.03. Adjustment in Insurance................................. 20
Section 12.04. Waiver of Subrogation................................... 21
Section 12.05. Insurance Proceeds...................................... 21
Section 12.06. General Provisions...................................... 21
ARTICLE XIII DESTRUCTION..................................................... 22
Section 13.01. The Developer's Obligation to Repair.................... 22
Section 13.02. No Abatement............................................ 22
ARTICLE XIV CONDEMNATION..................................................... 22
Section 14.01. Total Condemnation...................................... 22
Section 14.02. Proceeds of Total Condemnation.......................... 22
Section 14.03. Partial Condemnation.................................... 23
Section 14.04. Restoration............................................. 23
Section 14.05. Temporary Condemnation.................................. 23
Section 14.06. Rights to Appear........................................ 24
Section 14.07. Limitation on Eminent Domain Powers..................... 24
ARTICLE XV MORTGAGES......................................................... 24
ARTICLE XVI DEVELOPER'S RIGHT TO CURE THE PORT AUTHORITY'S DEFAULTS.......... 24
Section 16.01. Notices................................................. 24
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 16.02. Right to Cure.......................................... 25
Section 16.03. No Termination of HPA Footprint Sublease............... 25
Section 16.04. No Termination of the HPA Parking Lease................ 25
ARTICLE XVII DEFAULTS....................................................... 26
Section 17.01. Events of Default...................................... 26
Section 17.02. Extensions............................................. 27
Section 17.03. Remedies............................................... 27
Section 17.04. Default by Port Authority.............................. 27
ARTICLE XVIII BANKRUPTCY AND INSOLVENCY..................................... 28
Section 18.01. Certain Events of Default Specified.................... 28
Section 18.02. Preservation of Agreement.............................. 29
ARTICLE XIX SPECIFIC PERFORMANCE............................................ 29
ARTICLE XX SURRENDER........................................................ 29
Section 20.01. Surrender of Improvements.............................. 29
Section 20.02. Removal of Certain Property............................ 29
Section 20.03. Survival of Terms...................................... 30
ARTICLE XXI NO WAIVER.............................................. 30
ARTICLE XXII PORT AUTHORITY'S ASSIGNMENTAND THE PARTIES' LIABILITY
LIMITATION............................................. 30
Section 22.01. Assignment by the Port Authority....................... 30
Section 22.02. Limitations on Rights of Recovery...................... 31
ARTICLE XXIII FORCE MAJEURE.......................................... 31
ARTICLE XXIV NOTICES................................................ 31
ARTICLE XXV CERTIFICATES........................................... 33
ARTICLE XXVI GENERAL................................................ 34
Section 26.01. Governing Law.......................................... 34
Section 26.02. Partial Invalidity..................................... 34
Section 26.03. Remote Vesting......................................... 34
Section 26.04. Interpretation......................................... 34
Section 26.05. Entire Agreement....................................... 34
Section 26.06. Parties................................................ 34
Section 26.07. Construction of Agreement.............................. 35
Section 26.08. Attorneys' Fees........................................ 35
Section 26.09. Authority.............................................. 35
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 26.10. Standards for Consent................................... 35
Section 26.11. Nature of Agreement..................................... 35
ARTICLE XXVII DISPUTE RESOLUTION AND TERMINATION...................... 36
Section 27.01. Alternative Dispute Resolution.......................... 36
Section 27.02. Arbitration............................................. 36
Section 27.03. Actions During Pendency of Dispute...................... 37
ARTICLE XXVIII DEVELOPER'S COMMITMENTS................................. 38
Section 28.01. Construction Commitments................................ 38
ARTICLE XXIX PORT AUTHORITY'S COMMITMENT............................. 39
</TABLE>
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<PAGE>
AGREEMENT
This Agreement is entered into this 21st day of June, 1996, by and
between the Hammond Port Authority (the "Port Authority"), and Empress Casino
Hammond Corporation, an Indiana corporation (the "Developer").
RECITALS
WHEREAS, the Port Authority, acting pursuant to its authority and
powers under Indiana Code (S) 8-10-5-1, et seq., desires to grant to the
Developer certain rights with respect to that portion of the Hammond Marina and
Lake Michigan which is under its jurisdiction, subject to and conditioned upon
the terms and provisions set forth herein; and
WHEREAS, the Developer desires to obtain certain rights from the Port
Authority, subject to and conditioned upon the terms and provisions set forth
hereunder.
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, the Port Authority and the Developer hereby
covenant and agree as follows:
ARTICLE I
DEFINITIONS
The following terms, when used in the preceding recitals or the text
of this Agreement with initial capital letters, have the following respective
meanings:
"Act" means the Riverboat Gambling Act as established by Indiana Code
(S) 4-33-1-1, et seq. and all amendments thereto and all rules and orders
promulgated thereunder.
"Agreement" means this fully executed Agreement.
"Applicable Laws" means all laws, rules, regulations, ordinances,
codes, administrative actions and/or orders of any court or governmental agency
or unit, whether federal, state or local, properly exercising or having
jurisdiction with respect to or over the subject matter in question.
"Boat" means the vessel named and known as Empress III, a riverboat
casino owned or leased and to be operated by the Developer on Lake Michigan from
Hammond, Indiana, that may be further modified, improved, equipped and/or
replaced by the Developer from time to time as provided in the Development
Agreement.
"City" means the municipal corporation of Hammond, Indiana.
<PAGE>
"Clipper Lease" means the Lease Agreement by and between the Port
Authority and the Developer, dated February 9, 1993.
"Clipper Removal Agreement" means the Agreement Respecting The S/S
Milwaukee Clipper, dated March 20, 1996, by and between the Developer and the
Port Authority.
"Commencement Date" has the meaning set forth in Section 4.01.
"Commission" means the City of Hammond acting by and through its
Redevelopment Commission.
"Condemnation Proceeds" means the total aggregate award, or settlement
in lieu thereof, in the event of a total taking or Constructive Total Taking of
the Improvements.
"Constructive Total Taking" means a taking of such scope that the
remaining portion of the Improvements is insufficient to permit the restoration
of the Improvements so as to be suitable for the primary use permitted by
Section 2.01.
"County" means Lake County, Indiana.
"Development Agreement" means the Hammond Riverboat Gaming Project
Development Agreement entered into or to be entered into by and among the City
of Hammond, Indiana, the Commission, and the Developer, as the same has been or
may hereafter be amended.
"DMS" means DMS of Hammond, Inc., and any subsequent holder of DMS of
Indiana, Inc.'s right, title or interest under the Ground Lease and the Port
Authority Lease.
"Docking Facilities" has the meaning set forth in the Development
Agreement.
"Environmental Complaint" has the meaning set forth in Section 6.05.
"Environmental Laws" means federal, state and local laws, statutes,
ordinances, rules or regulations, effective on or after the date of execution of
this Lease, relating to pollution or protection of the environment, including
laws or regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment (including, without
limitation, ambient air, surface water, ground water or land) or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances or imposing standards of
conduct or liability concerning underground storage tanks. Such laws shall
include, but
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<PAGE>
not be limited to, the Resource Conservation and Recover Act of 1976 (RCRA), 42
U.S.C. (S)(S) 690 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. (S)(S) 9601-9657, as
amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA); the
Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 6901 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. (S)(S) 1251 et seq.; the Clean
Air Act, 42 U.S.C. (S)(S) 741 et seq.; the Clean Air Act, 33 U.S.C. (S) 7401;
the Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601-2629; the Safe Drinking
Water Act, 42 U.S.C. (S)(S) 300f-300j; the Atomic Energy Act, 42 U.S.C. (S)(S)
2011, et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
(S)(S) 11001 et seq.; Indiana Code, Title 13 - Environment; or any amendments
thereto; or any similar federal, state or local environmental laws, statutes,
ordinances, or any regulations, orders or decrees now or hereafter promulgated
thereunder.
"Event of Default" has the meaning set forth in Section 17.01.
"Extension Period" has the meaning set forth in Section 4.02.
"Gaming Commission" means the Indiana Gaming Commission as established
pursuant to the Act.
"Ground Lease" means the Ground Lease Agreement among the Port
Authority, as lessor, Hammond, as co-lessor, and DMS, as lessee, dated as of
June 30, 1989, as the same has been or may hereafter be amended or modified.
"Guest Facilities" has the meaning set forth in the Development
Agreement.
"Hammond" means the City of Hammond, Indiana, a municipal corporation.
"Hammond Marina" means the marina and related improvements located on
that portion of Lake Michigan and the adjacent lake front that are subject to
the Port Authority's jurisdiction and generally described and/or depicted on
Exhibit A attached hereto and incorporated herein by this reference.
"Hazardous Discharge" has the meaning set forth in Section 6.05.
"Hazardous Substances" means any substance:
(a) The presence of which requires investigation, response, remediation or
other corrective action under the Resource Conservation and Recovery Act of 1976
(RCRA), 42 U.S.C. (S)(S) 690 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. (S)(S) 9601-9657, as
amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA); the
Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 6901 et seq.; the
Federal Water Pollution
-3-
<PAGE>
Control Act, 33 U.S.C. (S)(S) 1251 et seq.; the Clean Air Act, 42 U.S.C. (S)(S)
741 et seq.; the Clean Water Act, 33 U.S.C. (S) 7401; the Toxic Substances
Control Act, 15 U.S.C. (S)(S) 2601-2629; the Safe Drinking Water Act, 42 U.S.C.
(S)(S) 300f-300j; the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. (S)(S) 11001 et seq.; or any amendments thereto; or any similar federal,
state or local environmental laws, statutes or ordinances, or any regulations,
orders or decrees now or hereafter promulgated thereunder; or
(b) Which is defined as "hazardous waste," "hazardous substance," "solid
waste," "infectious waste," "toxic substance," "radioactive waste," or is
otherwise regulated by the Resource Conservation and Recover Act of 1976 (RCRA),
42 U.S.C. (S)(S) 690 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. (S)(S) 9601-9657, as
amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA); the
Hazardous Materials Transportation Act, 49 U.S.C. (S)(S) 6901 et seq.; the
Federal Water Pollution Control Act, 33 U.S.C. (S)(S) 1251 et seq.; the Clean
Air Act, 42 U.S.C. (S)(S) 741 et seq.; the Clean Air Act, 33 U.S.C. (S) 7401;
the Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601-2629; the Safe Drinking
Water Act, 42 U.S.C. (S)(S) 300f-300j; the Atomic Energy Act, 42 U.S.C. (S)(S)
2011, et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
(S)(S) 11001 et seq.; Indiana Code, Title 13 - Environment; or any amendments
thereto; or any similar federal, state or local environmental laws, statutes,
ordinances, or any regulations, orders or decrees now or hereafter promulgated
thereunder.
"HPA Footprint Sublease" means the Intergovernmental Sub-Lease
Agreement between the Port Authority, as landlord, and the Commission, as
tenant, dated as of October 13, 1995, as the same has been or may hereafter be
amended.
"HPA Parking Lease" means the Intergovernmental Lease Agreement and
Grant of Easement entered into or to be entered into between the Port Authority,
as landlord, and the Commission, as tenant, pursuant to which the Port Authority
has or will lease the Parking Parcels to the Commission, as the same has been or
may hereafter be amended.
"Improvements" means all improvements (including, without limitation,
the Docking Facilities, any Infrastructure Facilities, landscaping, walkways,
and docking, mooring and marina facilities) that are hereafter located or
constructed by the Developer (a) in the Hammond Marina, or (b) in Lake Michigan
in the vicinity of the Hammond Marina to the extent the Port Authority has any
interest therein; provided, that the Improvements shall not include any
Improvements that are owned by the Commission or subject to the terms and
conditions of the Sublease; and provided further, that the Improvements shall
not include any improvements or facilities that are anchored or constructed on
the Redevelopment Parcel notwithstanding that any such improvements or
facilities encroach or protrude into the Hammond Marina.
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<PAGE>
"Infrastructure Facilities" means all pipelines, conduits, ducts,
cables, wires, manholes, vaults, tanks, tunnels or other manmade facilities or
structures, and any encasements containing such facilities, which have been or
will hereafter be installed for the purpose of furnishing, storing, removing or
transmitting electricity, gases, steam, liquid petroleum products, telephone or
other communications, cable television, computer signals or data, sewage
drainage, traffic or other control systems, or water or other utilities or
services to the Improvements.
"Initial period" has the meaning set forth in Section 4.01.
"License" means an owner's license as defined in Indiana Code (S) 4-
33-2-15 that allows the Developer to operate a riverboat casino on Lake Michigan
from the City of Hammond, Indiana.
"License Date" means the date on which the License is issued to the
Developer by the Gaming Commission.
"Parking Access Parcel" has the meaning set forth in the Sublease.
"Parking Parcels" has the meaning set forth in the Sublease.
"Port Authority" means the Hammond Port Authority; provided, that it
is expressly understood and agreed by the Developer that any obligations of the
Port Authority under this Agreement may be fulfilled by any subdivision, unit,
agency, commission, department, authority, instrumentality, officer or
representative, or any combination thereof, of the City.
"Port Authority Lease" means the Lease Agreement among the Port
Authority, as lessee, Hammond and DMS, as lessor, dated as of June 30, 1989, as
the same has been or may hereafter be amended or modified.
"Project" has the meaning set forth in the Development Agreement.
"Real Estate Taxes" means and includes all ad valorem real property
taxes and assessments levied upon or with respect to (or, if any such levy is
upon or with respect to a parcel of real estate and improvements thereon of
which the Improvements are a part, then the portion thereof properly allocable
and relating to) the Improvements, or any part thereof, and all taxes, levies
and charges which may be levied or imposed by any governmental authority in
replacement of, in lieu of, or in addition to ad valorem real property taxes, in
whole or in part, including but not limited to a state or local option tax
designed for property tax relief purposes, or a license or franchise fee
measured by rents received from the Improvements, or otherwise measured or based
upon the Developer's or the Port Authority's interest in the Improvements.
-5-
<PAGE>
"Redevelopment Parcel" has the meaning set forth in the Development
Agreement.
"Sublease" means the lease entered into or to be entered into by and
between the Commission and the Developer pursuant to which the Commission has
subleased or will sublease the Redevelopment Parcel to the Developer, as the
same has been or may hereafter be amended.
"Taxes" means all Real Estate Taxes, personal property taxes, special
and general assessments, water and sewer service charges, licenses and permit
fees, and other governmental impositions and charges of every kind and nature
whatsoever, extraordinary as well as ordinary, which may be assessed, levied, or
become due and payable or a lien with respect to the Improvements, or any part
thereof.
"Term" means the Initial Period together with all Extension Periods.
"Trust Indenture" means the Trust Indenture among DMS, the Port
Authority and the Trustee, as Trustee, dated as of June 30, 1989, as the same
has been or may hereafter be amended.
"Trustee" has the meaning set forth in the Development Agreement.
"Utility Expenses" means and includes all charges relating to the
providing of water, steam, heat, cooling, gas, electricity, light, sewer,
telephone, television, telecommunications, trash collection and other similar
services furnished to all or any part of the Improvements during the Term.
ARTICLE II
GRANT
SECTION 2.01. Rights Granted. The Port Authority hereby grants to the
Developer and the Developer hereby accepts from the Port Authority the following
rights as a license coupled with an interest, all upon and subject to the terms,
conditions, covenants and provisions hereof: (a) the non-exclusive, but with
priority over other watercraft operating in the Hammond Marina, right to
navigate the Boat within those portions of Lake Michigan and the Hammond Marina
over which the Port Authority has jurisdiction; (b) the right to construct,
maintain, alter, replace, operate and use the Docking Facilities and other
Improvements within that portion of the Hammond Marina over which the Port
Authority has jurisdiction; and (c) the exclusive right to dock and moor the
Boat at the Docking Facilities.
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<PAGE>
SECTION 2.02. PARKING. The Port Authority agrees to allow the
Developer exclusive use of all of the area in the Hammond Marina parking lot
located to the east of the current entrance drive to the Hammond Marina during
the period outside of the local boating season (March 15 to October 31) for the
vehicular parking of the Developer's patrons and employees; provided, that the
Developer shall provide the Port Authority with sufficient space to utilize one
boat launch ramp at all times during such period.
SECTION 2.03. Rights Limited. The rights granted to the Developer
hereunder are subject to the following:
(a) The lien of all Real Estate Taxes, all general and special
assessments and all other governmental dues, charges and impositions not
delinquent, if any;
(b) The lien, terms, conditions and provisions of the Trust
Indenture;
(c) The terms, conditions, and provisions of the Ground Lease;
(d) The terms, conditions and provisions of the Port Authority Lease;
(e) All rights, title and interests of the United States of America,
the State of Indiana and any political subdivision of the State of Indiana,
other than the Port Authority, that has jurisdiction over the use of the Hammond
Marina;
(f) All applicable restrictions, rules and regulations promulgated by
the Port Authority with respect to the use of the Hammond Marina that are not
inconsistent with the rights granted to the Developer hereunder;
(g) All applicable governmental restrictions, laws, ordinances, rules
and regulations; and
(h) The rights expressly reserved by the Port Authority in this
Agreement.
SECTION 2.04. Nature of Rights Granted to the Developer. The rights
granted to the Developer in Sections 2.01 and 2.02 shall be deemed to be coupled
with an interest and, subject to the provisions of Section 2.03 and Article
XVII, irrevocable during the Term.
SECTION 2.05. "AS IS" Condition. Except as provided in Section 2.06,
the Port Authority grants the rights set forth herein to the Developer and the
Developer accepts such rights "AS IS, WHERE IS" and without warranty of any kind
as to condition, fitness for the Developer's purposes or otherwise.
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<PAGE>
Section 2.06. Enjoyment. The Port Authority covenants and agrees
that the Developer, upon observing all covenants and agreements to be kept,
observed or performed by it hereunder, shall at all times during the Term have
the benefit of and ability to exercise the rights granted to the Developer in
Sections 2.01 and 2.02, without hindrance from the Port Authority or anyone
claiming by, through or under the Port Authority, subject to matters which this
Agreement is subject as provided in the foregoing Section 2.03 and to the rights
expressly reserved to the Port Authority in this Agreement. In the event an
adverse claim is made against the rights granted to the Developer hereunder by
someone not claiming by, through or under the Port Authority or included within
the matters to which this Agreement is subject as provided in Section 2.02, the
Port Authority shall not be in default hereunder, if it cooperates with the
Developer in the defense of such adverse claim and takes all reasonable
affirmative action to preserve the Developer's rights hereunder. The Port
Authority represents and warrants to the Developer that, as of the date hereof,
the Port Authority has not received notification from any governmental authority
that the Hammond Marina or the operation thereof is in violation of any
Environmental Laws.
ARTICLE III
-----------
PORT AUTHORITY'S RESERVED RIGHTS
--------------------------------
Section 3.01. General. The Port Authority hereby reserves all rights
in and to the Hammond Marina not expressly granted to the Developer hereunder,
including, without limitation, the right to grant to any other person or party
the non-exclusive right to operate and store boats and other watercraft in and
around the Hammond Marina and adjacent portions of Lake Michigan other than in
those areas in which the Developer has been granted exclusive rights.
ARTICLE IV
----------
TERM
----
Section 4.01. Term. The effective period of this Agreement (the
"Initial Period") shall commence on June 21, 1996 (the "Commencement Date") and
shall end at 11:59 p.m. Hammond time on the fifth (5th) anniversary of the
License Date, and shall be irrevocable during such period, unless sooner
terminated as provided herein.
Section 4.02. Extension Periods. The effective period of this
Agreement shall be automatically extended for periods equal to each renewal
period of the License granted to the Developer by the Gaming Commission (each
such extension period being referred to herein as an "Extension Period");
provided, that the total Term shall not exceed seventy-five (75) years.
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<PAGE>
Section 4.03. Holding Over. In the event the Developer shall continue
to exercise the rights granted to it hereunder after the expiration or earlier
termination of the Initial Period or any Extension Period, as applicable, then
such conduct on the part of the Developer shall be deemed an "Event of Default"
under Section 17.01 of this Agreement, and the Port Authority shall have all
rights and remedies set forth in Section 17.03 hereof.
ARTICLE V
---------
CONSIDERATION
-------------
Section 5.01. Passenger Payment. Commencing with the calendar year or
partial calendar year in which the Boat is placed in operation, and continuing
for each succeeding calendar year or partial calendar year of the Term
thereafter, the Developer shall pay to the Port Authority a passenger payment
("Passenger Payment") in an amount equal to One Dollar ($1.00) multiplied by the
number of passengers that enter and exit the Boat ("Embarking Passengers")
during such calendar year or partial calendar year. For purposes of this
Section 5.01, the number of Embarking Passengers shall be determined in the same
manner that the number of persons is determined for purposes of computing the
admissions tax imposed upon licensed owners pursuant to Chapter 12 of the Act.
Concurrently with each payment of admissions taxes required to be made
to the State pursuant to Chapter 12 of the Act, the Developer shall make a
corresponding deposit in an amount equal to the Passenger Payment for the same
time period covered by the payment of admissions taxes into an account
established by the Developer and invested as directed by the Port Authority from
time to time (the "Holding Account"). On Wednesday of each week, the Developer
shall transfer the entire Holding Account balance, representing all deposits by
the Developer for the immediately preceding week plus interest accrued thereon,
by wire transfer to an account designated by the Port Authority. On the 15th day
of each month during the Term the Developer shall deliver to the Port Authority
a detailed statement setting forth the number of Embarking Passengers on each
day and the calculation of the Passenger Payment for the immediately preceding
month (the "Monthly Statement"). Each Monthly Statement shall be prepared in
accordance with generally accepted accounting principles, consistently applied,
and in accordance with the requirements and definitions contained in this
Agreement, and shall be certified by a principal financial officer of the
Developer to be true, correct and complete and consistent with the pertinent
information submitted to the Gaming Commission on Form RG-1. In addition, at the
time that the Passenger Statement for any calendar year or partial calendar year
is submitted by the Developer to the Port Authority pursuant to Section 5.02
hereof, the Developer shall make a final installment of the Passenger Payment in
an amount equal to the difference between the total Passenger Payment, as
computed and stated in the Passenger Statement, and the
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sum of the installments of the Passenger Payment made by the Developer to the
City for such calendar year or partial calendar year.
The terms and conditions of the Passenger Payment described in this
Section 5.01 shall replace and supersede the per capita embarkation fee set
forth in Section 2.03(b) of the Clipper Lease.
Section 5.02. Accounting for Passenger Payment. The Developer shall
keep and make available to the City and the Port Authority complete and accurate
records of the number of Embarking Passengers for each calendar year and partial
calendar year during the Term (in the form and to the extent required to be
supplied to or reviewed and audited by the Gaming Commission). Commencing in the
calendar year or partial calendar year in which the Boat is placed in operation
and for each calendar year and partial calendar year of the Term thereafter, the
Developer shall submit a statement to the City and the Port Authority on or
before the last day of the following March stating the number of Embarking
Passengers on each day for the immediately preceding calendar year or partial
calendar year and showing the computation of the Passenger Payment for such
immediately preceding calendar year or partial calendar year (the "Passenger
Statement"). In addition, the Developer shall submit to the City and the Port
Authority with the Passenger Statement, any audits or other reports required to
be submitted by the Developer to the Gaming Commission or prepared by or on
behalf of the Gaming Commission and received by the Developer relating to
Embarking Passengers that constitute public records and records of any
correction to the number of Embarking Passengers made by the Developer and
reported to the Gaming Commission. Each Passenger Statement shall be prepared
in accordance with generally accepted accounting principles, consistently
applied, and in accordance with the requirements and definitions contained in
this Agreement and shall be certified by a principal financial officer of the
Developer to be true, correct and complete. The Port Authority may, at any time
on or before the later of thirteen (13) months after the end of a calendar year
or one (1) year after receipt of a Passenger Statement and at the Port
Authority's sole cost and expense, cause a comparison to be made of the
Passenger Statement to the forms, reports and information published or released
by the Gaming Commission, including any corrections thereto, that relate to the
number of Embarking Passenger or the payment of admission taxes. The Developer
shall cooperate with the Port Authority and provide the Port Authority with
copies of all such forms, reports and information that are nonconfidential or
classified as public records. The Port Authority may cause such comparison to be
made by such persons as the Port Authority may determine in its sole discretion.
If such comparison shows that the Passenger Payment shown on the Passenger
Statement is understated, the Developer shall within seven (7) days pay the
amount of such understatement to the Port Authority. If such comparison shows
that the Passenger Payment shown on the Passenger Statement understates the
actual Passenger Payment by more than three percent (3%) of such actual
Passenger Payment, then the fees and expenses for such comparison shall be paid
by the Developer. Otherwise, the fees or expenses for such comparison shall be
paid by the Port Authority.
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If such comparison shows that the Passenger Payment shown on the Passenger
Statement overstates the actual Passenger Payment then such overstated amount
shall be an offset to the Passenger Payment obligations of the Developer set
forth in Section 5.01, and shall be credited against future installments of the
Passenger Payment or in the event there are no future installments of the
Passenger Payment payable by the Developer, such overstated amount shall be
refunded to the Developer within seven (7) days after such comparison is
concluded.
Section 5.03. Marina Payments. The Developer shall pay to the Port
Authority, for deposit with the Trustee, any and all certified shortfalls, if
any, from time to time in the debt service owed and payable for the certificates
of participation issued and outstanding pursuant to the Trust Indenture (the
"Certificates") that become due and payable after the execution of the
Development Agreement by the Developer, the City and the Commission (the
"Shortfall"); provided, that the Developer shall have no obligation to pay (i)
any amounts necessary to cure any other default under the Trust Indenture or
(ii) any shortfall created as a result of any payment of a portion of the
Passenger Payment to the Water Department by the Port Authority. The Developer
shall deliver to the Port Authority, not less than thirty (30) days prior to a
Certificate payment date, that amount certified by the Trustee to represent the
anticipated Shortfall on such Certificate payment date. Any payment made by the
Developer after the date of execution of this Agreement by the Developer and the
Port Authority pursuant to this Section 5.03 shall be credited against the
obligations of the Developer to make the Passenger Payment pursuant to Section
5.01 of this Agreement. In connection with the Development Agreement and this
Section 5.03, the Developer hereby certifies that it has made all payments of
certified shortfalls in the debt service owed and payable for the Certificates,
that became due and payable prior to the execution of the Development Agreement
by the Developer, the City and the Commission, and the Port Authority hereby
certifies that it has received all such payments. The Developer may, at any
time on or before the later of one (1) year after the payment of any Shortfall
and at the Developer's sole cost and expense, cause an examination to be made of
all financial books and records of the Port Authority or books and records of
the Trustee to which the Port Authority has access relating to any such
Shortfall for the calendar year or partial calendar year to which such payment
applies; provided, the Developer shall notify the Port Authority not less than
five (5) days prior to commencing any such examination. The Developer may cause
such examination of all such financial books and records relating to any
Shortfall payment or the computation thereof to be made by such persons as the
Developer may determine in its sole discretion.
Section 5.04. Slip Fees. (a) The Developer shall pay to the Port
Authority an amount equal to the aggregate of the annual rental then being
charged by the Port Authority for each boat slip that is removed or taken out of
operation as a result of, or in connection with, the construction of the Docking
Facilities and/or the operation of the Boat multiplied by the number of each
such type of boat slip that is removed or made
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inoperational; provided, that such annual rental amounts shall be the same as
the annual rental amounts charged to other users of similar boat slips by the
Hammond Marina.
(b) The Port Authority shall keep and make available to the Developer
complete and accurate records of (i) the number and type of boat slips removed
or taken out of operation as a result of, or in connection with, the
construction of the Docking Facilities and/or the operation of the Boat, and
(ii) the annual rental amount for each boat slip and the calculation of the
aggregate of the annual rentals to be paid pursuant to Section 5.04(a) for each
calendar year and partial calendar year during the Term. No later than January
1, 1997, Port Authority shall submit a statement to the Developer stating the
number and type of boat slips removed or taken out of operation (the "Removal
Statement"); and at least thirty (30) days prior to the date any slip rental
payment is due, the Port Authority shall submit a statement to the Developer
stating the annual slip rentals and the calculation of the amount due to be paid
to the Port Authority pursuant to Section 5.04(a) (the "Slip Rental Statement").
Each slip rental payment shall be due thirty (30) days after the receipt of the
Slip Rental Statement therefore. The Developer may, at any time on or before one
(1) year after receipt of any Slip Rental Statement and at the Developer's sole
cost and expense, cause an examination to be made of all financial books and
records for the calendar year or partial calendar year to which such Slip Rental
Statement applies; provided, that the Developer shall notify the Port Authority
not less than five (5) days prior to commencing such examination. The Developer
may cause such examination of all such financial books and records relating to
Slip Rental Statements or the computation of the amount to be paid to the
Developer pursuant to Section 5.04(a) to be made by such persons as the
Developer may determine in its sole discretion; provided, that in the event the
Developer takes the position that the actual amount required to be paid to the
Port Authority pursuant to Section 5.04(a) has been overstated in any Slip
Rental Statement, the Port Authority may require that an audit be made by a
nationally-recognized accounting firm selected by the Port Authority and the
results of such audit shall be conclusive. If such audit (or the examination if
an audit is not required by the Port Authority) shows that the actual amount
required to be paid to the Port Authority pursuant to Section 5.04(a) is less
than the amount shown in the Slip Rental Statement and paid by the Developer,
the Port Authority shall within thirty (30) days refund the amount of such
overpayment to the Developer. If such audit (or the examination if an audit is
not required by the Port Authority) shows that the actual amount required to be
paid to the Port Authority pursuant to Section 5.04(a) is less than the amount
shown in the Slip Rental Statement (as determined by such audit or examination,
as the case may be) by more than three percent (3%) of such actual payment
amount, then the fees and expenses for such audit or examination, as the case
may be, shall be paid by the Port Authority. Otherwise, the fees and expenses
for such audit or examination shall be paid by the Developer. If such audit (or
the examination if an audit is not required by the Port Authority) shows that
the actual amount required to be paid to the Port Authority pursuant to Section
5.04(a) is more than the amount shown on the Slip Rental Statement and paid by
the Developer, then the amount of such underpayment shall be paid by the
Developer to the Port Authority within thirty (30) days.
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(c) At such time as the Certificates have been defeased and are no
longer outstanding under the Indenture, the monies held in the custody account
established and held by NBD Bank, N.A., as custodial agent, pursuant to Section
5(d) of the Memorandum of Understanding and Consent dated October 13, 1995, by
and between the Port Authority and DMS, as lessor representative (representing a
deposit of two years of slip rental payments) shall be paid to the Developer
within thirty (30) days unless such deposit is required under the terms of a
refinancing of the Certificates, provided that in such event the deposit shall
be returned to Developer by July 1, 2014, unless sooner applied or returned.
Section 5.05. Compliance With Development Agreement. Port Authority
acknowledges that to the extent the Developer makes payments pursuant to and in
accordance with the provisions of Sections 5.01, 5.03 and 5.04 of this
Agreement, such payments shall constitute compliance with Sections 10.03, 10.04
and 10.05 of the Development Agreement and with any corresponding provisions of
the Clipper Lease and the Clipper Removal Agreement. Further, the Port
Authority agrees not to seek from the Developer and the Developer shall not be
obligated to pay any additional consideration or financial commitments for the
rights granted to the Developer in this Agreement, the Development Agreement,
the Clipper Lease or the Clipper Removal Agreement that are not expressed in
this Agreement, the Development Agreement, the Clipper Lease or the Clipper
Removal Agreement or any other written agreement.
ARTICLE VI
----------
USE
---
Section 6.01. Permitted Uses. The Developer shall use the Hammond
Marina and the Improvements for the purposes set forth in Sections 2.01 and
2.02. No other uses of the Hammond Marina or the Improvements shall be permitted
without the prior written consent of the Port Authority.
Section 6.02. Compliance With Laws, Insurance Policies. During the
Term, the Developer, at its expense, shall observe and comply with all
Applicable Laws, and with all orders, rules and regulations of the National
Board of Fire Underwriters, the Indiana Board of Fire Underwriters, or any other
body or bodies exercising similar functions, affecting the Hammond Marina, or
any part thereof, or the construction of the Improvements or the use or manner
of use of the Hammond Marina or the Improvements, and the Developer shall pay
all costs, expenses, liabilities, losses, damages, fines, penalties, claims and
demands that may be-necessary to achieve such compliance or imposed because of
any failure of compliance by the Developer. The Developer, at its expense,
shall have the right to contest by appropriate legal proceedings, the validity
or application of any Applicable Laws or order, rules or regulation, of the
nature referred to in this Section 6.02. If compliance with any such Applicable
Law, order, rule or regulation
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may be delayed pending the prosecution of any such proceeding, the Developer may
delay such compliance until a final determination of such proceeding.
Section 6.03. Negative Covenants. The Developer shall not (a) cause
or permit any nuisance (public or private) to occur or exist in or upon the
Hammond Marina, (b) permit the use of the Hammond Marina for any lewd or
lascivious purpose, (c) commit any act or take any action that would constitute
a breach of or default under the Clipper Lease, the Clipper Removal Agreement,
the Ground Lease, the Port Authority Lease or the Trust Indenture, or (d) place
any vending machine or similar equipment in or on the Hammond Marina.
Section 6.04. Hazardous Substances.
(a) Developer shall not permit any Hazardous Substances to be dumped,
discharged, disposed of or released on, in or about the Hammond Marina or Lake
Michigan except to the extent permitted by and in compliance with Applicable
Laws.
(b) The Developer shall not place or install any underground storage
tanks on or in the Hammond Marina or Lake Michigan. The Developer shall not
permit any Hazardous Substances to be placed, held, located, disposed of or
released on or in the Hammond Marina or the Improvements, other than (i)
Hazardous Substances of a nature and in amounts normally present in or on, or
used in connection with the operation of, the Boat and commercial and retail
facilities of the type similar to the Improvements and (ii) to the extent
permitted by and in compliance with all Applicable Laws. To the extent any
Hazardous Substances permitted to be placed, held, located or disposed of on or
in the Hammond Marina or the Improvements are regulated by any Environmental
Laws, the Developer shall place, hold, locate and/or dispose of such Hazardous
Substances in strict compliance with any and all such Environmental Laws.
(c) If the Developer has knowledge of or receives any notice of (i)
the release, spill, discharge or emission of any Hazardous Substance on, in or
about the Hammond Marina or the Improvements or otherwise into the environment
(including, without limitation, ambient air, surface water, groundwater or land
(a "Hazardous Discharge")) or (ii) any inquiry, complaint, order, citation or
notice with regard to any Hazardous Discharge (an "Environmental Complaint")
from any person or entity, including, without limitation, the United States
Environmental Protection Agency and the Indiana Department of Environmental
Management or any successor agency, the Developer shall give immediate notice
thereof to the Port Authority disclosing full details of the Hazardous Discharge
or Environmental Complaint, as applicable.
(d) In the event that any Hazardous Substances are leaked, spilled,
disposed of or released on or in the Hammond Marina or the Improvements during
the Term as a result of the acts or omissions of the Developer or any employee,
guest, invitee, supplier, vendor, contractor or agent of the Developer, the
Developer shall
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(i) notify the Port Authority, (ii) report, remediate and dispose of such
Hazardous Substances to the extent required by and in compliance with all
Applicable Laws, and (iii) take whatever actions are reasonably necessary to
protect the general public and environment from immediate injury or damage
resulting from such Hazardous Substances. At the conclusion of the remediation
and disposal required under this Section 6.04, the Developer shall cause an
environmental engineer acceptable to the Port Authority to issue a statement to
the Port Authority that all actions required by this Agreement or Applicable
Laws to be taken with respect to such Hazardous Substances have been taken and
completed and, to the knowledge of the environmental engineer after reasonable
investigation and inquiry, there is no violation of Applicable Laws with respect
to such Hazardous Substances.
Section 6.05. Port Authority agrees to perform all obligations of the
Port Authority under the Ground Lease, the Port Authority Lease, the HPA
Footprint Sublease, the HPA Parking Lease and the Trust Indenture except for
those the Developer is expressly required to perform or discharge by the terms
of this Agreement.
ARTICLE VII
-----------
IMPROVEMENTS
------------
Section 7.01. Commencement And Completion Of Construction. The
Developer shall construct the Improvements in accordance with and upon and
subject to all the terms and conditions of the Development Agreement regarding
such construction. Except as expressly set forth in Section 28.01 of this
Agreement, the Developer is prohibited from making or constructing any
improvements, structures or facilities on or in the Hammond Marina other than
those set forth In the Development Agreement without the City's and the Port
Authority's prior written consent.
Section 7.02. Governmental Approvals. The Developer shall, at Its
expense, timely procure all approvals, permits or consents from all governmental
authorities having jurisdiction required to be obtained for the operation of the
Boat in Lake Michigan and the Hammond Marina and the construction of the
Improvements. The Developer shall have the right to make any necessary
applications for zoning approvals or variances in connection. with the
construction, operation and use of the Improvements and the Port Authority
hereby consents to the filing of such approvals by the Developer.
Section 7.03. Title To Improvements. The Improvements shall be the
property of the Developer during the Term, but shall become the property of the
Port Authority upon the expiration of the Term or earlier termination of this
Agreement.
Section 7.04. Refinancing Of Bonds. The Developer agrees to cooperate
with the Port Authority to refinance the certificates of participation issued
and outstanding
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pursuant to the Trust Indenture in the event the Port Authority determines to
refinance such certificates of participation; provided, that the refinancing
will not create any additional financial burden to the Developer or result in
material cost or expense to the Developer.
ARTICLE VIII
------------
ASSIGNMENT AND ENCUMBRANCES
---------------------------
Section 8.01. Assignments And Subleases. Except as hereafter
expressly provided in this Section 8.01, the Developer shall not assign, sell or
transfer this Agreement or any rights granted to the Developer hereunder or
title to the Improvements or any interest therein or sublease all or any part of
the Improvements (a "Transfer") without the prior written consent of the Gaming
Commission; provided, that in no event shall the Developer assign, sell or
transfer this Agreement or any rights granted to the Developer hereunder or
title to the Improvements or any interest therein or sublease all or any part of
the Improvements to any person or entity that does not hold a License in
accordance with the Act; and provided further, that the Developer shall not
assign, sell or transfer this Agreement or any rights granted to the Developer
hereunder or title to the Improvements or any interest therein or sublease all
or any part of the Improvements to any person or entity that has not executed a
written assignment and assumption agreement whereby the Developer's obligations
under this Agreement, the Development Agreement and the Sublease are assigned
to and assumed by such person or entity upon terms reasonably acceptable to the
Port Authority, the City and the Commission. Any assignment or transfer by
operation of law (voluntary or involuntary), merger, conversion or
reorganization, any assignment or transfer to a receiver or trustee in any
federal or state bankruptcy, insolvency or other proceeding or any change in
control of the Developer or of any entity controlling the Developer shall
constitute a Transfer for purposes of this Agreement. For purposes of this
Section 8.01, "control" means the power to direct the management and policies of
the Developer, directly or indirectly, whether through the ownership or control
of fifty percent (50%) or more of the shares or other equity or beneficial
interest or power to vote the same, or by the partnership or trust agreement or
other instrument or contract or otherwise; and the term "controlling" has the
meaning correlative to the foregoing. The Developer shall provide the Port
Authority with at least one hundred twenty (120) days written notice prior to
making any actual written request to the Gaming Commission to make a Transfer.
Section 8.02. Encumbrances. The Developer shall have no right to
mortgage, pledge, hypothecate or otherwise encumber this Agreement or its rights
or interests under this Agreement or title to or interests in the Improvements
or any part thereof.
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Section 8.03. General. In the event of a permitted Transfer in
accordance with the provisions of this Article VIII and the corresponding
assumption by such transferee of all duties and obligations to be performed or
observed by the Developer hereunder, the Developer shall no longer be
responsible for the future performance or observance of such duties or
obligations.
ARTICLE IX
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TAXES AND UTILITY EXPENSES
--------------------------
Section 9.01. Payment Of Taxes And Utility Expenses. The Developer
shall pay and discharge punctually, as and when the same shall become due and
payable (except as otherwise provided in Section 9.02):
(a) all Taxes which are assessed with respect to the Improvements, or
any part thereof, or any appurtenances or equipment thereon owned by or leased
to the Developer for any calendar year (or part thereof) within the Term,
together with all interest and penalties thereon;
(b) all Taxes which are payable on or with respect to the Developers
personal property and the Developer's business or operations; and
(c) all Utility Expenses-commencing with the first day of the Term.
The Developer shall be deemed to have complied with the covenants of
this Section 9.01 if payment of Taxes and Utility Expenses shall have been made
either within any period allowed by applicable law before the same shall become
a lien upon the Improvements; or, if the Tax or Utility Expense constitutes a
lien before it is due and payable, then, before any penalty or interest is
assessed with respect thereto. The Developer shall furnish the Port Authority
with satisfactory evidence of payment of Real Estate Taxes and any other payment
hereunder if requested to do so by the Port Authority in writing.
Section 9.02. Proration Of Real Estate Taxes. Real Estate Taxes
assessed for the calendar years in which the Term commences and ends shall be
paid by the Developer. The Developer shall pay on the date of termination of
this Lease all Real Estate Taxes due and payable during the calendar year in
which the Term ends and its prorata share of all Real Estate Taxes assessed for
the calendar year in which the Term ends based upon the number of days of the
Term in such calendar year. If the amount of such Real Estate Taxes is not then
determined, the most recently available tax rates and assessed valuations shall
be used in determining the amount to be paid under this Section 9.02.
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Section 9.03. Right To Contest. The Developer shall have the right
to contest all Taxes and Utility Expenses referred to in Section 9.01 by
appropriate legal proceedings, or in such other manner as it may deem
appropriate. Such legal proceedings shall include any and all appropriate
appeals or other proceedings and appeals from orders, judgments or decrees so
long as the same are sufficient to prevent a foreclosure sale. The Developer
shall conduct all such proceedings at its expense. The Port Authority shall
execute all documents reasonably required for such proceedings. The Developer
shall reimburse the Port Authority for any costs or expenses incurred by the
Port Authority in connection therewith. Notwithstanding the foregoing, the
Developer shall pay any such Taxes or Utility Expenses prior to the time the
Improvements (or any part thereof) shall become subject to sale upon foreclosure
of the lien therefor.
Section 9.04. Distribution Of Overpayment. If there shall be any
refunds or rebates on account of Taxes or Utility Expenses paid by the Developer
under the provisions of this Lease, such refund or rebate shall belong to the
Developer, whether or not received by the Port Authority during or after the
Term. Any refunds so received by the Port Authority shall be deemed to be
received by the Port Authority in trust for the Developer and shall be paid to
the Developer as its interest appears within ten (10) days of receipt. The Port
Authority will, upon request of the Developer, sign any receipts which may be
necessary to secure the payment of any such refund or rebate.
ARTICLE X
---------
MAINTENANCE, REPAIRS AND ALTERATIONS
------------------------------------
Section 10.01. Maintenance And Repair By The Developer. The
Developer shall at all times during the Term, at its expense, keep and maintain
or cause to be kept and maintained the Improvements in a first-class, clean and
safe condition and repair and in compliance with all Applicable Laws, including,
without limitation, the making of all necessary structural repairs and
replacements. The Port Authority shall not be required to furnish any services
or facilities or to make any improvements, repairs or alterations in or to the
Improvements during the Term.
Section 10.02. Alterations. After initial construction of the
Improvements, the Developer shall not make, construct or install any
alterations, changes, replacements, improvements or additions to all or any
portion of such Improvements that affect the structural integrity or exterior
appearance of such Improvements without the prior written consent of the City
and the Port Authority. Further, the Developer shall not construct any
Improvements other than the Docking Facilities and related Infrastructure
Facilities on or in the Hammond Marina without the City's and the Port
Authority's prior written consent.
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ARTICLE XI
----------
MECHANICS' LIENS; INDEMNIFICATION
---------------------------------
Section 11.01. Mechanics' Liens. The Developer shall promptly after
the filing thereof discharge of record, bond over or insure over, at the
Developees expense, any mechanics', materialmen's or other lien, or notice of
intention to file any such lien, filed against the Improvements or any real
estate upon which the Improvements are constructed; provided, that the Developer
shall have the right to contest the validity of any such lien in any manner
permitted by law so long as the Developer (a) shall provide to the Port
Authority title insurance, an indemnity, bond or other assurance or security
reasonably satisfactory to the Port Authority; and (b) shall thereafter
diligently proceed to cause such lien or notice of intention to file a lien to
be removed and discharged. If the Developer shall fail to so discharge, or to
seek to discharge, any such lien or notice of intention to file a lien, then the
Port Authority may, but shall not be obligated to, discharge the same, either by
paying the amount claimed to be due, or by procuring the discharge of such lien
by depositing in court a bond for the amount claimed or in such other manner as
is or may be permitted by law, and the Developer shall reimburse and indemnify
the Port Authority with respect thereto.
Section 11.02. Indemnification By The Developer. The Developer
agrees, at the sole cost and expense of the Developer, to protect, defend,
indemnify and save harmless the Port Authority from and against any and all
liabilities, obligations, claims, damages, penalties, causes of action, and
other costs and expenses (including, without limitation, reasonable attorneys'
fees, reasonable compensation for preparing and attending depositions or serving
as a witness where not named as a defendant, court costs and litigation
expenses), imposed upon or incurred by or asserted against the Port Authority by
reason of, arising out of or pertaining to: (a) the Developer's possession, use
or control of the Hammond Marina or the Improvements or any part thereof during
the Term, (b) any condition of the Improvements or any part thereof during the
Term, (c) the occurrence of any Event of Default, or (d) any willful or
negligent act or omission of the Developer, or any of its agents, contractors,
licensees, subtenants or its or their employees, customers or invitees. In any
circumstance where the Developer is obligated under this Agreement to indemnify
the Port Authority, the Developer shall have the right to undertake, conduct,
and control, through counsel of its choosing, reasonably acceptable to the Port
Authority, and at the sole expense of the Developer, the conduct and settlement
of such matter, and the Port Authority shall cooperate therewith; provided,
however, that (w) the Developer shall not thereby permit to exist any lien,
encumbrance, or other adverse change upon the assets of the Port Authority, (x)
the Developer shall not thereby consent to the imposition of any injunction
against the Port Authority without the consent of the Port Authority, (y) the
Developer shall permit the Port Authority to participate in such dispute or the
settlement thereof through counsel chosen by the Port Authority, but the fees
and expenses of such counsel shall be borne solely by the Port Authority, and
(z) the Developer shall agree promptly to reimburse the Port Authority for
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the full amount of the obligations due hereunder. If the Port Authority
reasonably believes that counsel selected by the Developer has a conflict of
interest by reason of asserting or threatening to assert a limitation on or
defense to the indemnification obligation of the Developer or otherwise or a
conflict of interest arises between the Developer and the Port Authority, then
the Port Authority may select new, independent counsel, reasonably acceptable to
the Developer, who shall represent the Port Authority at the sole cost and
expense of the Developer. The Developer shall specify any claimed limitations
on or defenses to its indemnification obligation upon the Port Authority's
request therefor. So long as the Developer is contesting any such matter in
good faith and the operations or assets of the Port Authority are not in any way
impaired, the Port Authority may not pay or settle any such action or suit
without the consent of the Developer unless it chooses to waive its rights to
reimbursement and indemnification hereunder. Notwithstanding the foregoing, the
Port Authority shall have the right to pay or settle any such action or suit,
provided that in such event the Port Authority shall waive any right to
indemnity therefore. However, if the Developer is obligated, but ceases to
contest such matter in good faith, then the Port Authority may pay or settle
such action or suit and obtain reimbursement from the Developer.
Developer's indemnification obligations hereunder shall be in addition
to any and all other obligations the Developer may have to the Port Authority
under any other agreement, at law or in equity, and shall survive the expiration
of the Term or earlier termination of this Agreement and any transfer by the
Port Authority of its interests in the Hammond Marina and/or Improvements.
ARTICLE XII
-----------
INSURANCE
---------
Section 12.01. Liability Insurance. The Developer shall maintain and
keep in force at all times during the Term, at its sole cost and expense, the
insurance required to be maintained by the Developer pursuant to the Development
Agreement.
Section 12.02. Proof Of Insurance. The Developer shall deliver copies
of the insurance policies showing the insurance required by this Article XII to
the Port Authority on or before the date of execution of this Lease, and
thereafter a copy of each replacement policy shall be provided not less than
sixty (60) days prior to the expiration of the policy being replaced. Each such
policy referred to in this Article XII shall contain a provision providing that
the policy shall not be canceled, not renewed or materially amended without
sixty (60) days prior written notice to the Port Authority.
Section 12.03. Adjustment in Insurance. If, after the Initial Term,
and no more frequently than every five years thereafter, by reason of changed
conditions or by reason of experience the Port Authority reasonably determines
that the insurance
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amounts referred to in the foregoing Section 12.01 are inadequate, the Developer
shall, at the request of the Port Authority, increase the amounts of such
insurance carried to the extent appropriate for a like facilities under like
circumstances. In the event that it shall become customary for operators of
similar facilities to maintain types or coverages of insurance other than those
required to be maintained by the Developer under this Article XII, the Developer
shall maintain such other types of coverages of insurance upon the written
request of the Port Authority so long as such types or coverages of insurance
can be obtained by the Developer at reasonable cost.
Section 12.04. Waiver Of Subrogation. The Developer and the Port
Authority waive all rights against each other and against those for whom the
other is legally liable for all losses covered by insurance provided under this
Article XII to the extent the limits of such insurance are adequate to cover
such losses, it being the intent of this provision to allocate all risk of such
loss to such insurance; provided, however, that this waiver shall not be
effective if it would preclude or prejudice the right of the Port Authority or
the Developer to recover under such insurance policy. If the policies of
insurance provided for under this Article XII require an endorsement to provide
for continued coverage where there is a waiver of subrogation, the Developer
shall cause such policies to be so endorsed.
Section 12.05. Insurance Proceeds. The proceeds of all policies of
insurance on the Improvements maintained pursuant to Section 12.02 shall be used
as a trust fund toward the repair, replacement or rebuilding of the
Improvements. Accordingly, all insurance proceeds for damage to the Improvements
paid to the Developer and/or the Port Authority under such policies shall be
held by or delivered to the Developer in trust for the payment of the costs of
repairing, replacing and rebuilding the Improvements. If such insurance proceeds
shall exceed the cost of repairing, replacing or rebuilding the Improvements,
the balance remaining after payment of such costs shall be the property of and
shall be paid to the Developer. The Port Authority shall cooperate fully with
the Developer in collecting such insurance proceeds and shall execute and
deliver, as requested by the Developer, any and all proofs, receipts, releases
and other instruments as may be appropriate for such purpose.
Section 12.06. General Provisions. In the event the Developer shall
fail or refuse to obtain any insurance required by this Article XII, the Port
Authority, in addition to any other rights the Port Authority may have under
this Lease or at law or in equity, shall have the option to obtain such
insurance. The cost of such insurance shall constitute an additional charge
payable by the Developer to the Port Authority immediately upon demand.
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<PAGE>
ARTICLE XIII
------------
DESTRUCTION
-----------
Section 13.01. The Developer's Obligation to Repair. If at any time
during the Term the Improvements shall be destroyed or damaged by fire or other
cause, the Developer shall cause the same to be repaired, replaced or rebuilt
within a period of time which, under all prevailing circumstances, shall be
reasonable. In the repair, replacement or rebuilding of all or any portion of
the Improvements hereunder, the Developer shall repair, replace or rebuild the
Improvements so damaged or destroyed to the condition in which they existed
immediately before such damage or destruction, subject to all then Applicable
Laws affecting the same. If the net insurance proceeds payable in respect of
any such damage or destruction shall be insufficient to pay the entire cost of
such repair, replacement or rebuilding, the Developer shall provide for the
deficiency. In such event, the time within which the Developer shall be
required to commence and complete its obligations hereunder shall include a
reasonable time to obtain and close the necessary commitments for equity
financing to cover the deficiency.
Section 13.02. No Abatement. In no event shall any charges due from
the Developer to the Port Authority hereunder abate in the event of such damage
or destruction.
ARTICLE XIV
-----------
CONDEMNATION
------------
Section 14.01. Total Condemnation. If at any time during the Term
there shall be a total taking or a Constructive Total Taking of the Improvements
in condemnation proceedings or by any right of eminent domain or by a conveyance
in lieu thereof, this Agreement shall terminate on the date of such taking.
Section 14.02. Proceeds Of Total Condemnation. In the event of any
such total taking or Constructive Total Taking and the termination of this
Agreement, the Condemnation Proceeds shall be apportioned and paid, to the
extent available, in the following order of priority:
(a) First, to the payment of costs and expenses, including (without
limitation) court costs and reasonable attorneys' fees, incurred by the Port
Authority and the Developer in connection with such taking;
(b) Second, to the Developer an amount equal to the fair market value
of the Improvements multiplied by a percentage, the numerator of which is a
number determined by subtracting the number of full or partial calendar years
that have passed
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<PAGE>
between the Commencement Date and the date that possession of the Improvements
are delivered to the condemning authority from twenty-five (25) and the
denominator of which is twenty-five (25); and
(c) Any remaining balance shall be paid to the Port Authority.
Nothing herein contained shall impair the right of the Developer to the full
award, compensation or damages payable as an award for loss of business or for
moving expenses, as long as such award shall not reduce the amount of the award
otherwise recoverable by the Port Authority from the condemning authority.
Section 14.03. Partial Condemnation. In the event of a taking that is
less than a Constructive Total Taking, this Agreement shall not terminate. The
Condemnation Proceeds in such event shall be apportioned and paid, to the extent
available, in the following order of priority:
(a) First, to the payment of costs and expenses, including (without
limitation) reasonable attorneys' fees, incurred by the Port Authority and the
Developer in connection with such taking;
(b) The balance of the Condemnation Proceeds shall be paid in trust
to the Developer to be disbursed and used for payment of the costs of repairing,
replacing and rebuilding the Improvements in the manner then reasonably feasible
as required by Section 14.04; and
(c) The Condemnation Proceeds, if any, remaining after repair,
replacement and rebuilding of the Improvements shall be paid to the Port
Authority.
Section 14.04. Restoration. In the event of a taking that is less
than a Constructive Total Taking, the Developer shall proceed with due diligence
to repair, replace and rebuild the remaining Improvements to their former
condition as nearly as may be reasonably possible and in compliance with the
requirements of the Development Agreement for the performance of the Work (as
such term is defined in the Development Agreement). If the Condemnation
Proceeds are insufficient to pay the entire cost of such repair, replacement and
rebuilding, the Developer shall pay any such deficiency.
Section 14.05. Temporary Condemnation. If, at any time during the
Term, the whole or any part of the Improvements or the Developer's interest
therein under this Agreement shall be taken in condemnation proceedings or by
any right of eminent domain for temporary use or occupancy, the foregoing
provisions of this Article shall not apply, and, except to the extent that the
Developer may be prevented from so doing pursuant to the terms of the order of
the condemning authority, the Developer shall perform and observe all of the
other terms, covenants, conditions and obligations hereof to be performed and
observed by it, as though such taking had not occurred. In the
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event of any such taking of the character referred to in this Section 14.05, the
Developer shall be entitled to receive the entire amount of the Condemnation
Proceeds paid for such taking, whether paid by way of damages, rent, costs of
moving or restoration or otherwise, unless such period of temporary use or
occupancy shall extend beyond the Term, in which case the Condemnation Proceeds
shall be apportioned between the Port Authority and the Developer as of the date
of termination of this Agreement. Upon the expiration of any such period of
temporary use or occupancy during the Term, the Developer shall, at its expense,
restore the Improvements as nearly as may be reasonably possible to the
condition in which the same were immediately prior to such taking. If such
period of temporary use or occupancy shall extend beyond the expiration of the
Term, any portion of the Condemnation Proceeds received by the Developer as
compensation for the cost of restoration of the Improvements shall be paid by
the Developer to the Port Authority on the date of termination of this
Agreement, and the Developer shall be thereby relieved of the obligation to
perform such restoration.
Section 14.06. Rights to Appear. The Port Authority and the
Developer shall have the right to participate in any condemnation proceeding for
the purpose of protecting their rights hereunder, and in this connection,
specifically and without limitation, to introduce evidence to establish the
value of or damage to the Improvements or any part thereof.
Section 14.07. Limitation on Eminent Domain Powers. To the extent
permitted by law, during the Term, the Port Authority shall not utilize any
power of eminent domain or of the sovereign to take from the Developer any of
its title to or rights in the Improvements.
ARTICLE XV
----------
MORTGAGES
---------
Nothing herein shall be deemed to constitute a subordination to any
mortgage of any rights that the Port Authority may have in and to the Hammond
Marina or the Improvements or to require the Port Authority to execute any
mortgage or agreement or instrument or take any action to effect any such
subordination.
ARTICLE XVI
-----------
DEVELOPER'S RIGHT TO CURE THE
-----------------------------
PORT AUTHORITY'S DEFAULTS
-------------------------
Section 16.01. Notices. The Port Authority shall give the Developer
prompt written notice of (a) each notice of default given to the Port Authority
by DMS
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under the Ground Lease or the Port Authority Lease, by the Trustee under the
Trust Indenture or by the Commission under the HPA Footprint Sublease or the HPA
Parking Lease, and (b) each notice of default given by the Port Authority to DMS
under the Ground Lease or the Port Authority Lease or to the Commission under
the HPA Footprint Sublease or the HPA Parking Lease. The Port Authority shall
use its best efforts to require DMS, the Trustee and the Commission to provide
direct notices of the Port Authority's defaults to the Developer. The Port
Authority hereby represents that there are no uncured defaults or matters which,
with the passage of time or the giving of notice, would ripen into defaults with
respect to the HPA Footprint Sublease or the HPA Parking Lease, and that it has
not received written notice of any default with respect to the Ground Lease, the
Port Authority Lease, the Trust Indenture or any other agreements that would
impact the ability of the Port Authority to perform its obligations hereunder.
Section 16.02. Right to Cure. The Developer shall have the right to
timely remedy or cause to be remedied the default which is the basis of any
notice to the Port Authority that is received by the Developer pursuant to
Section 16.01; and the Port Authority shall advise DMS, the Trustee and the
Commission that they should accept performance by the Developer as performance
by the Port Authority. To the extent that Developer incurs reasonable costs in
remedying or causing to be remedied any default by the Port Authority under the
Trust Indenture, the Ground Lease, the Port Authority Lease or the HPA Sublease,
such reasonable costs shall be credited against the obligations of the Developer
to make the Passenger Payment pursuant to Section 5.01 of this Agreement.
Nothing herein contained shall require the Developer to cure or undertake to
cure any default of the Port Authority under the Trust Indenture, the Ground
Lease, the Port Authority, the Port Authority Lease or the HPA Sublease.
Section 16.03. No Termination of HPA Footprint Sublease. If for any
reason the HPA Footprint Sublease is terminated by the Port Authority by legal
proceedings or otherwise in accordance with the terms of the HPA Footprint
Sublease, the Port Authority covenants and agrees that such termination of the
HPA Footprint Sublease shall not result in a termination of the Sublease as it
pertains to the real estate and interests in real estate subject to the HPA
Footprint Sublease, and that such Sublease shall continue in full force and
effect as a direct Sublease between the Port Authority and the Developer as it
pertains to the real estate and interests in real estate subject to the HPA
Footprint Sublease so long as the Developer is not in default thereunder for the
duration of the term of the Sublease and any extensions thereof. The Port
Authority shall, upon request, execute, acknowledge, and deliver such additional
agreements evidencing and agreeing to the foregoing as the Developer may
reasonably require.
Section 16.04. No Termination of the HPA Parking Lease. If for any
reason the HPA Parking Lease is terminated by the Port Authority by legal
proceedings or otherwise in accordance with the terms of the HPA Parking Lease,
the Port Authority covenants and agrees that such termination of the HPA Parking
Lease shall not result in
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<PAGE>
a termination of the Sublease as it pertains to the real estate and interests in
real estate subject to the HPA Parking Lease, and that such Sublease shall
continue in full force and effect as a direct Sublease between the Port
Authority and the Developer as it pertains to the real estate and interests in
real estate subject to the HPA Parking Lease so long as the Developer is not in
default thereunder for the duration of the term of the Sublease and any
extensions thereof. The Port Authority shall, upon request, execute,
acknowledge, and deliver such additional agreements evidencing and agreeing to
the foregoing as the Developer may reasonably require.
ARTICLE XVII
------------
DEFAULTS
--------
Section 17.01. Events of Default. Each of the following events, if
not remedied as hereinafter provided, shall be deemed an "Event of Default":
(a) The occurrence of any event set forth in Article XVIII, as
therein provided; or
(b) The Developer's failure to pay any payment required hereunder when
the same becomes due, and such failure continues for thirty (30) days after
receipt of written notice thereof from the Port Authority; or
(c) Developer's failure to perform any other covenant or agreement
herein on the Developer's part to be kept or performed which is not an Event of
Default under paragraphs (a), (b), (d), (e), (f), (g), (h) or (i) of this
Section 17.01 and the continuance of such failure for a period of thirty (30)
days after written notice to the Developer from the Port Authority specifying
the nature of such failure; or
(d) An Event of Default by the Developer occurs under the Development
Agreement; or
(e) An Event of Default by the Developer occurs under the Sublease;
or
(f) The Developer fails to comply with its duties and obligations
under the Clipper Removal Agreement and the expiration of any applicable grace
or cure period set forth in the Clipper Removal Agreement; or
(g) A breach or default by the Developer under the Clipper Lease and
the expiration of any applicable cure or grace period set forth in the Clipper
Lease; or
(h) The Developer does not receive a License on or before December
31, 1996; or
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<PAGE>
(i) The occurrence of an Event of Default pursuant to subparagraph
(f) of Section 16.01 of the Development Agreement.
Section 17.02. Extensions. If the Port Authority gives notice at any
time of a default under Section 17.01 (b) of a nature that cannot be cured
within the thirty (30) day period therein provided, then such default shall not
be deemed an Event of Default so long as the Developer, following notice from
the Port Authority, proceeds to cure the default as soon as reasonably possible
and continues to take all reasonable steps necessary to complete the same within
a period of time which, under all prevailing circumstances, shall be reasonable.
In addition, no Event of Default shall be deemed to have occurred if and so long
as the Developer shall be delayed in or prevented from curing the same within
the applicable cure period by Unavoidable Delay.
Section 17.03. Remedies. Upon the occurrence of any Event of Default
under subparagraphs (a), (b), (c), (d), (e), (f) or (g) of Section 17.01, or at
any time thereafter so long as the same is not cured, the Port Authority may (a)
cure any such Event of Default and collect the cost thereof from the Developer
upon demand, (b) seek, obtain and enforce a judgment for specific performance or
other declaratory relief against the Developer for the performance of any
agreement or covenant contained in this Agreement on the Developer's part to be
kept or performed, and/or (c) seek, obtain and enforce a judgment for monetary
damages resulting from any such Event of Default.
Upon the occurrence of any Event of Default under subparagraphs (h) or
(i) of Section 17.01, or at any time thereafter, the Port Authority may, at its
option and in addition to and without prejudice to any other rights and remedies
the Port Authority may have under this Agreement or at law or in equity, give to
the Developer a written notice of its election to terminate this Agreement upon
a date specified in such notice, which date shall be not less than forty-five
(45) days after the date of delivery to the Developer of such notice by the Port
Authority.
Section 17.04. Default By Port Authority. Port Authority's failure or
refusal to perform any provision of this Agreement which it is obligated to
perform or the breach of any covenant herein shall be a default by Port
Authority. In the event of a default by Port Authority, the Developer may:
(a) Emergency Situation. In an Emergency Situation, as hereinafter
defined, if the default is not cured after reasonable notice to (or attempts to
notify) the Port Authority, the Developer may cure the default, provided that
such cure is not more extensive than is reasonably necessary under the
circumstances; and
(b) Non-emergency Situation. In a non-Emergency Situation, if the
default is not cured within thirty (30) days of written notice from the
Developer to the Port Authority (or if such default is of such a nature as to
not be extended so long as the Port
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<PAGE>
Authority commences its efforts to cure within said thirty (30) day period and
thereafter diligently pursues the same to completion), the Developer may cure
the default;
If the Developer incurs any sum because of the Port Authority's
default, the reasonable sums paid by Developer shall be due from the Port
Authority upon demand and such sums shall be an offset to the Passenger Payment
obligations of the Developer set forth in Section 5.01, and shall
be credited against future installments of the Passenger Payment. "Emergency
Situation" as used in this Section means a situation which threatens the
physical well-being of persons, or which threatens immediate and material damage
to the Developer's property.
ARTICLE XVIII
-------------
BANKRUPTCY AND INSOLVENCY
-------------------------
Section 18.01. Certain Events Of Default Specified. If during the
Term:
(a) The Developer shall be adjudicated a bankrupt or adjudged to be
insolvent;
(b) A receiver or trustee shall be appointed for the Developer's
property and affairs, unless such appointment shall be vacated within ninety
(90) days of its entry;
(c) The Developer shall make an assignment for the benefit of
creditors;
(d) A petition shall be filed proposing the adjudication of the
Developer as a bankrupt or insolvent or the reorganization of the Developer or
an arrangement by the Developer with its creditors whether pursuant to the
United States Bankruptcy Code or any similar federal or state proceedings,
unless such petition is filed by a party other than the Developer and is
withdrawn or is dismissed within ninety (90) days after the date of filing; or
(e) Any execution or attachment shall be issued against the Developer
or any of the Developer's property, whereby the Improvements shall be taken or
occupied or attempted to be taken or occupied by someone other than the
Developer, unless such attachment is a prejudgment attachment that is set aside
within ninety (90) days after the issuance of the same;
then, subject to Section 18.02, an Event of Default hereunder shall be deemed to
have occurred so that the provisions of Article XVII hereof shall become
effective; and the Port Authority shall have the rights and remedies provided
for therein in addition to all other legal remedies available to the Port
Authority.
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<PAGE>
Section 18.02 Preservation Of Agreement. Notwithstanding anything to
the contrary contained in Article XVII, upon the occurrence of an Event of
Default pursuant to this Article XVIII, then if all of the covenants and
agreements of this Agreement on the Developer's part to be kept and performed
shall continue to be kept and performed, no Event of Default shall be deemed to
have occurred and the provisions of Article XVII shall not become effective.
ARTICLE XIX
-----------
SPECIFIC PERFORMANCE
--------------------
In addition to any other rights that the Developer or the Port
Authority may have under this Agreement, if the other fails or refuses to
execute, acknowledge and deliver any instrument or instruments or to take any
other action (other than an action solely involving the payment of any sum of
money) required to effectuate the provisions of this Agreement within the time
period required by this Agreement or, if no time period therefor is specified in
this Agreement, within any reasonable time period specified in any request from
the other party, then from and after the date fifteen (15) days after the date
of delivery of a written demand to the other party requesting such execution,
acknowledgment and delivery or other action, the requesting party shall be
entitled to specific performance, declaratory relief, or such other remedies at
law or equity which may be appropriate to effectuate the provisions of this
Agreement; provided, that the Port Authority shall not be entitled to terminate
this Agreement except in accordance with the terms and provisions of Article
XVII.
ARTICLE XX
----------
SURRENDER
---------
Section 20.01. Surrender of Improvements. The Developer shall
surrender the Improvements to the Port Authority at the expiration of the Term
or earlier termination of this Agreement and the Developer's rights hereunder,
without delay, in good order, condition and repair except for reasonable wear
and tear after the last necessary repair, replacement, or rebuilding made by the
Developer, for the purposes for which such Improvements were designed, free and
clear of all liens and encumbrances except the liens for taxes and assessments
not then due and payable, and without any payment or allowance whatever by the
Port Authority for the Improvements made by the Developer.
Section 20.02. Removal of Certain Property. All furniture, trade
fixtures, and other personal property may be removed by or on behalf of the
Developer at or prior to the expiration of the Term or other termination of this
Agreement or of the Developer's
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rights hereunder, but only if, and to the extent, that the removal thereof will
not cause physical injury or damage to the Improvements or necessitate changes
or repairs to the same. The Developer shall pay or cause to be paid to the Port
Authority the cost of repairing or restoring any injury or damage to the
Improvements arising from such removal so as to return the Improvements to its
condition immediately prior to such removal.
Section 20.03. Survival Of Terms. The terms of this Article XX shall
survive any termination of this Lease.
ARTICLE XXI
-----------
NO WAIVER
---------
Failure of the Port Authority or the Developer to object to any act or
omission on the part of the other party, however long the same may continue,
shall not be deemed to be a waiver by said party of any of its rights hereunder.
No waiver by the Port Authority or the Developer at any time, express or
implied, of any breach of any provision of this Agreement shall be deemed a
waiver of a breach of any other provision of this Agreement or a consent to any
subsequent breach of the same or any other provision. No acceptance by the Port
Authority of any partial payment shall constitute an accord or satisfaction, and
such partial payment shall only be deemed a part payment on account.
ARTICLE XXII
------------
PORT AUTHORITY'S ASSIGNMENT
---------------------------
AND THE PARTIES' LIABILITY LIMITATION
-------------------------------------
Section 22.01. Assignment By The Port Authority. The Port Authority
may transfer or assign its interests in the Hammond Marina or the Improvements
or under this Agreement to any other governmental entity with the power to
perform the duties and obligations and the authority to grant such rights set
forth in this Agreement, without the requirement of any consent by the
Developer, but may make no other transfers or assignments without the prior
written consent of the Developer. In the event of the transfer or assignment of
the Port Authority's interests as permitted hereunder and the assumption by such
transferee or assignee of all duties and obligations to be performed or observed
by the Port Authority with respect to such interests hereunder, only the
transferee or assignee shall be responsible for the performance or observance of
such covenants or agreements. However, the Port Authority may, without the
consent of Developer, collaterally assign its rights in this Agreement in
connection with a financing provided such assignment does not impair the rights
of the Developer hereunder.
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<PAGE>
Section 22.02. Limitations on Rights of Recovery. Notwithstanding
anything to the contrary contained in this Agreement, there shall be absolutely
no personal liability attributed to any member, director, officer, employee,
agent or attorney of the Port Authority with respect to the terms, covenants and
provisions of this Agreement, such exculpation of personal liability being
absolute and without any exception whatsoever. Notwithstanding anything to the
contrary contained in this Agreement, there shall be absolutely no personal
liability attributed to any member, shareholder, director, officer, employee,
agent, or attorney of the Developer with respect to the terms, covenants, and
provisions of this Agreement, such exculpation of personal liability being
absolute and without any exception whatsoever.
ARTICLE XXIII
-------------
FORCE MAJEURE
-------------
Notwithstanding anything contained in this Agreement to the contrary,
if the Developer or the Port Authority is delayed, hindered, or prevented in the
performance of any act or the achievement of any deadline required under this
Agreement (other than the payment of money) by reason of fire, casualty,
strikes, lockout, labor troubles, inability to procure materials or supplies,
failure of power, Gaming Commission or other governmental authority, weather,
riots, insurrection, war, or other reasons of like nature, or failure of timely
performance by or acts of the other party ("Force Majeure Events"), and such
delays, hindrances, or prevention of performance are not within the reasonable
control of the party obligated to perform, the party affected by such delay
shall promptly give notice thereof to the other parties and thereupon
performance of such act shall be excused for the period of delay and/or such
deadline extended for a period equal to the period of delay. Such excusal
and/or extension of time shall be, however, predicated upon the party subject to
the Force Majeure Event (i) notifying the other party in writing of the delay
and reasons causing the delay within thirty (30) days upon learning of the same;
and (ii) taking all reasonable steps to avoid the delay and all reasonable steps
to remove and address the condition(s) causing the delay.
ARTICLE XXIV
------------
NOTICES
-------
No notice, approval, consent or other communication authorized or
required by this Agreement shall be effective unless the same shall be in
writing. Any such communication shall be deemed given when either (a) hand
delivered, with signed receipt obtained therefor, (b) sent postage prepaid by
United States registered or certified mail, return receipt requested, directed
or addressed in each case to the other party at its address set forth below, or
such other address as either party may designate by notice
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<PAGE>
given from time to time in accordance with this Article XXIII, or (c) sent by
nationally recognized overnight courier service with all charges prepaid or
billed to sender, directed or addressed in each case to the other party at its
address set forth below, or such other address as either party may designate by
notice given from time to time in accordance with this Article XXIII.
The addresses and telefax numbers for notices are:
To the Port Authority: Hammond Port Authority
______ Empress Drive
Hammond, Indiana 463____
Attention: Director
With copies to: Mayor Duane W. Dedelow, Jr.
City of Hammond
5925 Calumet Avenue
Hammond, Indiana 46320
J.B. Smith, Esq.
Beckman Kelly & Smith
5920 Hohman Avenue
Hammond, IN 46320-2423
David L. Johnson, Esq.
Baker & Daniels
300 North Meridian Street
Suite 2700
Indianapolis, IN 46204
To the Developer Empress Casino Hammond Corporation
825 Empress Drive
Hammond, Indiana 46320
Attention: General Manager
With copies to: Empress Casino Joliet Corporation
2300 Empress Avenue
Joliet, Illinois 60436
Attention: Michael W. Hansen
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<PAGE>
Ice Miller Donadio & Ryan
One American Square
Box 82001
Indianapolis, Indiana 46282-0002
Attention: Phillip L. Bayt
All such communications shall be deemed received one day after the
date sent via any of the enumerated means, except for those sent by personal
delivery, which notices shall be deemed received only when actually received by
the other party.
ARTICLE XXV
CERTIFICATES
Either party shall, without charge, at any time and from time to time
hereafter, within thirty (30) days after written request of the other, certify
by written instrument duly executed and acknowledged to any person, firm or
corporation specified in such request:
(a) As to whether this Agreement has been supplemented or amended,
and if so, the substance and manner of such supplement or amendment;
(b) As to whether this Agreement has been assigned, transferred or
sublet, and if so, the substance and manner of such assignment, transfer or
sublet;
(c) As to the validity and force and effect of this Agreement, in
accordance with its tenor as then constituted;
(d) As to the existence of any default hereunder on the part of the
other party to this Agreement;
(e) As to the existence of any offsets, counterclaims or defenses
thereto on the part of such other party;
(f) As to the commencement and expiration dates of the Term; and
(g) As to any other matters as may reasonably be so requested.
Any certificate referred to in this Article XXIV may be relied upon by
the party requesting it and any other person, firm or corporation to whom the
same may be exhibited or delivered, and the contents of such certificate shall
be binding on the party executing same.
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Exhibit A (page 1 of 3)
[INSERT ART]
<PAGE>
EXTENSION OF TEMPORARY LICENSE AGREEMENT
----------------------------------------
The Hammond Port Authority (Licensor), and Hammond Bridge and Road Works,
L.L.C. (License) entered Temporary License Agreements in December, 1995, copies
of which are attached hereto and made a part hereof. So that construction may
continue without interruption, the parties find it to their mutual benefit to
extend said Temporary License Agreements in all of their terms and conditions
except termination date, through and including April 16, 1996.
IN WITNESS WHEREOF, licensor has duly executed this instrument this 11th
day of March, 1996.
HAMMOND PORT AUTHORITY
By: /s/ Bernadette C. Costa
-------------------------
Printed: Bernadette C. Costa
--------------------
Title: Chairman
-----------------------
ATTEST:
/s/ Dennis H. Terry
- ---------------------------
DENNIS TERRY, Secretary
STATE OF INDIANA )
) SS:
COUNTY OF LAKE )
Before me, the undersigned, a Notary Public, in and for said County and
State this 11th day of March, 1996, personally appeared Bernadette Costa,
Chairman and Dennis Terry, Secretary respectively, acting for and on behalf of
the Hammond Port Authority, who acknowledged the execution of the foregoing
instrument as their voluntary act for the uses and purposes set forth therein.
Witness my hand and notarial seal this 11th day of March, 1996.
Notary Public
/s/ J.B. Smith
----------------------
J.B. Smith
I am a resident of Lake
County, Indiana.
My commission expires:
12-17-98
- ----------------------
<PAGE>
TEMPORARY LICENSE AGREEMENT
12/05/95
The Hammond Port Authority ("LICENSOR"), for good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
and to the extent of its present or hereafter acquired right, title and
interest, if any, in and to that portion of the real estate described on Exhibit
"A" attached hereto and incorporated herein by this reference that is generally
depicted on Exhibit "B" attached hereto and incorporated herein by this
reference (the "LICENSE AREA"), does hereby GRANT to Hammond Bridge and Road
Works, L.L.C. ("LICENSEE") a temporary license (the "LICENSE") in, under, over
and through the LICENSE AREA for (a) the installation and construction of an
elevated roadway and related equipment and improvements (including, without
limitation, footings, retaining walls, decks, columns, pads, beams, supports,
ramps, embankments, utilities and drainage systems) and the relocation and
installation of rail lines and related equipment and improvements (said roadway,
rail lines and related equipment and improvements are collectively referred to
as the "FACILITIES"), and (b) drainage, entry upon, passage over, deposit of
excavated earth, and storage of material and equipment as may be necessary or
useful for the initial installation, construction and relocation of the
FACILITIES.
In consideration of the grant of the foregoing license, LICENSEE does
hereby covenant and agree as follows:
(a) LICENSEE shall protect, defend, indemnify and save harmless the
LICENSOR and each agency, commission, department, officer and
representative of LICENSOR from and against all liabilities,
obligations, claims, damages, penalties, causes of action and other
costs and expenses (including, without limitation, attorneys fees,
court costs and litigation expenses), imposed upon or incurred by or
asserted against LICENSOR or any agency, commission, department,
officer or representative of LICENSOR as a result of or in connection
with (i) the entry by LICENSEE or anyone claiming by or through
LICENSEE on all or any portion of the LICENSE AREA, (ii) the
installation, construction or relocation of the FACILITIES, or (iii)
the failure of LICENSEE to perform its obligations under this
Temporary License Agreement. LICENSEE'S obligations under this
subparagraph (a) shall survive the
<PAGE>
A parcel of land lying in the West one half of Section 6, Township 37 North,
Range 9 West of the Second Principal Meridian, Lake County, Indiana, described
as commencing at the intersection of the West line of Section 6 and the
Northerly line of the Baltimore and Ohio Railroad right-of-way; thence North 00
degrees 00 minutes 00 seconds East along the West section line 154.93 feet;
thence South 40 degrees 12 minutes 11 seconds East 61.97 feet to a cross in the
concrete walk marking the point of beginning; then continuing South 40 degrees
12 minutes 00 seconds East 90.97 feet to an iron rod; thence on a curve to the
left 230.01 feet said curve having a radius of 2,814.93 feet, a central angle of
4 degrees 40 minutes 54 seconds and a chord that bears South 42 degrees 32
minutes 27 seconds East 229.94 feet to a point; thence North 36 degrees 10
minutes 42 seconds East 385.02 feet along the lakeside face of the sheet piling
to a point on the present shoreline of Lake Michigan thence Northwesterly along
the present shoreline of Lake Michigan, 494 feet, plus or minus, to the Easterly
right-of-way line of Calumet Avenue; thence South 00 degrees 00 minutes 00
seconds West along said right-of-way line 281.19 feet to the point of beginning.
PARCEL 3:
A strip of land lying in the West one half of Section 6, Township 37 North,
Range 9 West of the Second Principal Meridian, Lake County, Indiana, described
as commencing at the intersection of the West section line and the Northerly
line of the Baltimore and Ohio Railroad right of way; thence North 0 degrees 00
minutes 00 seconds East along the West section line 92.96 feet to an iron pipe
marking the point of beginning, said point being on a line 40 feet from the
Northerly right of way line of the Elgin Joliet and Eastern Railroad; thence
North 0 degrees 00 minutes 00 seconds East along the West section line 61.97
feet to an iron rod; thence South 40 degrees 12 minutes 00 seconds East along
the Northerly right of way line of the Elgin Joliet and Eastern Railroad 152.94
feet to an iron rod; thence along said right of way line 663.25 feet on a curve
to the left said curve having a radius of 2,815.93 feet and a central angle of
13 degrees 30 minutes to an iron rod; thence South 53 degrees 42 minutes 00
seconds East along said right of way line 178.65 feet to an iron rod; thence
South 00 degrees 00 minutes 30 seconds West along said right of way line 42.18
feet to an iron rod; thence North 53 degrees 42 minutes 00 seconds West 254.31
feet to an iron rod; thence 621.51 feet along a curve to the right having a
radius of 2,637.78 feet and a central angle of 13 degrees 30 minutes to an iron
rod; thence North 40 degrees 12 minutes 00 seconds West 105.61 feet to the point
of beginning.
PARCEL 4:
A strip of land 40 feet wide, lying in the East one half of Section 1, Township
37 North, Range 10 West of the Second Principal Meridian, Lake County, Indiana,
described as commencing at the intersection of the East section line and the
Northerly line of the Baltimore and Ohio Railroad right of way; thence North 0
degrees 00 minutes 00 seconds East along the East Section line 92.96 feet to an
iron rod marking the point of beginning, said point being on a line 40 feet from
the Northerly right of way line of the Elgin Joliet and Eastern Railroad; thence
North 42 degrees 12 minutes 00 seconds West parallel with said Northerly right
of way line 1,718.57 feet to an iron rod; thence North 49 degrees 18 minutes 00
seconds East 40.00 feet to an iron rod and said Northerly right of way line;
thence South 40 degrees 12 minutes 00 seconds East along said Northerly right of
way line 1,671.2 feet to an iron rod and the East line of said Section 1; thence
South 00 degrees 00 minutes 00 seconds West 61.97 feet to the point of
beginning.
<PAGE>
EXHIBIT A
Description of property at: Hammond, Indiana
To: Hammond Port Authority
CSXT Deed File No.: 18089-021-999-GJK
DESCRIPTION: A parcel of land lying in Section 1, Township 37 North, Range 10
West of the Second Principal Meridian and in Section 36, Township 38 North,
Range 10 West of the Second Principal Meridian more particularly described as
follows: Commencing at the Southeast corner of said Section 1; thence North 0"
00' 00" East along the East line of said Section 1, a distance of 4054.78 feet
to the point of beginning; thence North 40" 13' 01" West, along the
Southwesterly line of the 100 foot wide right of way of the Elgin, Joliet and
Eastern Railroad, a distance of 6443.91 feet; thence North 47" 49' 16" West,
along said right of way line, a distance of 279.19 feet to the Indiana-Illinois
State Line; thence South 0' 08' 59 West, along said State Line, a distance of
134.52 feet; thence South 39' 25' 04" East; along a line 25.00 feet
Northeasterly, by perpendicular measurement, and parallel to the track
centerline of the Northeasterly tracks of the Baltimore and Ohio (CSX) R.R., a
distance of 1474.75 feet to a point of curve; thence Southeasterly along a curve
(25.00 feet distance from said track centerline) concave to the Northeast and
having a radius of 24,878.52 feet, an arc distance of 281.71 feet: (the chord of
which bears South 29" 34' 29" East, a distance of 281.77 feet); thence South 40"
14' 05" East (25.00 feet distance from said track centerline), a distance of
3916.53' (set to a point of curve; thence Southeasterly along a curve (25.00
feet distance from said track centerline) concave to the Northeast and having a
radius of 7051.15 feet, an arc distance of 1043.75 feet (the chord of which
bears South 44" 28' 16" East, a distance of 1042.84 feet) to the East line of
said Section 1; thence North 0" 00' 00" East along said East line, a distance of
101.51 feet to the point of beginning, containing 21.255 acres, more of less all
in the City of Hammond, Lake County, Indiana.
The Premises are shown on a print survey dated October 25, 1990, prepared
by Gary P. Torrenga, No. 20514, Torrenga Engineering Company, 907 Ridge
Road, Munster, Indiana 46321, incorporated herein by reference.
BEING all or part of the same property acquired by Grantor, or its
predecessor, by the following instruments, recorded among the Public Land
Records of Lake County, Indiana:
<TABLE>
<CAPTION>
Acquired Acquired Date of
By Prog Instrument Book Fare
-------- -------- ------------- --------------- ---------
<S> <C> <C> <C> <C>
B.P.&C. Rwy. * Jacob Forsythe 02/1874 B&02 530
B&O&C RR** D.B. Morgan 05/21/1888 44 112
B&O&C RR Edward Robey 07/02/1888 44 114
B.P.&C. Rwy G. W. Truxbury 08/12/1874 P 336
C&CT Rwy.*** Frederick Eggers 12/27/1888 None None
C&CT Rwy. B&O&C RR 12/12/1891 59 272
</TABLE>
* B.P.&C Rwy.--Baltimore, Pittsburgh & Chicago Railway
** B&O&C RR -- Baltimore & Ohio & Chicago Railroad
*** C&CT Rwy. -- Chicago & Calumet Terminal Railway
<PAGE>
[IMAGE OF EXHIBIT A]
EXH [A]
<PAGE>
TEMPORARY LICENSE AGREEMENT
12/05/95
The HAMMOND PORT AUTHORITY ("LICENSOR"), for good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
and to the extent of its present or hereafter acquired right, title and
interest, if any, in and to that portion of the real estate described on Exhibit
"A" attached hereto and incorporated herein by this reference that is generally
depicted on Exhibit "B" attached hereto and incorporated herein by this
reference (the "LICENSE AREA"), does hereby GRANT to Hammond Bridge and Road
Works, L.L.C. ("LICENSEE") a temporary license (the "LICENSE") in, under, over
and through the LICENSE AREA for (a) the installation and construction of
docking, staging, guest and parking facilities and related equipment and
improvements (said facilities and related equipment and improvements are
collectively referred to as the "FACILITIES"), and (b) drainage, entry upon,
passage over, deposit of excavated earth, and storage of material and equipment
as may be necessary or useful for the initial installation and construction of
the FACILITIES.
In consideration of the grant of the foregoing license, LICENSEE does
hereby covenant and agree as follows:
(a) LICENSEE shall protect, defend, indemnify and save harmless the
LICENSOR and each agency, commission, department, officer and
representative of LICENSOR from and against all liabilities,
obligations, claims, damages, penalties, causes of action and other
costs and expenses (including, without limitation, attorneys fees,
court costs and litigation expenses), imposed upon or incurred by or
asserted against LICENSOR or any agency, commission, department,
officer or representative of LICENSOR as a result of or in connection
with (i) the entry by LICENSEE or anyone claiming by or through
LICENSEE on all or any portion of the LICENSEE AREA, (ii) the
installation or construction of the FACILITIES, or (iii) the failure
of LICENSEE to perform its obligations under this Temporary License
Agreement. LICENSEE'S obligations under this subparagraph (a) shall
survive the termination of this Temporary License Agreement.
(b) LICENSEE shall promptly discharge (or cause to be discharged) all
mechanic's laborer's, materialmen's, supplier's and vendor's liens
<PAGE>
arising out of or connected with the exercise by LICENSEE or its
agents or contractors of the rights granted to it by this Temporary
License Agreement or the installation or construction of the
FACILITIES. If, within sixty (60) days from the filing of any lien,
LICENSEE shall fail to obtain (or cause to be obtained) the discharge
of such lien, then LICENSOR may (but is under no obligation to) (i)
obtain the discharge of the lien and (ii) recover from LICENSEE all
costs and expenses associated therewith. This subparagraph (b) shall
not be deemed to create the right to file or obtain a lien against the
LICENSE AREA or any portion thereof if such right does not already
exist under applicable law.
(c) The FACILITIES shall be installed and constructed at LICENSEE's sole
cost and expense.
(d) The construction delegation of LICENSOR and their counsel shall be
allowed to attend all construction meetings and shall receive adequate
prior notice of the same.
(e) LICENSEE shall provide or require any private contractor performing
any installation or construction of the FACILITIES to provide, at
no cost or expense to LICENSOR, liability and property damage
insurance in an amount acceptable to LICENSOR naming LICENSOR as a
co-insured.
(f) LICENSEE shall, at its cost and expense, comply with all of the
requirements of county, municipal, state, federal and other applicable
governmental authorities, now in force, or which may hereinafter be in
force, pertaining to the installation or construction of the
FACILITIES, and shall faithfully observe all municipal and county
ordinances and state and federal statutes now in force or which may
hereinafter be in force that are applicable to the installation or
construction of the FACILITIES.
(g) LICENSEE shall cause the FACILITIES to be installed and constructed in
accordance with the plans and specifications therefore, which plans
and specifications shall be provided to LICENSOR prior to commencing
the installation
2
<PAGE>
or construction of any of the FACILITIES, which plans and
specifications provided to LICENSOR shall be upon the foot print as
attached hereto as Exhibit "C".
(h) LICENSEE shall conduct its activities pursuant to this License
Agreement so as to minimize negative impacts upon the Hammond Marina
and the users thereof and shall at all times maintain suitable access
to the Marina and the facilities thereof and shall not cause LICENSOR
to cease or interrupt its usual and customary functions.
LICENSOR agrees that LICENSEE shall have the right to grant other entities
and individuals the right to perform any or all of the installation or
construction of the FACILITIES provided that any such other entities and
individuals agree to abide by the comply with the terms and provisions of this
Temporary License Agreement to the same extent as if they were the license
hereunder, with the prior approval of LICENSOR which approval shall not be
unreasonably held.
LICENSEE acknowledges and agrees that (a) LICENSOR does not represent or
warrant to LICENSEE that it has whatever right, title or interest in or to the
LICENSE AREA or any specified portions thereof that is necessary to grant the
LICENSE to LICENSEE, and (b) LICENSEE is accepting this Temporary License
Agreement upon the condition and with full knowledge that LICENSOR may not have
whatever right, title or interest in or to the LICENSE AREA or specified
portions thereof that is necessary to grant the LiCENSE to LICENSEE with respect
to the LICENSE AREA or any specified portions thereof; provided, that if
LICENSOR subsequently acquires whatever right, title or interest in or to the
LICENSE AREA or specified portions thereof that is necessary to grant the
LICENSE to LiCENSEE with respect to the LICENSE AREA or specified portion
thereof, the LICENSE and this Temporary License Agreement shall become effective
as to such right, title and interest in the LICENSE AREA or specified portions
thereof as of the date of such acquisition.
This Temporary License Agreement, and the covenants and agreements made in
consideration therefor, shall be binding upon and inure to the benefit of the
parties hereto and their successors and assigns.
The invalidity or unenforceability of any covenant, condition, term or
provision of this Temporary License Agreement shall not affect the validity or
enforceability of any other covenant, condition, term or provision.
3
<PAGE>
This temporary License Agreement shall terminate January 15, 1996.
The covenants, conditions, terms and provisions of this Temporary License
Agreement shall be governed by (and construed in accordance with) the laws of
the State of Indiana.
IN WITNESS WHEREOF, LICENSOR has duly executed this instrument this 7th day
of December, 1995.
HAMMOND POINT AUTHORITY
By: /s/ Arthur C. Peschke
--------------------------
Printed: ARTHUR C. PESCHKE
---------------------
Title: Chairman
-----------------------
ATTEST:
/s/ Peter Knoerzer
- -----------------------------
PETER KNOERZER Secretary
STATE OF INDIANA )
) SS:
COUNTY OF LAKE )
Before me, the undersigned, a Notary Public, in and for said County and
State this 7th day of December, 1995, personally appeared Arthur Peschke,
Chairman and Peter Knoerzer, Secretary, respectively, acting for and on behalf
of the hammond Port Authority who acknowledged the execution of the foregoing
instrument as their voluntary act for the uses and purposes set forth therein.
Witness my hand and notarial seal this 7th day of December, 1995.
Notary Public
J.B. SMITH
-------------------------
Printed
I am a resident of Lake County, Indiana.
My commission expires:
12/17/98
- ----------------------
4
<PAGE>
The HAMMOND BRIDGE AND ROAD WORKS, L.L.C., by its duly authorized officers
does hereby accept the foregoing Temporary-License Agreement, and it covenants
and agrees as provided therein.
Made and Executed this 15th day of DECEMBER, 1995.
HAMMOND BRIDGE AND ROAD WORKS,
L.L.C.
Printed: /s/ Michael Hansen
---------------------------
Title: V.P.
-----------------------------
ATTEST:
Allan McConnell
- -------------------------
Asst Secretary
STATE OF INDIANA )
) SS:
COUNTY OF )
Before me, the undersigned, a Notary Public, in and for said County and
State this 15th day of DECEMBER, 1995, personally appeared Michael Hansen, Vice
President and Allan McConnell, Assistant Secretary, respectively, acting for and
on behalf of the HAMMOND BRIDGE AND ROAD WORKS, L.L.C., who acknowledged the
execution of the foregoing instrument as their voluntary act for the uses and
purposes set forth therein.
Witness my hand and notarial seal this 15th day of DECEMBER __, 1995.
Notary Public
J.B. SMITH
-----------------------------------
Printed
I am a resident of Lake County, Indiana.
My commission expires:
12-17-98
- ----------------------
5
<PAGE>
PARCEL 1A
PARCEL 1: PART OF THE NORTHWEST QUARTER OF SECTION 6, TOWNSHIP 37 NORTH, RANGE 9
WEST OF THE SECOND PRINCIPAL MERIDIAN, IN LAKE COUNTY, INDIANA, MORE
PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE INTERSECTION OF THE WEST
LINE OF SECTION 6 AND THE NORTHERLY LINE OF THE BALTIMORE AND OHIO RAILROAD
RIGHT OF WAY; THENCE NORTH 00 DEGREES 00 MINUTES 00 SECONDS EAST ALONG THE WEST
SECTION LINE 154.93 FEET; THENCE SOUTH 40 DEGREES 12 MINUTES 11 SECONDS EAST
61.97 FEET TO A CROSS IN THE CONCRETE WALK MARKING THE POINT OF BEGINNING;
THENCE CONTINUING SOUTH 40 DEGREES 12 MINUTES 00 SECONDS EAST, 90.97 FEET TO AN
IRON ROD; THENCE ON A CURVE TO THE LEFT 230.01 FEET, SAID CURVE HAVING A RADIUS
OF 2,814.93 FEET, A CENTRAL ANGLE OF 04 DEGREES 40 MINUTES 54 SECONDS AND A
CHORD THAT BEARS SOUTH 42 DEGREES 32 MINUTES 27 SECONDS EAST 229.94 FEET TO A
POINT; THENCE NORTH 36 DEGREES 10 MINUTES 42 SECONDS EAST, 385.02 FEET ALONG THE
LAKESIDE FACE OF THE SHEET PILING TO A POINT ON THE SHORELINE OF LAKE MICHIGAN
AS OF FEBRUARY 8, 1989; THENCE NORTHWESTERLY ALONG THE FEBRUARY 8, 1989,
SHORELINE OF LAKE MICHIGAN, 494 FEET TO THE EASTERLY RIGHT OF WAY LINE OF
CALUMET AVENUE; THENCE SOUTH 00 DEGREES 00 MINUTES 00 SECONDS WEST ALONG SAID
RIGHT OF WAY LINE 281.19 FEET TO THE POINT OF BEGINNING.
PARCEL 2: AN "L" SHAPED PARCEL OF LAND LYING IN THE NORTHWEST QUARTER OF
SECTION 6, TOWNSHIP 37 NORTH, RANGE 9 WEST OF THE SECOND PRINCIPAL MERIDIAN, IN
LAKE COUNTY, INDIANA, MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE
INTERSECTION OF THE WEST LINE OF SECTION 6 AND THE NORTHERLY LINE OF THE
BALTIMORE AND OHIO RAILROAD RIGHT OF WAY; THENCE NORTH 00 DEGREES 00 MINUTES 00
SECONDS EAST ALONG THE WEST SECTION LINE 154.93 FEET; THENCE SOUTH 40 DEGREES 12
MINUTES 11 SECONDS EAST 61.97 FEET TO A CROSS IN THE CONCRETE WALK; THENCE
CONTINUING SOUTH 40 DEGREES 12 MINUTES 00 SECONDS EAST 90.97 FEET TO AN IRON
ROD; THENCE ON A CURVE TO THE LEFT 230.01 FEET SAID CURVE HAVING A RADIUS OF
2814.93 FEET, A CENTRAL ANGLE OF 04 DEGREES 40 MINUTES 54 SECONDS AND A CHORD
THAT BEARS SOUTH 42 DEGREES 32 MINUTES 27 SECONDS EAST 229.94 FEET TO A POINT
MARKING THE POINT OF BEGINNING; THENCE ALONG SAID CURVE TO THE LEFT 40.45 FEET,
SAID CURVE HAVING A CENTRAL ANGLE OF 00 DEGREES 49 MINUTES 24 SECONDS AND A
CHORD THAT BEARS SOUTH 45 DEGREES 17 MINUTES 36 SECONDS EAST, 40.45 FEET TO A
POINT; THENCE NORTH 36 DEGREES 10 MINUTES 42 SECONDS EAST, 799.93 FEET TO A
POINT; THENCE SOUTH 53 DEGREES 43 MINUTES 37 SECONDS EAST, 110.0 FEET TO A
POINT; THENCE NORTH 36 DEGREES 16 MINUTES 42 SECONDS EAST, 90.00 FEET TO A POINT
ON THE SHORELINE OF LAKE MICHIGAN AS OF FEBRUARY 8, 1989; THENCE ALONG THE
LAKESIDE FACE OF THE SHEET PILING NORTH 53 DEGREES 43 MINUTES 37 SECONDS WEST
98.83 FEET TO A CORNER OF THE SHEET PILING; THENCE SOUTH 81 DEGREES 10 MINUTES
15 SECONDS WEST, 72.38 FEET TO A CORNER OF THE SHEET PILING; THENCE SOUTH 81
DEGREES 10 MINUTES 15 SECONDS WEST, 72.38 FEET TO A CORNER OF THE SHEET PILING;
THENCE SOUTH 36 DEGREES 10 MINUTES 42 SECONDS WEST, 832.73 FEET TO THE POINT OF
BEGINNING.
<PAGE>
[ILLUSTRATION APPEARS HERE]
EXHIBIT B
<PAGE>
[ILLUSTRATION APPEARS HERE]
EXHIBIT "C"
<PAGE>
Made and Executed this 12 day of March, 1996.
HAMMOND BRIDGE AND ROAD WORKS
L.L.C.
By: /s/ Michael Hansen
-------------------------
Printed: Michael Hansen
---------------------
Title: Vice President
---------------------
ATTEST:
/s/ Allan McConnell
- ----------------------------------
Allan McConnell, Assistant
Secretary
STATE OF INDIANA
SS:
COUNTY OF LAKE
Before me, the undersigned, a Notary Public, in and for said County and
State this 12th day of March, 1996, personally appeared Michael Hansen, Vice
President and Allan McConnell, Assistant Secretary, respectively, acting for and
on behalf of the Hammond Bridge and Road Works, L.L.C., who acknowledged the
execution of the foregoing instrument as their voluntary act for the uses and
purposes set forth therein.
Witness my hand and notarial seal this 12th day of March 1996.
Notary Public
/s/ Patricia M. Pieiil
--------------------------
Patricia m. Pieiil
I am a resident of Porter County.
My commission expires: 2/17/98
-2-
<PAGE>
termination of this Temporary License Agreement.
(b) LICENSEE shall promptly discharge (or cause to be discharged) all
mechanic's, laborer's, materialmen's, supplier's and vendor's liens
arising out of or connected with the exercise by LICENSEE or its
agents or contractors of the rights granted to it by this Temporary
License Agreement or the installation, construction or relocation of
the FACILITIES. If, within sixty (60) days from the filing of any
lien, LICENSEE shall fail to obtain (or cause to be obtained) the
discharge of such lien, then LICENSOR may (but is under no obligation
to) (i) obtain the discharge of the lien and (ii) recover from
LICENSEE all costs and expenses associated therewith. This
subparagraph (b) shall not be deemed to create the right to file or
obtain a lien against the LICENSE AREA or any portion thereof if such
right does not already exist under applicable law.
(c) The FACILITIES shall be installed, constructed and relocated at
LICENSEE's sole cost and expense.
(d) The construction delegation of LICENSOR and their counsel shall be
allowed to attend all construction meetings and shall receive adequate
prior notice of the same.
(e) LICENSEE shall provide or require any private contractor performing
any installation, construction or relocation of the FACILITIES to
provide, at no cost or expense to LICENSOR, liability and property
damage insurance in an amount acceptable to LICENSOR naming LICENSOR
as a co-insured.
(f) LICENSEE shall, at its cost and expense, comply with all of the
requirements of county, municipal, state, federal and other applicable
governmental authorities, now in force, or which may hereinafter be in
force, pertaining to the installation, construction or relocation of
the FACILITIES, and shall faithfully observe all municipal and county
ordinances and state and federal statutes now in force or which may
hereinafter be in force that are applicable
2
<PAGE>
to the installation, construction or relocation of the FACILITIES.
(g) LICENSEE shall cause the FACILITIES to be installed, constructed and
relocated as generally depicted in the diagram identified as Job No.
94-470 of American Consulting Engineers, Inc., labeled Preliminary
3/31/95 Plan F Revised.
(h) LICENSEE shall conduct its activities pursuant to this License
Agreement so as to minimize negative impacts upon the Hammond Marina
and the users thereof and shall at all times maintain suitable access
to the Marina and the facilities thereof and shall not cause LICENSOR
to cease or interrupt its usual and customary functions.
LICENSOR agrees that LICENSEE shall have the right to grant other entities
and individuals the right to perform any or all of the installation,
construction or relocation of the FACILITIES provided that any such other
entities and individuals agree to abide by and comply with the terms and
provisions of this Temporary License Agreement to the same extent as if they
were the licensee hereunder, with the prior approval of LICENSOR, which approval
shall not be unreasonably withheld.
LICENSEE acknowledges and agrees that (a) LICENSOR does not represent or
warrant to LICENSEE that it has whatever right, title or interest in or to the
LICENSE AREA or any specified portions thereof that is necessary to grant the
LICENSE to LICENSEE, and (b) LICENSEE is accepting this Temporary License
Agreement upon the condition and with full knowledge that LICENSOR may not have
whatever right, title or interest in or to the LICENSE AREA or specified
portions thereof that is necessary to grant the LICENSE to LICENSEE with respect
to the LICENSE AREA or any specified portions thereof; provided, that if
LICENSOR subsequently acquires whatever right, title or interest in or to the
LICENSE AREA or specified portions thereof that is necessary to grant the
LICENSE to LICENSEE with respect to the LICENSE AREA or specified portion
thereof, the LICENSE and this Temporary License Agreement shall become effective
as to such right, title and interest in the LICENSE AREA or specified portions
thereof as of the date of such acquisition.
This Temporary License Agreement, and the covenants and agreements made in
consideration therefore, shall be binding upon the inure to the benefit of the
parties hereto and their successors and assigns.
3
<PAGE>
The invalidity or unenforceability of any covenant, condition, term or
provision of this Temporary License Agreement shall not affect the validity or
enforceability of any other covenant, condition, term or provision.
This temporary License Agreement shall terminate on January 15, 1996.
The covenants, conditions, terms and provisions of this Temporary License
Agreement shall be governed by (and construed in accordance with) the laws of
the State of Indiana.
IN WITNESS WHEREOF, LICENSOR has duly executed this instrument this 7th day
of December, 1995.
HAMMOND PORT AUTHORITY
By: /s/ Arthur C. Peschke
-----------------------------
Printed: ARTHUR C. PESCHKE
------------------------
Title: Chairman
--------------------------
ATTEST:
/s/ Peter Knoerzer
- ------------------------------
PETER KNOERZER Secretary
STATE OF INDIANA )
) SS:
COUNTY OF LAKE )
Before me, the undersigned, a Notary Public, in and for said County and
State this 7th day of December, 1995, personally appeared ARTHUR PESCHKE,
Chairman, and PETER KNOERZER, Secretary, respectively, acting for and on behalf
of the Hammond Port Authority, who acknowledged the execution of the foregoing
instrument as their voluntary act for the uses and purposes set forth therein.
Witness my hand and notarial seal this 7th day of December, 1995.
/s/ J.B. Smith
--------------------------------
Notary Public
J.B. Smith
--------------------------------
Printed
I am a resident of Lake County, Indiana.
My commission expires:
12/17/98
- ------------------------
4
<PAGE>
The HAMMOND BRIDGE AND ROAD WORKS, L.L.C., by its duly authorized officers
does hereby accept the foregoing Temporary License Agreement, and it covenants
and agrees as provided therein.
Made and Executed this 15th day of December, 1995.
HAMMOND BRIDGE AND ROAD
WORKS, L.L.C.
By: /s/ Michael W. Hansen
-----------------------------
Printed: Michael W. Hansen
------------------------
Title: V.P.
--------------------------
ATTEST:
/s/ Allan McConnell
- ------------------------------
Asst. Secretary
STATE OF INDIANA )
) SS:
COUNTY OF LAKE )
Before me, the undersigned, a Notary Public, in and for said County and
State this 15th day of December, 1995, personally appeared Michael Hansen,
President and Allan McConnell, Asst. Secretary, respectively, acting for and on
behalf of the HAMMOND BRIDGE AND ROAD WORKS, L.L.C., who acknowledged the
execution of the foregoing instrument as their voluntary act for the uses and
purposes set forth therein.
Witness my hand and notarial seal this 15th day of December, 1995.
/s/ J.B. Smith
--------------------------------
Notary Public
J.B. Smith
--------------------------------
Printed
I am a resident of Lake County, Indiana.
My commission expires:
12/17/98
- ------------------------
5
<PAGE>
EXHIBIT 10.13
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is made and entered into as of the
19th day of June, 1996, by and between the DEPARTMENT OF WATERWORKS OF THE CITY
OF HAMMOND and the CITY OF HAMMOND, INDIANA, by and through its DEPARTMENT OF
WATERWORKS (jointly, "Licensor") and EMPRESS CASINO HAMMOND CORPORATION
("Licensee").
RECITALS
A. Licensor owns certain real estate located in Lake County, Indiana, the
legal description of which is attached hereto as Exhibit A (the "Real Estate").
B. Licensee leases certain real estate adjacent to the Real Estate on which
it is developing and intends to operate certain facilities in connection with
the conduct of riverboat gaming operations under and pursuant to IC 4-33, (the
"Facilities").
C. Licensee desires to license from Licensor, and Licensor desires to
license to Licensee, a portion of the Real Estate for the purposes permitted
hereunder, subject to the terms and conditions hereof.
AGREEMENT
1. Recitals. The above and foregoing Recitals are true and correct.
2. Grant of License. Licensor, subject to Licensor's right to terminate
this Agreement in the event of a default as expressly provided for herein,
hereby grants to Licensee an irrevocable license coupled with an interest in and
to the portion of the Real Estate more particularly described in Exhibit B
attached hereto and made a part hereof and/or depicted on Exhibit C (the "Map")
attached hereto and made a part hereof (the "Licensed Premises"). The Licensed
Premises consists of (i) a 32-foot wide access roadway ("Licensed Access
Premises") as shown on the Map, which is part of the so-called Perimeter Road
that is or will be leased to the City of Hammond Department of Redevelopment,
(ii) an area approximately fifteen feet (15') in width (the "Landscape/Sign
Premises") as shown on the Map, (iii) a parking area, as shown on the Map (the
"Parking Premises"), located adjacent to the maintenance building of the Hammond
Port Authority ("Maintenance Building") and (iv) those areas required for the
construction of the Improvements and maintenance of the improvements and areas
required in paragraphs 6 and 7 hereof as described therein, and/or delineated on
the Map (the "Improvement Premises"). With respect to the Parking Premises and
Licensor's property lying south thereof,
<PAGE>
Licensor and Licensee shall have rights of access in common over entrances to
and drives and aisleways within said Parking Premises or Licensor's property.
3. Use of Licensed Premises. Licensee, its agents, employees, patrons,
invitees and licensees and Licensee's tenants, their agents, employees, patrons,
invitees and licensees shall be entitled to use and maintain (i) the Licensed
Access Premises for access to the Premises which provides access to the
Facilities, (ii) the Landscape/Sign Premises for landscaping, signs and displays
advertising the Facilities, subject to the approval of signs and displays by
Licensor's Board of Directors at its next meeting following Licensee's request
for approval, which shall be held within fifteen (15) days of such request, and
provided that such approval shall not be unreasonably withheld, (iii) the
Parking Premises for parking of vehicles, and (iv) the Improvement Premises for
the construction and maintenance of the improvements and areas set forth in 6
and 7 hereof lying outside the other Licensed Premises.
4. Term and Extensions. This Agreement shall commence on June 19, 1996 (the
"Commencement Date") and shall end at 11:59 p.m. Hammond time on the fifth (5th)
anniversary of the date on which Licensee receives an owner's license as defined
in IC 4-33-2-15 ("Gaming License") from the Indiana Gaming Commission to own and
operate a riverboat casino on Lake Michigan from the City of Hammond, Indiana,
unless sooner terminated as herein provided. The term of this License shall be
automatically extended for periods equal to each renewal period of the Gaming
License granted to the Licensee by the Indiana Gaming Commission, provided that
the term shall not extend more than seventy-five (75) years beyond the
Commencement Date.
5. License Fee. As the fee for the license granted herein Licensee shall
pay the sum of Ten Dollars ($10.00) and shall make the improvements listed in
paragraphs 6 and 7 hereof. Licensee shall not be required to pay any operational
costs or rent to Licensor for the Licensed Premises.
6. Improvements to Licensed Premises. Licensee shall construct, at its sole
cost and expense, the following improvements ("Improvements"), at the locations
depicted on the Map:
(a) A paved drive within the Licensed Access Premises ("Drive"),
provided that for purposes of this Agreement the term "Drive" shall also
include the paved portion of the Premises;
(b) An electric chain-link security gate across the Drive at or near
the line where the Licensed Access Premises and the Leased Premises meet
(the "First Gate");
(c) An electric security gate across the Drive at the eastern end of
the northernmost portion of the Leased Premises to consist of a security
bar across the Drive and a fence framing the Drive of wrought iron or
similar appearance, provided that such gate and fence shall not obscure the
view of the Chicago skyline by the public (the "Second Gate") and provided
that Licensee shall provide a pedestrian walkway and public access west of
the
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<PAGE>
second gate north of the Drive for a distance of two hundred (200) feet
from the northeastern corner of the Real Estate;
(d) A sidewalk along and north and east of the Drive along Lake
Michigan located in or along a portion of the Leased Premises and beginning
approximately at the point where the Drive first turns to the north and
west and along said Drive to the Second Gate (the "Lakefront Sidewalk"),
which shall be available and open to the public;
(e) Lighting fixtures upon poles spaced approximately every 200 feet
along the Lakefront Sidewalk;
(f) Four (4) benches located in the vicinity of the Second Gate;
(g) Chain link fencing upon the Real Estate approximately along the
western and southern boundaries of the Premises to replace fencing removed
during construction of the Facilities;
(h) Landscaping within the Landscape/Sign Premises consisting of
timbers or an earth retaining wall and appropriate plantings;
Licensee shall cause the Improvements to be constructed at its sole cost and
expense, and the same shall be completed, free of any mechanic's liens and in
compliance with all requirements of law and all ordinances, regulations, rules
or orders of any public agency or authority relating thereto. Licensee shall
obtain, at its sole cost and expense, all permits, releases, licenses and
approvals necessary for the construction of the Improvements prior to the
commencement thereof, provided Licensor shall support and assist Licensee in the
pursuit and obtaining of same. Licensee shall indemnify and hold Licensor
harmless from and against any and all costs, expenses, liability, claims,
actions and causes of action actually incurred by Licensor and arising out of
Licensee's violation of any legal requirements arising out of the construction
of the Improvements. Subject to causes beyond Licensee's control, Improvements
shall be completed on or before December 31, 1996.
7. Additional Covenants of Licensee. Licensee covenants and agrees to (i)
extend curbing along the drive leading to Licensor's fenced parking areas in the
vicinity of the southeastern corner of the Real Estate immediately south of the
proposed First Gate as agreed to by the parties (ii) construct a pedestrian
sidewalk at the south end of the Real Estate as shown on the Map, (iii) install
and maintain grass landscaping upon the Real Estate in the immediate vicinity of
the Maintenance Building adjacent to the Parking Premises and (iv) fill in and
provide pavement to Licensor's loading dock located on the south end of the Real
Estate.
8. Insurance. Licensee agrees to provide the liability insurance specified
in that certain Hammond Riverboat Gaming Project Development Agreement among
Licensee, the City of Hammond, Indiana and the City of Hammond Department of
Redevelopment, and shall name the Licensor as an additional insured thereunder.
-3-
<PAGE>
9. Maintenance of Licensed Premises and Improvements. Licensee agrees,
during the term of this Agreement, to maintain and to make all repairs and
replacements reasonably necessary to keep the Licensed Premises, including the
Drive, and the improvements thereto or required hereunder (until such time as
the same are dedicated and accepted as public improvements) in clean and good
order, operation, condition and repair, subject to reasonable wear and tear and
damage by the elements. Other than the maintenance of the grass landscaping in
the immediate vicinity of the Maintenance Building required under subparagraph 7
(iii) hereof, Licensee shall have no maintenance responsibilities with respect
to any portion of the Real Estate outside the Licensed Premises. Licensee may
make alterations or improvements to the Licensed Premises consistent with the
permitted uses thereof, but shall not erect any structures within the Parking
Premises without Licensor's written consent. Licensee shall pay all utility
charges in connection with the Licensed Premises.
10. Approvals from Other Property Owners. To the extent that it is
determined that any improvement required to be made by Licensee hereunder is to
be made on property owned by a party other than Licensor, Licensee shall use
commercially reasonable efforts to obtain such easements, licenses, consents or
approvals as may be reasonably required for the construction of such
improvements, and Licensor shall support and assist Licensee in obtaining same.
11. Licensor's Right to Expand. Licensor retains the right to expand its
waterworks facilities on the Real Estate into the Licensed Premises, provided
that in the event any expansion involves the taking back of any portion of the
Licensed Premises other than the Parking Premises, Licensor shall be required to
relocate such Licensed Premises so taken, and the Improvements thereto
(including the letting of bids and contracting therefor), such that the area or
use of the Licensed Premises or the Improvements is not reduced or diminished,
which relocation may require filling in portions of Lake Michigan as necessary,
and Licensor covenants to take all action required to accomplish such
relocation. Licensee shall be required to pay one-half (1/2) of the cost of such
relocation.
12. Licensee's Fight to Terminate with Respect to Parking Premises.
Licensee shall have the right to terminate this Agreement with respect to the
Parking Premises at any time during the term hereof by giving written notice to
Licensor of its election to so terminate, and thereafter the parties shall have
no further obligations hereunder with respect to the Parking Premises.
13. Licensor's Right to Terminate with Respect to Parking Premises. In
addition to Licensor's right to terminate this Agreement in the event of a
default by Licensee hereunder, Licensor shall have the right, subject to
Licensee's right to continue the Agreement as permitted in this paragraph, to
terminate this Agreement with respect to the Parking Premises only upon the
expansion of Licensor's facility located adjacent to the Parking Premises into
the Parking Premises and only at such time as the expansion takes place.
Licensor shall notify the Licensee in writing at least sixty (60) days in
advance of its intention to expand such facility and specifying the amount of
the Parking Premises to be taken on account of such expansion and the date that
construction of such expansion shall commence. Licensee may elect to continue
this
-4-
<PAGE>
Agreement with respect to that portion of the Parking Premises not taken for
such expansion by giving written notice to Licensor of such election.
14. Default. For breach of this Agreement by Licensee, Licensor may
terminate this Agreement upon thirty (30) days written notice in the event
Licensee fails to keep or perform any covenant required to be performed
hereunder by Licensee and fails to cure such failure within thirty (30) days
after receipt of written notice thereof, provided that such cure period shall be
extended as long as Licensee has commenced to cure such default within said
thirty (30) day period and diligently pursues such cure to completion. Upon such
termination, the parties shall have no further obligations hereunder.
15. Notices. Any notices to be given hereunder shall be deemed given when
in writing and (a) actually served on the party to be notified or (b) placed in
an envelope directed to the party to be notified at the following addresses and
deposited in the United States mail by certified or registered mail, postage
prepaid:
If to Licensor at: DEPARTMENT OF WATERWORKS OF THE CITY OF HAMMOND
and THE CITY OF HAMMOND, INDIANA, BY AND THROUGH
ITS DEPARTMENT OF WATERWORKS
6505 Columbia Avenue
Hammond, Indiana 46320
If to Licensee at: Empress Casino Hammond Corporation
825 Empress Drive
Hammond, Indiana 46320
Attention: General Manager
with copies to: Empress River Casino Corporation
P.O. Box 2789
Joliet, Illinois 60434-2789
Attention: Michael W. Hansen
Ice Miller Donadio & Ryan
One American Square
Box 82001
Indianapolis, Indiana 46282-0002
Attention: Phillip L. Bayt
Such addresses may be changed by either party by written advice as to the new
address given as above provided.
16. Assignment. Licensee shall have the right to assign its right, title
and interest in the Licensed Premises and this Agreement with Licensor's consent
to any entity that is granted a Gaming License with respect to the Facilities,
provided Licensor's consent shall not be unreasonably withheld, conditioned or
delayed.
-5-
<PAGE>
17. Governing Law. This Agreement shall be governed by the laws of the
State of Indiana.
18. Running with the Land. This Agreement shall be deemed a license coupled
with an interest that touches and concerns and shall run with Licensor's
interest in the Real Estate and shall be binding upon and inure to the benefit
of the successors and assigns of the parties hereto and in the case of Licensee,
this Agreement shall inure to Licensee and the tenants of the Facilities and
their respective agents, employees, patrons, invitees and licensees.
19. Licensor's Covenants. Licensor hereby covenants that it is the owner in
fee simple of the Real Estate, is lawfully seized thereof and has a good right
to grant the license herein granted, that the Licensed Premises is free from any
and all liens and encumbrances, except for those which are apparent or appearing
of public record, any covenants, conditions or restrictions of record, a certain
license agreement between Licensor and the Hammond Port Authority to a 24 foot
(24') area providing the Port Authority with access to its fuel tanks (the
rights of which do not interfere with the rights granted hereunder) and real
estate taxes not yet due and payable. The undersigned persons executing this
Agreement on behalf of Licensor represent and certify that they are duly elected
or appointed officers of Licensor and have been fully empowered, by proper
resolution of Licensor or otherwise, to execute and deliver this Agreement; that
Licensor has full capacity to enter into this Agreement; and that all necessary
action for the execution and delivery of this Agreement has been taken and done.
20. Recording. This License Agreement or a memorandum thereof may be
recorded by Licensee, at its expense, in the real estate records of Lake County,
Indiana.
21. Hours of Use. Licensee may use the Licensed Premises twenty-four (24)
hours each day the Facilities shall be open.
22. Dedication. The parties agree that the portion of the Licensed Access
Premises, the roadway lying west of the Licensed Access Premises to the main
entrance of the Facilities, commonly known or to be known as Empress Drive and
the sidewalk along Empress Drive, all as depicted on the Map in cross-hatching
shall be dedicated to the public upon the request of the governmental authority
having jurisdiction thereover, and the parties agree to cooperate in the
dedication of such portion of the Premises to such authority. Pending such
dedication Licensor grants to Licensee a license over that portion of Empress
Drive lying west of the Licensed Access Premises upon the same terms and
conditions hereof. Following the acceptance by the applicable governing
authority of such dedication, this Agreement and the license provided hereunder
shall terminate with respect to the area so dedicated and accepted.
23. Department's Access. The Department shall have access to the Licensed
Premises at all times for any reasonable purpose.
24. Taxes. The Commission shall require the Developer to pay when due and
payable all taxes which are assessed with respect to the Licensed Premises.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
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<PAGE>
"Licensor"
DEPARTMENT OF WATERWORKS OF THE
CITY OF HAMMOND
By: /s/ ROBERT S. KOTSO
------------------------------------
Robert S. Kotso
President Board of Directors
------------------------------------
(printed name and title)
Attest:
/s/ CHESTER SMITHERS
-------------------------
Chester Smithers SEC.
-------------------------
(printed name and title)
STATE OF INDIANA )
) SS:
COUNTY OF LAKE )
Before me, a Notary Public in and for said County and State, personally
appeared ROBERT KOTSO and CHESTER SMITHERS, the President and Secretary,
respectively of the Board of Directors of the Department of Waterworks of the
City of Hammond, a municipal corporation, who acknowledged the execution of the
foregoing License Agreement as such officers acting for and on behalf of the
Department of Waterworks of the City of Hammond.
Witness my hand and notarial seal this 20th day of June, 1996.
/s/ IDA DESATNICK
----------------------------------------
Notary Public
Ida Desatnick
----------------------------------------
Printed Name
My Commission expires: 1-13-00 My County of Residence is: Lake
-7-
<PAGE>
CITY OF HAMMOND, INDIANA, BY AND
THROUGH ITS DEPARTMENT OF WATERWORKS
By: /s/ ROBERT S. KOTSO
------------------------------------
Robert S. Kotso
President Board of Directors
------------------------------------
(printed name and title)
Attest:
/s/ CHESTER SMITHERS
-------------------------
Chester Smithers SEC.
-------------------------
(printed name and title)
STATE OF INDIANA )
) SS:
COUNTY OF LAKE )
Before me, a Notary Public in and for said County and State, personally
appeared ROBERT KOTSO and CHESTER SMITHERS, the President and Secretary,
respectively of the Board of Directors of the Department of Waterworks of the
City of Hammond, Indiana, a municipal corporation, who acknowledged the
execution of the foregoing License Agreement as such officers acting for and on
behalf of the City of Hammond, acting by and through its Department of
Waterworks.
Witness my hand and notarial seal this 20th day of June, 1996.
/s/ IDA DESATNICK
----------------------------------------
Notary Public
Ida Desatnick
----------------------------------------
Printed Name
My Commission expires: 1-13-00 My County of Residence is: Lake
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R
<PAGE>
"Licensee"
EMPRESS CASINO HAMMOND CORPORATION
By: /s/ MICHAEL W. HANSEN
------------------------------------
Michael W. Hansen, Vice-President
------------------------------------
(printed name and title)
STATE OF INDIANA )
) SS:
COUNTY OF LAKE )
Before me, a Notary Public in and for said County and State, personally
appeared MICHAEL W. HANSEN, the Vice President of Empress Casino Hammond
Corporation, who acknowledged the execution of the foregoing License Agreement
as such officer acting for and on behalf of said corporation.
Witness my hand and notarial seal this 20th day of June, 1996.
/s/ C JEROME SMITH
----------------------------------------
Notary Public
C Jerome Smith
----------------------------------------
Printed Name
My Commission expires: 12-16-98 My County of Residence is: Lake
This instrument was prepared by James B. Burroughs, Ice Miller Donadio & Ryan,
One American Square, Box 82001, Indianapolis, Indiana 46282; Telephone
(317) 236-2100.
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<PAGE>
Exhibit A
Real Estate
PART OF THE NORTHWEST QUARTER OF SECTION 6, TOWNSHIP 37 NORTH, RANGE 9 WEST OF
THE SECOND PRINCIPAL MERIDIAN, IN LAKE COUNTY, INDIANA, MORE PARTICULARLY
DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE EAST LINE OF U.S.
GOVERNMENT LOT 1 AND THE NORTH LINE OF THE 66 FOOT RIGHT OF WAY OF THE CHICAGO,
LAKE SHORE AND EASTERN RAILWAY (NOW THE ELGIN, JOLIET AND EASTERN RAILROAD), AS
LOCATED IN SAID U.S. GOVERNMENT LOT 1; THENCE NORTH ON SAID EAST LINE OF U.S.
GOVERNMENT LOT 1, A DISTANCE OF 215.38 FEET; THENCE NORTH 41 DEGREES 09 MINUTES
00 SECONDS EAST, A DISTANCE OF 381.14 FEET; THENCE NORTH 53 DEGREES 49 MINUTES
00 SECONDS WEST, A DISTANCE OF 247.27 FEET; THENCE NORTH 33 DEGREES 20 MINUTES
12 SECONDS EAST, A DISTANCE OF 356.40 FEET; THENCE NORTH 07 DEGREES 58 MINUTES
41 SECONDS WEST, A DISTANCE OF 55.89 FEET; THENCE NORTH 53 DEGREES 43 MINUTES
37 SECONDS WEST, A DISTANCE OF 90.00 FEET; THENCE NORTH 53 DEGREES 43 MINUTES 37
SECONDS WEST, A DISTANCE OF 110.00 FEET; THENCE SOUTH 36 DEGREES 10 MINUTES 42
SECONDS WEST, A DISTANCE OF 799.93 FEET; THENCE ON A CURVE TO THE LEFT, SAID
CURVE HAVING A RADIUS OF 2,814.93 FEET AND A CENTRAL ANGLE OF 13 DEGREES 30
MINUTES, A DISTANCE OF 392.79 FEET TO AN IRON ROD; THENCE SOUTH 53 DEGREES, 42
MINUTES 00 SECONDS EAST, A DISTANCE OF 178.65 FEET TO AN IRON ROD; THENCE SOUTH
00 DEGREES 00 MINUTES 30 SECONDS WEST, A DISTANCE OF 42.18 FEET TO AN IRON ROD;
THENCE SOUTH 53 DEGREES 42 MINUTES 30 SECONDS EAST, A DISTANCE OF 306.35 FEET TO
THE POINT OF BEGINNING.
EXCEPTING THEREFROM THE FOLLOWING DESCRIBED REAL ESTATE:
A PART OF THE NORTHWEST QUARTER OF SECTION 6, TOWNSHIP 37 NORTH, RANGE 9 WEST,
LOCATED IN NORTH TOWNSHIP, LAKE COUNTY, INDIANA, BEING BOUNDED AS FOLLOWS:
COMMENCING AT THE SOUTHEAST CORNER OF THE SOUTHEAST QUARTER OF SECTION 1,
TOWNSHIP 37 NORTH, RANGE 10 WEST; THENCE NORTH 01 DEGREE 01 MINUTE 03 SECOND
WEST (ASSUMED BEARING) 4,209.68 FEET ALONG THE EAST LINE OF SAID SECTION 1 AND
ALONG THE WEST LINE OF SECTION 6, TOWNSHIP 37 NORTH, RANGE 9 WEST; THENCE SOUTH
41 DEGREES 13 MINUTES 34 SECONDS EAST 61.96 FEET; THENCE SOUTH 41 DEGREES 13
MINUTES 34 SECONDS EAST 90.30 FEET TO THE POINT OF CURVATURE OF A CURVE TO THE
LEFT, SAID POINT OF CURVATURE BEING SOUTH 48 DEGREES 46 MINUTES 26 SECONDS WEST
2,814.93 FEET FROM THE RADIUS POINT OF SAID CURVE; THENCE SOUTHEASTERLY 229.76
FEET ALONG SAID CURVE TO A POINT BEING SOUTH 44 DEGREES 05 MINUTES 50 SECONDS
WEST 2,814.93 FEET FROM THE RADIUS POINT OF SAID CURVE; THENCE NORTH 35 DEGREES
17 MINUTES 10 SECONDS EAST
<PAGE>
831.29 FEET; THENCE NORTH 79 DEGREES 22 MINUTES 58 SECONDS EAST 71.38 FEET;
THENCE SOUTH 54 DEGREES 36 MINUTES 55 SECONDS EAST 100.48 FEET TO THE POINT OF
BEGINNING OF THIS DESCRIPTION; THENCE CONTINUING SOUTH 54 DEGREES 36 MINUTES 55
SECONDS EAST 146.67 FEET; THENCE SOUTH 35 DEGREES 16 MINUTES 41 SECONDS WEST
523.46 FEET; THENCE NORTH 54 DEGREES 35 MINUTES 11 SECONDS WEST 236.35 FEET;
THENCE SOUTH 35 DEGREES 15 MINUTES 53 SECONDS WEST 349.92 FEET; THENCE NORTH 46
DEGREES 40 MINUTES 28 SECONDS WEST 20.88 FEET; THENCE NORTH 35 DEGREES 17
MINUTES 10 SECONDS EAST 780.38 FEET; THENCE SOUTH 54 DEGREES 36 MINUTES 55
SECONDS EAST 110.00 FEET; THENCE NORTH 35 DEGREES 23 MINUTES 05 SECONDS EAST
90.00 FEET TO THE POINT OF BEGINNING.
<PAGE>
Exhibit B
Licensed Premises
<PAGE>
Licensed Access Premises
LAND DESCRIPTION
Redevelopment Commission Sublease
Water Department Perimeter Road
version 3
05 JUN 96
A 32.00 foot-wide strip of land being a part of the Northwest Quarter of Section
6, Township 37 North, Range 9 West located in North Township, Lake County,
Indiana the centerline of which is described as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,091.63 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West to a point on
a non-tangent curve concave to the northeast, said point being South 38 degrees
59 minutes 01 second West 1,637.02 feet from the radius point of said curve;
thence southeasterly 62.23 feet along said curve to its point of tangency, said
point of tangency being South 36 degrees 48 minutes 21 seconds West 1,637.02
feet from the radius point of said curve; thence South 53 degrees 11 minutes 39
seconds East 650.47 feet to the point of curvature of a curve to the left, said
point of curvature being South 36 degrees 48 minutes 21 seconds West 2,864.79
feet from the radius point of said curve; thence southeasterly 84.09 feet along
said curve to its point of tangency, said point of tangency being South 35
degrees 07 minutes 27 seconds West 2,864.79 feet from the radius point of said
curve; thence South 54 degrees 52 minutes 33 seconds East 325.80 feet to the
point of curvature of a curve to the left and to the POINT OF BEGINNING of this
description, said point of curvature being South 35 degrees 07 minutes 27
seconds West 55.00 feet from the radius point of said curve; thence
southeasterly, easterly, northeasterly, northerly, and northwesterly 142.07 feet
along said curve to its point of tangency, said point of tangency being North 67
degrees 07 minutes 27 seconds East 55.00 feet from the radius point of said
curve; thence North 22 degrees 52 minutes 33 seconds West 53.74 feet to the
point of curvature of a curve to the right, said point of curvature being South
67 degrees 07 minutes 27 seconds West 55.00 feet from the radius point of said
curve; thence northwesterly, northerly, and northeasterly 56.62 feet along said
curve to its point of tangency, said point of tangency being North 53 degrees 53
minutes 40 seconds West 55.00 feet from the radius point of said curve; thence
North 36 degrees 06 minutes 20 seconds East 270.31 feet to the point of
curvature of a curve left, said point of curvature being South 53 degrees 53
minutes 40 seconds East 40.00 feet from the radius point of said curve; thence
northeasterly, northerly, and northwesterly 63.49 feet along said curve to its
point of tangency, said point of tangency being North 35 degrees 09 minutes 56
seconds East 40.00 feet from the radius point of said curve; thence North 54
degrees 50 minutes 04 seconds West 117.95 feet to the point of curvature of a
curve to the right, said point of curvature being South 35 degrees 09 minutes 56
seconds West 40.00 feet from the radius point of said curve; thence
northwesterly, northerly, and northeasterly 60.84 feet along said curve to its
point of tangency, said point of tangency being North 57 degrees 40 minutes 52
seconds West 40.00 feet from the radius point of said curve; thence North 32
degrees 19 minutes 08 seconds East 330.68 feet to the point of curvature of a
curve to the left, said point of curvature being South 57 degrees 40 minutes 52
seconds East 40.00 feet from the radius point of said curve; thence
northeasterly, northerly, and northwesterly 60.76 feet along said curve to its
point of tangency, said point of tangency being North 35 degrees 17 minutes 10
seconds East 40.00 feet from the radius point of said curve; thence North 54
degrees 42 minutes 50 Seconds West 227.88 feet to the TERMINUS of this
centerline description. Containing 1.017 acres, more or less.
Excepting therefrom the property described on the following two (2) pages
<TABLE>
<CAPTION>
CURVE #1 CURVE #2 CURVE #3
-------- -------- --------
<S> <C> <C>
/\ = 02/o/10'41" /\ = 01/o/40'54" /\ = 148/o/00'00"
R = 1637.02' R = 2864.79' R = 55.00'
T = 31.12' T = 42.05' T = 191.81'
L = 62.23' L = 84.09' L = 142.07'
C = S52/o/06'19"E-62.22' C = S54/o/02'06"E-84.08' C = N51/o/07'27"E-105.74'
CURVE #4 CURVE #5 CURVE #6
-------- -------- --------
/\ = 58/o/58'53" /\ = 90/o/56'23" /\ = 87/o/09'12"
R = 55.00' R = 40.00' R = 40.00'
T = 31.11' T = 40.66' T = 38.06'
L = 56.62' L = 63.49' L = 60.84'
C = N06/o/36'53"E-54.15' C = N09/o/21'52"W-57.03' C = N11/o/15'28"W-55.15'
CURVE #7
--------
/\ = 87/o/01'58"
R = 40.00'
T = 37.98'
L = 60.76'
C = N11/o/11'51"W-55.09'
</TABLE>
- --------------------------------------------------------------------------------
AMERICAN CONSULTING ENGINEERS, INC.
4165 Millersville Road
INDIANAPOLIS INDIANA
(317) 547-5580 (C) Copyright 1996 46205-2998
DATE: May 28, 1996
DRAWN BY: CMM
JOB NO. 94-290
SHEET NO. 1 of 3
<PAGE>
LAND DESCRIPTION
Redevelopment Commission Sublease
Water, Department Perimeter Road
version 2
24 MAY 96
A 32.00 foot-wide strip of land being a part of the Northwest Quarter of Section
6, Township 37 North, Range 9 West located in North Township, Lake County,
Indiana the centerline of which is described as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,091,63 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West to a point on
a non-tangent curve concave to the northeast, said point being South 38 degrees
59 minutes 01 West 1,637.02 feet from the radius point of said curve; thence
southeasterly 62.23 feet along said curve to its point of tangency, said point
of tangency being South 36 degrees 48 minutes 21 seconds West 1,637,02 feet from
the radius point of said curve; thence South 53 degrees 11 minutes 39 seconds
East 650.47 feet to the point of curvature of a curve to the left, said point of
curvature being South 36 degrees 48 minutes 21 seconds West 2,864.79 feet from
the radius point of said curve; thence southeasterly 84.09 feet along said
curve to its point of tangency, said point of tangency being South 35 degrees 07
minutes 27 seconds West 2,864.79 feet from the radius point of said curve;
thence South 54 degrees 52 minutes 33 seconds East 325.80 feet to the point of
curvature of a curve to the left, said point of curvature being South 35 degrees
07 minutes 27 seconds West 55.00 feet from the radius point of said curve;
thence southeasterly, easterly, northeasterly, northerly, and northwesterly
142.07 feet along said curve to its point of tangency, said point of tangency
being North 67 degrees 07 minutes 27 seconds East 55.00 feet from the radius
point of said curve; thence North 22 degrees 52 minutes 33 seconds West 53.74
feet to the point of curvature of a curve to the right, said point of curvature
being South 67 degrees 07 minutes 27 seconds West 55.00 feet from the radius
point of said curve; thence northwesterly, northerly, and northeasterly 56.62
feet along said curve to its point of tangency, said point of tangencey being
North 53 degrees 53 minutes 40 seconds West 55.00 feet from the radius point of
said curve; thence North 36 degrees 06 minutes 20 seconds East 15.67 feet to the
POINT OF BEGINNING of this centerline description; thence North 36 degrees 06
minutes 20 seconds East 254.64 feet to the point of curvature or a curve left,
said point of curvature being South 53 degrees 53 minutes 40 seconds East 40.00
feet from the radius point of said curve; thence northeasterly,
<PAGE>
northerly, and northwesterly 63,49 feet along said curve to its point of
tangency, said point of tangency being North 35 degrees 09 minutes 56 seconds
East 40.00 feet from the radius point of said curve; thence North 54 degrees 50
minutes 04 seconds West 117.95 feet to the point of curvature of a curve to the
right, said point of curvature being South 35 degrees 09 minutes 56 seconds West
40.00 feet from the radius point of said curve; thence northwesterly, northerly,
and northeasterly 60.84 feet along said curve to its point of tangency, said
pint of tangency being North 57 degrees 40 minutes 52 seconds West 40.00 feet
from the radius point of said curve; thence North 32 degrees 19 minutes 08
seconds East 330.68 feet to the point of curvature of a curve to the left, said
point of curvature being South 57 degrees 40 minutes 52 seconds East 40.00 feet
from the radius point of said curve; thence northeasterly, northerly, and
northwesterly 60.76 feet along said curve to its point of tangency, said point
of tangency being North 35 degrees 17 minutes 10 seconds East 40.00 feet from
the radius point of said curve; thence North 54 degrees 42 minutes 50 seconds
West 227.88 feet to the TERMINUS of this centerline description. Containing
0.820 acres, more or less.
<PAGE>
LAND DESCRIPTION
parking premises
Hammond Water Works
version 2
14 JUN 96
A part of the Northwest Quarter of Section 6, Township 37 North, Range 9 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,091.63 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West to a point on
a non-tangent curve concave to the northeast, said point being South 38 degrees
59 minutes 01 second West 1,637.02 feet from the radius point of said curve;
thence southeasterly 62.23 feet along said curve to its point of tangency, said
point of tangency being South 36 degrees 48 minutes 21 seconds West 1,637.02
feet from the radius point of said curve; thence South 53 degrees 11 minutes 39
seconds East 273.37 feet; thence North 35 degrees 17 minutes 19 seconds East
178.74 feet; thence South 54 degrees 42 minutes 50 seconds East 19.00 feet to
the POINT OF BEGINNING of this description; thence South 54 degrees 42 minutes
50 seconds East 107.00 feet; thence South 35 degrees 17 minutes 10 seconds West
78.47 feet; thence North 54 degrees 42 minutes 50 seconds West 107.00 feet;
thence North 35 degrees 17 minutes 10 seconds East 78.47 feet to the POINT OF
BEGINNING containing 0.193 acres, more or less.
<PAGE>
LAND DESCRIPTION
parking premises
Hammond Water Works
version 2
14 JUN 96
A part of the Northwest Quarter of Section 6, Township 37 North, Range 9 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,091.63 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West to a point on
a non-tangent curve concave to the northeast, said point being South 38 degrees
59 minutes 01 second West 1,637.02 feet from the radius point of said curve;
thence southeasterly 62.23 feet along said curve to its point of tangency, said
point of tangency being South 36 degrees 48 minutes 21 seconds West 1,637.02
feet from the radius point of said curve; thence South 53 degrees 11 minutes 39
seconds East 273.37 feet; thence North 35 degrees 17 minutes 19 seconds East
178.74 feet; thence South 54 degrees 42 minutes 50 seconds East 19.00 feet to
the POINT OF BEGINNING of this description; thence South 54 degrees 42 minutes
50 seconds East 107.00 feet; thence South 35 degrees 17 minutes 10 seconds West
78.47 feet; thence North 54 degrees 42 minutes 50 seconds West 107.00 feet;
thence North 35 degrees 17 minutes 10 seconds East 78.47 feet to the POINT OF
BEGINNING containing 0.193 acres, more or less.
CURVE #1
(TRIANGLE) = 02/o/10'41"
R = 1637.02'
T = 31.12'
L = 62.23'
C = S52/o/06'19/o/E- 62.22'
- --------------------------------------------------------------------------------
AMERICAN CONSULTING ENGINEERS, INC. DATE: JUNE 6, 1996
4165 Millersville Road -------------------------
INDIANAPOLIS INDIANA DRAWN BY: CMM
(317)547-5580 46205-2998 -------------------------
(C) Copyright 1996
JOB NO. 94-290
- --------------------------------------------------------------------------------
SHEET NO. 1 OF 2
<PAGE>
[MAP APPEARS HERE]
- --------------------------------------------------------------------------------
AMERICAN CONSULTING ENGINEERS, INC. DATE: JUNE 6, 1996 SHEET NO.
4165 Millersville Road DRAWN BY: CMM 2
INDIANAPOLIS INDIANA JOB NO. 94-290 of
(317) 547-5580 (C) Copyright 1996 46205-2998 2
- --------------------------------------------------------------------------------
<PAGE>
LAND DESCRIPTION
landscape/sign premises
version 1
6 JUN 96
A part of the Northwest Quarter of Section 6, Township 37 North, Range 9 West
located in North Township, Lake County, Indiana being bounded as follows:
Commencing at the Southeast Corner of the Southeast Quarter of Section 1,
Township 37 North, Range 10 West; thence, North 01 degree 01 minute 03 seconds
West (assumed bearing) 4,091.63 feet along the East Line of said Section 1 and
along the West Line of Section 6, Township 37 North, Range 9 West to a point on
a non-tangent curve concave to the northeast, said point being South 38 degrees
59 minutes 01 second West 1,637.02 feet from the radius point of said curve;
thence southeasterly 62.23 feet along said curve to its point of tangency, said
point of tangency being South 36 degrees 48 minutes 21 seconds West 1,637.02
feet from the radius point of said curve; thence South 53 degrees 11 minutes 39
seconds East 650.47 feet to the point of curvature of a curve to the left, said
point of curvature being South 36 degrees 48 minutes 21 seconds West 2,864.79
feet from the radius point of said curve; thence southeasterly 84.09 feet along
said curve to its point of tangency, said point of tangency being South 35
degrees 07 minutes 27 seconds West 2,864.79 feet from the radius point of said
curve; thence South 54 degrees 52 minutes 33 seconds East 325.80 feet to the
point of curvature of a curve to the left, said point of curvature being South
35 degrees 07 minutes 27 seconds West 55.00 feet from the radius point of said
curve; thence southeasterly, easterly, northeasterly, northerly, and
northwesterly 142.07 feet along said curve to its point of tangency, said point
of tangency being North 67 degrees 07 minutes 27 seconds East 55.00 feet from
the radius point of said curve; thence North 22 degrees 52 minutes 33 seconds
West 53.74 feet to the point of curvature of a curve to the right, said point of
curvature being South 67 degrees 07 minutes 27 seconds West 55.00 feet from the
radius point of said curve; thence northwesterly, northerly, and northeasterly
56.62 feet along said curve to its point of tangency, said point of tangency
being North 53 degrees 53 minutes 40 seconds West 55.00 feet from the radius
point of said curve; thence North 36 degrees 06 minutes 20 seconds East 270.31
feet to the point of curvature of a curve left, said point of curvature being
South 53 degrees 53 minutes 40 seconds East 40.00 feet from the radius point of
said curve; thence northeasterly, northerly. and northwesterly 63.49 feet along
said curve to its point of tangency, said point of tangency being North 35
degrees 09 minutes 56 seconds East 40.00 feet from the radius point of said
curve; thence North 54 degrees 50 minutes 04 seconds West 117.95 feet to the
point of curvature of a curve to the right, said point of curvature being South
35 degrees 09 minutes 56 seconds West 40.00 feet from the radius point of said
curve; thence northwesterly, northerly, and northeasterly 60.84 feet along said
curve to its point of tangency, said point of tangency being North 57 degrees 40
minutes 52 seconds West 40.00 feet from the radius point of said curve; thence
North 32 degrees 19 minutes 08 seconds East 330.68 feet to the point of
curvature of a curve to the left, said point of curvature being South 57 degrees
40 minutes 52 seconds East 40.00 feet from the radius point of said curve;
thence northeasterly, northerly, and northwesterly 60.76 feet along said curve
to its point of tangency, said point of tangency being North 35 degrees 17
minutes 10 seconds East 40.00 feet from the radius point of said curve; thence
South 35 degrees 17 minutes 10 seconds West 16.00 along the radius line of said
curve to the POINT OF BEGINNING of this description; thence South 35 degrees 17
minutes 10 seconds West 15.00 feet along the radius line of said curve; thence
North 54 degrees 42 minutes 50 seconds West 227.88 feet; thence North 35 degrees
16 minutes 41 seconds East 15.00 feet; thence South 54 degrees 42 minutes 50
seconds East 227.88 feet to the POINT OF BEGINNING containing 0.078 acres, more
or less.
CURVE #1 CURVE #2
(TRIANGLE) = 02/o/10'41" (TRIANGLE) = 01/o/40'54"
R = 1637.02' R = 2864.79'
T = 31.12' T = 42.05'
L = 62.23' L = 84.09'
C = S52/o/06'19'E- 62.22' C = S54/o/02'06'E- 84.08'
CURVE #3 CURVE #4
(TRIANGLE) = 148/o/00'00' (TRIANGLE) = 58/o/58'53"
R = 55.00 R = 55.00'
T = 191.81' T = 31.11'
L = 142.07' L = 56.62'
C = N51/o/07'27"E-105.74' C = N06/o/36'53"E-54.15'
CURVE #5 CURVE #6
(TRIANGLE) = 90/o/56'23" (TRIANGLE) = 87/o/09'12"
R = 40.00' R = 40.00'
T = 40.66' T = 38.06'
L = 63.49' L = 60.84'
C = N09/o/'52"W-57.03' C = N11/o/'28"W-55.15'
CURVE #7
(TRIANGLE) = 87/o/01'58"
R = 40.00
T = 37.98'
L = 60.76'
C = N11/o/11'51"W-55.09'
- --------------------------------------------------------------------------------
AMERICAN CONSULTING ENGINEERS, INC. DATE: JUNE 6, 1996
4165 Millersville Road -------------------------
INDIANAPOLIS INDIANA DRAWN BY: CMM
(317)547-5580 46205-2998 -------------------------
(C) Copyright 1996
JOB NO. 94-290
- --------------------------------------------------------------------------------
SHEET NO. 1 OF 3
<PAGE>
[MAP APPEARS HERE]
- --------------------------------------------------------------------------------
AMERICAN CONSULTING ENGINEERS, INC. DATE: JUNE 6, 1996 SHEET NO.
4165 Millersville Road DRAWN BY: CMM 2
INDIANAPOLIS INDIANA JOB NO. 94-290 of
(317) 547-5580 (C) Copyright 1996 46205-2998 3
- --------------------------------------------------------------------------------
<PAGE>
[MAP APPEARS HERE]
- --------------------------------------------------------------------------------
AMERICAN CONSULTING ENGINEERS, INC. DATE: JUNE 6, 1996 SHEET NO.
4165 Millersville Road DRAWN BY: CMM 3
INDIANAPOLIS INDIANA JOB NO. 94-290 of
(317) 547-5580 (C) Copyright 1996 46205-2998 3
- --------------------------------------------------------------------------------
<PAGE>
[MAP OF EXHIBIT APPEARS HERE]
<PAGE>
EXHIBIT 10.14
AGREEMENT
---------
This Employment Agreement ("Agreement") is entered into on March 7, 1997
between Empress Casino Hammond Corporation, an Indiana corporation, 825 Empress
Drive, Hammond, Indiana 46320 hereinafter referred to as the "Company," and
Peter A. Ferro, Jr., 19941 West Manhattan Road, Elwood, Illinois 60421,
hereinafter referred to as the "Employee," to be effective as of January 1,
1997.
RECITALS:
WHEREAS, Employee and the Company wish to enter into an agreement
containing the terms and conditions of Employee's employment as President and
Chief Executive Officer of the Company.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties agree as follows:
1. DUTIES. The Employee shall serve as President and Chief Executive
Officer of the Company. As such, the Employee shall have the responsibilities
and duties as set forth in the bylaws of the Company and such other duties
commensurate with the position of president and chief executive officer of
entities comparable to the Company, including responsibility for implementing
all resolutions adopted by the Company's Board of Directors. The Employee shall
report regularly to the Board of Directors of the Company. The Company
acknowledges that the Employee presently serves as an officer and director of
other companies, and agrees that this Agreement shall not preclude the Employee
from such service and from engaging in other civic, charitable and gaming
industry activities.
2. TERM. Employment and compensation pursuant to this Agreement shall
begin on January 1, 1997, and shall continue until December 31, 1999.
3. COMPENSATION. For all services rendered by the Employee under this
Agreement, the Company shall pay the Employee an annual salary of Four Hundred
Thousand Dollars ($400,000), payable on the same timetable as the regular
payroll of the Company, less any salary earned by Employee from Empress Casino
Joliet Corporation.
4. OFFICE FACILITIES. The Company shall furnish the Employee with a
private office, supplies, secretarial assistance, equipment, and such other
facilities and services suitable to his position and adequate for the
performance of his duties.
5. EXPENSES. Employee is authorized, in carrying out his duties and
responsibilities hereunder, to make expenditures on behalf of the Company for
meetings, dues, journals, travel, entertainment, and appropriate gifts. The
Company will promptly reimburse the Employee for such expenditures upon his
compliance with the expense reimbursement policies of the Company in effect from
time to time.
<PAGE>
6. INDEMNIFICATION. Employee shall have the benefit of indemnification
as provided under applicable law and the bylaws of the Company on terms no less
favorable than the indemnification provided as of the date of this Agreement.
7. VACATIONS. Employee shall be entitled to thirty (30) vacation days
per calendar year. These vacation days shall be concurrent with and not in
addition to the vacation provided by Empress Casino Joliet Corporation.
Vacation days available but not used by Employee in a calendar year may not be
cumulated or carried over into subsequent years.
8. AUTOMOBILE. The Company shall provide Employee with a luxury
automobile selected by Employee for his exclusive use, unless such an automobile
is being supplied by Empress Casino Joliet Corporation. The automobile may be
replaced by Employee after it has been in service three years. Employee's
expenses of automobile maintenance, repair and insurance shall be reimbursed by
the Company in accordance with the expense reimbursement policies of the
Company. This provision shall be implemented as necessary to avoid duplication
of benefits provided by Empress Casino Joliet Corporation.
9. EMPLOYEE BENEFIT PLANS; FRINGE BENEFITS. Employee shall be entitled
to participate in all of the employee benefit plans and fringe benefits which
the Company makes available to its employees on the same terms and conditions as
any other executive level employee of the Company, except as otherwise provided
in this Agreement and except to the extent necessary to avoid duplication of
benefits provided by Empress Casino Joliet Corporation. To the extent Employee
is unable to perform the duties and responsibilities of his position by reason
of illness, accident, or incapacity during the term of this Agreement, his full
salary shall continue to be paid to him until such time as he receives payment
under the disability insurance benefit policy of the Company, the Company will
provide Employee with the Executive Health Program of his choice.
10. DEATH DURING EMPLOYMENT. If Employee dies during the term of this
Agreement, the Company shall continue to make all such payments required
hereunder to the estate of the Employee through the scheduled termination date
of this agreement.
11. EARLY TERMINATION. This Agreement shall terminate early upon the
occurrence of any one of the following events:
(a) Employee shall have his gaming license in Indiana suspended or
revoked.
(b) Employee shall fail a drug test administered by the Company.
(c) At least two-thirds of the Company's Board of Directors votes to
terminate Employee's employment with the Company.
(d) The Company's gaming license in Indiana is revoked or not renewed.
2
<PAGE>
(e) There is a change in control in the Company during the term of this
Agreement, consisting of either a sale or transfer of a majority equity interest
in the Company or the sale of a substantial portion of the assets of the
Company.
Notwithstanding termination due to (c), (d) or (e) above, the Company's
obligations to Employee under this Agreement, including all payments, shall
continue in full force and effect until December 31, 1999.
12. COMPANY OBLIGATIONS. In addition to all obligations of the Company
set forth in this Agreement, the Company shall comply with all of its
obligations to Employee in his capacity as a shareholder and director. The
Company agrees that, to the extent permitted by law, Employee shall receive
distributions from the Company in an amount sufficient to reimburse Employee for
income taxes payable on his share of the Company's income, such taxes to be
measured at the highest marginal tax rates.
13. WAIVER OF BREACH. The waiver by the Company or Employee of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by the Company or Employee.
14. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of both the Company and Employee and their respective successors,
assigns, heirs, and legal representatives, but neither this Agreement nor any
rights hereunder may be assigned by the Company or Employee without the written
consent of the other parties.
15. AMENDMENTS. No amendments or variations of the terms and conditions
of this Agreement shall be valid unless the same is in writing and signed by all
of the parties hereto.
16. SAVINGS CLAUSE. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not effect the validity and enforceability or any other provision hereof.
17. NOTICE. All notices provided for by this Agreement shall be in
writing and shall be transmitted either by actual delivery of the notice into
the hands of the parties hereunto entitled, or by the mailing of such notice in
the United States Mail to the last known address of the parties entitled thereto
by certified or registered mail, return receipt requested. The notice shall be
deemed to be received in case of actual delivery on the date of its actual
receipt by the parties entitled thereto and in case of delivery by mail on the
date of the return receipt.
18. GOVERNING LAW. This Agreement shall be governed both as to
interpretation and performance under the laws of the State of Indiana. This
Agreement is subject to review by the Indiana Gaming Commission and may be
subsequently disapproved or cancelled by the Indiana Gaming Commission in
accordance with applicable rules.
3
<PAGE>
19. CONFIDENTIALITY. The Company and the Employee agree not to disclose
the terms of this Agreement to any third party, except as may be required by
law. A copy of this Agreement shall be filed with the Indiana Gaming
Commission.
20. ALLOCATION. The Company and the Employee acknowledge that Employee is
presently serving as President and Chief Executive Officer of Empress Casino
Joliet Corporation and that the compensation and benefits earned by Employee
under this Agreement are not intended to duplicate the compensation and benefits
earned by Employee from Empress Casino Joliet Corporation. The Company will
cooperate with Empress Casino Joliet Corporation to fairly allocate costs and
expenses in the employment of Employee in a manner commensurate with the
relative efforts and time commitment provided by Employee to the Company and to
Empress Casino Joliet Corporation.
IN WITNESS WHEREOF, this Agreement has been executed by the Company and
Employee as of the date first written above.
EMPLOYEE:
EMPRESS CASINO HAMMOND
CORPORATION
/s/ Peter A. Ferro, Jr.
---------------------------------
Peter A. Ferro, Jr.
By: /s/ [SIGNATURE ILLEGIBLE]^^
----------------------------
Chairman of the Board
4
<PAGE>
EXHIBIT 10.15
AGREEMENT
---------
This Employment Agreement ("Agreement") is entered into on March 7, 1997
between Empress Casino Joliet Corporation, an Illinois corporation, 2300 Empress
Drive, Joliet, Illinois 60436 hereinafter referred to as the "Company," and
Peter A. Ferro, Jr., 19941 West Manhattan Road, Elwood, Illinois 60421,
hereinafter referred to as the "Employee," to be effective as of January 1,
1997.
RECITALS:
WHEREAS, Employee and the Company wish to enter into an agreement
containing the terms and conditions of Employee's employment as President and
Chief Executive Officer of the Company.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties agree as follows:
1. DUTIES. The Employee shall serve as President and Chief Executive
Officer of the Company. As such, the Employee shall have the responsibilities
and duties as set forth in bylaws of the Company and such other duties
commensurate with the position of president and chief executive officer of
entities comparable to the Company, including responsibility for implementing
all resolutions adopted by the Company's Board of Directors. The Employee shall
report regularly to the Board of Directors of the Company. The Company
acknowledges that the Employee presently serves as an officer and director of
other companies, and agrees that this Agreement shall not preclude the Employee
from such service and from engaging in other civic, charitable and gaming
industry activities.
2. TERM. Employment and compensation pursuant to this Agreement shall
begin on January 1, 1997, and shall continue until December 31, 1999.
3. COMPENSATION. For all services rendered by the Employee under this
Agreement, the Company shall pay the Employee an annual salary of Four Hundred
Thousand Dollars ($400,000), payable on the same timetable as the regular
payroll of the Company. This salary is exclusive of any contributions by the
Company for the benefit of Employee to any pension or profit sharing plans that
may now exist or as may hereafter be created, and any incentive compensation or
bonus payments that the Company may elect to pay to Employee, at its sole
discretion, at any time during the term of this Agreement.
4. OFFICE FACILITIES. The Company shall furnish the Employee with a
private office, supplies, secretarial assistance, equipment, and such other
facilities and services suitable to his position and adequate for the
performance of his duties.
5. EXPENSES. Employee is authorized, in carrying out his duties and
responsibilities hereunder, to make expenditures on behalf of the Company for
meetings, dues, journals, travel, entertainment, and appropriate gifts. The
Company shall reimburse the Employee for such expenditures upon his compliance
with the expense reimbursement policies of the Company.
<PAGE>
6. INDEMNIFICATION. Employee shall have the benefit of indemnification
as provided under applicable law and the bylaws of the Company on terms no less
favorable than the indemnification provided as of the date of this Agreement.
7. VACATIONS. Employee shall be entitled to thirty (30) vacation days
per calendar year. Vacation days available but not used by Employee in a
calendar year may not be cumulated or carried over into subsequent years.
8. AUTOMOBILE. The Company shall provide Employee with a luxury
automobile selected by Employee for his exclusive use. The automobile may be
replaced by Employee after it has been in service three years. Employee's
expenses of automobile maintenance, operation, repair and insurance shall be
reimbursed by the Company in accordance with the expense reimbursement policies
of the Company.
9. EMPLOYEE BENEFIT PLANS; FRINGE BENEFITS. Employee shall be entitled
to participate in all of the employee benefit plans and fringe benefits which
the Company makes available to its employees on the same terms and conditions as
any other executive level employee of the Company, except as otherwise provided
in this Agreement. To the extent Employee is unable to perform the duties and
responsibilities of his position by reason of illness, accident, or incapacity
during the term of this Agreement, his full salary shall continue to be paid to
him until such time as he receives payment under the disability insurance
benefit policy of the Company. The Company will provide Employee with the
Executive Health Program of his choice.
10. DEATH DURING EMPLOYMENT. If Employee dies during the term of this
Agreement, the Company shall continue to make all such payments required
hereunder to the estate of the Employee through the scheduled termination date
of this Agreement.
11. EARLY TERMINATION. This Agreement shall terminate early upon the
occurrence of any one of the following events:
(a) Employee shall have his gaming license in Illinois suspended or
revoked.
(b) Employee shall fail a drug test administered by the Company.
(c) At least two-thirds of the Company's Board of Directors votes to
terminate Employee's employment with the Company.
(d) The Company's gaming license in Illinois is revoked or not renewed.
(e) There is a change in control in the Company during the term of this
Agreement, consisting of either a sale or transfer of a majority equity interest
in the Company or the sale of a substantial portion of the assets of the
Company.
2
<PAGE>
Notwithstanding termination due to (c), (d) or (e) above, the Company's
obligations to Employee under this Agreement, including all payments, shall
continue in full force and effect until December 31, 1999.
12. WAIVER OF BREACH. The waiver by the Company or Employee of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by the Company or Employee.
13. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of both the Company and Employee and their respective successors,
assigns, heirs, and legal representatives, but neither this Agreement nor any
rights hereunder may be assigned by the Company or Employee without the written
consent of the other parties.
14. AMENDMENTS. No amendments or variations of the terms and conditions
of this Agreement shall be valid unless the same is in writing and signed by all
of the parties hereto.
15. SAVINGS CLAUSE. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not effect the validity and enforceability or any other provision hereof.
16. NOTICE. All notices provided for by this Agreement shall be in
writing and shall be transmitted either by actual delivery of the notice into
the hands of the parties hereunto entitled, or by the mailing of such notice in
the United States Mail to the last known address of the parties entitled thereto
by certified or registered mail, return receipt requested. The notice shall be
deemed to be received in case of actual delivery on the date of its actual
receipt by the parties entitled thereto and in case of delivery by mail on the
date of the return receipt.
17. GOVERNING LAW. This Agreement shall be governed both as to
interpretation and performance under the laws of the State of Illinois.
3
<PAGE>
18. CONFIDENTIALITY. The Company and the Employee agree not to disclose
the terms of this Agreement to any third party, except as may be required by
law. A copy of this Agreement shall be filed with the Illinois Gaming Board.
IN WITNESS WHEREOF, this Agreement has been executed by the Company and
Employee as of the date first written above.
EMPRESS CASINO JOLIET EMPLOYEE:
CORPORATION
By: /s/ [SIGNATURE ILLEGIBLE]^^ /s/ Peter A. Ferro, Jr.
---------------------------- -------------------------------
Chairman of the Board Peter A. Ferro, Jr.
4
<PAGE>
EXHIBIT 10.16
AGREEMENT
---------
This Agreement is entered into on March 7, 1997, between Empress Casino
Joliet Corporation ("Empress Joliet") and Empress Casino Hammond Corporation
("Empress Hammond"), to be effective as of January 1, 1997.
RECITALS
Each of the parties has entered into an Employment Agreement with Peter A.
Ferro, Jr. ("Employee") to serve as President and Chief Executive Officer.
The parties contemplate that Employee will not receive duplicative
compensation or benefits for his service; rather, based upon the relative
efforts expended for each entity, his compensation and benefits will be
allocated between Empress Joliet and Empress Hammond.
For good and valuable consideration, the receipt and sufficiency of which
acknowledged, the parties agree as follows:
1. Consent. Empress Joliet and Empress Hammond each consent to Employee
-------
serving as President and Chief Executive Officer of both entities concurrently.
2. Allocation. Empress Joliet and Empress Hammond shall mutually agree
----------
upon the appropriate allocation of compensation and benefits associated with
Employee's service based upon the degree of effort expended for each entity. In
the absence of an express agreement otherwise, the cost of Employee's
compensation and benefits shall be shared equally by Empress Joliet and Empress
Hammond. Amounts advanced by either party in excess of its allocable portion
shall be reimbursed by the other party immediately on request.
EMPRESS CASINO JOLIET EMPRESS CASINO HAMMOND
CORPORATION CORPORATION
By: /s/ Thomas J. Lambrecht By: /s/ Thomas J. Lambrecht
---------------------------- ----------------------------
Its: Chairman of the Board Its: Chairman of the Board
-------------------------- ---------------------------
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Exhibit 10.17
AGREEMENT
---------
This Employment Agreement ("Agreement") is entered into on June 12, 1997,
between Empress Casino Hammond Corporation, an Indiana corporation, 825 Empress
Drive, Hammond, Indiana 46320 hereinafter referred to as the "Company," and
Joseph J. Canfora, 825 Empress Drive, Hammond, Indiana 46320, hereinafter
referred to as the "Employee," to be effective as of June 23, 1997.
RECITALS:
WHEREAS, Employee and the Company wish to enter into an agreement
containing the terms and conditions of Employee's employment as President of
the Company.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties agree as follows:
1. DUTIES. The Employee shall serve as President of the Company. As
such, the Employee shall have the responsibilities and duties as set forth in
the bylaws of the Company and such other duties commensurate with the position
of president and chief operating officer of entities comparable to the Company,
including responsibility for implementing all resolutions adopted by the
Company's Board of Directors. During the term of this Agreement, Employee shall
devote his full business time and attention to the business affairs of the
Company and Empress Casino Joliet Corporation (with whom Employee is entering a
like employment agreement) and shall use his best efforts, skills and abilities
to promote the Company's interests. The Employee shall report regularly to the
Board of Directors of the Company. The Company agrees that this Agreement shall
not preclude the Employee from engaging in other civic, charitable and gaming
industry activities. In addition, subject to the approval of a majority of the
members of the Company's Board of Directors (which approval shall not be
withheld without reason), Employee may serve as a member of the board of
directors of corporations other than the Company.
2. TERM. The initial term of employment pursuant to this Agreement shall
begin on June 23, 1997, and, subject to the provisions hereof, shall continue
until the close of business on June 22, 2000. The term of this Agreement shall
be automatically extended thereafter for successive twelve (12) month periods,
provided that neither party has given written notice to the other party at least
one hundred and eighty (180) days prior to the end of the current term that such
term shall not be extended. The original termination date of June 22, 2000, and
any automatic extensions thereof shall be hereinafter defined as the "Next
Scheduled Termination Date."
3. COMPENSATION.
a. BASE SALARY. For all services rendered by the Employee under this
Agreement, the Company shall pay the Employee a base salary at the rate of Five
Hundred
<PAGE>
Thousand Dollars ($500,000) per year, payable on the same timetable as the
regular payroll of the Company, less any salary earned by Employee from Empress
Casino Joliet Corporation.
b. BONUS. In addition, the Company will pay to the Employee for each
fiscal year that the Employee is employed by the Company pursuant to this
Agreement, a bonus in an amount determined in accordance with Schedule A
attached hereto and incorporated herein by reference. This amount shall be
payable to Employee as soon as practicable after the completion of the audit of
the Company's books and records following the end of the Company's fiscal year.
In any year in which the Employee is not employed for a full fiscal year, the
Employee shall be entitled to receive a pro rata portion of the bonus which
would otherwise be payable, based on the number of days Employee was actually
employed during such year; provided, however, that if Employee is terminated for
"Cause" (as defined in Section 9) or if the Employee resigns, other than at the
expiration of the term of this Agreement, Employee shall not be entitled to a
pro rata bonus hereunder with respect to the year in which Employee's employment
terminates. In any year with respect to which (i) Employee is not employed on
the last day of such fiscal year and (ii) Employee is entitled to receive a pro
rata bonus, as described in the preceding sentence, the amount of such bonus,
prior to such pro ration, shall be the amount of Employee's bonus for the prior
fiscal year.
c. ADJUSTMENTS TO BASE SALARY AND BONUS. The Chief Executive Officer of
the Company may, in his sole discretion, increase (but not decrease) the
Employee's Base Salary and Bonus to take into account conditions outside the
control of Employee.
4. OFFICE FACILITIES. The Company shall furnish the Employee with a
private office, supplies, secretarial assistance, equipment, and such other
facilities and services suitable to his position and adequate for the
performance of his duties.
5. EXPENSES.
a. GENERAL. Employee is authorized, in carrying out his duties and
responsibilities hereunder, to make reasonable expenditures on behalf of the
Company for meetings, dues, journals, travel, entertainment, and appropriate
gifts. The Company will promptly reimburse the Employee for such expenditures
upon his compliance with the expense reimbursement policies of the Company in
effect from time to time.
b. RELOCATION EXPENSES. The Company agrees to reimburse Employee for
100% of his reasonable expenses incurred in relocating Employee and his
dependants from the Kansas City, Missouri area to the Chicago, Illinois area,
including but not limited to the cost of transporting household goods, the cost
of house hunting trips for Employee and Employee's spouse (including meals,
lodging and rental car), the cost of storing Employee's household goods until
such time as Employee finds permanent housing in the Chicago, Illinois area, and
the cost of transporting Employee, his dependents and any household pets to the
Chicago area. In addition, the Company agrees to pay or to reimburse Employee
for the cost of a real estate
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relocation service, such service to be mutually agreed upon, to guarantee the
sale of Employee's current residence at fair market value.
c. TEMPORARY HOUSING. The Company agrees to reimburse Employee for the
cost of temporary housing in the Chicago, Illinois area for a period not to
exceed ninety (90) days from the date of this Agreement, such reimbursement not
to exceed Fifteen Thousand Dollars ($15,000).
6. VACATIONS. Employee shall be entitled to twenty (20) vacation days
per calendar year (based on a five (5) day work week) to be taken in accordance
with the Company's normal vacation policies in effect from time to time;
provided, however, that vacation days available but not used by Employee in a
calendar year may not be cumulated or carried over into subsequent years. These
vacation days shall be concurrent with and not in addition to the vacation
provided by Empress Casino Joliet Corporation.
7. AUTOMOBILE. The Company shall provide Employee with, or reimburse
Employee for, a luxury automobile mutually selected by Employee and the Company,
for Employee's exclusive use. The automobile may be replaced by Employee after
it has been in service three years or, if leased, upon expiration of the lease.
Employee's expenses of automobile maintenance, repair and insurance shall be
reimbursed by the Company in accordance with the expense reimbursement policies
of the Company. This provision shall be implemented as necessary to avoid
duplication of benefits provided by Empress Casino Joliet Corporation.
8. EMPLOYEE BENEFIT PLANS; FRINGE BENEFITS.
a. GENERAL. Employee shall be entitled to participate in all of the
employee benefit plans and fringe benefits which the Company makes available to
its employees on the same terms and conditions as any other executive level
employee of the Company, except as otherwise provided in this Agreement and
except to the extent necessary to avoid duplication of benefits provided by
Empress Casino Joliet Corporation.
b. LIFE INSURANCE. During the term of this Agreement, including any
extensions thereof, the Company shall provide, subject to Employee's
insurability, Employee with a term life insurance policy, with the beneficiaries
to be designated by Employee, in addition to any life insurance benefits that
may be available to Employee under the terms of any group term life insurance
plan offered to employees of the Company generally, in an amount equal to
$4,000,000. In the event of the termination of Employee's employment with the
Company, Employee shall have the right, subject to the terms and conditions of
such policy, to assume and continue at his own expense such policy. This
provision shall be implemented as necessary to avoid duplication of benefits
provided by Empress Casino Joliet Corporation.
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9. TERMINATION.
a. CAUSE. This Agreement shall terminate without any liability to or
upon the Company other than to pay Base Salary for services rendered prior to
the date of termination and and Bonus for years prior to the year in which the
termination occurs, to the extent earned but not yet paid, if Employee is
terminated for "Cause." "Cause" shall be defined as: (i) Employee's theft or
embezzlement or attempted theft or embezzlement of money or tangible or
intangible assets or property of the Company or its employees; (ii) any act or
acts of moral turpitude by Employee materially injurious to the interest,
property, operations, business or reputation of the Company; (iii) Employee's
conviction of a felony materially injurious to the interest, property,
operations, business or reputation of the Company; (iv) gross negligence or
willful misconduct in the performance of Employee's duties; (v) Employee's
willful neglect of his duties under this Agreement; (viii) Employee's failure
to pass a drug test administered by the Company and/or failure to obtain,
suspension or revocation of Employee's gaming license in Indiana.
b. DEATH OR DISABILITY. In the event of the death or "Disability" of
Employee, this Agreement shall terminate without any liability to or upon the
Company other than (i) to pay Base Salary and earned benefits for services
rendered prior to the date of termination, and Bonus for years prior to the year
in which the termination occurs, to the extent earned but not yet paid, (ii) to
pay a pro rata Bonus determined as set forth in Section 3 for the year in which
the termination occurs; (iii) to make all payments of Base Salary required
hereunder to the Employee through the next Scheduled Termination Date of this
Agreement; and (iv) in the case of Disability, to continue to provide health
insurance to Employee under the health insurance program provided by the Company
to employees generally, from time to time, through the next Scheduled
Termination Date of this Agreement, provided that Employee makes any required
employee contributions therefor. Employee's right to continue health care
coverage under applicable law shall commence as of the date that Employee's
health care coverage under this Section 9. ends. "Disability" shall be defined
as Employee's inability, as determined reasonably and in good faith by the
Company, acting in consultation with a physician selected by it, to the extent
reasonably and in good faith necessary, due to illness, accident, injury,
physical or mental incapacity or other disability, effectively to carry out his
duties under this Agreement for ninety (90) consecutive days or shorter periods
aggregating ninety (90) days (whether or not consecutive) during any one-year
period.
c. RESIGNATION. In the event that Employee resigns his employment with
the Company, other than at the expiration of the term of this Agreement, the
Company shall have no liability other than to pay Base Salary and earned
benefits for services rendered prior to the date of resignation and Bonus for
years prior to the year in which the resignation occurs, to the extent earned
but not yet paid, and, except as required by applicable law, he shall not be
entitled to any compensation or benefits beyond his last day of employment.
Employee agrees to provide not less than sixty (60) days written notice to the
Company prior to his resignation.
d. TERMINATION WITHOUT CAUSE. If the Company terminates Employee's
employment for reasons other than Cause, death, Disability or Change in Control
(as defined in the
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Long-Term Incentive Agreement entered into between the parties), this Agreement
shall terminate, without any liability to or upon the Company other than (i) to
pay Base Salary and earned benefits for services rendered prior to the date of
termination, and Bonus for years prior to the year in which the termination
occurs, to the extent earned but not yet paid, (ii) to pay a pro rata Bonus
determined as set forth in Section 3 for the year in which the termination
occurs, such Bonus to be payable within thirty (30) days following termination
of employment, (iii) to make all payments of Base Salary required hereunder to
the Employee through the Next Scheduled Termination Date of this Agreement (the
"Severance Period"), and (iv) to continue to provide health insurance to
Employee under the health insurance program provided by the Company to employees
generally, from time to time, through the next scheduled termination date of
this Agreement, provided that Employee makes any required employee contributions
therefor. Employee's right to continue health care coverage under applicable law
shall commence as of the date that Employee's health care coverage under this
Section 9 ends upon the close of the Severance Period.
10. CHANGE IN CONTROL. Notwithstanding anything contained herein, or in
any other agreement between the Company and Employee, or benefit or compensation
plan under which the Employee participates, to the contrary, in the event that
any amounts due Employee hereunder or under any other plan or program of the
Company or other agreement between the Company and Employee, constitute
"parachute payments", within the meaning of section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and the amount of such parachute
payments, when reduced by the federal excise taxes due and owing on such
parachute payments, if any, is less than the amount Employee would receive if he
were paid only three (3) times his "base amount", as that term is defined in
section 280G of the Code, then, in lieu of all payments hereunder which are
parachute payments, Employee shall be paid, in cash, an amount equal to three
(3) times his base amount less one dollar ($1.00). The determinations to be
made with respect to this Section 10 shall be made by an independent auditor
jointly selected by the parties.
11. INDEMNIFICATION. Employee shall have the benefit of indemnification
as provided under applicable law and the bylaws of the Company. The Company
shall cause Employee to be covered by the current policies of directors' and
officers' liability insurance covering directors and officers of the Company,
copies of which have been provided to Employee, in accordance with their terms,
to the maximum extent of the coverage available for any director or officer of
the Company. The Company shall use commercially reasonable efforts to cause the
current policies of directors' and officers' liability insurance covering
directors and officers of the Company to be maintained throughout the term of
Employee's employment with the Company and for such period thereafter as may be
necessary to continue to cover acts of Employee during the term of his
employment (provided that the Company may substitute therefor, or allow to be
substituted therefor, policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured in any material respect).
12. CONFIDENTIAL INFORMATION. Employee, during the period of his
employment by the Company and thereafter, irrespective of whether the
termination of his employment is voluntary or involuntary, will not directly or
indirectly (without the Company's
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prior written consent), use for himself, or use for or disclose to any other
party, any confidential information regarding the Company. For purposes of this
Agreement, such confidential information shall include any data or information
regarding the business of the Company or any subsidiary or affiliate of the
Company that is not generally known to the public, including without limitation
any confidential information or data regarding the plans of the Company or its
affiliates or the business methods of the Company or its affiliates not in
general use by others.
13. NON-SOLICITATION. Employee agrees, that during the term of his
employment with the Company and for a period of one (1) year following the
termination of his employment with the Company for any reason, he will not,
directly or indirectly, on his own behalf or on behalf of any other person or
entity, solicit, induce or attempt to solicit or induce: (i) any then current
employee, representative, or independent contractor of the Company or its
affiliates to terminate or modify his, her or its employment or business
relationship with the Company or such affiliate; (ii) any then current customer
of the Company or its affiliates with which Employee had personal contact during
his employment or about which Employee had access to confidential information
regarding such customer to terminate or modify its use of the Company's, or such
affiliate's, products and services; or (iii) any then current vendor, supplier,
service provider, or other business relation of the Company or its affiliates to
terminate or modify his, her or its relationship with the Company or such
affiliate.
14. NON-COMPETITION. Employee agrees that during the term of his
employment with the Company and for a period of one (1) year following the
termination of his employment with the Company for any reason other than (i)
termination at the Next Scheduled Termination Date of the Agreement or (ii)
termination without Cause, in the counties of Lake, Cook, Kane, Will, DuPage or
McHenry, in the State of Illinois, and the counties of Lake, Porter and LaPorte,
in the State of Indiana, he will not, directly or indirectly, on his own behalf
or on behalf of any other person or entity, represent, engage in, be employed
by, furnish consulting services to, or have any interest in (whether as an
agent, director, officer, owner, partner, principal, proprietor, representative,
shareholder, or otherwise) any business located in the aforementioned counties
that is competitive with the Company's, or such affiliate's, products or
services in such counties or that would benefit from access to the Company's, or
such affiliate's, confidential information (as defined in Section 12).
Employee's ownership, in itself, of one percent or less of the outstanding
publicly traded securities of any class of a corporation shall not be violation
of this Section 14 so long as Employee does not participate in the conduct of
the business of such corporation, in such counties.
15. REASONABLE RESTRICTIONS. Employee acknowledges that the covenants
contained in Sections 12, 13 and 14 of this Agreement are reasonable in scope,
area and duration, are necessary to protect the Company's confidential
information, trade secrets, and near permanent, permanent and/or long-standing
relationships with its customers, and will not materially affect Employee's
ability to be employed after his employment with the Company . Employee further
agrees that in the event of an actual, attempted, or threatened breach by
Employee of Section 12, 13 or 14 of this Agreement, the Company shall be
entitled to injunctive relief to enjoin such conduct in addition to any other
available legal or equitable remedies.
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16. WAIVER OF BREACH. The waiver by the Company or Employee of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by the Company or Employee.
17. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of both the Company and Employee and their respective successors,
assigns, heirs, and legal representatives, but neither this Agreement nor any
rights hereunder may be assigned by the Company or Employee without the written
consent of the other party.
18. AMENDMENTS. No amendments or variations of the terms and conditions
of this Agreement shall be valid unless the same is in writing and signed by all
of the parties hereto.
19. SAVINGS CLAUSE. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not effect the validity and enforceability or any other provision hereof.
20. NOTICE. All notices provided for by this Agreement shall be in
writing and shall be transmitted either by actual delivery of the notice into
the hands of the parties hereunto entitled, or by the mailing of such notice in
the United States Mail to the address, as set forth above, or such other address
as such party shall have provided to the other by written notice, of the parties
entitled thereto by certified or registered mail, return receipt requested. The
notice shall be deemed to be received in case of actual delivery on the date of
its actual receipt by the parties entitled thereto and in case of delivery by
mail on the date of the return receipt.
21. GOVERNING LAW. This Agreement shall be governed both as to
interpretation and performance under the laws of the State of Indiana. This
Agreement is subject to review by the Indiana Gaming Commission and may be
subsequently disapproved or canceled by the Indiana Gaming Commission in
accordance with applicable rules.
22. CONFIDENTIALITY OF AGREEMENT. The Company and the Employee agree not
to disclose the terms of this Agreement to any third party, except as may be
required by law. A copy of this Agreement shall be filed with the Indiana
Gaming Commission.
23. ALLOCATION. The Company and the Employee acknowledge that, concurrent
herewith, Employee is entering into an agreement pursuant to which he will serve
as President of Empress Casino Joliet Corporation (the "Empress Joliet
Agreement") and that the compensation and benefits earned by Employee under this
Agreement are not intended to duplicate the compensation and benefits earned by
Employee from Empress Casino Joliet Corporation. The Company will cooperate
with Empress Casino Joliet Corporation to fairly allocate costs and expenses in
the employment of Employee in a manner commensurate with the relative efforts
and time commitment provided by Employee to the Company and to Empress Casino
Joliet
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Corporation. Notwithstanding the right of the Company and Empress Casino
Joliet Corporation to allocate costs and expenses as set forth herein, as
between Employee and the Company and Empress Casino Joliet Corporation, the
liability of the Company hereunder and Empress Casino Joliet Corporation under
the Empress Joliet Agreement to Employee shall be joint and several as to both
agreements.
IN WITNESS WHEREOF, this Agreement has been executed, in one or more
counterparts, each of which shall be deemed to be an original, by the Company
and Employee as of the date first written above.
EMPRESS CASINO HAMMOND EMPLOYEE:
CORPORATION
By: _________________________________ ____________________________________
Chairman of the Board Joseph J. Canfora
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SCHEDULE A continued
SCHEDULE A
TO THE EMPLOYMENT AGREEMENT (THE "AGREEMENT") BETWEEN
EMPRESS CASINO JOLIET CORPORATION (THE "COMPANY")
AND
JOSEPH J. CANFORA (THE "EMPLOYEE")
Except as set forth below, the amount of the Bonus to which Employee is entitled
under Section 3.b. of the Agreement, shall be determined in accordance with the
following table, as determined by the Company's independent accountants, of the
Company, Empress Casino Hammond Corporation and LMC Leasing, Ltd.
(collectively, the "Affiliated Companies"):
<TABLE>
<CAPTION>
Combined EBITDA Amount of Bonus
- -------------------------------------------------------------------------
<S> <C>
$100 million or less The amount of the Bonus, if any, shall be
determined by the Board of Directors of the
Company, in its sole discretion
In excess of $100 million 3.913% of one-half of the combined
after-tax earnings of the Affiliated
Companies less Base Salary
</TABLE>
The bonus level shall be determined based on the combined earnings of the
Affiliated Companies before net interest expense, taxes, depreciation and
amortization ("Combined EBITDA") for the fiscal year for which the Bonus is
being determined. The Bonus is calculated with reference to combined earnings
of the Affiliated Companies after interest expense, depreciation, amortization
and taxes for such year.
In the event of a Change in Control (as defined in the Long-Term Incentive
Agreement entered into between the parties) with respect to one or more of the
Affiliated Companies, then, with respect to the year in which such Change in
Control occurs, Employee shall receive a pro rata Bonus with respect to the
company(ies) with respect to which a Change in Control has occurred, and shall
receive a Bonus, with respect to remaining company(ies) (the "On-going
Company(ies)"), in each case determined on the basis of the combined EBITDA of
the Affiliated Companies in the fiscal year prior to the fiscal year in which
such Change in Control occurs, multiplied by a fraction, the numerator of which
is the portion of the combined EBITDA for such prior fiscal year which is
attributable to (i) the company(ies) with respect to which the Change in Control
occurred, in the case of the Bonus with respect to such company(ies) and (ii)
the On-going Company(ies), in the case of the Bonus with respect to such
company(ies), and the denominator of which is the total combined EBITDA of the
Affiliated Companies for such prior fiscal year.
<PAGE>
SCHEDULE A continued
EXAMPLE OF BONUS CALCULATION
ASSUMPTIONS:
1. Combined earnings of the Affiliated Companies before net interest
expense, income taxes, depreciation and amortization ("Combined
EBITDA") is $105 million
2. The sum of net interest expense, depreciation and amortization
for the Affiliated Companies is $37 million
3. Combined federal, state and local income tax rate is presently
43% (paid at the shareholder level for S-corporations)
CALCULATION OF BONUS:
The bonus level is based on the Combined EBITDA of $105 million. Therefore, the
bonus level is 3.913% of one-half of the combined after-tax earnings of the
Affiliated Companies.
Combined after-tax earnings is equal to the Combined EBITDA less interest
expense, taxes, depreciation and amortization:
Combined after-tax earnings = Combined EBITDA minus (the sum of interest,
depreciation and amortization) minus (taxes on Combined EBITDA less
interest, depreciation and amortization)
Combined after-tax earnings = $105 million - $37 million - (43% x ($105
million- $37 million))
Combined after-tax earnings = $105 million - $37 million - $29.24 million
Combined after-tax earnings = $38,760,000
Bonus is equal to 3.913% of one-half of the combined after-tax earnings of the
Affiliated Companies less Base Salary
Bonus = (3.913% x (50% x Combined after-tax earnings)) - Base Salary
Bonus = (3.913% x (50% x $38,760,000)) - $500,000
Bonus = (3.913% x $19,380,000) - $500,000
Bonus = $758,339.40 - $500,000
Bonus = $258,339.40
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EXHIBIT 10.18
AGREEMENT
---------
This Employment Agreement ("Agreement") is entered into on June 12, 1997,
between Empress Casino Joliet Corporation, an Illinois corporation, 2300 Empress
Drive, Joliet, Illinois 60436 hereinafter referred to as the "Company," and
Joseph J. Canfora, 2300 Empress Drive, Joliet, Illinois 60436, hereinafter
referred to as the "Employee," to be effective as of June 23, 1997.
RECITALS:
WHEREAS, Employee and the Company wish to enter into an agreement
containing the terms and conditions of Employee's employment as President of
the Company.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties agree as follows:
1. DUTIES. The Employee shall serve as President of the Company. As
such, the Employee shall have the responsibilities and duties as set forth in
the bylaws of the Company and such other duties commensurate with the position
of president and chief operating officer of entities comparable to the Company,
including responsibility for implementing all resolutions adopted by the
Company's Board of Directors. During the term of this Agreement, Employee shall
devote his full business time and attention to the business affairs of the
Company and Empress Casino Hammond Corporation (with whom Employee is entering a
like employment agreement) and shall use his best efforts, skills and abilities
to promote the Company's interests. The Employee shall report regularly to the
Board of Directors of the Company. The Company agrees that this Agreement shall
not preclude the Employee from engaging in other civic, charitable and gaming
industry activities. In addition, subject to the approval of a majority of the
members of the Company's Board of Directors (which approval shall not be
withheld without reason), Employee may serve as a member of the board of
directors of corporations other than the Company.
2. TERM. The initial term of employment pursuant to this Agreement shall
begin on June 23, 1997, and, subject to the provisions hereof, shall continue
until the close of business on June 22, 2000. The term of this Agreement shall
be automatically extended thereafter for successive twelve (12) month periods,
provided that neither party has given written notice to the other party at least
one hundred and eighty (180) days prior to the end of the current term that such
term shall not be extended. The original termination date of June 22, 2000, and
any automatic extensions thereof shall be hereinafter defined as the "Next
Scheduled Termination Date."
3. COMPENSATION.
a. BASE SALARY. For all services rendered by the Employee under this
Agreement, the Company shall pay the Employee a base salary at the rate of Five
Hundred
<PAGE>
Thousand Dollars ($500,000) per year, payable on the same timetable as the
regular payroll of the Company, less any salary earned by Employee from Empress
Casino Hammond Corporation.
b. BONUS. In addition, the Company will pay to the Employee for each
fiscal year that the Employee is employed by the Company pursuant to this
Agreement, a bonus in an amount determined in accordance with Schedule A
attached hereto and incorporated herein by reference. This amount shall be
payable to Employee as soon as practicable after the completion of the audit of
the Company's books and records following the end of the Company's fiscal year.
In any year in which the Employee is not employed for a full fiscal year, the
Employee shall be entitled to receive a pro rata portion of the bonus which
would otherwise be payable, based on the number of days Employee was actually
employed during such year; provided, however, that if Employee is terminated for
"Cause" (as defined in Section 9) or if the Employee resigns, other than at the
expiration of the term of this Agreement, Employee shall not be entitled to a
pro rata bonus hereunder with respect to the year in which Employee's employment
terminates. In any year with respect to which (i) Employee is not employed on
the last day of such fiscal year and (ii) Employee is entitled to receive a pro
rata bonus, as described in the preceding sentence, the amount of such bonus,
prior to such pro ration, shall be the amount of Employee's bonus for the prior
fiscal year.
c. ADJUSTMENTS TO BASE SALARY AND BONUS. The Chief Executive Officer of
the Company may, in his sole discretion, increase (but not decrease) the
Employee's Base Salary and Bonus to take into account conditions outside the
control of Employee.
4. OFFICE FACILITIES. The Company shall furnish the Employee with a
private office, supplies, secretarial assistance, equipment, and such other
facilities and services suitable to his position and adequate for the
performance of his duties.
5. EXPENSES.
a. GENERAL. Employee is authorized, in carrying out his duties and
responsibilities hereunder, to make reasonable expenditures on behalf of the
Company for meetings, dues, journals, travel, entertainment, and appropriate
gifts. The Company will promptly reimburse the Employee for such expenditures
upon his compliance with the expense reimbursement policies of the Company in
effect from time to time.
b. RELOCATION EXPENSES. The Company agrees to reimburse Employee for
100% of his reasonable expenses incurred in relocating Employee and his
dependants from the Kansas City, Missouri area to the Chicago, Illinois area,
including but not limited to the cost of transporting household goods, the cost
of house hunting trips for Employee and Employee's spouse (including meals,
lodging and rental car), the cost of storing Employee's household goods until
such time as Employee finds permanent housing in the Chicago, Illinois area, and
the cost of transporting Employee, his dependents and any household pets to the
Chicago area. In addition, the Company agrees to pay or to reimburse Employee
for the cost of a real estate relocation
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service, such service to be mutually agreed upon, to guarantee the sale of
Employee's current residence at fair market value.
c. TEMPORARY HOUSING. The Company agrees to reimburse Employee for the
cost of temporary housing in the Chicago, Illinois area for a period not to
exceed ninety (90) days from the date of this Agreement, such reimbursement not
to exceed Fifteen Thousand Dollars ($15,000).
6. VACATIONS. Employee shall be entitled to twenty (20) vacation days
per calendar year (based on a five (5) day work week) to be taken in accordance
with the Company's normal vacation policies in effect from time to time;
provided, however, that vacation days available but not used by Employee in a
calendar year may not be cumulated or carried over into subsequent years. These
vacation days shall be concurrent with and not in addition to the vacation
provided by Empress Casino Hammond Corporation.
7. AUTOMOBILE. The Company shall provide Employee with, or reimburse
Employee for, a luxury automobile mutually selected by Employee and the Company,
for Employee's exclusive use. The automobile may be replaced by Employee after
it has been in service three years or, if leased, upon expiration of the lease.
Employee's expenses of automobile maintenance, repair and insurance shall be
reimbursed by the Company in accordance with the expense reimbursement policies
of the Company. This provision shall be implemented as necessary to avoid
duplication of benefits provided by Empress Casino Hammond Corporation.
8. EMPLOYEE BENEFIT PLANS; FRINGE BENEFITS.
a. GENERAL. Employee shall be entitled to participate in all of the
employee benefit plans and fringe benefits which the Company makes available to
its employees on the same terms and conditions as any other executive level
employee of the Company, except as otherwise provided in this Agreement and
except to the extent necessary to avoid duplication of benefits provided by
Empress Casino Hammond Corporation.
b. LIFE INSURANCE. During the term of this Agreement, including any
extensions thereof, the Company shall provide, subject to Employee's
insurability, Employee with a term life insurance policy, with the beneficiaries
to be designated by Employee, in addition to any life insurance benefits that
may be available to Employee under the terms of any group term life insurance
plan offered to employees of the Company generally, in an amount equal to
$4,000,000. In the event of the termination of Employee's employment with the
Company, Employee shall have the right, subject to the terms and conditions of
such policy, to assume and continue at his own expense such policy. This
provision shall be implemented as necessary to avoid duplication of benefits
provided by Empress Casino Hammond Corporation.
3
<PAGE>
9. TERMINATION.
a. CAUSE. This Agreement shall terminate without any liability to or
upon the Company other than to pay Base Salary for services rendered prior to
the date of termination and Bonus for years prior to the year in which the
termination occurs, to the extent earned but not yet paid, if Employee is
terminated for "Cause." "Cause" shall be defined as: (i) Employee's theft or
embezzlement or attempted theft or embezzlement of money or tangible or
intangible assets or property of the Company or its employees; (ii) any act or
acts of moral turpitude by Employee materially injurious to the interest,
property, operations, business or reputation of the Company; (iii) Employee's
conviction of a felony materially injurious to the interest, property,
operations, business or reputation of the Company; (iv) gross negligence or
willful misconduct in the performance of Employee's duties; (v) Employee's
willful neglect of his duties under this Agreement; (viii) Employee's failure to
pass a drug test administered by the Company and/or failure to obtain,
suspension or revocation of Employee's gaming license in Illinois.
b. DEATH OR DISABILITY. In the event of the death or "Disability" of
Employee, this Agreement shall terminate without any liability to or upon the
Company other than (i) to pay Base Salary and earned benefits for services
rendered prior to the date of termination, and Bonus for years prior to the year
in which the termination occurs, to the extent earned but not yet paid, (ii) to
pay a pro rata Bonus determined as set forth in Section 3 for the year in which
the termination occurs; (iii) to make all payments of Base Salary required
hereunder to the Employee through the next Scheduled Termination Date of this
Agreement; and (iv) in the case of Disability, to continue to provide health
insurance to Employee under the health insurance program provided by the Company
to employees generally, from time to time, through the next Scheduled
Termination Date of this Agreement, provided that Employee makes any required
employee contributions therefor. Employee's right to continue health care
coverage under applicable law shall commence as of the date that Employee's
health care coverage under this Section 9. ends. "Disability" shall be defined
as Employee's inability, as determined reasonably and in good faith by the
Company, acting in consultation with a physician selected by it, to the extent
reasonably and in good faith necessary, due to illness, accident, injury,
physical or mental incapacity or other disability, effectively to carry out his
duties under this Agreement for ninety (90) consecutive days or shorter periods
aggregating ninety (90) days (whether or not consecutive) during any one-year
period.
c. RESIGNATION. In the event that Employee resigns his employment with
the Company, other than at the expiration of the term of this Agreement, the
Company shall have no liability other than to pay Base Salary and earned
benefits for services rendered prior to the date of resignation and Bonus for
years prior to the year in which the resignation occurs, to the extent earned
but not yet paid, and, except as required by applicable law, he shall not be
entitled to any compensation or benefits beyond his last day of employment.
Employee agrees to provide not less than sixty (60) days written notice to the
Company prior to his resignation.
d. TERMINATION WITHOUT CAUSE. If the Company terminates Employee's
employment for reasons other than Cause, death, Disability or Change in Control
(as defined in the Long-Term Incentive Agreement entered into between the
parties), this Agreement shall terminate,
4
<PAGE>
without any liability to or upon the Company other than (i) to pay Base Salary
and earned benefits for services rendered prior to the date of termination, and
Bonus for years prior to the year in which the termination occurs, to the extent
earned but not yet paid, (ii) to pay a pro rata Bonus determined as set forth in
Section 3 for the year in which the termination occurs, such Bonus to be payable
within thirty (30) days following termination of employment, (iii) to make all
payments of Base Salary required hereunder to the Employee through the Next
Scheduled Termination Date of this Agreement (the "Severance Period"), and (iv)
to continue to provide health insurance to Employee under the health insurance
program provided by the Company to employees generally, from time to time,
through the next scheduled termination date of this Agreement, provided that
Employee makes any required employee contributions therefor. Employee's right to
continue health care coverage under applicable law shall commence as of the date
that Employee's health care coverage under this Section 9 ends upon the close of
the Severance Period.
10. CHANGE IN CONTROL. Notwithstanding anything contained herein, or in
any other agreement between the Company and Employee, or benefit or compensation
plan under which the Employee participates, to the contrary, in the event that
any amounts due Employee hereunder or under any other plan or program of the
Company or other agreement between the Company and Employee, constitute
"parachute payments", within the meaning of section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and the amount of such parachute
payments, when reduced by the federal excise taxes due and owing on such
parachute payments, if any, is less than the amount Employee would receive if he
were paid only three (3) times his "base amount", as that term is defined in
section 280G of the Code, then, in lieu of all payments hereunder which are
parachute payments, Employee shall be paid, in cash, an amount equal to three
(3) times his base amount less one dollar ($1.00). The determinations to be made
with respect to this Section 10 shall be made by an independent auditor jointly
selected by the parties.
11. INDEMNIFICATION. Employee shall have the benefit of indemnification
as provided under applicable law and the bylaws of the Company. The Company
shall cause Employee to be covered by the current policies of directors' and
officers' liability insurance covering directors and officers of the Company,
copies of which have been provided to Employee, in accordance with their terms,
to the maximum extent of the coverage available for any director or officer of
the Company. The Company shall use commercially reasonable efforts to cause the
current policies of directors' and officers' liability insurance covering
directors and officers of the Company to be maintained throughout the term of
Employee's employment with the Company and for such period thereafter as may be
necessary to continue to cover acts of Employee during the term of his
employment (provided that the Company may substitute therefor, or allow to be
substituted therefor, policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured in any material respect).
12. CONFIDENTIAL INFORMATION. Employee, during the period of his
employment by the Company and thereafter, irrespective of whether the
termination of his employment is voluntary or involuntary, will not directly or
indirectly (without the Company's
5
<PAGE>
prior written consent), use for himself, or use for or disclose to any other
party, any confidential information regarding the Company. For purposes of this
Agreement, such confidential information shall include any data or information
regarding the business of the Company or any subsidiary or affiliate of the
Company that is not generally known to the public, including without limitation
any confidential information or data regarding the plans of the Company or its
affiliates or the business methods of the Company or its affiliates not in
general use by others.
13. NON-SOLICITATION. Employee agrees, that during the term of his
employment with the Company and for a period of one (1) year following the
termination of his employment with the Company for any reason, he will not,
directly or indirectly, on his own behalf or on behalf of any other person or
entity, solicit, induce or attempt to solicit or induce: (i) any then current
employee, representative, or independent contractor of the Company or its
affiliates to terminate or modify his, her or its employment or business
relationship with the Company or such affiliate; (ii) any then current customer
of the Company or its affiliates with which Employee had personal contact during
his employment or about which Employee had access to confidential information
regarding such customer to terminate or modify its use of the Company's, or such
affiliate's, products and services; or (iii) any then current vendor, supplier,
service provider, or other business relation of the Company or its affiliates to
terminate or modify his, her or its relationship with the Company or such
affiliate.
14. NON-COMPETITION. Employee agrees that during the term of his
employment with the Company and for a period of one (1) year following the
termination of his employment with the Company for any reason other than (i)
termination at the Next Scheduled Termination Date of the Agreement or (ii)
termination without Cause, in the counties of Lake, Cook, Kane, Will, DuPage or
McHenry, in the State of Illinois, and the counties of Lake, Porter and LaPorte,
in the State of Indiana, he will not, directly or indirectly, on his own behalf
or on behalf of any other person or entity, represent, engage in, be employed
by, furnish consulting services to, or have any interest in (whether as an
agent, director, officer, owner, partner, principal, proprietor, representative,
shareholder, or otherwise) any business located in the aforementioned counties
that is competitive with the Company's, or such affiliate's, products or
services in such counties or that would benefit from access to the Company's, or
such affiliate's, confidential information (as defined in Section 12).
Employee's ownership, in itself, of one percent or less of the outstanding
publicly traded securities of any class of a corporation shall not be violation
of this Section 14 so long as Employee does not participate in the conduct of
the business of such corporation, in such counties.
15. REASONABLE RESTRICTIONS. Employee acknowledges that the covenants
contained in Sections 12, 13 and 14 of this Agreement are reasonable in scope,
area and duration, are necessary to protect the Company's confidential
information, trade secrets, and near permanent, permanent and/or long-standing
relationships with its customers, and will not materially affect Employee's
ability to be employed after his employment with the Company . Employee further
agrees that in the event of an actual, attempted, or threatened breach by
Employee of Section 12, 13 or 14 of this Agreement, the Company shall be
entitled to injunctive relief to enjoin such conduct in addition to any other
available legal or equitable remedies.
6
<PAGE>
16. WAIVER OF BREACH. The waiver by the Company or Employee of a breach
of any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by the Company or Employee.
17. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of both the Company and Employee and their respective successors,
assigns, heirs, and legal representatives, but neither this Agreement nor any
rights hereunder may be assigned by the Company or Employee without the written
consent of the other party.
18. AMENDMENTS. No amendments or variations of the terms and conditions
of this Agreement shall be valid unless the same is in writing and signed by all
of the parties hereto.
19. SAVINGS CLAUSE. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not effect the validity and enforceability or any other provision hereof.
20. NOTICE. All notices provided for by this Agreement shall be in
writing and shall be transmitted either by actual delivery of the notice into
the hands of the parties hereunto entitled, or by the mailing of such notice in
the United States Mail to the address, as set forth above, or such other address
as such party shall have provided to the other by written notice, of the parties
entitled thereto by certified or registered mail, return receipt requested. The
notice shall be deemed to be received in case of actual delivery on the date of
its actual receipt by the parties entitled thereto and in case of delivery by
mail on the date of the return receipt.
21. GOVERNING LAW. This Agreement shall be governed both as to
interpretation and performance under the laws of the State of Illinois. This
Agreement is subject to review by the Illinois Gaming Board and may be
subsequently disapproved or canceled by the Illinois Gaming Board in accordance
with applicable rules.
22. CONFIDENTIALITY OF AGREEMENT. The Company and the Employee agree not
to disclose the terms of this Agreement to any third party, except as may be
required by law. A copy of this Agreement shall be filed with the applicable
state regulatory agency, if so required.
23. ALLOCATION. The Company and the Employee acknowledge that, concurrent
herewith, Employee is entering into an agreement pursuant to which he will serve
as President of Empress Casino Hammond Corporation (the "Empress Hammond
Agreement") and that the compensation and benefits earned by Employee under this
Agreement are not intended to duplicate the compensation and benefits earned by
Employee from Empress Casino Hammond Corporation. The Company will cooperate
with Empress Casino Hammond Corporation to fairly allocate costs and expenses in
the employment of Employee in a manner commensurate with the
7
<PAGE>
relative efforts and time commitment provided by Employee to the Company and to
Empress Casino Hammond Corporation. Notwithstanding the right of the Company and
Empress Casino Hammond Corporation to allocate costs and expenses as set forth
herein, as between Employee and the Company and Empress Casino Hammond
Corporation, the liability of the Company hereunder and Empress Casino Hammond
Corporation under the Empress Hammond Agreement to Employee shall be joint and
several as to both agreements.
IN WITNESS WHEREOF, this Agreement has been executed, in one or more
counterparts, each of which shall be deemed to be an original, by the Company
and Employee as of the date first written above.
EMPRESS CASINO JOLIET EMPLOYEE:
CORPORATION
By: /s/[Signature Illegible]^^ /s/ Joseph J. Canfora
--------------------------- ---------------------------
Chairman of the Board Joseph J. Canfora
8
<PAGE>
SCHEDULE A CONTINUED
SCHEDULE A
TO THE EMPLOYMENT AGREEMENT (THE "AGREEMENT") BETWEEN
EMPRESS CASINO JOLIET CORPORATION (THE "COMPANY")
AND
JOSEPH J. CANFORA (THE "EMPLOYEE")
Except as set forth below, the amount of the Bonus to which Employee is entitled
under Section 3.b. of the Agreement, shall be determined in accordance with the
following table, as determined by the Company's independent accountants, of the
Company, Empress Casino Hammond Corporation and LMC Leasing, Ltd.
(collectively, the "Affiliated Companies"):
COMBINED EBITDA AMOUNT OF BONUS
-------------------------------------------------------------------------
$100 MILLION OR LESS The amount of the Bonus, if any, shall be
determined by the Board of Directors of the
Company, in its sole discretion
IN EXCESS OF $100 MILLION 3.913% of one-half of the combined
after-tax earnings of the Affiliated
Companies less Base Salary
The bonus level shall be determined based on the combined earnings of the
Affiliated Companies before net interest expense, taxes, depreciation and
amortization ("Combined EBITDA") for the fiscal year for which the Bonus is
being determined. The Bonus is calculated with reference to combined earnings of
the Affiliated Companies after interest expense, depreciation, amortization and
taxes for such year.
In the event of a Change in Control (as defined in the Long-Term Incentive
Agreement entered into between the parties) with respect to one or more of the
Affiliated Companies, then, with respect to the year in which such Change in
Control occurs, Employee shall receive a pro rata Bonus with respect to the
company(ies) with respect to which a Change in Control has occurred, and shall
receive a Bonus, with respect to remaining company(ies) (the "On-going
Company(ies)"), in each case determined on the basis of the combined EBITDA of
the Affiliated Companies in the fiscal year prior to the fiscal year in which
such Change in Control occurs, multiplied by a fraction, the numerator of which
is the portion of the combined EBITDA for such prior fiscal year which is
attributable to (i) the company(ies) with respect to which the Change in Control
occurred, in the case of the Bonus with respect to such company(ies) and (ii)
the On-going Company(ies), in the case of the Bonus with respect to such
company(ies), and the denominator of which is the total combined EBITDA of the
Affiliated Companies for such prior fiscal year.
<PAGE>
SCHEDULE A continued
EXAMPLE OF BONUS CALCULATION
ASSUMPTIONS:
1. Combined earnings of the Affiliated Companies before net interest
expense, income taxes, depreciation and amortization ("Combined
EBITDA") is $105 million
2. The sum of net interest expense, depreciation and amortization
for the Affiliated Companies is $37 million
3. Combined federal, state and local income tax rate is presently
43% (paid at the shareholder level for S-corporations)
CALCULATION OF BONUS:
The bonus level is based on the Combined EBITDA of $105 million. Therefore, the
bonus level is 3.913% of one-half of the combined after-tax earnings of the
Affiliated Companies.
Combined after-tax earnings is equal to the Combined EBITDA less interest
expense, taxes, depreciation and amortization:
Combined after-tax earnings = Combined EBITDA minus (the sum of interest,
depreciation and amortization) minus (taxes on Combined EBITDA less
interest, depreciation and amortization)
Combined after-tax earnings = $105 million - $37 million - (43% x ($105
million- $37 million))
Combined after-tax earnings = $105 million - $37 million - $29.24 million
Combined after-tax earnings = $38,760,000
Bonus is equal to 3.913% of one-half of the combined after-tax earnings of the
Affiliated Companies less Base Salary
Bonus = (3.913% x (50% x Combined after-tax earnings)) - Base Salary
Bonus = (3.913% x (50% x $38,760,000)) - $500,000
Bonus = (3.913% x $19,380,000) - $500,000
Bonus = $758,339.40 - $500,000
Bonus = $258,339.40
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<PAGE>
EXHIBIT 10.19
LONG TERM INCENTIVE BONUS AGREEMENT
-----------------------------------
This Agreement ("Agreement") is entered into on June 12, 1997, between
Empress Casino Hammond Corporation, an Indiana corporation, 825 Empress Drive,
Hammond, Indiana 46320 hereinafter referred to as the "Company," and Joseph J.
Canfora, 825 Empress Drive, Hammond, Indiana 46320, hereinafter referred to as
the "Employee," to be effective as of June 23, 1997.
RECITALS:
WHEREAS, Employee and the Company wish to enter into an agreement
containing the terms and conditions of the bonus to be paid to Employee under
certain specified circumstances.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties agree as follows:
1. DEFINITIONS.
-----------
(a) "AFFILIATED COMPANIES" shall mean the Company, Empress Casino
--------------------
Joliet Corporation and LMC Leasing, Ltd., each of which is sometimes referred
to as an "Affiliated Company".
(b) "BASE VALUE" shall mean (i) with respect to the combined
----------
Affiliated Companies, $325 million, (ii) with respect to the Company and LMC
Leasing, Ltd., combined, $179 million, and (iii) with respect to Empress Casino
Joliet Corporation only, $146 million.
(c) "BENCHMARK VALUE" shall mean
---------------
(i) In the case of a Change in Control on account of other than
an initial public offering of the stock of one or more of the Affiliated
Companies, the aggregate net amount received by the Affiliated Companies,
or the shareholders of the Affiliated Companies, LESS any debt for borrowed
money of the Affiliated Company(ies) with respect to which the Change in
Control occurred that is not assumed by the buyer, PLUS any cash retained
by such Affiliated Company(ies). If a Change in Control occurs with
respect to one or more Affiliated Company, but not all Affiliated
Companies, then the Benchmark Value shall be determined solely with regard
to the specific Affiliated Companies with respect to which the Change in
Control occurs. To the extent that proceeds are received by the Affiliated
Companies or the shareholders of the Affiliated Companies in other than
cash or deferred installments of cash, the such other consideration shall
be valued in good faith by the Company, for purposes of determining the
Benchmark Value.
(ii) In all other cases other than those described in the
foregoing provisions of this paragraph 1.(c), an amount equal to (A) the
Combined EBITDA multiplied by 5, plus (B) cash held by the Affiliated
Companies, less (C) debt of the Affiliated Companies (other than trade
payables).
<PAGE>
Benchmark Value shall be determined by the Company's independent
accountants, as of the end of the prior fiscal year in the cases described
in paragraph 1 (c)(ii) a month in which the termination of employment or
Change in Control occurs.
(d) "CAUSE" shall have the meaning ascribed to it in the Employment
-----
Agreement.
(e) "CHANGE IN CONTROL" shall mean (i) the sale of all or
-----------------
substantially all of the stock or assets of the one or more Affiliated Companies
to one or more third parties who are not, immediately preceding such transaction
shareholders of an Affiliated Company, (ii) the merger of the one or more
Affiliated Companies into or with another company in which a controlling
interest is not owned by one or more shareholders of an Affiliated Company, or
(iii) an initial public offering of the stock of one or more of the Affiliated
Companies; provided, however, that the disposition by one or more of the
Affiliated Companies of one or more vessels, without a transfer of the operating
business shall not be deemed to be a "Change in Control".
(f) "COMBINED EBITDA" shall mean the combined earnings before
---------------
interest, taxes, depreciation and amortization of the Affiliated Companies.
(g) "DISABILITY" shall have the meaning ascribed to it in the
----------
Employment Agreement.
(h) "EMPLOYMENT AGREEMENT" shall mean the Employment Agreement
--------------------
between Employee and the Company effective as of June 23, 1997.
2. LONG-TERM INCENTIVE BONUS.
-------------------------
(a) GENERAL. Subject to the terms and conditions described below, in
-------
the event of (i) the termination of Employee's employment with the Company for
reasons other than Cause or (ii) a Change in Control, the Company shall pay to
Employee a bonus, in addition to any bonus to which he may be entitled under the
Employment Agreement, equal to 3.913% of the excess, if any, of the Benchmark
Value of the Affiliated Companies as of the date of termination of employment or
Change in Control, whichever is applicable, over the Base Value of the
Affiliated Companies.
(b) MINIMUM BONUS DURING FIRST TWELVE MONTHS. Notwithstanding
----------------------------------------
anything contained herein to the contrary, in the event of a Change of Control
occurring during the period beginning on the date of this Agreement and ending
twelve (12) months thereafter, Employee shall be entitled to receive a bonus
equal to the greater of (i) the bonus determined in accordance with paragraph 2
(a) or (ii) $1,000,000.00.
2
<PAGE>
(c) MAXIMUM BONUS. Notwithstanding anything contained herein to the
-------------
contrary, in the event of a termination of Employee's employment with the
Company, the maximum amount that Employee shall be entitled to receive under
paragraph 2 (a) shall be $10,000,000.00. In the event of a Change in Control,
there shall be no limit on the amount of the bonus that Employee shall be
entitled to receive under paragraph 2 (a).
3. VESTING IN BONUS.
----------------
(a) GENERAL. In the event that Employee's termination of employment
-------
occurs before the end of business on June 22, 1999, shall have no vested
interest in the bonus and this Agreement shall terminate. Upon completion of
two full years of employment, Employee shall become vested with respect to 30%
of the bonus. Upon completion of the initial three (3) year term of employment,
Employee shall become vested with respect to 40% of the bonus. Thereafter,
Employee will become vested with respect to an additional 10% of the bonus on
and after each of the next succeeding six (6) anniversary dates of the last day
of the initial employment term, provided he is still employed on such
anniversary date, such that he will be 100% vested in the bonus after completing
nine (9) years of employment. In the event that Employee's termination of
employment occurs prior to the time that he is 100% vested in the bonus, only
that portion of the bonus in which Employee is vested shall be payable to him
hereunder.
(b) CHANGE IN CONTROL. Notwithstanding the provisions of paragraph 3
-----------------
(a), in the event of a Change in Control, Employee shall be 100% vested in the
bonus, regardless of Employee's period of service.
4. TIME AND METHOD OF PAYMENT.
--------------------------
(a) TERMINATION OF EMPLOYMENT OTHER THAN FOR REASONS OF DEATH,
----------------------------------------------------------
DISABILITY. The vested amount of the a bonus that becomes payable to Employee
- ----------
hereunder following termination of Employee's employment for reasons other than
death or Disability, determined in accordance with paragraphs 2 and 3, shall be
made to Employee (or in the event of Employee's death after termination of
employment, to Employee's estate) in cash, in thirty-six (36) equal monthly
installments, beginning as of the first day of the month following the later of
the month in which Employee attains age 55 or the month in which Employee's
employment terminates.
(b) TERMINATION OF EMPLOYMENT FOR REASONS OF DEATH, DISABILITY. The
----------------------------------------------------------
vested amount of the a bonus that becomes payable to Employee hereunder
following termination of Employee's employment on account of death or
Disability, determined in accordance with paragraphs 2 and 3, shall be made to
Employee (or in the event of Employee's death, to Employee's estate) in cash,
in one hundred and twenty (120) equal monthly installments, beginning as of the
first day of the month following the month in which Employee dies or the month
in which Employee's employment terminates on account of Disability, whichever is
applicable. Notwithstanding the immediately preceding, in the event that
Employee (or
3
<PAGE>
Employee's estate) is still receiving installment payments as of the date he
attains (or would have attained) age 55, the remaining amount due as of such
date shall be paid to Employee (or Employee's estate) in thirty-six (36) equal
monthly installments, beginning as of the first day of the month following the
month in which Employee attains (or would have attained) age 55.
(c) CHANGE IN CONTROL OTHER THAN IPO. The vested amount of the a
--------------------------------
bonus that becomes payable to Employee hereunder on account of a Change in
Control other than an initial public offering of the stock of an Affiliated
Company, 7, determined in accordance with paragraphs 2 and 3, shall be made to
Employee in cash, or deferred installments of cash, at the same time(s) as
shareholders in the Affiliated Company with respect to which the Change in
Control occurs are paid.
(d) CHANGE IN CONTROL ON ACCOUNT OF IPO. The vested amount of the a
-----------------------------------
bonus that becomes payable to Employee hereunder on account of a Change in
Control by reason of an initial public offering of the stock of an Affiliated
Company, determined in accordance with paragraphs 2 and 3, shall be made in that
number of shares of stock of the Affiliated Company with respect to which the
initial public offering occurs, the value of which is equal to the bonus payable
hereunder, based upon the initial price of such shares offered to the public in
the initial public offering. Such shares will be transferrable by Employee only
if such securities have been registered under the federal Securities Act of
1933, as amended (the "Act"), or pursuant to an exemption from registration
available to Employee under the Act. To the extent that Employee is subject to
withholding taxes on a bonus payable hereunder in shares of stock, the Company
may loan to Employee, upon such terms and conditions as Employee and the Company
shall agree, an amount sufficient to satisfy the withholding obligation with
respect to such shares of stock, such loan to be secured by the shares of stock
received by Employee hereunder.
5. CONTINUATION OF AGREEMENT IN EVENT OF CHANGE IN CONTROL. In the event
-------------------------------------------------------
of a Change in Control with respect to one or more of the Affiliated Companies,
but not all of the Affiliated Companies, Employee shall receive a bonus
hereunder with respect to the Affiliated Company(ies) with respect to which the
Change in Control occurred. In addition, this Agreement shall continue with
respect to those Affiliated Companies with respect to which no Change in Control
has occurred.
6. PARACHUTE PAYMENTS. To the extent that any amount payable hereunder
------------------
is a "parachute payment" within the meaning of section 280G of the Internal
Revenue Code of 1986, as amended, the provisions of Section 10 of the Employment
Agreement, or any successor section thereto or replacement section therefor,
shall govern.
7. MISCELLANEOUS.
-------------
(a) NO ASSIGNMENT. The benefits payable hereunder may not be
-------------
voluntarily or involuntarily assigned or alienated and are not subject to the
claims of creditors.
4
<PAGE>
(b) NO GUARANTEE OF EMPLOYMENT. Nothing in the Agreement shall be
--------------------------
construed as a contract of employment or be deemed to confer upon Employee the
right to be retained in the service of the Company or any Affiliated Company,
nor shall it interfere with the right of the Company or any Affiliated Company
to discharge or otherwise deal with Employee without regard to the existence of
this Agreement.
(c) NO FUNDING. All benefits hereunder are payable, as and when they
----------
come due, solely from the general assets of the Company or from Empress Casino
Hammond Corporation.
(d) FACILITY OF PAYMENT. When, in the Company's opinion, the Employee
-------------------
is under a legal disability or is incapacitated in any way so as to be unable to
manage his affairs, the benefits hereunder may be paid to Employee, Employee's
spouse, or to a duly appointed guardian or conservator, custodian, adult
relative, or directly for the benefit, of Employee, as the Company shall in its
discretion determine. Any such payments shall constitute a complete discharge
therefor.
(e) WITHHOLDING FOR TAXES. Notwithstanding any other provisions of
---------------------
this Agreement, all payments hereunder shall be subject to any applicable
withholding for all federal, state and local taxes income, employment or excise
taxes. In the event that payment hereunder is made to Employee in shares of
stock in accordance with paragraph 4, Employee will provide the Company with the
funds, if any are necessary, to discharge any income tax and FICA tax
withholding obligations of the Company relating to the shares received by
Employee, either through withholding from the Employee's subsequent salary or
bonus payments or through a direct cash payment to the Company by Employee.
(f) GOVERNING LAW. This Agreement shall be construed and administered
-------------
according to the laws of the State of Illinois to the extent that such laws are
not preempted by the laws of the United States of America.
(g) BINDING EFFECT. This Agreement shall be binding upon and shall
--------------
inure to the benefit of both the Company and Employee and their respective
successors, assigns, heirs, and legal representatives, but neither this
Agreement nor any rights hereunder may be assigned by the Company or Employee
without the written consent of the other party.
(h) AMENDMENTS. No amendments or variations of the terms and
----------
conditions of this Agreement shall be valid unless the same is in writing and
signed by all of the parties hereto.
(i) SAVINGS CLAUSE. If any one or more of the provisions contained in
--------------
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not effect the validity and enforceability or any other provision hereof.
5
<PAGE>
8. ALLOCATION. The Company and the Employee acknowledge that, concurrent
----------
herewith, Employee is entering into a Long Term Incentive Bonus Agreement with
Empress Casino Joliet Corporation (the "Empress Joliet Agreement") and that
the benefits payable to Employee under this Agreement are not intended to
duplicate the benefits payable to Employee from Empress Casino Joliet
Corporation. The Company will cooperate with Empress Casino Joliet Corporation
to fairly allocate costs and expenses of the bonus payable hereunder to Employee
in a manner (i) commensurate with the relative efforts and time commitment
provided by Employee to the Company and to Empress Casino Joliet Corporation,
in the case of a bonus which is payable following a termination of employment
and (ii) consistent with the Change in Control, in the case of a bonus which is
payable following a Change in Control. Notwithstanding the right of the Company
and Empress Casino Joliet Corporation to allocate costs and expenses as set
forth herein, as between Employee and the Company and Empress Casino Joliet
Corporation, the liability of the Company hereunder and Empress Casino Joliet
Corporation under the Empress Joliet Agreement to Employee shall be joint and
several as to both agreements.
IN WITNESS WHEREOF, this Agreement has been executed by the Company and
Employee, in one or more counterparts, each of which shall be deemed an
original, as of the date first written above.
EMPRESS CASINO HAMMOND EMPLOYEE:
CORPORATION
By: [SIGNATURE ILLEGIBLE] ^^ /s/ Joseph J. Canfora
--------------------------------- ------------------------------------
Chairman of the Board Joseph J. Canfora
6
<PAGE>
EXHIBIT 10.20
LONG TERM INCENTIVE BONUS AGREEMENT
-----------------------------------
This Agreement ("Agreement") is entered into on June 12, 1997, between
Empress Casino Joliet Corporation, an Illinois corporation, 2300 Empress Drive,
Joliet, Illinois 60436 hereinafter referred to as the "Company," and Joseph J.
Canfora, 2300 Empress Drive, Joliet, Illinois 60436, hereinafter referred to as
the "Employee," to be effective as of June 23, 1997.
RECITALS:
WHEREAS, Employee and the Company wish to enter into an agreement
containing the terms and conditions of the bonus to be paid to Employee under
certain specified circumstances.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties agree as follows:
1. Definitions.
(a) "Affiliated Companies" shall mean the Company, Empress Casino
Hammond Corporation and LMC Leasing, Ltd., each of which is sometimes referred
to as an "Affiliated Company".
(b) "Base Value" shall mean (i) with respect to the combined
Affiliated Companies, $325 million, (ii) with respect to the Company only,
$146 million, and (iii) with respect to Empress Casino Hammond Corporation and
LMC Leasing, Ltd., combined, $179 million.
(c) "Benchmark Value" shall mean
(i) In the case of a Change in Control on account of other than
an initial public offering of the stock of one or more of the Affiliated
Companies, the aggregate net amount received by the Affiliated Companies,
or the shareholders of the Affiliated Companies, less any debt for borrowed
money of the Affiliated Company(ies) with respect to which the Change in
Control occurred that is not assumed by the buyer, plus any cash retained
by such Affiliated Company(ies). If a Change in Control occurs with respect
to one or more Affiliated Company, but not all Affiliated Companies, then
the Benchmark Value shall be determined solely with regard to the specific
Affiliated Companies with respect to which the Change in Control occurs.
To the extent that proceeds are received by the Affiliated Companies or the
shareholders of the Affiliated Companies in other than cash or deferred
installments of cash, the such other consideration shall be valued in good
faith by the Company, for purposes of determining the Benchmark Value.
(ii) In all other cases other than those described in the
foregoing provisions of this paragraph 1.(c), an amount equal to (A) the
Combined EBITDA
<PAGE>
multiplied by 5, plus (B) cash held by the Affiliated Companies, less (C)
debt of the Affiliated Companies (other than trade payables).
Benchmark Value shall be determined by the Company's independent
accountants, as of the end of the prior fiscal year in the cases described
in paragraph l.(c)(ii) a month in which the termination of employment or
Change in Control occurs.
(d) "Cause" shall have the meaning ascribed to it in the Employment
Agreement.
(e) "Change in Control" shall mean (i) the sale of all or
substantially all of the stock or assets of the one or more Affiliated
CoJnpanies to one or more third parties who are not, immediately preceding such
transaction shareholders of an Affiliated Company, (ii) the merger of the one or
more Affiliated Companies into or with another company in which a controlling
interest is not owned by one or more shareholders of an Affiliated Company, or
(iii) an initial public offering of the stock of one or more of the Affiliated
Companies; provided, however, that the disposition by one or more of the
Affiliated Companies of one or more vessels, without a transfer of the
operating business shall not be deemed to be a "Change in Control".
(f) "Combined EBITDA" shall mean the combined earnings before
interest, taxes, depreciation and amortization of the Affiliated Companies.
(g) "Disability" shall have the meaning ascribed to it in the
Employment Agreement.
(h) "Employment Agreement" shall mean the Employment Agreement
between Employee and the Company effective as of June 23, 1997.
2. Long-Term Incentive Bonus
(a) General. Subject to the terms and conditions described below, in
the event of (i) the termination of Employee's employment with the Company for
reasons other than Cause or (ii) a Change in Control, the Company shall pay to
Employee a bonus, in addition to any bonus to which he may be entitled under the
Employment Agreement, equal to 3.913% of the excess, if any, of the Benchmark
Value of the Affiliated Companies as of the date of termination of employment or
Change in Control, whichever is applicable, over the Base Value of the
Affiliated Companies.
(b) Minimum Bonus During First Twelve Months. Notwithstanding
anything contained herein to the contrary, in the event of a Change of Control
occurring during the period beginning on the date of this Agreement and enting
twelve (12) months thereafter, Employee shall be entitled to receive a bonus
equal to the greater of (i) the bonus determined in accordance with paragraph
2.(a) or (ii) $1,000,000.00.
2
<PAGE>
(c) Maximum Bonus. Notwithstanding anything contained herein to the
contrary, in the event of a termination of Employee's employment with the
Company, the maximum amount that Employee shall be entitled to receive under
paragraph 2.(a) shall be $10,000,000.00. In the event of a Change in Control,
there shall be no limit on the amount of the bonus that Employee shall be
entitled to receive under paragraph 2(a).
3. Vesting in Bonus.
(a) General. In the event that Employee's termination of employment
occurs before the end of business on June 22, 1999, shall have no vested
interest in the bonus and this Agreement shall terminate. Upon completion of
two full years of employment, Employee shall become vested with respect to 30%
of the bonus. Upon completion of the initial three (3) year term of employment,
Employee shall become vested with respect to 40% of the bonus. Thereafter,
Employee will become vested with respect to an additional 10% of the bonus on
and after each of the next succeeding six (6) anniversary dates of the last day
of the initial employment term, provided he is still employed on such
anniversary date, such that he will be 100% vested in the bonus after completing
nine (9) years of employment. In the event that Employee's termination of
employment occurs prior to the time that he is 100% vested in the bonus, only
that portion of the bonus in which Employee is vested shall be payable to him
hereunder.
(b) Change Control. Notwithstanding the provisions of paragraph
3.(a), in the event of a Change in Control, Employee shall be 100% vested in the
bonus, regardless of Employee's period of service.
4. Time and Method of Payment.
(a) Termination of Employment Other Than for Reasons of Death,
Disability. The vested amount of the a bonus that becomes payable to Employee
hereunder following termination of Employee's employment for reasons other
than death or Disability, determined in accordance with paragraphs 2 and 3,
shall be made to Employee (or in the event of Employee's death after termination
of employment, to Employee's estate) in cash, in thirty-six (36) equal monthly
installments, beginning as of the first day of the month following the later of
the month in which Employee attains age 55 or the month in which Employee's
employment terminates.
(b) Termination of Employment for Reasons of Death, Disability. The
vested amount of the a bonus that becomes payable to Employee hereunder
following termination of Employee's employment on account of death or
Disability, determined in accordance with paragraphs 2 and 3, shall be made to
Employee (or in the event of Employee's death, to Employee's estate) in cash, in
one hundred and twenty (120) equal monthly installments, beginning as of the
first day of the month following the month in which Employee dies or the month
in which Employee's employment terminates on account of Disability, whichever is
3
<PAGE>
applicable. Notwithstanding the immediately preceding, in the event that
Employee (or Employee's estate) is still receiving installment payments as of
the date he attains (or would have attained) age 55, the remaining amount due as
of such date shall be paid to Employee (or Employee's estate) in thirty-six (36)
equal monthly installments, beginning as of the first day of the month following
the month in which Employee attains (or would have attained) age 55.
(c) Change in Control other Than IPO. The vested amount of the a
bonus that becomes payable to Employee hereunder on account of a Change in
Control other than an initial public offering of the stock of an Affiliated
Company, 7, determined in accordance with paragraphs 2 and 3, shall be made to
Employee in cash, or deferred installments of cash, at the same time(s) as
shareholders in the Affiliated Company with respect to which the Change in
Control occurs are paid.
(d) Change in Control on Account of IPO. The vested amount of the a
bonus that becomes payable to Employee hereunder on account of a Change in
Control by reason of an initial public offering of the stock of an Affiliated
Company, determined in accordance with paragraphs 2 and 3, shall be made in that
number of shares of stock of the Affiliated Company with respect to which the
initial public offering occurs, the value of which is equal to the bonus payable
hereunder, based upon the initial price of such shares offered to the public in
the initial public offering. Such shares will be transferrable by Employee only
if such securities have been registered under the federal Securities Act of
1933, as amended (the "Act"), or pursuant to an exemption from registration
available to Employee under the Act. To the extent that Employee is subject to
withholding taxes on a bonus payable hereunder in shares of stock, the Company
may loan to Employee, upon such terms and conditions as Employee and the Company
shall agree, an amount sufficient to satisfy the withholding obligation with
respect to such shares of stock, such loan to be secured by the shares of stock
received by Employee hereunder.
5. Continuation of Agreement in Event of Change in Control. In the event
of a Change in Control with respect to one or more of the Affiliated Companies,
but not all of the Affiliated Companies, Employee shall receive a bonus
hereunder with respect to the Affiliated Company(ies) with respect to which the
Change in Control occurred. In addition, this Agreement shall continue with
respect to those Affiliated Companies with respect to which no Change in Control
has occurred.
6. Parachute Payments. To the extent that any amount payable hereunder is
a "parachute payment" within the meaning of section 280G of the Internal Revenue
Code of 1986, as amended, thc provisions of Section 10 of the Employment
Agreement, or any successor section thereto or replacement section therefor,
shall govern.
7. Miscellaneous.
(a) No Assignment. The benefits payable hereunder may not be
voluntarily or involuntarily assigned or alienated and are not subject to the
claims of creditors.
4
<PAGE>
(b) No Guarantee of Employment. Nothing in the Agreement shall be
construed as a contract of employment or be deemed to confer upon Employee the
right to be retained in the service of the Company or any Affiliated Company,
nor shall it interfere with the right of the Company or any Affiliated Company
to discharge or otherwise deal with Employee without regard to the existence of
this Agreement.
(c) No Funding. All benefits hereunder are payable, as and when they
come due, solely from the general assets of the Company or from Empress Casino
Hammond Corporation.
(d) Facility of Payment. When, in the Company's opinion, the Employee
is under a legal disability or is incapacitated in any way so as to be unable to
manage his affairs, the benefits hereunder may be paid to Employee, Employee's
spouse, or to a duly appointed guardian or conservator, custodian, adult
relative, or directly for the benefit, of Employee, as the Company shall in its
discretion determine. Any such payments shall constitute a complete discharge
therefor.
(e) Withholding for Taxes. Notwithstanding any other provisions of
this Agreement, all payments hereunder shall be subject to any applicable
withholding for all federal, state ant local taxes income, employment or excise
taxes. In the event that payment hereunder is made to Employee in shares of
stock in accordance with paragraph 4.(d), Employee will provide the Company
with the funds, if any are necessary, to discharge any income tax and FICA tax
withholding obligations of the Company relating to the shares received by
Employee, either through withholding from the Employee's subsequent salary or
bonus payments or through a direct cash payment to the Company by Employee.
(f) Governing Law. This Agreement shall be construed and administered
according to the laws of the State of Illinois to the extent that such laws are
not preempted by the laws of the United States of America.
(g) Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of both the Company and Employee and their respective
successors, assigns, heirs, and legal representatives, but neither this
Agreement nor any rights hereunder may be assigned by the Company or Employee
without the written consent of the other party.
(h) Amendments. No amendments or variations of the terms and
conditions of this Agreement shall be valid unless the same is in writing and
signed by all of the parties hereto.
(i) Savings Clause. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such
5
<PAGE>
invalidity, illegality, or enforceability shall not effect the validity and
enforceability or any other provision hereof.
8. Allocation. The Company and the Employee acknowledge that, concurrent
herewith, Employee is entering into a Long Term Incentive Bonus Agreement with
Empress Casino Hammond Corporation (the "Empress Hammond Agreement") and that
the benefits payable to Employee under this Agreement are not intended to
duplicate the benefits payable to Employee from Empress Casino Hammond
Corporation. The Company will cooperate with Empress Casino Hammond Corporation
to fairly allocate costs and expenses of the bonus payable hereunder to Employee
in a manner (i) commensurate with the relative efforts and time commitment
provided by Employee to the Company and to Empress Casino Hammond Corporation,
in the case of a bonus which is payable following a termination of employment
and (ii) consistent with the Change in Control, in the case of a bonus which is
payable following a Change in Control. Notwithstanding the right of the Company
and Empress Casino Hammond Corporation to allocate costs and expenses as set
forth herein, as between Employee and the Company and Empress Casino Hammond
Corporation, the liability of the Company hereunder and Empress Casino Hammond
Corporation under the Empress Hammond Agreement to Employee shall be joint and
several as to both agreements.
IN WITNESS WHEREOF, this Agreement has been executed by the Company and
Employee, in one or more counterparts, each of which shall be deemed an
original, as of the date first written above.
EMPRESS CASINO JOLIET EMPLOYEE:
CORPORATION
By: /s/ Thomas Lambrecht /s/ Joseph J. Canfora
---------------------------- ---------------------------
Chairman of the Board Joseph J. Canfora
6
<PAGE>
EXHIBIT 10.21
AGREEMENT
---------
This Agreement is entered into on June 12, 1997, between Empress Casino
Joliet Corporation ("Empress Joliet") and Empress Casino Hammond Corporation
("Empress Hammond"), to be effective as of June 23, 1997.
RECITALS
Each of the parties has entered into an Employment Agreement with Joseph J.
Canfora ("Employee") to serve as President.
The parties contemplate that Employee will not receive duplicative
compensation or benefits for his service; rather, based upon the relative
efforts expended for each entity, his compensation and benefits will be
allocated between Empress Joliet and Empress Hammond.
For good and valuable consideration, the receipt and sufficiency of which
acknowledged, the parties agree as follows:
1. Consent. Empress Joliet and Empress Hammond each consent to Employee
-------
serving as President and Chief Executive Officer of both entities concurrently.
2. Allocation. Empress Joliet and Empress Hammond shall mutually agree
----------
upon the appropriate allocation of compensation and benefits associated with
Employee's service based upon the degree of effort expended for each entity. In
the absence of an express agreement otherwise, the cost of Employee's
compensation and benefits shall be shared equally by Empress Joliet and Empress
Hammond. Amounts advanced by either party in excess of its allocable portion
shall be reimbursed by the other party immediately on request.
IN WITNESS WHEREOF, this Agreement is executed on the date first written
above.
EMPRESS CASINO JOLIET EMPRESS CASINO HAMMOND
CORPORATION CORPORATION
By: /s/ Peter A. Ferro By: /s/ Peter A. Ferro
------------------------------ --------------------------
Its: Chief Executive Officer Its: Chief Executive Officer
----------------------------- -------------------------
<PAGE>
EXHIBIT 10.22
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement") is entered into as of the 1st day
of January, 1998 between Empress Casino Joliet Corporation, an Illinois
corporation, hereinafter termed "Employer," and John G. Costello, hereinafter
termed "Employee."
WITNESSETH:
WHEREAS, the Employee is presently employed as Chief Financial Officer of
the Employer and is an elected officer of the Employer; and
WHEREAS, the Employer considers it essential to the best interests of the
Employer that the Employee remain with the Employer and continue to devote his
full attention to the Employer; and
WHEREAS, to induce the Employee to remain in the employ of the Employer,
the
Employer desires the Employee to enter into this Agreement; and
WHEREAS, the Employee desires to have the Employer agree to his employment
and to be bound by the covenants herein.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT. The Employer hereby employs the Employee as Chief
Financial Officer of the Employer and the Employee hereby accepts employment
from the Employer upon the terms and conditions set forth in this Agreement.
2. POSITION AND DUTIES. The Employee shall devote his best efforts and
his full business time and attention to the performance at 2300 Empress Drive,
Joliet, Illinois 60436 of the duties customarily incident to the position of
Chief Financial Officer and to such other duties of a senior officer as may be
reasonably requested by the Chief Executive Officer or President of the
Employer.
3. TERM. The initial term of employment pursuant to this Agreement shall
begin on January 1, 1998, and, unless this Agreement is terminated earlier as
provided herein, shall continue until the close of business on December 31,
1999. The term of this Agreement shall be automatically extended thereafter for
successive twelve (12) month periods, provided that neither party has given
written notice to the other party at least one hundred eighty (180) days prior
to the end of the initial or extended term that such term shall not be extended.
<PAGE>
4. COMPENSATION. For all services rendered by the Employee under this
Agreement, the Employer shall pay the Employee an annual base salary of not less
than One Hundred Thirty Five Thousand Dollars ($135,000.00) during the term of
the Agreement, payable in accordance with the payroll policies of the Employer.
The Employer shall annually at the regularly scheduled review opportunity
consider in good faith the base salary of the Employee and may increase the base
salary of the Employee depending upon his performance, the current prevailing
industry compensation scales and other relevant factors.
In addition, the Employee shall be entitled to participate in such
incentive compensation bonus programs and employee benefit plans that now exist
or which may hereafter be created and to receive employee benefits and
perquisites equivalent to those in effect on the date of this Agreement or as
may be enhanced for all senior officers. There shall be no diminution of
compensation, perquisites or benefits during the employment of the Employee.
The Employee shall be paid any bonus payments at the time provided for herein to
which he is entitled herein regardless of whether the Employee is employed by
the Employer on the date of the payment of the bonus.
5. EXPENSES. The Employee shall be authorized in carrying out his duties
and responsibilities to incur reasonable business related expenditures for
meetings, dues, journals, entertainment and such other job related matters. The
Employer shall promptly reimburse or indemnify the Employee for such reasonable
business related expenditures following presentation of documentation in
accordance with the business expense reimbursement policies of the Employer.
6. VACATION. The Employee shall be entitled during the term of his
employment to the maximum amount of PTO days per calendar years as are permitted
for the highest level of a senior officer.
7. AUTOMOBILE. The Employer at its expense shall select and provide a
luxury domestic automobile for use by the Employee. The expenses of automobile
maintenance, repair and insurance shall be paid by the Employer in accordance
with the expense reimbursement policies of the Employer.
8. BENEFITS. During the term of this Agreement, the Employee, his spouse
and dependents shall be eligible for participation in and shall receive all
benefits under any welfare benefit plans, practices, policies and programs
presently or hereafter provided by the Employer (including, without limitation,
medical, prescription, dental, disability, salary continuance, employee life,
group life and accidental death) to the Employee or to senior officers of the
Employer.
2
<PAGE>
9. TERMINATION PROVISIONS.
A. Automatic or Corporate Termination. Notwithstanding the provisions of
----------------------------------
Section 3 of this Agreement, the employment of the Employee shall automatically
terminate upon the occurrence of the following events:
(i) Death of the Employee - This Agreement and the employment of
---------------------
Employee shall terminate upon his death, and the Employer shall pay to the
estate of the Employee his base salary through the scheduled term of this
Agreement, plus any unpaid prorated bonus through the date of death. The
Employer shall have the option to make such payment in a lump sum or at the same
time and in the same manner as if the Employee were still employed. In
addition, the Employer shall provide at its expense to the spouse and dependents
of the Employee welfare benefit plan coverage through the next scheduled
termination date of this Agreement.
(ii) Disability of the Employee - For purposes of this Agreement,
--------------------------
disability is defined to mean that, as a result of the incapacity of the
Employee due to physical or mental illness, the Employee shall have been absent
for five (5) consecutive months from his duties as described herein or in any
other capacity in which he then serves on a substantially full-time basis all as
determined at that time to be total and permanent by a physician selected by the
Employer and within thirty (30) days after the Employer notifies the Employee in
writing that it intends to replace him, the Employee shall not have returned to
the performance of such duties on a full-time basis. During the period that the
Employee has been absent from his duties, the Employer shall pay the Employee
his full base salary and provide at its expense to the Employee, his spouse and
dependents continued coverage under any welfare benefit plan.
Upon such determination that the Employee is disabled, this Agreement and
the employment of Employee shall terminate. The Employee shall receive such
benefits from any disability policies of the Employer then in effect. The
Employer also shall pay to the Employee the difference between the base salary
of the Employee through the next scheduled termination date of the Agreement and
any benefit payments received by the Employee from any disability policies of
the Employer. In addition, the Employer shall provide at its expense to the
spouse and dependents of the Employee such welfare benefit plan coverage through
the next scheduled termination date of this Agreement at the same coverage level
and on the same terms and conditions which are in effect immediately prior to
the date of the disability of the Employee. Following the scheduled date of
termination of this Agreement, there shall be no further obligation of the
Employer to provide any payments to the Employee hereunder.
(iii) Resignation by the Employee - The Employee may resign his
---------------------------
employment and terminate this Agreement at any time hereunder upon thirty (30)
days written notice to the Employer. Upon such termination, the Employer shall
pay the Employee his unpaid base salary and any benefits that are due through
the date of termination.
3
<PAGE>
(iv) Termination by the Employer with Cause - For purposes of this
--------------------------------------
Agreement, Cause is defined as (a) the Employee's theft, embezzlement or
misappropriation or attempted theft, embezzlement or misappropriation of money
or tangible or intangible assets or property of the Employer or its employees;
(b) any act or acts of moral turpitude by the Employee materially injurious to
the interest, property, operations, business or reputation of the Employer; (c)
the Employee's conviction for a felony; (d) willful misconduct in the
performance of the duties of the Employee; (e) the Employee's willful neglect of
his duties under this Agreement; (f) willful and knowing violation of any rules
or regulations of any governmental or regulatory body, which is materially
injurious to the financial condition of the Employer; or (g) Employee's failure
to pass a drug test administered by the Employer and/or the failure to obtain,
retain, suspension or revocation of the Employee's gaming license in the State
of Illinois. Provided, however, that for purpose of determining whether any such
cause is present, no act or failure to act by the Employee shall be considered
"willful" if done or omitted to be done by the Employee in good faith and in the
reasonable belief that such act or omission was in the best interest of the
Employer and/or required by applicable law. Upon such termination, the Employer
shall pay the Employee his unpaid base salary and any benefits that are due
through the date of termination.
(v) Termination by the Employer Without Cause - For purposes of
-----------------------------------------
this Agreement, the employment of the Employee may be terminated by the Employer
at any time without Cause upon thirty (30) days written notice to the Employee.
Upon such termination, the Employer shall pay to the Employee his base salary
plus two additional weeks of salary and provide at its expense such welfare
benefit plan coverage to the Employee as he would have received if still
employed during the period commencing on the effective date of such termination
and ending on the later of (i) the next scheduled termination date of the
employment of the Employee; or (ii) the date that is one (1) year following the
date of such termination. The Employer also shall pay Employee an amount equal
to the last annual bonus payment paid to the Employee, which bonus payment shall
be paid within thirty (30) days following the date of termination.
The Employer shall have the option to pay such base salary in a lump sum or
at the same time and in the same manner as if the Employee were still employed.
During this period, the benefit arrangement shall include the spouse and
dependents of the Employee at the same coverage level and on the same terms and
conditions which applied immediately prior to the Date of Termination. If,
however, as the result of the termination of the Employee's employment, the
Employee and/or his otherwise eligible dependents or beneficiaries shall become
ineligible for benefits under any one or more of the Employer's benefit plans,
the Employer at its expense shall continue to provide the Employee and his
eligible dependents or beneficiaries, through direct payment or other sources,
with benefits at a level substantially equivalent to the level of benefits for
which the Employee and his dependents and beneficiaries were eligible under such
plans immediately prior to the date of the Employee's termination of employment.
The Employer shall not be responsible for continuing such benefits, however,
4
<PAGE>
upon the date the Employee and his dependents become eligible to participate in
a welfare benefit plan without any limitation for pre-existing conditions.
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employee as to all matters
arising in connection with his employment and termination.
B. Termination of the Employee Upon Change in Control. Notwithstanding
--------------------------------------------------
the provisions of Section 3 and Section 9(A) of this Agreement, upon a change in
control (as defined herein), if Employer terminates the employment of the
Employee for any reason, the Employer shall continue to pay to the Employee his
base salary through the next scheduled termination date of this Agreement or one
year, whichever is greater, and shall pay to the Employee an amount equal to the
last annual bonus payment paid to the Employee, prorated to the date of
Employer's termination of Employee. If the employment of Employee is not
terminated upon a change in control, then thereafter if Employee terminates his
employment during the term of the Agreement for Good Reason as defined herein,
the Employer shall continue to pay the Employee his base salary for a period of
one year or through the next scheduled termination date of this Agreement,
whichever is less, and shall pay to the Employee an amount equal to the last
annual bonus payment paid to the Employee, prorated to the date of termination
by Employee of his employment.
During the period of base salary continuation, the Employer shall provide
at its expense such welfare benefit plan coverage to the Employee as he would
have received if still employed.
A "change in control" shall mean the consummation of (a) a reorganization,
merger or consolidation of the Employer into or with another company in which a
controlling interest is not owned by a majority of the current shareholders of
the Employer ; (b) a sale, transfer or conveyance, whether direct or indirect,
of a majority interest (i.e. more than 50% ownership) of the issued and
outstanding stock of the Employer in which the issued and outstanding stock of
the Employer is changed into or exchanged for cash, securities or other property
of or from a third party that is unaffiliated with Employer; (c) a sale,
transfer or conveyance of all or substantially all of the assets of the Employer
provided, however, that the disposition by the Employer of any vessel or other
major assets without a transfer of the operating business shall not be deemed to
be a change in control; (d) a "change of control" as defined in the Indenture of
the Employer shall have occurred; or (e) the Employer is liquidated or dissolved
or adopts a plan of liquidation.
"Good Reason" is defined as the occurrence of any of the following events
without the express written consent of the Employee: (i) The assignment to the
Employee of any duties inconsistent in any respect with the position of Employee
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 2 of this Agreement, or
any other action by the Employer which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and
5
<PAGE>
inadvertent action not taken in bad faith and which is remedied by the Employer
promptly after receipt of notice thereof given by the Employee; (ii) Any failure
by the Employer to comply with any of the provisions of Sections 4 and/or 8 of
this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Employee; or (iii) The Employer's
requiring the Employee to be based at any office or location other than that
described in Section 2 hereof, except for travel reasonably required in the
performance of the Employee's responsibilities. The right of Employee to
terminate his employment pursuant to this Agreement for Good Reason shall not be
affected by his incapacity due to physical or mental illness. The Employee's
continued employment shall not constitute consent to, or a waiver with respect
to, any circumstance constituting Good Reason hereunder.
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employer as to all matters
arising in connection with his employment and termination.
C. Termination of Agreement upon Conclusion of the Term. Unless this
----------------------------------------------------
Agreement has been extended pursuant to the provisions of Section 3 herein, this
Agreement shall terminate without further obligation to the Employee other than
the hereafter provided for obligation of the Employer at the conclusion of its
initial or extended term. In that event, the Employee shall be entitled to a
severance payment of six months of his annual base salary, plus all accrued and
unpaid base salary, welfare benefits and bonus through the scheduled term based
upon the last annual bonus payment paid to Employee.
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employer as to all matters
arising in connection with his employment and termination.
D. Continuation of Coverage. When the termination of benefits coverage
------------------------
under any section in this Agreement occurs, the Employee, his spouse and
dependents shall be entitled to continuation of coverage pursuant to Section
4980B of the Internal Revenue Code of 1986, as amended, Section 601-608 of the
Employee Retirement Income Security Act of 1974, as amended, and under any other
applicable law, to the extent required by such laws, as if the Employee had
terminated employment with the Employer on the date such benefits coverage
terminates.
10. BONUS ON CHANGE IN CONTROL. Upon the occurrence of a change in
control (as defined in Section 9(B) above), and regardless of whether the
Employee's employment with the Employer is continued or terminated upon the
occurrence of such change in control, the Employee shall be entitled to a bonus
calculated by (a) adding the Employee's annual base salary in effect immediately
prior to the change in control, plus the Employee's annual bonus for the fiscal
----
year immediately prior to the change in control, and (b) multiplying
6
<PAGE>
the foregoing sum by two and one-half (2.5). Such bonus shall be payable to the
Employee by the Employer in a lump sum upon the occurence of the change in
control.
11. CONFIDENTIAL INFORMATION. The Employee, during the term of his
employment with the Employer and thereafter following the termination of his
employment with the Employer for any reason, shall not, directly or indirectly,
on his own behalf or on behalf of any other person or entity, use for himself,
or use or disseminate or disclose to any other party, any secret or confidential
information regarding the Employer. The Employee shall also return all
property, documents, materials and confidential information of the Employer upon
termination of his employment for any reason or at any time the Employer may
request. For purposes of this Agreement, such confidential information shall
include any data or information regarding the business of the Employer or any
subsidiary or affiliate of the Employer that is not generally known to the
public, including without limitation any confidential information or data
regarding the plans of the Employer or its subsidiaries or affiliates or the
business methods of the Employer or its subsidiaries or affiliates not in
general use by others, including without limitation any proprietary knowledge,
trade secrets, data, formulae, information and client and customer lists and all
papers, resumes, records, including computer records and the documents
containing such confidential information. The Employee acknowledges that such
confidential information remains the exclusive property of the Employer and is
specialized, unique in nature, of great value to the Employer and that such
information gives the Employer a competitive advantage.
12. NON-SOLICITATION. The Employee, during the term of his employment
with the Employer and one year thereafter following the termination for any
reason of his employment with the Employer, shall not, directly or indirectly,
on his own behalf or on behalf of any other person or entity, solicit,
influence, induce or attempt to solicit, recruit or induce: (i) any then
current employee, representative or independent contractor of the Employer or
its subsidiaries or affiliates to terminate or modify his, her or its employment
or business relationship with the Employer or such subsidiary or affiliate; (ii)
any then current customer or client of the Employer or its subsidiaries or
affiliates with which the Employee had personal contact during his employment or
about which the Employee had access to confidential information regarding such
customer to terminate or modify his, her or its use of the Employer's, or such
subsidiary's or affiliate's, products and services; or (iii) any then current
vendor, supplier, service provider or other business relation of the Employer or
its affiliates to terminate or modify his, her or its relationship with the
Employer or such subsidiary or affiliate.
13. COVENANT NOT TO COMPETE. Employee, during his employment with the
Employer and (a) for a period of one (1) year after (i) resignation of Employee
of his employment; (ii) voluntary termination by Employee of his employment with
the Employer; (iii) termination of Employee by the Employer for cause; (iv)
termination of Employee upon a change in control; or (v) termination by Employee
of his employment for Good Cause following a change in control, or (b) for a
period of six (6) months after the expiration of the term of this Agreement
without renewal by the Employer, shall not, directly or indirectly, accept an
7
<PAGE>
employment or consulting opportunity or become an owner, partner, joint
venturer, director, officer or employee of any entity conducting casino gaming
located within a radius of fifty (50) miles of the location on the date of
Agreement of the Employer or any of its affiliates or subsidiaries, provided,
however, that the ownership by Employee of public traded securities of a
corporation or other entity which owns, manages or supplies building services to
a casino shall not be a violation of this Section 13. The Employee agrees that
during such period he will not assist or encourage any other person in carrying
out any activity that would be prohibited by the foregoing provisions of this
Section 13 if such activity were carried out by the Employee and, in particular,
the Employee agrees that he will not induce or attempt to induce any employee of
the Employer to carry out any such activity.
14. REASONABLE RESTRICTIONS. The Employee acknowledges that the covenants
contained in Sections 11, 12 and 13 of this Agreement are reasonable in scope,
area and duration, are necessary to protect the Employer's confidential
information, trade secrets and near permanent, permanent and/or long-standing
relationships with its employees and customers and will not materially affect
the Employee's ability to be employed following his employment with the
Employer. The Employee further agrees that in the event of an actual, attempted
or threatened breach by the Employee of Section 11, 12 or 13 of this Agreement,
the Employer shall be entitled to injunctive relief and any other available
legal or equitable remedies without any bond in addition to payment of
reasonable attorney fees. If it is determined by a court of competent
jurisdiction that any restriction in Sections 11, 12 or 13 is excessive in
duration or scope or is unreasonable or unenforceable under the laws of the
State of Illinois, it is the intention of the parties that such restriction may
be modified or amended by the court to render it enforceable to the maximum
extent permitted by the laws of the State of Illinois.
15. SURVIVAL. The Employee agrees that the provisions of Sections 11, 12
and 13 shall survive the termination of this Agreement and the termination of
the Employee's employment with the Employer. In no event shall an asserted
violation of any of the provisions of Section 11, 12 or 13 constitute a basis
for deferring or withholding any amounts otherwise payable to the Employee under
this Agreement.
16. NO OFFSET AND NO MITIGATION. The Employee shall not be required to
mitigate damages under this Agreement by seeking other comparable employment.
The amount of any payment or benefit provided for in this Agreement shall not be
reduced by any compensation or benefits earned by or provided to him as the
result of employment by another employer, except as provided otherwise in
Section 9(D) with respect to welfare benefit plan coverage during the salary
continuation period.
17. ARBITRATION. Except for the Employer's rights as provided in Sections
11, 12 and 13 to injunctive relief, any disputes or disagreements between the
parties relating to or arising out of the Employee's employment by the Employer
or the terms of this Agreement shall be submitted to arbitration. If the
parties are unable to agree upon an arbitrator within seven (7) days after
notice of any such claim from either party, an arbitrator shall be selected from
a panel
8
<PAGE>
furnished by the American Arbitration Association ("AAA") in accordance with its
procedures, such arbitration shall take place at the AAA office closest to the
Employer's principal offices or a location mutually acceptable to the parties.
The award of the arbitrator shall be final and binding upon all parties. The
arbitrator shall have no authority to order specific performance or to add to,
subtract from or modify this Agreement, but shall have the authority only to
interpret this Agreement. The arbitrator's fee and other common expenses of the
arbitration shall be borne equally by the parties, except that each party shall
be responsible for its own attorney's fees.
18. TAXES. All payments to be made to the Employee under this Agreement
will be subject to any applicable withholding of federal, state and local income
and employment taxes.
19. INDEMNIFICATION. The Employee shall have at a minimum during the term
of this Agreement and for a period of not less than two years after the
termination of this Agreement the benefit of the current indemnification
provisions as provided under applicable law and the bylaws of the Employer. The
Employer shall cause the Employee to be covered by any policies of directors and
officers liability insurance of the Employer now in force or hereafter obtained
in accordance with their terms to the maximum extent of the coverage available
for any director or officer of the Employer.
20. WAIVER OF BREACH. The waiver by either the Employer or the Employee
of a breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by either the Employer or the Employee.
21. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of both the Employer and the Employee and their respective
successors (in the case of Employer, whether by purchase, merger, consolidation
or otherwise), assigns, heirs and legal representatives, but this Agreement or
any rights hereunder may not be assigned by the Employee without the consent, in
writing, of the Employer.
22. AMENDMENTS. No amendments or variations of the terms and conditions
of this Agreement shall be valid unless they are in writing and signed by both
parties.
23. ASSIGNMENT. The Employer may assign this Agreement to any direct or
indirect affiliate, subsidiary or parent of the Employer or joint venture in
which the Employer has an interest, or any successor (whether by merger,
consolidation, purchase or otherwise) to all or substantially all of the stock,
assets or business of the Employer. Except as expressly provided herein, the
Employee may not sell, transfer, assign or pledge any of his rights or interests
pursuant to this Agreement.
24. SAVINGS CLAUSE. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the validity and enforceability of any other provision hereof.
9
<PAGE>
25. NOTICE. Any notice or demand provided for herein or given pursuant to
this Agreement shall be in writing and served on the parties at the following
addresses:
Employee:
--------
John G. Costello
128 Oakview
New Lenox, Illinois 60451
and
Employer:
--------
Empress Casino Joliet Corporation
Attention: Chief Executive Officer
2300 Empress Drive
Joliet, Illinois 60436
Fax No. 815-744-9482
Any notice shall be either: (i) personally delivered to the addresses set forth
above, in which case it shall be deemed delivered on the date of delivery to
said addresses; or (ii) sent by registered or certified mail, return receipt
requested, in which case it shall be deemed delivered three business days after
deposited in the U.S. Mail; (iii) sent by a nationally recognized overnight
courier, in which case it shall be deemed delivered one business day after
deposit with such courier; or (iv) sent by telecopier or facsimile machine, in
which case it will be deemed delivered on the date of transmission. In the
event a party's address shall change it shall immediately give the other party
notice of such change of address. The above addresses shall remain effective
until the date of delivery of a notice of change of address.
26. ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement between the parties with respect to the subject matter hereof and
supersedes all prior and existing negotiations and agreements between the
parties and cannot be amended, modified or supplemented in any respect except by
any subsequent written agreement entered into and executed by both parties.
27. GOVERNING LAW. This Agreement shall be governed both as to
interpretation and performance under the laws of the State of Illinois.
10
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the Employer and
the Employee on the 12th day of March, 1998 effective as of the date and year
first above written.
Employer:
EMPRESS CASINO JOLIET CORPORATION
/s/ Peter A. Ferro, Jr.,
- -----------------------------------------------
By Peter A. Ferro, Jr., Chief Executive Officer
Employee:
/s/ John G. Costello
- -----------------------------------------------
John G. Costello
11
<PAGE>
EXHIBIT 10.23
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement") is entered into as of the 1st day
of January, 1998 between Empress Casino Joliet Corporation, an Illinois
corporation, hereinafter termed "Employer," and Michael W. Hansen, hereinafter
termed "Employee."
WITNESSETH:
WHEREAS, the Employee is presently employed as Chief Legal Officer of the
Employer and is an elected officer of the Employer; and
WHEREAS, the Employer considers it essential to the best interests of the
Employer that the Employee remain with the Employer and continue to devote his
full attention to the Employer; and
WHEREAS, to induce the Employee to remain in the employ of the Employer,
the Employer desires the Employee to enter into this Agreement; and
WHEREAS, the Employee desires to have the Employer agree to his employment
and to be bound by the covenants herein.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT. The Employer hereby employs the Employee as Chief Legal
Officer of the Employer and the Employee hereby accepts employment from the
Employer upon the terms and conditions set forth in this Agreement.
2. POSITION AND DUTIES. The Employee shall devote his best efforts and
his full business time and attention to the performance at 2300 Empress Drive,
Joliet, Illinois 60436 of the duties customarily incident to the position of
Chief Legal Officer and to such other duties of a senior officer as may be
reasonably requested by the Chief Executive Officer or President of the
Employer.
3. TERM. The initial term of employment pursuant to this Agreement shall
begin on January 1, 1998, and, unless this Agreement is terminated earlier as
provided herein, shall continue until the close of business on December 31,
1999. The term of this Agreement shall be automatically extended thereafter for
successive twelve (12) month periods, provided that neither party has given
written notice to the other party at least one hundred eighty (180) days prior
to the end of the initial or extended term that such term shall not be extended.
<PAGE>
4. COMPENSATION. For all services rendered by the Employee under this
Agreement, the Employer shall pay the Employee an annual base salary of not less
than Two Hundred Six Thousand Dollars ($206,000.00) during the term of the
Agreement, payable in accordance with the payroll policies of the Employer. The
Employer shall annually at the regularly scheduled review opportunity consider
in good faith the base salary of the Employee and may increase the base salary
of the Employee depending upon his performance, the current prevailing industry
compensation scales and other relevant factors.
In addition, the Employee shall be entitled to participate in such
incentive compensation bonus programs and employee benefit plans that now exist
or which may hereafter be created and to receive employee benefits and
perquisites equivalent to those in effect on the date of this Agreement or as
may be enhanced for all senior officers. There shall be no diminution of
compensation, perquisites or benefits during the employment of the Employee.
The Employee shall be paid any bonus payments at the time provided for herein to
which he is entitled herein regardless of whether the Employee is employed by
the Employer on the date of the payment of the bonus.
5. EXPENSES. The Employee shall be authorized in carrying out his duties
and responsibilities to incur reasonable business related expenditures for
meetings, dues, journals, entertainment and such other job related matters. The
Employer shall promptly reimburse or indemnify the Employee for such reasonable
business related expenditures following presentation of documentation in
accordance with the business expense reimbursement policies of the Employer.
6. VACATION. The Employee shall be entitled during the term of his
employment to the maximum amount of PTO days per calendar years as are permitted
for the highest level of a senior officer.
7. AUTOMOBILE. The Employer at its expense shall select and provide a
luxury domestic automobile for use by the Employee. The expenses of automobile
maintenance, repair and insurance shall be paid by the Employer in accordance
with the expense reimbursement policies of the Employer.
8. BENEFITS. During the term of this Agreement, the Employee, his spouse
and dependents shall be eligible for participation in and shall receive all
benefits under any welfare benefit plans, practices, policies and programs
presently or hereafter provided by the Employer (including, without limitation,
medical, prescription, dental, disability, salary continuance, employee life,
group life and accidental death) to the Employee or to senior officers of the
Employer.
2
<PAGE>
9. TERMINATION PROVISIONS.
A. Automatic or Corporate Termination. Notwithstanding the provisions of
----------------------------------
Section 3 of this Agreement, the employment of the Employee shall automatically
terminate upon the occurrence of the following events:
(i) Death of the Employee - This Agreement and the employment of
---------------------
Employee shall terminate upon his death, and the Employer shall pay to the
estate of the Employee his base salary through the scheduled term of this
Agreement, plus any unpaid prorated bonus through the date of death. The
Employer shall have the option to make such payment in a lump sum or at the same
time and in the same manner as if the Employee were still employed. In
addition, the Employer shall provide at its expense to the spouse and dependents
of the Employee welfare benefit plan coverage through the next scheduled
termination date of this Agreement.
(ii) Disability of the Employee - For purposes of this Agreement,
--------------------------
disability is defined to mean that, as a result of the incapacity of the
Employee due to physical or mental illness, the Employee shall have been absent
for five (5) consecutive months from his duties as described herein or in any
other capacity in which he then serves on a substantially full-time basis all as
determined at that time to be total and permanent by a physician selected by the
Employer and within thirty (30) days after the Employer notifies the Employee in
writing that it intends to replace him, the Employee shall not have returned to
the performance of such duties on a full-time basis. During the period that the
Employee has been absent from his duties, the Employer shall pay the Employee
his full base salary and provide at its expense to the Employee, his spouse and
dependents continued coverage under any welfare benefit plan.
Upon such determination that the Employee is disabled, this Agreement and
the employment of Employee shall terminate. The Employee shall receive such
benefits from any disability policies of the Employer then in effect. The
Employer also shall pay to the Employee the difference between the base salary
of the Employee through the next scheduled termination date of the Agreement and
any benefit payments received by the Employee from any disability policies of
the Employer. In addition, the Employer shall provide at its expense to the
spouse and dependents of the Employee such welfare benefit plan coverage through
the next scheduled termination date of this Agreement at the same coverage level
and on the same terms and conditions which are in effect immediately prior to
the date of the disability of the Employee. Following the scheduled date of
termination of this Agreement, there shall be no further obligation of the
Employer to provide any payments to the Employee hereunder.
(iii) Resignation by the Employee - The Employee may resign his
---------------------------
employment and terminate this Agreement at any time hereunder upon thirty (30)
days written notice to the Employer. Upon such termination, the Employer shall
pay the Employee his unpaid base salary and any benefits that are due through
the date of termination.
3
<PAGE>
(iv) Termination by the Employer with Cause - For purposes of this
--------------------------------------
Agreement, Cause is defined as (a) the Employee's theft, embezzlement or
misappropriation or attempted theft, embezzlement or misappropriation of money
or tangible or intangible assets or property of the Employer or its employees;
(b) any act or acts of moral turpitude by the Employee materially injurious to
the interest, property, operations, business or reputation of the Employer; (c)
the Employee's conviction for a felony; (d) willful misconduct in the
performance of the duties of the Employee; (e) the Employee's willful neglect of
his duties under this Agreement; (f) willful and knowing violation of any rules
or regulations of any governmental or regulatory body, which is materially
injurious to the financial condition of the Employer; or (g) Employee's failure
to pass a drug test administered by the Employer and/or the failure to obtain,
retain, suspension or revocation of the Employee's gaming license in the State
of Illinois. Provided, however, that for purpose of determining whether any
such cause is present, no act or failure to act by the Employee shall be
considered "willful" if done or omitted to be done by the Employee in good faith
and in the reasonable belief that such act or omission was in the best interest
of the Employer and/or required by applicable law. Upon such termination, the
Employer shall pay the Employee his unpaid base salary and any benefits that are
due through the date of termination.
(v) Termination by the Employer Without Cause - For purposes of this
-----------------------------------------
Agreement, the employment of the Employee may be terminated by the Employer at
any time without Cause upon thirty (30) days written notice to the Employee.
Upon such termination, the Employer shall pay to the Employee his base salary
plus two additional weeks of salary and provide at its expense such welfare
benefit plan coverage to the Employee as he would have received if still
employed during the period commencing on the effective date of such termination
and ending on the later of (i) the next scheduled termination date of the
employment of the Employee; or (ii) the date that is one (1) year following the
date of such termination. The Employer also shall pay Employee an amount equal
to the last annual bonus payment paid to the Employee, which bonus payment shall
be paid within thirty (30) days following the date of termination.
The Employer shall have the option to pay such base salary in a lump sum or
at the same time and in the same manner as if the Employee were still employed.
During this period, the benefit arrangement shall include the spouse and
dependents of the Employee at the same coverage level and on the same terms and
conditions which applied immediately prior to the Date of Termination. If,
however, as the result of the termination of the Employee's employment, the
Employee and/or his otherwise eligible dependents or beneficiaries shall become
ineligible for benefits under any one or more of the Employer's benefit plans,
the Employer at its expense shall continue to provide the Employee and his
eligible dependents or beneficiaries, through direct payment or other sources,
with benefits at a level substantially equivalent to the level of benefits for
which the Employee and his dependents and beneficiaries were eligible under such
plans immediately prior to the date of the Employee's termination of employment.
The Employer shall not be responsible for continuing such benefits, however,
4
<PAGE>
upon the date the Employee and his dependents become eligible to participate in
a welfare benefit plan without any limitation for pre-existing conditions.
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employee as to all matters
arising in connection with his employment and termination.
B. Termination of the Employee Upon Change in Control. Notwithstanding
--------------------------------------------------
the provisions of Section 3 and Section 9(A) of this Agreement, upon a change in
control (as defined herein), if Employer terminates the employment of the
Employee for any reason, the Employer shall continue to pay to the Employee his
base salary through the next scheduled termination date of this Agreement or one
year, whichever is greater, and shall pay to the Employee an amount equal to the
last annual bonus payment paid to the Employee, prorated to the date of
Employer's termination of Employee. If the employment of Employee is not
terminated upon a change in control, then thereafter if Employee terminates his
employment during the term of the Agreement for Good Reason as defined herein,
the Employer shall continue to pay the Employee his base salary for a period of
one year or through the next scheduled termination date of this Agreement,
whichever is less, and shall pay to the Employee an amount equal to the last
annual bonus payment paid to the Employee, prorated to the date of termination
by Employee of his employment.
During the period of base salary continuation, the Employer shall provide
at its expense such welfare benefit plan coverage to the Employee as he would
have received if still employed.
A "change in control" shall mean the consummation of (a) a reorganization,
merger or consolidation of the Employer into or with another company in which a
controlling interest is not owned by a majority of the current shareholders of
the Employer ; (b) a sale, transfer or conveyance, whether direct or indirect,
of a majority interest (i.e. more than 50% ownership) of the issued and
outstanding stock of the Employer in which the issued and outstanding stock of
the Employer is changed into or exchanged for cash, securities or other property
of or from a third party that is unaffiliated with Employer; (c) a sale,
transfer or conveyance of all or substantially all of the assets of the Employer
provided, however, that the disposition by the Employer of any vessel or other
major assets without a transfer of the operating business shall not be deemed to
be a change in control; (d) a "change of control" as defined in the Indenture of
the Employer shall have occurred; or (e) the Employer is liquidated or dissolved
or adopts a plan of liquidation.
"Good Reason" is defined as the occurrence of any of the following events
without the express written consent of the Employee: (i) The assignment to the
Employee of any duties inconsistent in any respect with the position of Employee
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 2 of this Agreement, or
any other action by the Employer which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and
5
<PAGE>
inadvertent action not taken in bad faith and which is remedied by the Employer
promptly after receipt of notice thereof given by the Employee; (ii) Any failure
by the Employer to comply with any of the provisions of Sections 4 and/or 8 of
this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Employee; or (iii) The Employer's
requiring the Employee to be based at any office or location other than that
described in Section 2 hereof, except for travel reasonably required in the
performance of the Employee's responsibilities. The right of Employee to
terminate his employment pursuant to this Agreement for Good Reason shall not be
affected by his incapacity due to physical or mental illness. The Employee's
continued employment shall not constitute consent to, or a waiver with respect
to, any circumstance constituting Good Reason hereunder.
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employer as to all matters
arising in connection with his employment and termination.
C. Termination of Agreement upon Conclusion of the Term. Unless this
----------------------------------------------------
Agreement has been extended pursuant to the provisions of Section 3 herein, this
Agreement shall terminate without further obligation to the Employee other than
the hereafter provided for obligation of the Employer at the conclusion of its
initial or extended term. In that event, the Employee shall be entitled to a
severance payment of six months of his annual base salary, plus all accrued and
unpaid base salary, welfare benefits and bonus through the scheduled term based
upon the last annual bonus payment paid to Employee.
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employer as to all matters
arising in connection with his employment and termination.
D. Continuation of Coverage. When the termination of benefits coverage
------------------------
under any section in this Agreement occurs, the Employee, his spouse and
dependents shall be entitled to continuation of coverage pursuant to Section
4980B of the Internal Revenue Code of 1986, as amended, Section 601-608 of the
Employee Retirement Income Security Act of 1974, as amended, and under any other
applicable law, to the extent required by such laws, as if the Employee had
terminated employment with the Employer on the date such benefits coverage
terminates.
10. BONUS ON CHANGE IN CONTROL. Upon the occurrence of a change in
control (as defined in Section 9(B) above), and regardless of whether the
Employee's employment with the Employer is continued or terminated upon the
occurrence of such change in control, the Employee shall be entitled to a bonus
calculated by (a) adding the Employee's annual base salary in effect immediately
prior to the change in control, plus the Employee's annual bonus for the fiscal
----
year immediately prior to the change in control, and (b) multiplying
6
<PAGE>
the foregoing sum by two (2). Such bonus shall be payable to the Employee by the
Employer in a lump sum upon the occurence of the change in control.
11. CONFIDENTIAL INFORMATION. The Employee, during the term of his
employment with the Employer and thereafter following the termination of his
employment with the Employer for any reason, shall not, directly or indirectly,
on his own behalf or on behalf of any other person or entity, use for himself,
or use or disseminate or disclose to any other party, any secret or confidential
information regarding the Employer. The Employee shall also return all property,
documents, materials and confidential information of the Employer upon
termination of his employment for any reason or at any time the Employer may
request. For purposes of this Agreement, such confidential information shall
include any data or information regarding the business of the Employer or any
subsidiary or affiliate of the Employer that is not generally known to the
public, including without limitation any confidential information or data
regarding the plans of the Employer or its subsidiaries or affiliates or the
business methods of the Employer or its subsidiaries or affiliates not in
general use by others, including without limitation any proprietary knowledge,
trade secrets, data, formulae, information and client and customer lists and all
papers, resumes, records, including computer records and the documents
containing such confidential information. The Employee acknowledges that such
confidential information remains the exclusive property of the Employer and is
specialized, unique in nature, of great value to the Employer and that such
information gives the Employer a competitive advantage.
12. NON-SOLICITATION. The Employee, during the term of his employment
with the Employer and one year thereafter following the termination for any
reason of his employment with the Employer, shall not, directly or indirectly,
on his own behalf or on behalf of any other person or entity, solicit,
influence, induce or attempt to solicit, recruit or induce: (i) any then
current employee, representative or independent contractor of the Employer or
its subsidiaries or affiliates to terminate or modify his, her or its employment
or business relationship with the Employer or such subsidiary or affiliate; (ii)
any then current customer or client of the Employer or its subsidiaries or
affiliates with which the Employee had personal contact during his employment or
about which the Employee had access to confidential information regarding such
customer to terminate or modify his, her or its use of the Employer's, or such
subsidiary's or affiliate's, products and services; or (iii) any then current
vendor, supplier, service provider or other business relation of the Employer or
its affiliates to terminate or modify his, her or its relationship with the
Employer or such subsidiary or affiliate.
13. COVENANT NOT TO COMPETE. Employee, during his employment with the
Employer and (a) for a period of one (1) year after (i) resignation of Employee
of his employment; (ii) voluntary termination by Employee of his employment with
the Employer; (iii) termination of Employee by the Employer for cause; (iv)
termination of Employee upon a change in control; or (v) termination by Employee
of his employment for Good Cause following a
7
<PAGE>
change in control, or (b) for a period of six (6) months after the expiration of
the term of this Agreement without renewal by the Employer, shall not, directly
or indirectly, accept an employment or consulting opportunity or become an
owner, partner, joint venturer, director, officer or employee of any entity
conducting casino gaming located within a radius of fifty (50) miles of the
location on the date of Agreement of the Employer or any of its affiliates or
subsidiaries, provided, however, that the ownership by Employee of public traded
securities of a corporation or other entity which owns, manages or supplies
building services to a casino shall not be a violation of this Section 13. The
Employee agrees that during such period he will not assist or encourage any
other person in carrying out any activity that would be prohibited by the
foregoing provisions of this Section 13 if such activity were carried out by the
Employee and, in particular, the Employee agrees that he will not induce or
attempt to induce any employee of the Employer to carry out any such activity.
14. REASONABLE RESTRICTIONS. The Employee acknowledges that the covenants
contained in Sections 11, 12 and 13 of this Agreement are reasonable in scope,
area and duration, are necessary to protect the Employer's confidential
information, trade secrets and near permanent, permanent and/or long-standing
relationships with its employees and customers and will not materially affect
the Employee's ability to be employed following his employment with the
Employer. The Employee further agrees that in the event of an actual, attempted
or threatened breach by the Employee of Section 11, 12 or 13 of this Agreement,
the Employer shall be entitled to injunctive relief and any other available
legal or equitable remedies without any bond in addition to payment of
reasonable attorney fees. If it is determined by a court of competent
jurisdiction that any restriction in Sections 11, 12 or 13 is excessive in
duration or scope or is unreasonable or unenforceable under the laws of the
State of Illinois, it is the intention of the parties that such restriction may
be modified or amended by the court to render it enforceable to the maximum
extent permitted by the laws of the State of Illinois.
15. SURVIVAL. The Employee agrees that the provisions of Sections 11, 12
and 13 shall survive the termination of this Agreement and the termination of
the Employee's employment with the Employer. In no event shall an asserted
violation of any of the provisions of Section 11, 12 or 13 constitute a basis
for deferring or withholding any amounts otherwise payable to the Employee under
this Agreement.
16. NO OFFSET AND NO MITIGATION. The Employee shall not be required to
mitigate damages under this Agreement by seeking other comparable employment.
The amount of any payment or benefit provided for in this Agreement shall not be
reduced by any compensation or benefits earned by or provided to him as the
result of employment by another employer, except as provided otherwise in
Section 9(D) with respect to welfare benefit plan coverage during the salary
continuation period.
17. ARBITRATION. Except for the Employer's rights as provided in Sections
11, 12 and 13 to injunctive relief, any disputes or disagreements between the
parties relating to or arising out of the Employee's employment by the Employer
or the terms of this Agreement shall be submitted to arbitration. If the
parties are unable to agree upon an arbitrator within seven (7) days after
notice of any such claim from either party, an arbitrator shall be selected from
a panel
8
<PAGE>
furnished by the American Arbitration Association ("AAA") in accordance with its
procedures, such arbitration shall take place at the AAA office closest to the
Employer's principal offices or a location mutually acceptable to the parties.
The award of the arbitrator shall be final and binding upon all parties. The
arbitrator shall have no authority to order specific performance or to add to,
subtract from or modify this Agreement, but shall have the authority only to
interpret this Agreement. The arbitrator's fee and other common expenses of the
arbitration shall be borne equally by the parties, except that each party shall
be responsible for its own attorney's fees.
18. TAXES. All payments to be made to the Employee under this Agreement
will be subject to any applicable withholding of federal, state and local income
and employment taxes.
19. INDEMNIFICATION. The Employee shall have at a minimum during the term
of this Agreement and for a period of not less than two years after the
termination of this Agreement the benefit of the current indemnification
provisions as provided under applicable law and the bylaws of the Employer. The
Employer shall cause the Employee to be covered by any policies of directors and
officers liability insurance of the Employer now in force or hereafter obtained
in accordance with their terms to the maximum extent of the coverage available
for any director or officer of the Employer.
20. WAIVER OF BREACH. The waiver by either the Employer or the Employee
of a breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by either the Employer or the Employee.
21. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of both the Employer and the Employee and their respective
successors (in the case of Employer, whether by purchase, merger, consolidation
or otherwise), assigns, heirs and legal representatives, but this Agreement or
any rights hereunder may not be assigned by the Employee without the consent, in
writing, of the Employer.
22. AMENDMENTS. No amendments or variations of the terms and conditions
of this Agreement shall be valid unless they are in writing and signed by both
parties.
23. ASSIGNMENT. The Employer may assign this Agreement to any direct or
indirect affiliate, subsidiary or parent of the Employer or joint venture in
which the Employer has an interest, or any successor (whether by merger,
consolidation, purchase or otherwise) to all or substantially all of the stock,
assets or business of the Employer. Except as expressly provided herein, the
Employee may not sell, transfer, assign or pledge any of his rights or interests
pursuant to this Agreement.
24. SAVINGS CLAUSE. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the validity and enforceability of any other provision hereof.
9
<PAGE>
25. NOTICE. Any notice or demand provided for herein or given pursuant to
this Agreement shall be in writing and served on the parties at the following
addresses:
Employee:
--------
Michael W. Hansen
750 Meadow Wood Drive
Joliet, Illinois 60435
and
Employer:
--------
Empress Casino Joliet Corporation
Attention: Chief Executive Officer
2300 Empress Drive
Joliet, Illinois 60436
Fax No. 815-744-9482
Any notice shall be either: (i) personally delivered to the addresses set forth
above, in which case it shall be deemed delivered on the date of delivery to
said addresses; or (ii) sent by registered or certified mail, return receipt
requested, in which case it shall be deemed delivered three business days after
deposited in the U.S. Mail; (iii) sent by a nationally recognized overnight
courier, in which case it shall be deemed delivered one business day after
deposit with such courier; or (iv) sent by telecopier or facsimile machine, in
which case it will be deemed delivered on the date of transmission. In the
event a party's address shall change it shall immediately give the other party
notice of such change of address. The above addresses shall remain effective
until the date of delivery of a notice of change of address.
26. ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement between the parties with respect to the subject matter hereof and
supersedes all prior and existing negotiations and agreements between the
parties and cannot be amended, modified or supplemented in any respect except by
any subsequent written agreement entered into and executed by both parties.
27. GOVERNING LAW. This Agreement shall be governed both as to
interpretation and performance under the laws of the State of Illinois.
10
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the Employer and
the Employee on the 12th day of March, 1998 effective as of the date and year
first above written.
Employer:
EMPRESS CASINO JOLIET CORPORATION
/s/ Peter A. Ferro, Jr.
- --------------------------------------
By Peter A. Ferro, Jr., Chief Executive Officer
Employee:
/s/ Michael W. Hansen
- --------------------------------------
Michael W. Hansen
11
<PAGE>
EXHIBIT 10.24
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement") is entered into as of the 1st day
of August, 1997, between Empress Casino Joliet Corporation, an Illinois
corporation, hereinafter termed "Employer," and David F. Fendrick, hereinafter
termed "Employee."
WITNESSETH:
WHEREAS, the Employee is presently employed as General Manager of the
Employer and is an elected officer of the Employer; and
WHEREAS, the Employer considers it essential to the best interests of the
Employer that the Employee remain with the Employer and continue to devote his
full attention to the Employer; and
WHEREAS, to induce the Employee to remain in the employ of the Employer,
the Employer desires the Employee to enter into this Agreement; and
WHEREAS, the Employee desires to have the Employer agree to his employment
and to be bound by the covenants herein.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT. The Employer hereby employs the Employee as General
Manager of the Employer and the Employee hereby accepts employment from the
Employer upon the terms and conditions set forth in this Agreement.
2. POSITION AND DUTIES. The Employee shall devote his best efforts and
his full business time and attention to the performance at 2300 Empress Drive,
Joliet, Illinois 60436 of the duties customarily incident to the position of
General Manager and to such other duties of a senior officer as may be
reasonably requested by the President of the Employer.
3. TERM. The initial term of employment pursuant to this Agreement shall
begin on August 1, 1997, and, unless this Agreement is terminated earlier as
provided herein, shall continue until the close of business on July 31, 2000.
The term of this Agreement shall be automatically extended thereafter for
successive twelve (12) month periods, provided that neither party has given
written notice to the other party at least one hundred eighty (180) days prior
to the end of the initial or extended term that such term shall not be extended.
4. COMPENSATION. For all services rendered by the Employee under this
Agreement, the Employer shall pay the Employee an annual base salary of not less
than Two Hundred Thousand Dollars ($200,000.00) during the term of the
Agreement, payable in
<PAGE>
accordance with the payroll policies of the Employer. The Employer shall
annually at the regularly scheduled review opportunity consider in good faith
the base salary of the Employee and may increase the base salary of the Employee
depending upon his performance, the current prevailing industry compensation
scales and other relevant factors.
In addition, the Employee shall be entitled to participate in such
incentive compensation bonus programs and employee benefit plans that now exist
or which may hereafter be created and to receive employee benefits and
perquisites equivalent to those in effect on the date of this Agreement or as
may be enhanced for all senior officers. There shall be no diminution of
compensation, perquisites or benefits during the employment of the Employee. The
Employee shall be paid any bonus payments at the time provided for herein to
which he is entitled herein regardless of whether the Employee is employed by
the Employer on the date of the payment of the bonus.
5. EXPENSES. The Employee shall be authorized in carrying out his duties
and responsibilities to incur reasonable business related expenditures for
meetings, dues, journals, entertainment and such other job related matters. The
Employer shall promptly reimburse or indemnify the Employee for such reasonable
business related expenditures following presentation of documentation in
accordance with the business expense reimbursement policies of the Employer.
6. VACATION. The Employee shall be entitled during the term of his
employment to the maximum amount of PTO days per calendar years as are permitted
for the highest level of a senior officer.
7. AUTOMOBILE. The Employer at its expense shall select and provide a
luxury domestic automobile for use by the Employee. The expenses of automobile
maintenance, repair and insurance shall be paid by the Employer in accordance
with the expense reimbursement policies of the Employer.
8. BENEFITS. During the term of this Agreement, the Employee, his spouse
and dependents shall be eligible for participation in and shall receive all
benefits under any welfare benefit plans, practices, policies and programs
presently or hereafter provided by the Employer (including, without limitation,
medical, prescription, dental, disability, salary continuance, employee life,
group life and accidental death) to the Employee or to senior officers of the
Employer.
2
<PAGE>
9. TERMINATION PROVISIONS.
A. Automatic or Corporate Termination. Notwithstanding the provisions of
----------------------------------
Section 3 of this Agreement, the employment of the Employee shall automatically
terminate upon the occurrence of the following events:
(i) Death of the Employee - This Agreement and the employment of
---------------------
Employee shall terminate upon his death, and the Employer shall pay to the
estate of the Employee his base salary through the scheduled term of this
Agreement, plus any unpaid prorated bonus through the date of death. The
Employer shall have the option to make such payment in a lump sum or at the same
time and in the same manner as if the Employee were still employed. In
addition, the Employer shall provide at its expense to the spouse and dependents
of the Employee welfare benefit plan coverage through the next scheduled
termination date of this Agreement.
(ii) Disability of the Employee - For purposes of this Agreement,
--------------------------
disability is defined to mean that, as a result of the incapacity of the
Employee due to physical or mental illness, the Employee shall have been absent
for five (5) consecutive months from his duties as described herein or in any
other capacity in which he then serves on a substantially full-time basis all as
determined at that time to be total and permanent by a physician selected by the
Employer and within thirty (30) days after the Employer notifies the Employee in
writing that it intends to replace him, the Employee shall not have returned to
the performance of such duties on a full-time basis. During the period that the
Employee has been absent from his duties, the Employer shall pay the Employee
his full base salary and provide at its expense to the Employee, his spouse and
dependents continued coverage under any welfare benefit plan.
Upon such determination that the Employee is disabled, this Agreement and
the employment of Employee shall terminate. The Employee shall receive such
benefits from any disability policies of the Employer then in effect. The
Employer also shall pay to the Employee the difference between the base salary
of the Employee through the next scheduled termination date of the Agreement and
any benefit payments received by the Employee from any disability policies of
the Employer. In addition, the Employer shall provide at its expense to the
spouse and dependents of the Employee such welfare benefit plan coverage through
the next scheduled termination date of this Agreement at the same coverage level
and on the same terms and conditions which are in effect immediately prior to
the date of the disability of the Employee. Following the scheduled date of
termination of this Agreement, there shall be no further obligation of the
Employer to provide any payments to the Employee hereunder.
(iii) Resignation by the Employee - The Employee may resign his
---------------------------
employment and terminate this Agreement at any time hereunder upon thirty (30)
days written notice to the Employer. Upon such termination, the Employer shall
pay the Employee his unpaid base salary and any benefits that are due through
the date of termination.
(iv) Termination by the Employer with Cause - For purposes of this
--------------------------------------
Agreement, Cause is defined as (a) the Employee's theft, embezzlement or
misappropriation or
3
<PAGE>
attempted theft, embezzlement or misappropriation of money or tangible or
intangible assets or property of the Employer or its employees; (b) any act or
acts of moral turpitude by the Employee materially injurious to the interest,
property, operations, business or reputation of the Employer; (c) the Employee's
conviction for a felony; (d) willful misconduct in the performance of the duties
of the Employee; (e) the Employee's willful neglect of his duties under this
Agreement; (f) willful and knowing violation of any rules or regulations of any
governmental or regulatory body, which is materially injurious to the financial
condition of the Employer; or (g) Employee's failure to pass a drug test
administered by the Employer and/or the failure to obtain, retain, suspension or
revocation of the Employee's gaming license in the State of Illinois. Provided,
however, that for purpose of determining whether any such cause is present, no
act or failure to act by the Employee shall be considered "willful" if done or
omitted to be done by the Employee in good faith and in the reasonable belief
that such act or omission was in the best interest of the Employer and/or
required by applicable law. Upon such termination, the Employer shall pay the
Employee his unpaid base salary and any benefits that are due through the date
of termination.
(v) Termination by the Employer Without Cause - For purposes of this
-----------------------------------------
Agreement, the employment of the Employee may be terminated by the Employer at
any time without Cause upon thirty (30) days written notice to the Employee.
Upon such termination, the Employer shall pay to the Employee his base salary
plus two additional weeks of salary and provide at its expense such welfare
benefit plan coverage to the Employee as he would have received if still
employed during the period commencing on the effective date of such termination
and ending on the later of (i) the next scheduled termination date of the
employment of the Employee; or (ii) the date that is one (1) year following the
date of such termination. The Employer also shall pay Employee an amount equal
to the last annual bonus payment paid to the Employee, which bonus payment shall
be paid within thirty (30) days following the date of termination.
The Employer shall have the option to pay such base salary in a lump sum or
at the same time and in the same manner as if the Employee were still employed.
During this period, the benefit arrangement shall include the spouse and
dependents of the Employee at the same coverage level and on the same terms and
conditions which applied immediately prior to the Date of Termination. If,
however, as the result of the termination of the Employee's employment, the
Employee and/or his otherwise eligible dependents or beneficiaries shall become
ineligible for benefits under any one or more of the Employer's benefit plans,
the Employer at its expense shall continue to provide the Employee and his
eligible dependents or beneficiaries, through direct payment or other sources,
with benefits at a level substantially equivalent to the level of benefits for
which the Employee and his dependents and beneficiaries were eligible under such
plans immediately prior to the date of the Employee's termination of employment.
The Employer shall not be responsible for continuing such benefits, however,
upon the date the Employee and his dependents become eligible to participate in
a welfare benefit plan without any limitation for pre-existing conditions.
4
<PAGE>
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employee as to all matters
arising in connection with his employment and termination.
B. Termination of the Employee Upon Change in Control. Notwithstanding
--------------------------------------------------
the provisions of Section 3 and Section 9(A) of this Agreement, upon a change in
control (as defined herein), if Employer terminates the employment of the
Employee for any reason, the Employer shall continue to pay to the Employee his
base salary through the next scheduled termination date of this Agreement or one
year, whichever is greater, and shall pay to the Employee an amount equal to the
last annual bonus payment paid to the Employee, prorated to the date of
Employer's termination of Employee. If the employment of Employee is not
terminated upon a change in control, then thereafter if Employee terminates his
employment during the term of the Agreement for Good Reason as defined herein,
the Employer shall continue to pay the Employee his base salary for a period of
one year or through the next scheduled termination date of this Agreement,
whichever is less, and shall pay to the Employee an amount equal to the last
annual bonus payment paid to the Employee, prorated to the date of termination
by Employee of his employment.
During the period of base salary continuation, the Employer shall provide
at its expense such welfare benefit plan coverage to the Employee as he would
have received if still employed.
A "change in control" shall mean the consummation of (a) a reorganization,
merger or consolidation of the Employer into or with another company in which a
controlling interest is not owned by a majority of the current shareholders of
the Employer ; (b) a sale, transfer or conveyance, whether direct or indirect,
of a majority interest (i.e. more than 50% ownership) of the issued and
outstanding stock of the Employer in which the issued and outstanding stock of
the Employer is changed into or exchanged for cash, securities or other property
of or from a third party that is unaffiliated with Employer; (c) a sale,
transfer or conveyance of all or substantially all of the assets of the Employer
provided, however, that the disposition by the Employer of any vessel or other
major assets without a transfer of the operating business shall not be deemed to
be a change in control; (d) a "change of control" as defined in the Indenture of
the Employer shall have occurred; or (e) the Employer is liquidated or dissolved
or adopts a plan of liquidation.
"Good Reason" is defined as the occurrence of any of the following events
without the express written consent of the Employee: (i) The assignment to the
Employee of any duties inconsistent in any respect with the position of Employee
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 2 of this Agreement, or
any other action by the Employer which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Employer promptly after receipt of notice thereof given by the
Employee; (ii) Any failure by the Employer to comply with any of the provisions
of Sections 4 and/or 8 of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Employee; or (iii)
The Employer's
5
<PAGE>
requiring the Employee to be based at any office or location other than that
described in Section 2 hereof, except for travel reasonably required in the
performance of the Employee's responsibilities. The right of Employee to
terminate his employment pursuant to this Agreement for Good Reason shall not be
affected by his incapacity due to physical or mental illness. The Employee's
continued employment shall not constitute consent to, or a waiver with respect
to, any circumstance constituting Good Reason hereunder.
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employer as to all matters
arising in connection with his employment and termination.
C. Termination of Agreement upon Conclusion of the Term. Unless this
----------------------------------------------------
Agreement has been extended pursuant to the provisions of Section 3 herein, this
Agreement shall terminate without further obligation to the Employee other than
the hereafter provided for obligation of the Employer at the conclusion of its
initial or extended term. In that event, the Employee shall be entitled to a
severance payment of six months of his annual base salary, plus all accrued and
unpaid base salary, welfare benefits and bonus through the scheduled term based
upon the last annual bonus payment paid to Employee.
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employer as to all matters
arising in connection with his employment and termination.
D. Continuation of Coverage. When the termination of benefits coverage
------------------------
under any section in this Agreement occurs, the Employee, his spouse and
dependents shall be entitled to continuation of coverage pursuant to Section
4980B of the Internal Revenue Code of 1986, as amended, Section 601-608 of the
Employee Retirement Income Security Act of 1974, as amended, and under any other
applicable law, to the extent required by such laws, as if the Employee had
terminated employment with the Employer on the date such benefits coverage
terminates.
10. BONUS ON CHANGE IN CONTROL. Upon the occurrence of a change in
control (as defined in Section 9(B) above), and regardless of whether the
Employee's employment with the Employer is continued or terminated upon the
occurrence of such change in control, the Employee shall be entitled to a bonus
calculated by (a) adding the Employee's annual base salary in effect immediately
prior to the change in control, plus the Employee's annualized bonus for the
----
fiscal year immediately prior to the change in control, and (b) multiplying the
foregoing sum by one and one-half (1.5). Such bonus shall be payable to the
Employee by the Employer in a lump sum upon the occurrence of the change in
control.
11. CONFIDENTIAL INFORMATION. The Employee, during the term of his
employment with the Employer and thereafter following the termination of his
employment with the Employer for any reason, shall not, directly or indirectly,
on his own behalf or on behalf of any other person or entity, use for himself,
or use or disseminate or disclose to any other party, any secret or confidential
information regarding the Employer. The Employee shall also return
6
<PAGE>
all property, documents, materials and confidential information of the Employer
upon termination of his employment for any reason or at any time the Employer
may request. For purposes of this Agreement, such confidential information shall
include any data or information regarding the business of the Employer or any
subsidiary or affiliate of the Employer that is not generally known to the
public, including without limitation any confidential information or data
regarding the plans of the Employer or its subsidiaries or affiliates or the
business methods of the Employer or its subsidiaries or affiliates not in
general use by others, including without limitation any proprietary knowledge,
trade secrets, data, formulae, information and client and customer lists and all
papers, resumes, records, including computer records and the documents
containing such confidential information. The Employee acknowledges that such
confidential information remains the exclusive property of the Employer and is
specialized, unique in nature, of great value to the Employer and that such
information gives the Employer a competitive advantage.
12. NON-SOLICITATION. The Employee, during the term of his employment
with the Employer and one year thereafter following the termination for any
reason of his employment with the Employer, shall not, directly or indirectly,
on his own behalf or on behalf of any other person or entity, solicit,
influence, induce or attempt to solicit, recruit or induce: (i) any then current
employee, representative or independent contractor of the Employer or its
subsidiaries or affiliates to terminate or modify his, her or its employment or
business relationship with the Employer or such subsidiary or affiliate; (ii)
any then current customer or client of the Employer or its subsidiaries or
affiliates with which the Employee had personal contact during his employment or
about which the Employee had access to confidential information regarding such
customer to terminate or modify his, her or its use of the Employer's, or such
subsidiary's or affiliate's, products and services; or (iii) any then current
vendor, supplier, service provider or other business relation of the Employer or
its affiliates to terminate or modify his, her or its relationship with the
Employer or such subsidiary or affiliate.
13. COVENANT NOT TO COMPETE. Employee, during his employment with the
Employer and (a) for a period of one (1) year after (i) resignation of Employee
of his employment; (ii) voluntary termination by Employee of his employment with
the Employer; (iii) termination of Employee by the Employer for cause; (iv)
termination of Employee upon a change in control; or (v) termination by Employee
of his employment for Good Cause following a change in control, or (b) for a
period of six (6) months after the expiration of the term of this Agreement
without renewal by the Employer, shall not, directly or indirectly, accept an
employment or consulting opportunity or become an owner, partner, joint
venturer, director, officer or employee of any entity conducting casino gaming
located within a radius of fifty (50) miles of the location on the date of
Agreement of the Employer or any of its affiliates or subsidiaries, provided,
however, that the ownership by Employee of public traded securities of a
corporation or other entity which owns, manages or supplies building services to
a casino shall not be a violation of this Section 13. The Employee agrees that
during such period he will not assist or encourage any other person in carrying
out any activity that would be prohibited by the foregoing provisions of this
Section 13 if such activity were carried out by the Employee and, in particular,
the Employee agrees that he will not induce or attempt to induce any employee of
the Employer to carry out any such activity.
7
<PAGE>
14. REASONABLE RESTRICTIONS. The Employee acknowledges that the covenants
contained in Sections 11, 12 and 13 of this Agreement are reasonable in scope,
area and duration, are necessary to protect the Employer's confidential
information, trade secrets and near permanent, permanent and/or long-standing
relationships with its employees and customers and will not materially affect
the Employee's ability to be employed following his employment with the
Employer. The Employee further agrees that in the event of an actual, attempted
or threatened breach by the Employee of Section 11, 12 or 13 of this Agreement,
the Employer shall be entitled to injunctive relief and any other available
legal or equitable remedies without any bond in addition to payment of
reasonable attorney fees. If it is determined by a court of competent
jurisdiction that any restriction in Sections 11, 12 or 13 is excessive in
duration or scope or is unreasonable or unenforceable under the laws of the
State of Illinois, it is the intention of the parties that such restriction may
be modified or amended by the court to render it enforceable to the maximum
extent permitted by the laws of the State of Illinois.
15. SURVIVAL. The Employee agrees that the provisions of Sections 11, 12
and 13 shall survive the termination of this Agreement and the termination of
the Employee's employment with the Employer. In no event shall an asserted
violation of any of the provisions of Section 11, 12 or 13 constitute a basis
for deferring or withholding any amounts otherwise payable to the Employee under
this Agreement.
16. NO OFFSET AND NO MITIGATION. The Employee shall not be required to
mitigate damages under this Agreement by seeking other comparable employment.
The amount of any payment or benefit provided for in this Agreement shall not be
reduced by any compensation or benefits earned by or provided to him as the
result of employment by another employer, except as provided otherwise in
Section 9(D) with respect to welfare benefit plan coverage during the salary
continuation period.
17. ARBITRATION. Except for the Employer's rights as provided in Sections
11, 12 and 13 to injunctive relief, any disputes or disagreements between the
parties relating to or arising out of the Employee's employment by the Employer
or the terms of this Agreement shall be submitted to arbitration. If the parties
are unable to agree upon an arbitrator within seven (7) days after notice of any
such claim from either party, an arbitrator shall be selected from a panel
furnished by the American Arbitration Association ("AAA") in accordance with its
procedures, such arbitration shall take place at the AAA office closest to the
Employer's principal offices or a location mutually acceptable to the parties.
The award of the arbitrator shall be final and binding upon all parties. The
arbitrator shall have no authority to order specific performance or to add to,
subtract from or modify this Agreement, but shall have the authority only to
interpret this Agreement. The arbitrator's fee and other common expenses of the
arbitration shall be borne equally by the parties, except that each party shall
be responsible for its own attorney's fees.
18. TAXES. All payments to be made to the Employee under this Agreement
will be subject to any applicable withholding of federal, state and local income
and employment taxes.
19. INDEMNIFICATION. The Employee shall have at a minimum during the term
of this Agreement and for a period of not less than two years after the
termination of this
8
<PAGE>
Agreement the benefit of the current indemnification provisions as provided
under applicable law and the bylaws of the Employer. The Employer shall cause
the Employee to be covered by any policies of directors and officers liability
insurance of the Employer now in force or hereafter obtained in accordance with
their terms to the maximum extent of the coverage available for any director or
officer of the Employer.
20. WAIVER OF BREACH. The waiver by either the Employer or the Employee
of a breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by either the Employer or the Employee.
21. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of both the Employer and the Employee and their respective
successors (in the case of Employer, whether by purchase, merger, consolidation
or otherwise), assigns, heirs and legal representatives, but this Agreement or
any rights hereunder may not be assigned by the Employee without the consent, in
writing, of the Employer.
22. AMENDMENTS. No amendments or variations of the terms and conditions
of this Agreement shall be valid unless they are in writing and signed by both
parties.
23. ASSIGNMENT. The Employer may assign this Agreement to any direct or
indirect affiliate, subsidiary or parent of the Employer or joint venture in
which the Employer has an interest, or any successor (whether by merger,
consolidation, purchase or otherwise) to all or substantially all of the stock,
assets or business of the Employer. Except as expressly provided herein, the
Employee may not sell, transfer, assign or pledge any of his rights or interests
pursuant to this Agreement.
24. SAVINGS CLAUSE. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the validity and enforceability of any other provision hereof.
25. NOTICE. Any notice or demand provided for herein or given pursuant to
this Agreement shall be in writing and served on the parties at the following
addresses:
Employee:
--------
David F. Fendrick
26839 South Overland
Channahon, Illinois 60510
and
Employer:
--------
Empress Casino Joliet Corporation
Attention: President
2300 Empress Drive
9
<PAGE>
Joliet, Illinois 60436
Fax No. (815) 744-9455
Any notice shall be either: (i) personally delivered to the addresses set forth
above, in which case it shall be deemed delivered on the date of delivery to
said addresses; or (ii) sent by registered or certified mail, return receipt
requested, in which case it shall be deemed delivered three business days after
deposited in the U.S. Mail; (iii) sent by a nationally recognized overnight
courier, in which case it shall be deemed delivered one business day after
deposit with such courier; or (iv) sent by telecopier or facsimile machine, in
which case it will be deemed delivered on the date of transmission. In the event
a party's address shall change it shall immediately give the other party notice
of such change of address. The above addresses shall remain effective until the
date of delivery of a notice of change of address.
26. ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement between the parties with respect to the subject matter hereof and
supersedes all prior and existing negotiations and agreements between the
parties and cannot be amended, modified or supplemented in any respect except by
any subsequent written agreement entered into and executed by both parties.
27. GOVERNING LAW. This Agreement shall be governed both as to
interpretation and performance under the laws of the State of Illinois.
10
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the Employer and
the Employee on the 12th day of March, 1998 effective as of the date and year
first above written.
Employer:
EMPRESS CASINO JOLIET CORPORATION
/s/ Joseph A. Canfora
- -------------------------------
By Joseph A. Canfora, President
Employee:
/s/ David F. Fendrick
- -------------------------------
David F. Fendrick
11
<PAGE>
EXHIBIT 10.25
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement ("Agreement") is entered into as of the 1st day
of January, 1998, between Empress Casino Hammond Corporation, an Indiana
corporation, hereinafter termed "Employer," and Rick S. Mazer, hereinafter
termed "Employee."
WITNESSETH:
WHEREAS, the Employee is presently employed as General Manager of the
Employer and is an elected officer of the Employer; and
WHEREAS, the Employer considers it essential to the best interests of the
Employer that the Employee remain with the Employer and continue to devote his
full attention to the Employer; and
WHEREAS, to induce the Employee to remain in the employ of the Employer,
the Employer desires the Employee to enter into this Agreement; and
WHEREAS, the Employee desires to have the Employer agree to his employment
and to be bound by the covenants herein.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT. The Employer hereby employs the Employee as General
Manager of the Employer and the Employee hereby accepts employment from the
Employer upon the terms and conditions set forth in this Agreement.
2. POSITION AND DUTIES. The Employee shall devote his best efforts and
his full business time and attention to the performance at 825 Empress Drive,
Hammond, Indiana 46320 of the duties customarily incident to the position of
General Manager and to such other duties of a senior officer as may be
reasonably requested by the President of the Employer.
3. TERM. The initial term of employment pursuant to this Agreement shall
begin on January 1, 1998, and, unless this Agreement is terminated earlier as
provided herein, shall continue until the close of business on December 31,
1999. The term of this Agreement shall be automatically extended thereafter for
successive twelve (12) month periods, provided that neither party has given
written notice to the other party at least one hundred eighty (180) days prior
to the end of the initial or extended term that such term shall not be extended.
4. COMPENSATION. For all services rendered by the Employee under this
Agreement, the Employer shall pay the Employee an annual base salary of not less
than One Hundred Eighty Thousand Dollars ($180,000.00) during the term of the
Agreement, payable in
<PAGE>
accordance with the payroll policies of the Employer. The Employer shall
annually at the regularly scheduled review opportunity consider in good faith
the base salary of the Employee and may increase the base salary of the Employee
depending upon his performance, the current prevailing industry compensation
scales and other relevant factors.
In addition, the Employee shall be entitled to participate in such
incentive compensation bonus programs and employee benefit plans that now exist
or which may hereafter be created and to receive employee benefits and
perquisites equivalent to those in effect on the date of this Agreement or as
may be enhanced for all senior officers. There shall be no diminution of
compensation, perquisites or benefits during the employment of the Employee. The
Employee shall be paid any bonus payments at the time provided for herein to
which he is entitled herein regardless of whether the Employee is employed by
the Employer on the date of the payment of the bonus.
5. EXPENSES. The Employee shall be authorized in carrying out his duties
and responsibilities to incur reasonable business related expenditures for
meetings, dues, journals, entertainment and such other job related matters. The
Employer shall promptly reimburse or indemnify the Employee for such reasonable
business related expenditures following presentation of documentation in
accordance with the business expense reimbursement policies of the Employer.
6. VACATION. The Employee shall be entitled during the term of his
employment to the maximum amount of PTO days per calendar years as are permitted
for the highest level of a senior officer.
7. AUTOMOBILE. The Employer at its expense shall select and provide a
luxury domestic automobile for use by the Employee. The expenses of automobile
maintenance, repair and insurance shall be paid by the Employer in accordance
with the expense reimbursement policies of the Employer.
8. BENEFITS. During the term of this Agreement, the Employee, his spouse
and dependents shall be eligible for participation in and shall receive all
benefits under any welfare benefit plans, practices, policies and programs
presently or hereafter provided by the Employer (including, without limitation,
medical, prescription, dental, disability, salary continuance, employee life,
group life and accidental death) to the Employee or to senior officers of the
Employer.
2
<PAGE>
9. TERMINATION PROVISIONS.
A. Automatic or Corporate Termination. Notwithstanding the provisions of
----------------------------------
Section 3 of this Agreement, the employment of the Employee shall automatically
terminate upon the occurrence of the following events:
(i) Death of the Employee - This Agreement and the employment of
---------------------
Employee shall terminate upon his death, and the Employer shall pay to the
estate of the Employee his base salary through the scheduled term of this
Agreement, plus any unpaid prorated bonus through the date of death. The
Employer shall have the option to make such payment in a lump sum or at the same
time and in the same manner as if the Employee were still employed. In
addition, the Employer shall provide at its expense to the spouse and dependents
of the Employee welfare benefit plan coverage through the next scheduled
termination date of this Agreement.
(ii) Disability of the Employee - For purposes of this Agreement,
--------------------------
disability is defined to mean that, as a result of the incapacity of the
Employee due to physical or mental illness, the Employee shall have been absent
for five (5) consecutive months from his duties as described herein or in any
other capacity in which he then serves on a substantially full-time basis all as
determined at that time to be total and permanent by a physician selected by the
Employer and within thirty (30) days after the Employer notifies the Employee in
writing that it intends to replace him, the Employee shall not have returned to
the performance of such duties on a full-time basis. During the period that the
Employee has been absent from his duties, the Employer shall pay the Employee
his full base salary and provide at its expense to the Employee, his spouse and
dependents continued coverage under any welfare benefit plan.
Upon such determination that the Employee is disabled, this Agreement and
the employment of Employee shall terminate. The Employee shall receive such
benefits from any disability policies of the Employer then in effect. The
Employer also shall pay to the Employee the difference between the base salary
of the Employee through the next scheduled termination date of the Agreement and
any benefit payments received by the Employee from any disability policies of
the Employer. In addition, the Employer shall provide at its expense to the
spouse and dependents of the Employee such welfare benefit plan coverage through
the next scheduled termination date of this Agreement at the same coverage level
and on the same terms and conditions which are in effect immediately prior to
the date of the disability of the Employee. Following the scheduled date of
termination of this Agreement, there shall be no further obligation of the
Employer to provide any payments to the Employee hereunder.
(iii) Resignation by the Employee - The Employee may resign his
---------------------------
employment and terminate this Agreement at any time hereunder upon thirty (30)
days written notice to the Employer. Upon such termination, the Employer shall
pay the Employee his unpaid base salary and any benefits that are due through
the date of termination.
(iv) Termination by the Employer with Cause - For purposes of this
--------------------------------------
Agreement, Cause is defined as (a) the Employee's theft, embezzlement or
misappropriation or
3
<PAGE>
attempted theft, embezzlement or misappropriation of money or tangible or
intangible assets or property of the Employer or its employees; (b) any act or
acts of moral turpitude by the Employee materially injurious to the interest,
property, operations, business or reputation of the Employer; (c) the Employee's
conviction for a felony; (d) willful misconduct in the performance of the duties
of the Employee; (e) the Employee's willful neglect of his duties under this
Agreement; (f) willful and knowing violation of any rules or regulations of any
governmental or regulatory body, which is materially injurious to the financial
condition of the Employer; or (g) Employee's failure to pass a drug test
administered by the Employer and/or the failure to obtain, retain, suspension or
revocation of the Employee's gaming license in the State of Indiana. Provided,
however, that for purpose of determining whether any such cause is present, no
act or failure to act by the Employee shall be considered "willful" if done or
omitted to be done by the Employee in good faith and in the reasonable belief
that such act or omission was in the best interest of the Employer and/or
required by applicable law. Upon such termination, the Employer shall pay the
Employee his unpaid base salary and any benefits that are due through the date
of termination.
(v) Termination by the Employer Without Cause - For purposes of this
-----------------------------------------
Agreement, the employment of the Employee may be terminated by the Employer at
any time without Cause upon thirty (30) days written notice to the Employee.
Upon such termination, the Employer shall pay to the Employee his base salary
plus two additional weeks of salary and provide at its expense such welfare
benefit plan coverage to the Employee as he would have received if still
employed during the period commencing on the effective date of such termination
and ending on the later of (i) the next scheduled termination date of the
employment of the Employee; or (ii) the date that is one (1) year following the
date of such termination. The Employer also shall pay Employee an amount equal
to the last annual bonus payment paid to the Employee, which bonus payment shall
be paid within thirty (30) days following the date of termination.
The Employer shall have the option to pay such base salary in a lump sum or
at the same time and in the same manner as if the Employee were still employed.
During this period, the benefit arrangement shall include the spouse and
dependents of the Employee at the same coverage level and on the same terms and
conditions which applied immediately prior to the Date of Termination. If,
however, as the result of the termination of the Employee's employment, the
Employee and/or his otherwise eligible dependents or beneficiaries shall become
ineligible for benefits under any one or more of the Employer's benefit plans,
the Employer at its expense shall continue to provide the Employee and his
eligible dependents or beneficiaries, through direct payment or other sources,
with benefits at a level substantially equivalent to the level of benefits for
which the Employee and his dependents and beneficiaries were eligible under such
plans immediately prior to the date of the Employee's termination of employment.
The Employer shall not be responsible for continuing such benefits, however,
upon the date the Employee and his dependents become eligible to participate in
a welfare benefit plan without any limitation for pre-existing conditions.
4
<PAGE>
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employee as to all matters
arising in connection with his employment and termination.
B. Termination of the Employee Upon Change in Control. Notwithstanding
--------------------------------------------------
the provisions of Section 3 and Section 9(A) of this Agreement, upon a change in
control (as defined herein), if Employer terminates the employment of the
Employee for any reason, the Employer shall continue to pay to the Employee his
base salary through the next scheduled termination date of this Agreement or one
year, whichever is greater, and shall pay to the Employee an amount equal to the
last annual bonus payment paid to the Employee, prorated to the date of
Employer's termination of Employee. If the employment of Employee is not
terminated upon a change in control, then thereafter if Employee terminates his
employment during the term of the Agreement for Good Reason as defined herein,
the Employer shall continue to pay the Employee his base salary for a period of
one year or through the next scheduled termination date of this Agreement,
whichever is less, and shall pay to the Employee an amount equal to the last
annual bonus payment paid to the Employee, prorated to the date of termination
by Employee of his employment.
During the period of base salary continuation, the Employer shall provide
at its expense such welfare benefit plan coverage to the Employee as he would
have received if still employed.
A "change in control" shall mean the consummation of (a) a reorganization,
merger or consolidation of the Employer into or with another company in which a
controlling interest is not owned by a majority of the current shareholders of
the Employer ; (b) a sale, transfer or conveyance, whether direct or indirect,
of a majority interest (i.e. more than 50% ownership) of the issued and
outstanding stock of the Employer in which the issued and outstanding stock of
the Employer is changed into or exchanged for cash, securities or other property
of or from a third party that is unaffiliated with Employer; (c) a sale,
transfer or conveyance of all or substantially all of the assets of the Employer
provided, however, that the disposition by the Employer of any vessel or other
major assets without a transfer of the operating business shall not be deemed to
be a change in control; (d) a "change of control" as defined in the Indenture of
the Employer shall have occurred; or (e) the Employer is liquidated or dissolved
or adopts a plan of liquidation.
"Good Reason" is defined as the occurrence of any of the following events
without the express written consent of the Employee: (i) The assignment to the
Employee of any duties inconsistent in any respect with the position of Employee
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 2 of this Agreement, or
any other action by the Employer which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Employer promptly after receipt of notice thereof given by the
Employee; (ii) Any failure by the Employer to comply with any of the provisions
of Sections 4 and/or 8 of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Employee; or (iii)
The Employer's
5
<PAGE>
requiring the Employee to be based at any office or location other than that
described in Section 2 hereof, except for travel reasonably required in the
performance of the Employee's responsibilities. The right of Employee to
terminate his employment pursuant to this Agreement for Good Reason shall not be
affected by his incapacity due to physical or mental illness. The Employee's
continued employment shall not constitute consent to, or a waiver with respect
to, any circumstance constituting Good Reason hereunder.
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employer as to all matters
arising in connection with his employment and termination.
C. Termination of Agreement upon Conclusion of the Term. Unless this
----------------------------------------------------
Agreement has been extended pursuant to the provisions of Section 3 herein, this
Agreement shall terminate without further obligation to the Employee other than
the hereafter provided for obligation of the Employer at the conclusion of its
initial or extended term. In that event, the Employee shall be entitled to a
severance payment of six months of his annual base salary, plus all accrued and
unpaid base salary, welfare benefits and bonus through the scheduled term based
upon the last annual bonus payment paid to Employee.
The Employee shall only be entitled to receive compensation pursuant to
this section upon his execution of a release of the Employer as to all matters
arising in connection with his employment and termination.
D. Continuation of Coverage. When the termination of benefits coverage
------------------------
under any section in this Agreement occurs, the Employee, his spouse and
dependents shall be entitled to continuation of coverage pursuant to Section
4980B of the Internal Revenue Code of 1986, as amended, Section 601-608 of the
Employee Retirement Income Security Act of 1974, as amended, and under any other
applicable law, to the extent required by such laws, as if the Employee had
terminated employment with the Employer on the date such benefits coverage
terminates.
10. BONUS ON CHANGE IN CONTROL. Upon the occurrence of a change in
control (as defined in Section 9(B) above), and regardless of whether the
Employee's employment with the Employer is continued or terminated upon the
occurrence of such change in control, the Employee shall be entitled to a bonus
calculated by (a) adding the Employee's annual base salary in effect immediately
prior to the change in control, plus the Employee's annual bonus for the fiscal
----
year immediately prior to the change in control, and (b) multiplying the
foregoing sum by two (2). Such bonus shall be payable to the Employee by the
Employer in a lump sum upon the occurrence of the change in control.
11. CONFIDENTIAL INFORMATION. The Employee, during the term of his
employment with the Employer and thereafter following the termination of his
employment with the Employer for any reason, shall not, directly or indirectly,
on his own behalf or on behalf of any other person or entity, use for himself,
or use or disseminate or disclose to any other party, any secret or confidential
information regarding the Employer. The Employee shall also return
6
<PAGE>
all property, documents, materials and confidential information of the Employer
upon termination of his employment for any reason or at any time the Employer
may request. For purposes of this Agreement, such confidential information shall
include any data or information regarding the business of the Employer or any
subsidiary or affiliate of the Employer that is not generally known to the
public, including without limitation any confidential information or data
regarding the plans of the Employer or its subsidiaries or affiliates or the
business methods of the Employer or its subsidiaries or affiliates not in
general use by others, including without limitation any proprietary knowledge,
trade secrets, data, formulae, information and client and customer lists and all
papers, resumes, records, including computer records and the documents
containing such confidential information. The Employee acknowledges that such
confidential information remains the exclusive property of the Employer and is
specialized, unique in nature, of great value to the Employer and that such
information gives the Employer a competitive advantage.
12. NON-SOLICITATION. The Employee, during the term of his employment
with the Employer and one year thereafter following the termination for any
reason of his employment with the Employer, shall not, directly or indirectly,
on his own behalf or on behalf of any other person or entity, solicit,
influence, induce or attempt to solicit, recruit or induce: (i) any then current
employee, representative or independent contractor of the Employer or its
subsidiaries or affiliates to terminate or modify his, her or its employment or
business relationship with the Employer or such subsidiary or affiliate; (ii)
any then current customer or client of the Employer or its subsidiaries or
affiliates with which the Employee had personal contact during his employment or
about which the Employee had access to confidential information regarding such
customer to terminate or modify his, her or its use of the Employer's, or such
subsidiary's or affiliate's, products and services; or (iii) any then current
vendor, supplier, service provider or other business relation of the Employer or
its affiliates to terminate or modify his, her or its relationship with the
Employer or such subsidiary or affiliate.
13. COVENANT NOT TO COMPETE. Employee, during his employment with the
Employer and (a) for a period of one (1) year after (i) resignation of Employee
of his employment; (ii) voluntary termination by Employee of his employment with
the Employer; (iii) termination of Employee by the Employer for cause; (iv)
termination of Employee upon a change in control; or (v) termination by Employee
of his employment for Good Cause following a change in control, or (b) for a
period of six (6) months after the expiration of the term of this Agreement
without renewal by the Employer, shall not, directly or indirectly, accept an
employment or consulting opportunity or become an owner, partner, joint
venturer, director, officer or employee of any entity conducting casino gaming
located within a radius of fifty (50) miles of the location on the date of
Agreement of the Employer or any of its affiliates or subsidiaries, provided,
however, that the ownership by Employee of public traded securities of a
corporation or other entity which owns, manages or supplies building services to
a casino shall not be a violation of this Section 13. The Employee agrees that
during such period he will not assist or encourage any other person in carrying
out any activity that would be prohibited by the foregoing provisions of this
Section 13 if such activity were carried out by the Employee and, in particular,
the Employee agrees that he will not induce or attempt to induce any employee of
the Employer to carry out any such activity.
7
<PAGE>
14. REASONABLE RESTRICTIONS. The Employee acknowledges that the covenants
contained in Sections 11, 12 and 13 of this Agreement are reasonable in scope,
area and duration, are necessary to protect the Employer's confidential
information, trade secrets and near permanent, permanent and/or long-standing
relationships with its employees and customers and will not materially affect
the Employee's ability to be employed following his employment with the
Employer. The Employee further agrees that in the event of an actual, attempted
or threatened breach by the Employee of Section 11, 12 or 13 of this Agreement,
the Employer shall be entitled to injunctive relief and any other available
legal or equitable remedies without any bond in addition to payment of
reasonable attorney fees. If it is determined by a court of competent
jurisdiction that any restriction in Sections 11, 12 or 13 is excessive in
duration or scope or is unreasonable or unenforceable under the laws of the
State of Indiana, it is the intention of the parties that such restriction may
be modified or amended by the court to render it enforceable to the maximum
extent permitted by the laws of the State of Indiana.
15. SURVIVAL. The Employee agrees that the provisions of Sections 11, 12
and 13 shall survive the termination of this Agreement and the termination of
the Employee's employment with the Employer. In no event shall an asserted
violation of any of the provisions of Section 11, 12 or 13 constitute a basis
for deferring or withholding any amounts otherwise payable to the Employee under
this Agreement.
16. NO OFFSET AND NO MITIGATION. The Employee shall not be required to
mitigate damages under this Agreement by seeking other comparable employment.
The amount of any payment or benefit provided for in this Agreement shall not be
reduced by any compensation or benefits earned by or provided to him as the
result of employment by another employer, except as provided otherwise in
Section 9(D) with respect to welfare benefit plan coverage during the salary
continuation period.
17. ARBITRATION. Except for the Employer's rights as provided in Sections
11, 12 and 13 to injunctive relief, any disputes or disagreements between the
parties relating to or arising out of the Employee's employment by the Employer
or the terms of this Agreement shall be submitted to arbitration. If the parties
are unable to agree upon an arbitrator within seven (7) days after notice of any
such claim from either party, an arbitrator shall be selected from a panel
furnished by the American Arbitration Association ("AAA") in accordance with its
procedures, such arbitration shall take place at the AAA office closest to the
Employer's principal offices or a location mutually acceptable to the parties.
The award of the arbitrator shall be final and binding upon all parties. The
arbitrator shall have no authority to order specific performance or to add to,
subtract from or modify this Agreement, but shall have the authority only to
interpret this Agreement. The arbitrator's fee and other common expenses of the
arbitration shall be borne equally by the parties, except that each party shall
be responsible for its own attorney's fees.
18. TAXES. All payments to be made to the Employee under this Agreement
will be subject to any applicable withholding of federal, state and local income
and employment taxes.
19. INDEMNIFICATION. The Employee shall have at a minimum during the term
of this Agreement and for a period of not less than two years after the
termination of this
8
<PAGE>
Agreement the benefit of the current indemnification provisions as provided
under applicable law and the bylaws of the Employer. The Employer shall cause
the Employee to be covered by any policies of directors and officers liability
insurance of the Employer now in force or hereafter obtained in accordance with
their terms to the maximum extent of the coverage available for any director or
officer of the Employer.
20. WAIVER OF BREACH. The waiver by either the Employer or the Employee
of a breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by either the Employer or the Employee.
21. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of both the Employer and the Employee and their respective
successors (in the case of Employer, whether by purchase, merger, consolidation
or otherwise), assigns, heirs and legal representatives, but this Agreement or
any rights hereunder may not be assigned by the Employee without the consent, in
writing, of the Employer.
22. AMENDMENTS. No amendments or variations of the terms and conditions
of this Agreement shall be valid unless they are in writing and signed by both
parties.
23. ASSIGNMENT. The Employer may assign this Agreement to any direct or
indirect affiliate, subsidiary or parent of the Employer or joint venture in
which the Employer has an interest, or any successor (whether by merger,
consolidation, purchase or otherwise) to all or substantially all of the stock,
assets or business of the Employer. Except as expressly provided herein, the
Employee may not sell, transfer, assign or pledge any of his rights or interests
pursuant to this Agreement.
24. SAVINGS CLAUSE. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the validity and enforceability of any other provision hereof.
25. NOTICE. Any notice or demand provided for herein or given pursuant to
this Agreement shall be in writing and served on the parties at the following
addresses:
Employee:
--------
Rick S. Mazer
13210 Waverly Road
St. John, Indiana 46373
and
Employer:
--------
Empress Casino Hammond Corporation
Attention: President
825 Empress Drive
9
<PAGE>
Hammond, Indiana 46320
Fax No. (219) 933-0518
Any notice shall be either: (i) personally delivered to the addresses set forth
above, in which case it shall be deemed delivered on the date of delivery to
said addresses; or (ii) sent by registered or certified mail, return receipt
requested, in which case it shall be deemed delivered three business days after
deposited in the U.S. Mail; (iii) sent by a nationally recognized overnight
courier, in which case it shall be deemed delivered one business day after
deposit with such courier; or (iv) sent by telecopier or facsimile machine, in
which case it will be deemed delivered on the date of transmission. In the event
a party's address shall change it shall immediately give the other party notice
of such change of address. The above addresses shall remain effective until the
date of delivery of a notice of change of address.
26. ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement between the parties with respect to the subject matter hereof and
supersedes all prior and existing negotiations and agreements between the
parties and cannot be amended, modified or supplemented in any respect except by
any subsequent written agreement entered into and executed by both parties.
27. GOVERNING LAW. This Agreement shall be governed both as to
interpretation and performance under the laws of the State of Indiana.
28. INDIANA GAMING COMMISSION APPROVAL. This Agreement is subject to
review by the Indiana Gaming Commission and may be subsequently disapproved or
canceled by the Indiana Gaming Commission in accordance with applicable rules.
10
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the Employer and
the Employee on the 12th day of March, 1998 effective as of the date and year
first above written.
Employer:
EMPRESS CASINO HAMMOND CORPORATION
/s/ Joseph A. Canfora
- ------------------------------------
By Joseph A. Canfora, President
Employee:
/s/ Rick S. Mazer
- ------------------------------------
Rick S. Mazer
11
<PAGE>
EXHIBIT 12.1
Empress Entertainment
Registration Statement
Ratio of Earnings of Fixed Charges
<TABLE>
<CAPTION>
Three Months Ended
------------------------
March 31, Year Ended December 31,
-------- ---------------------------------------
1998 1997 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Fixed Charges
- -------------
Interest expense 5,300,715 5,658,554 21,153,957 18,274,497 16,351,561
Capitalized interest - - 144,313 1,644,000 602,900
Amortization of debt issue costs 54,499 30,316 139,313 80,842 -
Interest portion of rent expense (1) 76,207 83,630 263,249 261,020 152,893
---------- ---------- ---------- ---------- ----------
Total Fixed Charges 5,431,421 5,772,832 21,700,832 20,260,359 17,107,354
Income before state income taxes 16,591,799 17,007,037 46,818,146 45,367,604 51,385,595
Fixed charges per above 5,431,421 5,772,832 21,700,832 20,260,359 17,107,354
Less capitalized interest - - 144,313 1,644,000 602,900
Current period amortization of interest
capitalized in prior period 31,558 30,413 121,651 69,460 50,321
---------- ---------- ---------- ---------- ----------
22,054,778 22,809,950 68,496,316 64,053,423 97,940,370
Ratio of earnings to fixed charges 4.06 3.95 3.16 3.16 3.97
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
-------------------------
Three Months
Ended
March 31, Year Ended
------------ December 31,
1998(2) 1997(3)
------------------ ------- -------
1994 1993
<S> <C> <C> <C> <C>
Fixed Charges
- -------------
Interest expense 11,494,622 2,818,525 8,500,715 34,053,957
Capitalized interest 1,585,100 - - 144,313
Amortization of debt issue costs - - 54,499 139,313
Interest portion of rent expense (1) 110,248 292,193 76,207 263,249
---------- ---------- ---------- ----------
Total Fixed Charges 13,189,970 3,110,718 8,631,421 34,600,832
Income before state income taxes 58,334,466 75,633,424 15,691,799 43,118,146
Fixed charges per above 13,189,970 3,110,718 8,631,421 34,600,832
Less capitalized interest 1,585,100 - - 144,313
Current period amortization of interest
capitalized in prior period - - 31,558 121,651
---------- ---------- ---------- ----------
69,939,336 78,744,142 24,354,778 77,696,316
Ratio of earnings to fixed charges 5.30 25.31 2.82 2.25
</TABLE>
(1) Interest portion of rent expense calculated at 25%.
(2) Pro forma includes an increase in interest income of $2.3 million and an
increase in interest expense of $3.2 million.
(3) Pro forma includes an increase in interest income of $9.2 million and an
increase in interest expense of $12.9 million.
<PAGE>
Exhibit 21.1
EMPRESS ENTERTAINMENT, INC.
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
Company Name State of Formation Type of Entity
- ------------ ------------------ --------------
<S> <C> <C>
Empress Casino Hammond Corporation Indiana Corporation
Empress Casino Joliet Corporation Illinois Corporation
Empress River Casino Finance Corporation Delaware Corporation
Hammond Residential, L.L.C. Indiana Limited Liability Company
Empress Opportunities, Inc. Delaware Corporation
Empress Racing, Inc. Delaware Corporation
Empress Mississippi, Inc. Delaware Corporation
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated April 7, 1998, except for Note 10 as to which the date
is June 18, 1998, in the Registration Statement (Form S-4) and related
Prospectus of Empress Entertainment, Inc. for the registration of $150,000,000
8-1/8% Senior Subordinated Notes due 2006.
Our audits also included the financial statement schedule listed in Item 21(b)
of this Registration Statement. This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth herein.
Ernst & Young LLP
Chicago, Illinois
July 30, 1998
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM T-1
Statement of Eligibility Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
U.S. BANK TRUST NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0257700
(State of Incorporation) (I.R.S. Employer
Identification No.)
U.S. Bank Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
(Address of Principal Executive Offices) (Zip Code)
EMPRESS ENTERTAINMENT, INC.
EMPRESS CASINO HAMMOND CORPORATION
EMPRESS CASINO JOLIET CORPORATION
EMPRESS RIVER CASINO FINANCE CORPORATION
HAMMOND RESIDENTIAL, L.L.C.
(Exact name of Registrant as specified in its charter)
Delaware 36-3932031
Indiana 36-3865868
Illinois 36-3740765
Delaware 36-3929804
Indiana
(State of Incorporation) (I.R.S. Employer
Identification No.)
2300 Empress Drive
Joliet, Illinois 60436
(Address of Principal Executive Offices) (Zip Code)
8 1/8% Senior Subordianted Notes due 2006
(Title of the Indenture Securities)
<PAGE>
GENERAL
-------
1. General Information Furnish the following information as to the Trustee.
-------------------
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any
------------------------------------------
underwriter for the obligor is an affiliate of the Trustee, describe each
such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.
16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement
----------------
of eligibility and qualification.
1. Copy of Articles of Association.*
2. Copy of Certificate of Authority to Commence Business.*
3. Authorization of the Trustee to exercise corporate trust powers
(included in Exhibits 1 and 2; no separate instrument).*
4. Copy of existing By-Laws.*
5. Copy of each Indenture referred to in Item 4. N/A.
6. The consents of the Trustee required by Section 321 (b) of the act.
7. Copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority is incorporated by reference to Registration Number 333-53211.
* Incorporated by reference to Registration Number 22-27000.
<PAGE>
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors, or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, U.S. Bank Trust National Association, an Association organized and
existing under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Saint Paul and State of Minnesota on the 13th day of July, 1998.
U.S. BANK TRUST NATIONAL ASSOCIATION
/s/ Richard H. Prokosch
-----------------------------
Richard H. Prokosch
Assistant Vice President
/s/ Judith M. Zuzek
- -------------------------
Judith M. Zuzek
Assistant Secretary
<PAGE>
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, U.S. BANK TRUST NATIONAL ASSOCIATION hereby consents that reports
of examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: July 13, 1998
U.S. BANK TRUST NATIONAL ASSOCIATION
/s/ Richard H. Prokosch
------------------------
Richard H. Prokosch
Assistant Vice President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-M0S
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 77,511 55,815
<SECURITIES> 16,083 27,028
<RECEIVABLES> 4,861 3,918
<ALLOWANCES> 1,964 1,726
<INVENTORY> 883 1,258
<CURRENT-ASSETS> 98,977 90,118
<PP&E> 237,540 217,019
<DEPRECIATION> 48,568 32,485
<TOTAL-ASSETS> 302,444 291,027
<CURRENT-LIABILITIES> 51,317 70,270
<BONDS> 186,000 163,048
0 0
0 0
<COMMON> 11,500 11,500
<OTHER-SE> 53,628 46,209
<TOTAL-LIABILITY-AND-EQUITY> 302,444 291,027
<SALES> 0 0
<TOTAL-REVENUES> 96,862 94,026
<CGS> 0 0
<TOTAL-COSTS> 75,951 72,422
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 5,301 5,659
<INCOME-PRETAX> 16,592 17,007
<INCOME-TAX> 83 79
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 16,509 16,928
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1997 JAN-01-1996 JAN-01-1995
<PERIOD-END> DEC-31-1997 DEC-31-1996 DEC-31-1995
<CASH> 73,257 45,465 40,812
<SECURITIES> 10,010 30,242 26,286
<RECEIVABLES> 5,551 4,674 2,546
<ALLOWANCES> 1,762 1,528 1,170
<INVENTORY> 1,006 1,311 791
<CURRENT-ASSETS> 90,449 84,542 73,843
<PP&E> 230,298 214,983 113,326
<DEPRECIATION> 44,386 28,259 20,132
<TOTAL-ASSETS> 291,542 288,310 201,819
<CURRENT-LIABILITIES> 45,683 70,516 14,974
<BONDS> 190,000 150,000 150,000
0 0 0
0 0 0
<COMMON> 11,500 11,500 11,500
<OTHER-SE> 44,359 38,111 25,345
<TOTAL-LIABILITY-AND-EQUITY> 291,542 288,310 201,819
<SALES> 0 0 0
<TOTAL-REVENUES> 369,644 278,662 214,611
<CGS> 0 0 0
<TOTAL-COSTS> 304,996 218,507 152,113
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 21,154 18,274 16,352
<INCOME-PRETAX> 46,818 45,368 51,386
<INCOME-TAX> 514 448 744
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 46,304 44,920 50,642
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
EMPRESS ENTERTAINMENT, INC.
OFFER TO EXCHANGE
ALL 8 1/8% SENIOR SUBORDINATED NOTES DUE 2006
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ALL OUTSTANDING 8 1/8% SENIOR SUBORDINATED NOTES DUE 2006
PURSUANT TO THE PROSPECTUS DATED , 1998.
----------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998,
UNLESS EXTENDED (THE "EXPIRATION DATE").
----------------------------------------------------------
The Exchange Agent
for the Exchange Offer is:
U.S. Bank Trust National Association
Delivery By Hand, Registered or Certified Mail or Overnight Courier:
U.S. Bank Trust National Association
U.S. Bank Trust Center
180 East Fifth Street
St. Paul, MN 55101
Attention: Specialized Finance Department
Delivery By Facsimile:
(651) 244-1537
Attention: Specialized Finance Department
Confirm by Telephone: (651) _______
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL
VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE
DOES NOT CONSTITUTE VALID DELIVERY. THE INSTRUCTIONS
CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE
THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE>
The undersigned hereby acknowledges receipt of the Prospectus dated
__________, 1998 (as it may be amended or supplemented from time to time, the
"Prospectus") of Empress Entertainment, Inc., a Delaware corporation (the
"Company"), and this Letter of Transmittal, which together constitute the
Company's offer (the "Exchange Offer") to exchange an aggregate of up to
$150,000,000 principal amount of its 8 1/8% Senior Subordinated Notes due 2006
(the "New Notes"), which have been registered under the Securities Act of 1933,
as amended (the "Securities Act"), pursuant to a Registration Statement of which
the Prospectus is a part, for an identical principal amount of its outstanding 8
1/8% Senior Subordinated Notes due 2006 (the "Old Notes"). The term "Expiration
Date" shall mean 5:00 p.m., New York City time on , 1998, unless
the Exchange Offer is extended, in which case the term "Expiration Date" means
the latest date and time to which the Exchange Offer is extended. Capitalized
terms used but not defined herein have the meaning given to them in the
Prospectus.
This Letter of Transmittal is to be used (i) if certificates of Old Notes
are to be forwarded herewith, (ii) if delivery of Old Notes is to be made by
book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company (the "Depository" or "DTC") pursuant to the procedures
set forth in "The Exchange Offer--Procedures for Tendering Old Notes" in the
Prospectus or (iii) if tender of the Old Notes is to be made according to the
guaranteed delivery procedures described in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." Holders who tender their
Notes using the DTC Automated Transfer of Position ("ATOP") procedure need not
submit a Letter of Transmittal.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter of
Transmittal or any other documents required by this Letter of Transmittal to the
Exchange Agent on or prior to the Expiration Date or (iii) who cannot complete
the procedure for book-entry transfer on a timely basis, may tender their Old
Notes according to the guaranteed delivery procedures set forth in the
Prospectus under the caption "The Exchange Offer--Guaranteed Delivery
Procedures." See Instruction 2.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, list the certificate numbers and
principal amount on a separate signed schedule and attach that schedule to this
Letter of Transmittal. See Instruction 4.
<PAGE>
ALL TENDERING HOLDERS COMPLETE THIS BOX:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES TENDERED
- ---------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Old Notes Tendered
Holder (Fill in, if blank)
- ---------------------------------------------------------------------------------------------------
Certificate or Aggregate Principal
Registration Principal Amount Amount
Number(s)* Represented by Tendered**
Old Notes
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ $
- ---------------------------------------------------------------------------------------------------
$ $
- ---------------------------------------------------------------------------------------------------
Total Amount Tendered: $ $
- ---------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders. Such holders should check the
appropriate box below and provide the requested information.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by such Old Notes. All tenders must
be in integral multiples of $1,000.
- -----------------------------------------------------------------
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this letter in its entirety.
(The Following Boxes Are to Be Checked by Eligible Institutions Only.)
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT AT DTC AND COMPLETE
THE FOLLOWING:
Name of Tendering
Institution:______________________________________________________________
DTC Account Number:_______________________________________________________
Transaction Code Number:__________________________________________________
[_] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered
Holder(s):________________________________________________________________
Date of Execution of Notice
of Guaranteed Delivery:__________________________________________________
Name of Eligible Institution for Guaranteed
Delivery:_________________________________________________________________
If Guaranteed Delivery is to be made by book-entry transfer:
DTC Account Number:_______________________________________________________
Transaction Code Number:__________________________________________________
<PAGE>
[_] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED OLD NOTES FOR YOUR OWN
ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES
(A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES
OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:____________________________________________________________________
Address: ________________________________________________________________
________________________________________________________________
Telephone Number:________________________________________________________
Contact Person:__________________________________________________________
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above described principal amount
of Old Notes in exchange for an identical principal amount of New Notes. Subject
to, and effective upon, the acceptance for exchange of the Old Notes tendered
herewith, the undersigned hereby exchanges, assigns and transfers to or upon the
order of the Company all right, title and interest in and to such Old Notes as
are being tendered herewith, including all rights to accrued and unpaid interest
thereon as of the Expiration Date. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Company in connection with the Exchange Offer) to cause the Old Notes to be
assigned, transferred and exchanged.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, ASSIGN AND TRANSFER THE OLD NOTES
TENDERED HEREBY AND TO ACQUIRE NEW NOTES ISSUABLE UPON THE EXCHANGE OF SUCH
TENDERED OLD NOTES, AND THAT, WHEN THE OLD NOTES ARE ACCEPTED FOR EXCHANGE, THE
COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND
CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE OLD
NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE
UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS
DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO
COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE OLD NOTES TENDERED HEREBY.
THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
The undersigned understands that tenders of Old Notes pursuant to any one
of the procedures described in "The Exchange Offer--Procedures for Tendering Old
Notes" in the Prospectus and in the instructions herein will, upon the Company's
acceptance for exchange of such tendered Old Notes, constitute a binding
agreement between the undersigned and the Company upon the terms and subject to
the conditions of the Exchange Offer.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered Old Notes or transfer ownership of such Old Notes on the account books
maintained by a book-entry transfer facility. The undersigned further agrees
that acceptance of any tendered Old Notes by the Company and the issuance of New
Notes in exchange therefor shall constitute performance in full by the Company
of its obligations under the Registration Rights Agreement and that the Company
shall have no further obligations or liabilities thereunder for the registration
of the Old Notes or the New Notes.
The Exchange Offer is not conditioned upon any principal amount of Old
Notes being tendered for exchange. However, the Exchange Offer is subject to
certain conditions set forth in the Prospectus under the caption "The Exchange
Offer--Conditions." The undersigned recognizes that as a result of these
conditions (which may be waived, in whole or in part, by the Company), as more
particularly set forth in the Prospectus, the Company may not be required to
exchange any of the Old Notes tendered hereby and,
<PAGE>
in such event, the Old Notes not exchanged will be returned to the undersigned
at the address shown below the signature of the undersigned.
The name(s) and addressee(s) of the registered holder(s) of the Old Notes
tendered hereby should be printed above, if they are not already set forth
above, as they appear on the Certificates representing such Old Notes. The
Certificate number(s) and the Old Notes that the undersigned wishes to tender
should be indicated in the appropriate boxes above.
The undersigned acknowledges that this Exchange Offer is being made in
reliance on the position of the staff of the Security and Exchange Commission
(the "Commission") as set forth in certain interpretive letters addressed to
third parties in other transactions substantially similar to the Exchange Offer,
which lead the Company to believe that New Notes issued pursuant to the Exchange
Offer to a holder in exchange for Old Notes may be offered for resale, resold
and otherwise transferred by a holder (other than (i) a broker-dealer who
purchased Old Notes directly from the Company for resale pursuant to Rule 144A
or any other available exemption under the Securities Act, (ii) an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act, or (iii)
a broker-dealer who acquired the Old Notes as a result of market-making or other
trading activities) without further compliance with the registration and
prospectus delivery provisions of the Securities Act, provided, that such holder
is acquiring the New Notes in the ordinary course of business and is not
participating, and has no arrangement or understanding with any person to
participate, in the distribution of the New Notes. Accordingly, the undersigned
represents that (i) it is not an "affiliate" of the Company as defined in Rule
405 of the Securities Act, (ii) it is not a broker-dealer that acquired Old
Notes directly from the Company in order to resell them pursuant to Rule 144A of
the Securities Act or any other available exemption under the Securities Act,
(iii) it will acquire the New Notes in the ordinary course of business and (iv)
it is not participating, and has no arrangement or understanding with any person
to participate, in the distribution of the New Notes. The undersigned
acknowledges that if it is unable to make these representations to the Company,
it will not be able to rely on the interpretations of the staff of the
Commission described above and therefore will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Old Notes unless such sale is
made pursuant to an exemption from such requirements. If the undersigned is a
broker-dealer that will receive New Notes for its own account in exchange for
Old Notes, it represents that it acquired the Old Notes for its own account as a
result of market-making activities or other trading activities and acknowledges
that it will deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of such New Notes; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of Section 2(11) of the Securities
Act. Failure to comply with any of the above-mentioned requirements could result
in the undersigned or any such other person incurring liability under the
Securities Act for which such persons are not indemnified by the Company.
Unless otherwise indicated in the box entitled "Special Exchange
Instruction" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, certificates for all New Notes delivered in exchange for
tendered Old Notes, and any Old Notes delivered herewith but not exchanged, will
be registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned. If a
New Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal, or if the New Note is to be mailed to someone other than
the person(s) signing this Letter of Transmittal or to the person(s) signing
this Letter of Transmittal at an address different than the address shown on
this letter of Transmittal, the appropriate boxes of this Letter of
<PAGE>
Transmittal should be completed. If Old Notes are surrendered by holder(s) that
have completed either the box entitled "Special Exchange Instructions" or the
box entitled "Special Delivery Instructions" in this Letter of Transmittal,
signature(s) on this Letter of Transmittal must be guaranteed by an Eligible
Institution (as defined in Instruction 2).
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives, successors and assigns of the undersigned. Tendered Old
Notes may be withdrawn in accordance with Instruction 3 hereto at any time prior
to the Expiration Date.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES
TENDERED" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD
NOTES AS SET FORTH IN SUCH BOX.
<PAGE>
REGISTERED HOLDERS OF OLD NOTES SIGN HERE
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
PLEASE SIGN HERE: PLEASE SIGN HERE:
_________________________________________ ____________________________________
Authorized Signature of Registered Holder Authorized Signature of Registered
Holder
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Old Notes or on a security position listing as the owner of the Old Notes or by
person(s) authorized to become registered holder(s) by properly completed bond
powers transmitted herewith. See Instruction 4. If signature is by attorney-
in-fact, trustee, executor, administrator, guardian, officer of a corporation or
other person acting in a fiduciary capacity, please provide the following
information:
Name:_________________________________ Name:_________________________________
Title:________________________________ Title:________________________________
Address:______________________________ Address:______________________________
______________________________________ ______________________________________
Telephone Number:_____________________ Telephone Number:_____________________
Dated:________________________________ Dated:________________________________
______________________________________ ______________________________________
Taxpayer Identification or Taxpayer Identification or
Social Security Number:___________ Social Security Number:_____________
Signature Guarantee
(If required--see Instruction 4)
Signature(s) Guaranteed by an
Eligible Institution:___________________________ Date:_____________________
Authorized Signature:___________________________
Name of Eligible Institution
Guaranteeing Signature:________________________
Address:_________________________________________
Capacity (full title):_____________________
Telephone Number:__________________________
<PAGE>
SPECIAL EXCHANGE INSTRUCTIONS
(See Instructions 4 and 5)
To be completed ONLY if the New Notes or any Old Notes that are not
tendered or not accepted are to be issued in the name of someone other than the
undersigned.
Issue:
[_] New Notes to:
[_] Old Notes to:
Name(s)_______________________________________________________________________
Address_______________________________________________________________________
______________________________________________________________________________
Telephone Number:_____________________________________________________________
Book-Entry Transfer Facility Account:_________________________________________
Tax Identification or
Social Security Number: ____________________________________________________
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4 and 5)
To be completed ONLY if the New Notes or any Old Notes that are not
tendered or not accepted are to be sent to someone other than the undersigned,
or to the undersigned at an address other than that shown above under
"Description of Old Notes Tendered."
Mail:
[_] New Notes to:
[_] Old Notes, to:
Name(s)_______________________________________________________________________
Address_______________________________________________________________________
______________________________________________________________________________
Telephone Number:_____________________________________________________________
Tax Identification or
Social Security Number: ____________________________________________________
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered Old Notes or confirmation of any book-entry
transfer to the Exchange Agent's account at DTC, as well as a properly completed
and duly executed copy of this Letter of Transmittal (or facsimile thereof), and
any other documents required by this Letter of Transmittal, must be received by
the Exchange Agent at any of its addresses set forth herein on or prior to the
Expiration Date. The method of delivery of this Letter of Transmittal, the Old
Notes and all other required documents is at the election and risk of the
holder. Instead of delivery by mail, it is recommended that holders use an
overnight or hand delivery service. Except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange Agent.
Holders who tender their Notes using the DTC ATOP procedure need not submit a
Letter of Transmittal.
Any beneficial holder whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender Old Notes in the Exchange Offer should contact such registered holder
promptly and instruct such registered holder to tender on such beneficial
holder's behalf. If such beneficial holder wishes to tender directly, such
beneficial holder must, prior to completing and executing the Letter of
Transmittal and tendering Old Notes, either make appropriate arrangements to
register ownership of the Old Notes in such beneficial holder's own name or
obtain a properly completed bond power from the registered holder. Beneficial
holders should be aware that the transfer of registered ownership may take
considerable time.
Delivery to an address other than as set forth herein, or instructions via
a facsimile number other than the ones set forth herein, will not constitute a
valid delivery.
The Company expressly reserves the right, at any time or from time to time,
to extend the Expiration Date by complying with certain conditions set forth in
the Prospectus.
LETTERS OF TRANSMITTAL SHOULD NOT BE SENT TO THE COMPANY OR TO DTC.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date or (iii) who cannot complete the procedures for book-entry
transfers on a timely basis, may effect a tender if:
a. the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent
in the United States or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution");
<PAGE>
b. prior to the Expiration Date, the Exchange Agent receives from
such holder and the Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile transmission, mail or
hand delivery) setting forth the name and address of the holder of the Old
Notes, the certificate or registration number(s) of the tendered Old Notes,
and the principal amount of Old Notes tendered, stating that the tender is
being made thereby and guaranteeing that, at least within three (3) New
York Stock Exchange trading days after the Expiration Date, the tendered
Old Notes, a duly executed Letter of Transmittal and any other documents
required by the Letter of Transmittal (or facsimile thereof), will be
deposited by the Eligible Institution with the Exchange Agent; and
c. such properly completed and executed documents required by the
Letter of Transmittal (or facsimile thereof) and tendered Old Notes in
proper form for transfer (or a confirmation of book-entry transfer of such
Old Notes into the Exchange Agent's account at DTC) must be received by the
Exchange Agent at least within four (4) New York Stock Exchange trading
days after the Expiration Date.
Any holder who wishes to tender Old Notes pursuant to the guaranteed
delivery procedures described above must ensure that the Exchange Agent receives
the Notice of Guaranteed Delivery relating to such Old Notes prior to the
Expiration Date. Failure to complete the guaranteed delivery procedures
outlined above will not, of itself, affect the validity or effect a revocation
of any Letter of Transmittal form properly completed and executed by a holder
who attempted to use the guaranteed delivery procedures.
3. PARTIAL TENDERS; WITHDRAWALS.
Tenders of Old Notes will be accepted only in integral multiples of $1,000
principal amount at maturity. If less than the entire principal amount of Old
Notes evidenced by a submitted certificate is tendered, the tendering holder
should fill in the principal amount tendered in the column entitled "Principal
Amount Tendered" of the box entitled "Description of Old Notes Tendered." A
newly issued Old Note for the principal amount of Old Notes submitted but not
tendered will be sent to such holder, unless the appropriate boxes on this
Letter of Transmittal are completed, as soon as practicable after the Expiration
Date. All Old Notes delivered to the Exchange Agent will be deemed to have been
tendered in full unless otherwise indicated.
Any Old Notes tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date, after which tenders of Old Notes are
irrevocable. To withdraw a tender of Old Notes in the Exchange Offer, a written
or facsimile transmission notice of withdrawal must be received by the Exchange
Agent by 5:00 p.m., New York City time, on the Expiration Date. Any such notice
of withdrawal must (i) specify the name of the person having deposited the Old
Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate or registration number(s) and principal
amount of such Old Notes, or, in the case of Old Notes transferred by book-entry
transfer, the name and number of the account at DTC to be credited), (iii) be
signed by the Depositor in the same manner as the original signature on this
Letter of Transmittal (including any required signature guarantees) or be
accompanied by a bond power in the name of the person withdrawing the tender, in
satisfactory form as determined by the Company in its sole discretion, duly
executed by the registered holder, with the signature thereon guaranteed by a
Eligible Institution together with the other documents required upon transfer by
the Indenture, (iv) specify the name in which such Old Notes are to be
registered, if different from that of the Depositor, pursuant to such documents
of transfer, and (v) include a statement
<PAGE>
that such holder is withdrawing his election to have such Old Notes exchanged.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company, in its sole
discretion, whose determination shall be final and binding on all parties. Any
Old Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no New Notes will be issued with respect
thereto unless the Old Notes so withdrawn are validly retendered. Any Old Notes
which have been tendered but which are not accepted for exchange will be
returned to the holder thereof without cost to such holder as promptly as
practicable after withdrawal.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered holder(s) of the
Old Notes tendered hereby, the signature must correspond with the name(s) as
written on the face of the certificates without alteration or enlargement or any
change whatsoever. If this Letter of Transmittal is signed by a participant in
DTC, the signature must correspond with the name as it appears on the security
position listing as the owner of the Old Notes.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Old Notes registered in different names are tendered, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of Old Notes.
Signatures on this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution unless the Old Notes
tendered hereby are tendered (i) by a registered holder who has not completed
the box entitled "Special Exchange Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution.
If this Letter of Transmittal is signed by the registered holder or holders
of Old Notes (which term, for the purposes described herein, shall include a
participant in DTC whose name appears on a security listing as the owner of the
Old Notes) listed and tendered hereby, no endorsements of the tendered Old Notes
or separate written instruments of transfer or exchange are required. In any
other case, the registered holder (or acting holder) must either properly
endorse the Old Notes or transmit properly completed bond powers with this
Letter of Transmittal (in either case executed exactly as the name(s) of the
registered holder(s) appear(s) on the Old Notes, and, with respect to a
participant in DTC whose name appears on a security position listing as the
owner of Old Notes, exactly as the name of the participant appears on such
security position listing), with the signature on the Old Notes or bond power
guaranteed by an Eligible Institution (except where the Old Notes are tendered
for the account of an Eligible Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
<PAGE>
5. SPECIAL EXCHANGE AND DELIVERY INSTRUCTIONS.
Tendering holders should indicate, in the applicable box, the name and
address (or account at DTC) in which the New Notes or Old Notes for principal
amounts not tendered or not accepted for exchange are to be issued and delivered
(or deposited), if different from the names and addresses or accounts of the
person signing this Letter of Transmittal. In the case of issuance in a
different name, the taxpayer identification number or social security number of
the person named must also be indicated and the tendering holder should complete
the applicable box.
If no instructions are given, the New Notes (and any Old Notes not tendered
or not accepted) will be issued in the name of and delivered to the acting
holder of the Old Notes or deposited at such holder's account at the Depository.
6. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable to the
exchange of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered holder of the Old Notes
tendered, or if tendered Old Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchanged Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other person) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the Old Notes listed in the Letter of
Transmittal.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive, in whole or in part, any
of the specified conditions to the Exchange Offer set forth in the Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above for further
instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter of Transmittal may be
directed to the Exchange Agent at the address and telephone number set forth
above.
10. VALIDITY AND FORM.
<PAGE>
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject
any and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the absolute right to waive any
irregularities or conditions of tender as to particular Old Notes either before
or after the Expiration Date (including the right to waive the ineligibility of
any holder who seeks to tender Old Notes in the Exchange Offer). The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in this Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of Old Notes must be cured within such time as the Company shall
determine. Neither the Company, the Exchange Agent nor any other person shall
be under any duty to give notification of defects or irregularities with respect
to tenders of Old Notes, nor shall any of them incur any liability for failure
to give such notification. Tenders of Old Notes will not be deemed to have been
made until such irregularities have been cured or waived. Any Old Notes
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
without cost to such holder by the Exchange Agent to the tendering holders of
Old Notes, unless otherwise provided herein, as soon as practicable following
the Expiration Date.
11. IMPORTANT TAX INFORMATION
Under U.S. federal income tax law, a holder tendering Old Notes is required
to provide the Exchange Agent with such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 above. If such holder is an individual,
the TIN is the holder's social security number. The Certificate of Awaiting
Taxpayer Identification Number should be completed if the tendering holder has
not been issued a TIN and has applied for a number or intends to apply for a
number in the near future. If the Exchange Agent is not provided with the
correct TIN, the holder may be subject to a $50 penalty imposed by the Internal
Revenue Service. In addition, payments that are made to such holder with
respect to tendered Old Notes may be subject to backup withholding.
Certain holders (including, among others, all domestic corporations and
certain foreign individuals and foreign entities) are not subject to these
backup withholding and reporting requirements. Such a holder who satisfies one
or more of the conditions set forth in Part 2 of the Substitute Form W-9 should
execute the certification following such Part 2. In order for a foreign holder
to qualify as an exempt recipient, that holder must submit to the Exchange Agent
a properly completed Internal Revenue Service Form W-9, signed under penalties
of perjury, attesting to that holder's exempt status. A copy of such form is
attached to this Letter of Transmittal.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the holder. Backup withholding is not
an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
To prevent backup withholding on payments that are made to a holder with
respect to Old Notes tendered for exchange, the holder is required to notify the
Exchange Agent of his or her correct TIN by completing the form herein
certifying that the TIN provided on Substitute Form W-9 is correct (or that such
holder is awaiting a TIN) and that (i) such holder is exempt, (ii) such holder
has not been notified by
<PAGE>
the Internal Revenue Service that he or she is subject to backup withholding as
a result of failure to report all interest or dividends or (iii) the Internal
Revenue Service has notified such holder that he or she is no longer subject to
backup withholding.
Each holder is required to give the Exchange Agent the social security
number or employer identification number of the record holder(s) of the Old
Notes. If Old Notes are in more than one name or are not in the name of the
actual holder, consult the instructions on Internal Revenue Service Form W-9,
which are attached to this Letter of Transmittal, for additional guidance on
which number to report.
If the tendering holder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, write "Applied For"
in the space for the TIN on Substitute Form W-9, sign and date the form and the
Certificate of Awaiting Taxpayer Identification Number and return them to the
Exchange Agent. If such certificate is completed and the Exchange Agent is not
provided with the TIN within 60 days, the Exchange Agent will withhold 31% of
all payments made thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
OLD NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE
AGENT ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE>
PAYER'S NAME:
EMPRESS ENTERTAINMENT, INC.
- --------------------------------------------------------------------------------
Name(s).
- --------------------------------------------------------------------------------
Address(es).
- --------------------------------------------------------------------------------
City, State and Zip Code
- --------------------------------------------------------------------------------
SUBSTITUTE Part I - PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND
Form W-9 CERTIFY BY SIGNING AND
DATING BELOW. See enclosed -----------------------
Department of Treasury Guidelines for Certification Employer Identification
Internal Revenue Service of Taxpayer Identification No. or Social Security
Number on Substitute Form W-9 Number
Payer's Request for Tax- for instructions.
payer Identification
Number (TIN) ------------------------------------------------------
Part II -- Awaiting TIN [_]
For Payees exempt from backup withholding, see the
enclosed Guildelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 and
complete as instructed under "31% Backup Withholding"
above.
- --------------------------------------------------------------------------------
Certification. Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because: (a) I am exempt from
backup withholding; (b) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a result of a
failure to report all interest or dividends; or (c) the IRS has notified me
that I am no longer subject to backup withholding.
(3) Any other information provided on this form is true and correct.
Certification Instructions. You must cross out (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreported interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
another notification form the IRS that you are no longer subject to backup
withholding, do not cross out (2). (Also see the enclosed Guildelines for
Certification of Taxpayer Identification Number on Substitute Form W-9).
- --------------------------------------------------------------------------------
Signature Date
- --------------------------------------------------------------------------------
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART III OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Center or Social Security Administration Office or (b) I intend
to mail or deliver an application in the near future. I understand that
notwithstanding that I have checked the box in Part III (and have completed this
Certificate of Awaiting Taxpayer Identification Number), 31% of all reportable
payments made to me will be withheld until I provide a properly certified
identification number to the Exchange Agent.
Signature Date
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
ALL QUESTIONS WITH RESPECT TO THIS LETTER OF TRANSMITTAL WILL BE
DETERMINED BY EMPRESS ENTERTAINMENT, INC. WHICH DETERMINATION SHALL BE
CONCLUSIVE AND BINDING. QUESTIONS SHOULD BE DIRECTED TO THE EXCHANGE AGENT AT
THE ADDRESS AS SPECIFIED ON FACE HEREOF OR BY TELEPHONE AT (612)_______.
ADDITIONAL COPIES OF THIS LETTER OF TRANSMITTAL MAY BE OBTAINED FROM THE
EXCHANGE AGENT.
<PAGE>
Exhibit 99.2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Give the Payer.
Social Security numbers have nine digits separated by two hyphens: i.e,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
For this type of Give the SOCIAL For this type of Give the EMPLOYER
Account SECURITY number account IDENTIFICATION
of- NUMBER OF
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Individual The Individual 6. Sole proprietorship The owner (1)
- --------------------------------------------------------------------------------------------------------------
2. Two or more The actual owner of 7. A valid trust, estate, The legal entity(3)
individuals (joint the account or, if or pension trust
account) combined funds, the
first individual on the
account. (2)
- --------------------------------------------------------------------------------------------------------------
3. Custodian The minor (4) 8. Corporate The corporation
account of a
minor (Uniform
Gift to Minors
Act)
- --------------------------------------------------------------------------------------------------------------
4.a. The usual The grantor-trustee(2) 9. Association, club, The organization
revocable savings religious charitable,
trust (grantor is educational or other
also a trustee) tax-exempt
organization
- --------------------------------------------------------------------------------------------------------------
4.b. So-called trust The actual owner(2) 10. Partnership The partnership
account that is not
a legal or valid
trust under state
law
- --------------------------------------------------------------------------------------------------------------
5. Sole The owner(1) 11. A broker or registered The broker or
proprietorship nominee registered nominee
- --------------------------------------------------------------------------------------------------------------
12. Account with the The public entity
Department of
Agriculture in the
name of a public
entity
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) You must show your individual name, but you may also enter your business or
"doing business as" name. Or may use either your SSN or EIN.
(2) List first and circle the name of the person whose number you furnish.
<PAGE>
(3) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the identifying number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title).
(4) Circle the minor's name and furnish the minor's social security number.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9
Obtaining a Number
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
Payees Exempt from Backup Withholding
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except item (9). For broker transactions, payees listed in
items (1) through (13) and a person registered under the Investment Advisers Act
of 1940 U.C. who regularly acts s a broker are exempt. Payments subject to
reporting under sections 6041 and 6041A are generally exempt from backup
withholding only if made to payees described in items (1) through (7), except a
corporation that provides medical and health care services or bills and collects
payments for such services is not exempt from backup withholding or information
reporting. Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions and patronage dividends.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an individual
retirement plan or custodial account under section 403(b)(7).
(3) The United States or any agency or instrumentality thereof.
(4) A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
(5) A foreign government, a political subdivision of a foreign government, or
an agency or instrumentality thereof.
(6) An international organization or any agency or instrumentality thereof.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or
a possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times under the Investment Company Act of
1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporate
Secretaries, Inc. Nominee List.
(15) An exempt charitable remainder trust, or a non-exempt trust described in
section 4947.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payment of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
. Section 404(k) payments made by an ESOP.
Interest payments that are generally exempt from back-up withholding include:
<PAGE>
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER. WRITE "EXEMPT" ON THE FACE OF THE FORM AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, royalties, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice. Section 6109 requires most recipients of dividend, interest,
or other payments to give taxpayer identification numbers to payers who must
report the payments to IRS. IRS uses the numbers for identification purposes.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification Number. If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty for False Information with Respect to Withholding. If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information. Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
Exhibit 99.3
NOTICE OF GUARANTEED DELIVERY
FOR TENDER OF
8 1/8% SENIOR SUBORDINATED NOTES DUE 2006
(INCLUDING THOSE IN BOOK-ENTRY FORM)
OF
EMPRESS ENTERTAINMENT, INC.
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, and the related Letter of Transmittal (the "Letter of Transmittal") must
be used to accept the Exchange Offer (as defined below) of Empress
Entertainment, Inc., a Delaware corporation (the "Company"), made pursuant to
the Prospectus, dated , 1998 (as it may be amended or supplemented from time
to time, the "Prospectus"), if certificates for the outstanding 8 1/8% Senior
Subordinated Notes due 2006 of the Company (the "Old Notes") are not immediately
available, or time will not permit the Letter of Transmittal (together with the
documents required by such Letter of Transmittal) to reach U.S. Bank Trust
National Association(the "Exchange Agent") on or prior to 5:00 p.m., New York
City time, on the Expiration Date (as defined herein), or if Holders cannot
complete the procedure for book-entry transfer on a timely basis. Such form may
be delivered or transmitted by telegram, telex, facsimile transmission, mail or
hand delivery to the Exchange Agent as set forth below. In addition in order to
utilize the guaranteed delivery procedure to tender the Old Notes pursuant to
the Exchange Offer, a completed signed and dated Letter of Transmittal (or
facsimile thereof) must also be received by the Exchange Agent prior to 5:00
p.m., New York City time, at least within four New York Stock Exchange trading
days after the Expiration Date. Capitalized terms not defined herein are defined
in the Prospectus.
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THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1998, UNLESS EXTENDED (THE "EXPIRATION DATE").
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The Exchange Agent for the Exchange Offer is:
U.S. Bank Trust National Association
Delivery By Hand, Registered or Certified Mail or Overnight Courier:
U.S. Bank Trust National Association
U.S. Bank Trust Center
180 East Fifth Street
St. Paul, MN 55101
Attention: Specialized Finance Department
Delivery By Facsimile:
(651) 244-1537
Attention: Specialized Finance Department
Confirm by Telephone: (651) __________
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY
VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.
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This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If
a signature on a Letter of Transmittal is required to be guaranteed by an
"Eligible Institution" under the instructions thereto, such signature guarantee
must appear in the applicable space provided in the signature box on the Letter
of Transmittal.
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Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Prospectus and the Letter of Transmittal (which
together constitute the "Exchange Offer"), receipt of which are hereby
acknowledged, the aggregate principal amount of Old Notes set forth below
pursuant to the guaranteed delivery procedure described in "The Exchange Offer--
Guaranteed Delivery Procedures" section in the Prospectus and Instruction 2 of
the Letter of Transmittal.
Name(s) of Registered Holder(s): _______________________________
(Please Print or Type)
Principal Amount of Old Notes Tendered:* Certificate No(s). (if available):
$
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$
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$
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* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
If Old Notes will be delivered by book-entity transfer to The Depository Trust
Company ("DTC"), provide the DTC account number.
DTC Account Number: _______________________
All authority herein conferred or agreed to be conferred shall survive the death
or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, legal representatives, successors and
assigns of the undersigned.
PLEASE SIGN HERE
Must be signed by the holder(s) of Old Notes as their name(s) appear(s) on
certificates for Old Notes or on a security position listing, or by person(s)
authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery.
___________________________________ ________
___________________________________ ________
Signature(s) of Holder(s) or Authorized Date
Signatory
Area Code and Telephone Number: ____________________
If signature is by a trustee, executor, administrator, guardian, attorney- in-
fact, officer or other person acting in a fiduciary or representative capacity,
such person must set forth his or her full title below. Please print name(s)
and address(es)
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Name(s) of Holder(s): _______________________
_______________________
_______________________
_______________________
Title/Capacity: __________________________
Address(es): _____________________________
_____________________________
_____________________________
_____________________________
GUARANTEE
(Not to be Used for Signature Guarantee)
The undersigned, a member firm of a registered national securities exchange or
of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or a correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, hereby guarantees that the
undersigned will deliver to the Exchange Agent the certificates representing the
Old Notes being tendered hereby in proper form for transfer (or a confirmation
of book-entry transfer of such Old Notes into the Exchange Agent's account at
the book-entry transfer facility of DTC) with delivery of a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees and any other required documents, all within four
New York Stock Exchange trading days after the Expiration Date.
_____________________________
Name of Firm
_____________________________
(Authorized Signature)
_____________________________
Print or Type Name
_____________________________
_____________________________
_____________________________
_____________________________
Address ( including Zip Code)
_____________________________
Dated
_____________________________
Telephone Number
The institution that completes this form must communicate the guarantee to the
Exchange Agent and must deliver the certificates representing any Old Notes (or
a confirmation of book-entry transfer of such Old Notes into the
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Exchange Agent's account at DTC) and the Letter of Transmittal to the Exchange
Agent within the time period shown herein. Failure to do so could result in a
financial loss to such institution.
NOTE: DO NOT SEND CERTIFICATES OF OLD NOTES WITH THIS FORM. CERTIFICATES FOR OLD
NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
