August 26, 1996
VIA FACSIMILE (219) 398-0144 & FEDEX
Mr. Joseph G. O'Brien
Vice President Finance
Showboat Marina Casino Partnership
2001 East Columbus Drive
East Chicago, IN 46312
Re: Equipment Lease Commitment (Seventh Revised)
Dear Mr. O'Brien:
PDS Financial Corporation ("PDS") is pleased to present the
following revised lease commitment to Showboat Marina Casino
Partnership ("SMCP") for the purpose of providing $8,000,000.00
in lease financing for gaming equipment (as hereafter defined),
to be placed on or used in connection with a proposed riverboat
gaming vessel to be located in East Chicago, Indiana (the
"Enterprise").
The following represents the basic terms of our commitment:
PARTIES:
Lessee: Showboat Marina Casino Partnership
2001 E. Columbus Drive
East Chicago, IN 46312
Lessor: PDS Financial Corporation
(or, its successors or assigns)
6442 City West Parkway
Suite 300
East Prairie, MN 55344
MASTER AGREEMENT TERMS:
Structure: Non-cancelable master lease agreement
("Lease") with individual schedule
("Lease Schedule") attachments per
the terms of a pre-determined
funding schedule. Lessor shall
Mr. Joseph G. O'Brien
Showboat Marina Casino Partnership
August 26, 1996
Page 2
have a precautionary first priority
perfected purchase money security
interest in the equipment outlined in
each Lease Schedule, which may
include a preferred ship mortgage
limited to PDS' interest in the
Gaming Equipment located and/or
installed on the SMCP riverboat
gaming vessel (the "Vessel").
Equipment: New IGT Slot machines (hereinafter
"Gaming Equipment") to be identified
at a later date and acceptable to
Lessee.
Location of Equipment: The Vessel which is owned and
operated by SMCP and based in East
Chicago, Indiana.
Equipment Cost: $8,000,000.00
Term: 48 months
Rate: To be fixed two (2) weeks prior to
closing of each Lease Schedule at
four hundred fifty (450) basis points
over the four (4) year Treasury Note
rate as published daily in the WALL
STREET JOURNAL. For purposes of the
rental factor calculation below the
rate is 11.10%.
Monthly Rental Factor: .025657
Lease Schedule Funding: Funding shall be subject to the terms
of individual Lease Schedules. Each
Lease Schedule will be for a minimum
amount of $1,000,000. The entire
lease facility, as outlined herein,
must be fully utilized by July 1,
1997.
Purchase Option: At the end of the term of each Lease
Schedule, Lessee will have the option
to purchase the Gaming Equipment
included in such Lease Schedule for
$1.00.
Advance Payment: Due at closing of each Lease
Schedule, thereafter in forty-seven
(47) remaining rental payments due on
the first of each month.
Anticipated Closing First Lease Schedule to be Closed on
Date: or before July 1, 1997.
Mr. Joseph G. O'Brien
Showboat Marina Casino Partnership
August 26, 1996
Page 3
Miscellaneous Covenants: A) During the term of any Lease
Schedule, SMCP shall comply with
Section 4.07, Restricted Payments, of
its Indenture with American Bank
National Association dated as of
March 28, 1996. Section 4.07 of the
Indenture is incorporated herein by
this reference as if it was fully set
forth herein.
B) Lessor will require the approval
of various regulatory gaming
authorities, including the Indiana
Gaming Commission, in the State of
Indiana to obtain legal ownership of
the Gaming Equipment. In the event
of default, prior to the Lessor being
able to exercise any ownership rights
over the Gaming Equipment, the Lessor
must obtain approval from the Indiana
Gaming Commission, which may include
requiring the Lessor to become
licensed as a supplier pursuant to IC
4-33 and 68 IAC2-2.
C) SMCP must have all necessary
licenses to own and operate the
Enterprise.
ADDITIONAL REQUIREMENTS:
Commitment Fee: The $30,000.00 Commitment Fee
forwarded by SMCP on October 5, 1995,
will be applied against; (i) any
legal and transaction fees incurred
by PDS during negotiation and
drafting of definitive documentation
in preparation for closing, up to a
maximum of $20,000.00; and (ii) as a
credit toward the first months
payment due under the lease.
Consistent with the Proposal the
Commitment Fee has been deemed earned
and non-refundable with the issuance
of this commitment letter.
Costs & Expenses: SMCP agrees to pay all of PDS' out-of-
pocket costs and expenses incurred by
PDS in connection with the Lease
transaction contemplated by this
proposal including, without
limitation, (i) the fees and costs
costs of legal counsel retained by
Mr. Joseph G. O'Brien
Showboat Marina Casino Partnership
August 26, 1996
Page 4
PDS; (ii) all other out-of-pocket
expenses incurred by or on behalf
of PDS in connection with the
transaction contemplated by this
proposal; and (iii) all costs with
respect to management and operation
of the escrow account (if any) in
accordance with the transaction
contemplated by this proposal. The
total legal fees and transaction
expenses are not to exceed
$20,000.00. These fees shall be
deducted from the Commitment Fee, as
defined above, upon execution of the
first Lease Schedule.
Insurance: SMCP shall provide PDS with marine,
casualty, and property damage
insurance from a carrier or carriers
acceptable to PDS for the full
replacement cost of the Gaming
Equipment acquired from proceeds of
this Lease.
Cross Default: It shall be an event of default under
the Lease contemplated hereunder if a
material event of default occurs
under any mortgage, indenture or
instrument under which there may be
issued or by which there may be
secured or evidenced any indebtedness
of SMCP for money borrowed, whether
such indebtedness now exists or shall
be created hereafter, which event of
default is not cured within thirty
(30) days or, in the event of a non-
monetary default, within such
reasonable period of time as may be
agreed upon by the parties hereto.
Governing Law: The transaction contemplated hereby
shall be governed by the laws of the
State of Indiana.
Termination: PDS' commitment may be withdrawn at
PDS' option in any of the following
events:
1) If SMCP at any time defaults in
any of their undertakings
hereunder;
2) If any representation or
warranty made by SMCP in
connection with the financing
shall prove untrue;
Mr. Joseph G. O'Brien
Showboat Marina Casino Partnership
August 26, 1996
Page 5
3) If all terms and conditions of
this commitment have not been
complied with;
4) If SMCP shall have discontinued
or suspended their businesses;
5) Any material adverse change
financial, business, or
otherwise) in SMCP or any of
its affiliates;
6) Any attempt to assign SMCP's
rights under this commitment;
7) If any material facts or
information have not been
provided to PDS or have been
misrepresented or misstated to
PDS and such facts or
information would have been
relevant in PDS's decision to
provide the Lease;
8) Failure to receive all
necessary documentation
acceptable to PDS or PDS's
funding sources, in their sole
discretion.
Delay in the exercise of PDS's
rights to terminate shall not be
construed a waiver of such right to
terminate with regard to the
occurrence of any specific event
referenced to above.
Proposal Expiration: This finance commitment expires on
August 28, 1996, if not accepted by
SMCP or extended in writing by PDS.
If the foregoing terms and conditions are acceptable, please
acknowledge your acceptance by having duly authorized
representatives of SMCP execute this commitment in the spaces
provided below and return the original, to PDS Financial
Corporation, 6442 City West Parkway, Suite 300, Eden Prairie, MN
55344.
Mr. Joseph G. O'Brien
Showboat Marina Casino Partnership
August 26, 1996
Page 6
If this commitment is unacceptable in any way, please contact me
directly at (612) 996-8701. Thank you in advance for your
anticipated cooperation and assistance.
Sincerely,
PDS Financial Corporation
/s/ Johan P. Finley
Johan P. Finley
Chief Executive Officer
AGREED AND ACCEPTED this 28TH day
of AUGUST, 1996
SHOWBOAT MARINA CASINO PARTNERSHIP
By: /s/ J. Keith Wallace
Its: President and CEO
cc: David Mylrea
Robert Mann
David Larson
Brad Straub (via facsimile (609) 823-7811)
Mike Rodriquez (vis facsimile (609) 823-7811)
Kay Fleming (via facsimile (317) 233-0047)