EXHIBIT 10.21
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[Original printed on letterhead of Finova Capital Corporation]
November 21, 1996
Showboat Marina Casino Partnership
6601 Ventnor Avenue, Suite 105
Ventnor, NJ 08406
Attn: Mr. Joseph O'Brien
Gentlemen:
We are pleased to confirm our commitment to you, that subject to
all the terms and conditions hereof and receipt by us of all
documents requested by us, in form and substance satisfactory to
us and our counsel, we are prepared to enter into the following
loan transaction with you (this "Commitment"). All capitalized
terms shall have the meanings ascribed to them in this
Commitment.
Borrower: Showboat Marina Casino Partnership, a
general partnership ("Borrower") owned
1% by Showboat Marina Investment
Partnership ("SMIP") and 99% by Showboat
Marina Partnership ("SMP"), both SMIP
and SMP are 45% owned by Waterfront
Entertainment and Development, Inc.
("Waterfront") and 55% owned by Showboat
Indiana Investment L.P. ("LP") which is
owned (i) 1% Showboat Indiana, Inc.
("SII") which is wholly owned by
Showboat Development Company, ("SDCI")
and (ii) 99% by Showboat Operating
Company ("SOC") which is wholly owned by
Showboat, Inc. SMP is a general partner
of Borrower. Borrower, SMP, LP, SII,
SDCI, SOC, Showboat, Inc. and any
present and future wholly or partially
owned subsidiary or affiliate of any of
the foregoing are herein collectively
referred to as the Showboat Entities.
Loan: The lesser of (i) $11,000,000 or
(ii) Borrower' s cost to acquire the
Equipment.
Use of Loan Proceeds: To finance Borrower's acquisition of
non-gaming equipment, consisting of
kitchen, surveillance and other
equipment, substantially as set forth on
Exhibit A, (the "Equipment"), to be
located on Borrower's vessel and
Borrower's related land based support
facilities to be constructed and to be
operated as a gaming casino from the
port of East Chicago, Indiana (the
"Vessel").
Advances: Subject to the terms and conditions
hereof, Borrower may, from time to time,
during the Advance Term request advances
(each an "Advance") of the Loan, in
amounts of not less than $1,000,000
each.
Promissory Note: The Loan shall be evidenced by a
promissory note, in form and substance
satisfactory to us, made by Borrower
payable to us.
Advance Term: The period commencing on the Closing
Date (as hereinafter defined) and
continuing until the earlier of
(a) October 1, 1997, (b) such time as
the maximum amount of Advances have been
made or (c) a date mutually agreed upon
by each of us. Such earliest date is
hereinafter referred to as the ("Advance
Termination Date.")
Advance Term
Interest Rate: The rate of interest publicly announced
by Citibank, N.A. in New York, NY, from
time to time as its Prime or Base Rate
plus two (2%) percent per annum. The
Advance Term Interest Rate shall
increase or decrease to reflect any
increase or decrease in the Prime Rate
or Base Rate, effective as of the date
of each such change.
Advance Term
Interest Payments: During the Advance Term, interest shall
accrue on the outstanding principal
balance of the Advances at the Advance
Term Interest Rate and shall be payable
monthly and on the Conversion Date (as
hereinafter defined).
Conditions to
Conversion to
Term Loan: The following are the conditions to the
conversion (the "Conversion Conditions")
of the then outstanding principal
balance of the Advances to a term loan
(the "Term Loan"): (i) Borrower's
faithful observance of all of the terms
and conditions of the Loan Documents (as
hereinafter defined); and (ii) there
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having occurred no material adverse
change in Borrower's financial or
business condition, on or before the
Conversion Date.
Conversion to and
Term of the Term
Loan; Conversion
Date: In the event that: (i) Borrower has
completed all of the Conversion
Conditions on or before the Advance
Termination Date; (ii) Borrower has not
breached any of the terms and conditions
of the Loan Documents; and (iii) no
material adverse change in Borrower's
financial or business condition has
occurred, the Term of the Term Loan
shall commence on such date and, subject
to the provisions of the Loan Documents
shall continue until the Maturity Date
(as hereinafter defined). The date of
the commencement of the Term of the Term
Loan is referred to herein as the
"Conversion Date."
Failure to Satisfy
Conversion Conditions: In the event that Borrower fails to
satisfy all of the Conversion Conditions
by October 1, 1997, the Advances shall
not convert into a Term Loan and all
Advances together with any interest
accrued thereupon shall become
immediately due and payable.
Term of the Term Loan: Three (3) Years.
Term Loan
Interest Rate: The highest yield for Treasury Notes
with a maturity date on or closest to
the Maturity Date, as published in THE
WALL STREET JOURNAL, on the first
business day preceding the Closing Date
plus four and ninety hundredths (4.90%)
percent per annum.
Term Loan Payments: Thirty-Six (36) equal and consecutive
monthly installments of principal and
interest, which in the aggregate will
fully amortize the Term Loan at the
Interest Rate over the Term of the Term
Loan.
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Certain Provisions
Applicable to Advances
and Term Loan: (a) Interest on the Advances and the
Term Loan shall be calculated on the
basis of a 360-day year of twelve 30-day
months, payable in arrears.
(b) All payments on the Advances and
the Term Loan shall be applied first to
charges and expenses, if any, then to
accrued interest at the Advance Rate
Interest Rate or the Term Loan Interest
Rate, as applicable and the balance in
reduction of the principal balance of
the Loan.
Special Conditions;
Maturity Date: The first Term Loan Payments shall be
payable on the first day of the second
month immediately following the month in
which the Conversion Date occurs or, if
the Conversion Date is the first day of
a month, then on the first day of the
next succeeding month; and the remaining
Term Loan Payments shall be payable on
the first day of each successive month
thereafter. The date of the last
scheduled Term Loan Payments is the
"Maturity Date." In addition, on the
first day of the first month immediately
following the Conversion Date, Borrower
shall pay the accrued interest on the
Loan, at the Term Loan Interest Rate,
for the period from the Conversion Date
through the last day of the month in
which the Conversion Date occurred
("Interest Adjustment Payment").
Closing Date: The date that we made the first Advance
but not later than July 1, 1997.
Net Loan: All payments made by Borrower to us are
to be net of all charges, taxes,
expenses and the like. All insurance,
maintenance and taxes with respect to
the transactions contemplated hereby,
the Equipment, the Collateral and the
Loan are to be paid by Borrower and are
Borrower's sole responsibility.
Fees and Other Charges: Borrower shall pay or reimburse us for
all reasonable out of pocket costs and
expenses (including, but not limited to,
our attorneys fees no to exceed $50,000,
and costs of appraisals, inspections,
filing fees and searches)
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incurred by us in connection with the
negotiation and documentation for this
Commitment, the Loan Documents and
closing of the transactions contemplated
hereby.
Collateral: The payment and performance of all of
Borrower's present and future
obligations to us pursuant to the Loan
Documents shall be secured by a
perfected first priority security
interest in and lien upon the Equipment
and all accessions and additions to,
substitutions for, and replacements
thereof and all proceeds of any of the
foregoing, whether cash or non-cash,
including, but not limited to, insurance
proceeds (collectively the
"Collateral").
Documentation: All documentation (collectively the
"Loan Documents") shall be prepared or
reviewed by us or our counsel, shall be,
in form and substance, satisfactory to
us and our counsel and shall include,
but not be limited to the following:
promissory notes, a loan and security
agreement, partnership agreements and
resolutions, subordination agreements
(with respect to liens on the Collateral
and certain debt owing by Borrower to
any of the Showboat Entities), opinions
of counsel, a Vessel Chattel Mortgage on
the Vessel covering solely the
Collateral, ("FINOVA Chattel Vessel
Mortgage"), Uniform Commercial Code
("UCC") financing statements perfecting
our security interests in the Collateral
and such other documents as we and our
counsel deem appropriate.
Additional Financing and
Equity Requirements: The making of the Advances shall be
conditioned upon, among other things,
your procurement of equity, financing
and financing commitments as follows:
(a) Evidence that Borrower received
$140,000,000 (less underwriting expenses
actually incurred by Borrower in
connection with the Bond Placement) from
the sale of First Mortgage Notes due
2003 issued jointly by Borrower and
Showboat Marina Finance Corporation
("SMFC") under an Indenture dated as of
March 28, 1996 (the "Indenture") among
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Borrower, SMFC and American Bank
National Association as Trustee (the
"Bond Placement");
(b) Evidence that Borrower received
$39,000,000 of equity capitalization
("Required Capitalization").
Subordination: Except as expressly permitted pursuant
to Section 4.07 of the Indenture, no
present or future indebtedness of
Borrower to any of the Showboat Entities
(including, without limitation, any
management fees) shall be paid or
withdrawn in whole or in part, nor shall
any of the Showboat Entitles accept any
payment of or on account of any such
indebtedness or as a withdrawal of
capital while any present or future
indebtedness from Borrower to us is
outstanding.
Certain Documentation
Provisions: The Loan Documents shall contain such
representations, warranties, covenants
(financial and otherwise), events of
default including, but not limited to,
default in the event (a) of the
termination or assignment of the
agreement to be entered into between
Borrower and SMP, for the management of
Borrower's business and operations (the
"Management Agreement"); (b) (i) SMP
ceases to be a general partner of
Borrower; (ii) SMP ceases to own 99% of
Borrower; (iii) there occurs any change
in the ownership of SMP (iv) Thomas S.
Cappos and Michael A. Pannos, cease to
own, in the aggregate, at least 25% of
Waterfront; or (v) Showboat, Inc.,
ceases to maintain (directly or
indirectly) 100% of the legal and
beneficial ownership of LP; or (c) of a
default with respect to the bonds (which
are the subject of the Bond Placement)
or any agreement executed in connection
therewith including, but not limited to,
any Indenture in connection therewith;
and remedies and other terms as are
customarily required by lenders in the
transactions of this type.
Continuing Compliance
by Borrower: The operation of Borrower's business on
the Vessel shall be in compliance with
all applicable, federal, state, and
local laws, rules, regulations, permits,
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orders and other requirements now in
effect or as may become effective and
applicable during the Term of the Loan.
If non-compliance could have a material
adverse effect on Borrower's business,
operations, or financial condition or on
Borrower's ability to perform its
obligations under the Loan Documents
Borrower must forthwith make such
changes, if any, necessary to comply
with such laws and ordinances. The Loan
Documents shall include, but not be
limited to, provisions encompassing all
of the foregoing.
Financial Reporting;
Pre and Post Closing:
Pre-Closing: Throughout the period that this
Commitment is effective, Borrower shall
deliver and cause to be delivered to us
annual financial statements, for each
of Borrower and Showboat, Inc. audited
with respect to Showboat, Inc. by KPMG
Peat Marwick LLP or other Certified
Public Accountants acceptable to us,
within 105 days following the end of the
respective fiscal years of Borrower and
Showboat, Inc., and quarterly financial
statements within 60 days following
the respective quarter ends of Borrower
and Showboat, Inc. The quarterly
financial statements shall be certified,
by the respective chief financial
officers of Borrower and Showboat, Inc.
If Borrower or Showboat, Inc. updates
its projections prior to the closing of
the transaction contemplated hereby (the
"Closing"), the updated projections
shall be provided to us
contemporaneously with the creation
thereof and shall be satisfactory to us.
Any such projections which are
satisfactory to us in both form and
content are hereinafter referred to as
the "Satisfactory Subsequent
Projections."
Post-Closing: Throughout the Term of the Loan Borrower
shall deliver to us annual financial
statements, within 105 days following
the end of its fiscal year and quarterly
financial statements within 60 days
following its quarter ends. The
financial statements shall be certified,
by Borrower's chief financial officer
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and accompanied by a certificate
executed by such chief financial officer
certifying Borrower's compliance with
the representations, warranties, and
covenants set forth in the Loan
Documents.
This Commitment and the Closing, shall be further subject to,
among other things, receipt by us of the following, each of which
shall be satisfactory to us and our counsel:
(i) all documentation set forth herein and
as may be required by our counsel, including,
but not limited to, the Loan Documents;
(ii) evidence, that the operation of
Borrower's gaming business on the Vessel is
in compliance with all applicable, federal,
state, and local laws, rules, regulations,
and evidence that Borrower has obtained all
necessary pre-licenses, licenses, permits,
orders and other requirements as may be
required by any entity having jurisdiction
thereof, including but not limited to the
Indiana Gaming Commission;
(iii) evidence that our entering into the
transaction contemplated by the terms of this
Commitment, does not require any licenses
(other than our current business licenses) or
approvals by any entity having jurisdiction
thereof;
(iv) evidence that our enforcement of our
rights under the Loan Documents including,
but not limited to, repossession and sale of
the Equipment, does not require any licenses
(other than our current business licenses) or
approvals by any entity having jurisdiction
thereof;
(v) evidence of the receipt by Borrower of
no less than $140,000,000 (less underwriting
expenses actually incurred by Borrower in
connection with the Bond Placement) from the
Bond Placement;
(vi) evidence of the receipt by Borrower of
the Required Capitalization;
(vii) evidence that the Collateral is
owned by Borrower, free and clear of all
liens and encumbrances, excepting only for
the FINOVA Vessel Chattel Mortgage, any liens
subordinated to the FINOVA Vessel Chattel
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Mortgage in form and substance satisfactory
to us and inchoate liens which affect the
Vessel ("Inchoate Liens");
(viii) results of UCC and Coast Guard
Searches;
(ix) the partnership agreement of Borrower;
(x) the Management Agreement;
(ix) all agreements relating to Borrower's
purchase of the Equipment including, without
limitation, invoices and agreements which
evidence that all Equipment is new and
unused;
(xii) evidence of the satisfaction by
Borrower of all conditions set forth herein;
(xiii) policies of insurance and
endorsements for the Collateral in such form
and of such type as are satisfactory to us
issued by insurers rated A.M. Best A-VIII or
better;
(xiv) evidence that the Collateral is
owned by Borrower, free and clear of all
liens and encumbrances other than our first
and only priority security interest and lien
and Inchoate Liens;
(xv) such opinions of counsel (including, but
not limited to, provisions relating to the
enforceability of the Loan Documents and
perfection of the FINOVA Vessel Chattel
Mortgage, our first priority security
interest and lien in the Collateral, and
confirming that (a) we require no licenses
(other than our current business licenses) or
approvals from any entity in connection with
our making of the Loan and our repossession
and sale of the Equipment and (b) Borrower
has obtained all necessary pre-licenses,
licenses and approvals to conduct a gaming
business on the Vessel) and such
certificates, registrations, waivers,
searches, releases and further documents as
may be required by our counsel.
This Commitment and the Closing shall be subject, in addition to
all other conditions and requirements set forth herein, to the
following: (i) in our sole reasonable judgment, there being
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no material adverse change in Borrower's financial, business or
other conditions or in Showboat, Inc.'s financial, business or
other condition; and (ii) the Closing occurring on or before July
1, 1997. This Commitment is not assignable without our prior
written consent. We reserve the right to cancel this Commitment
in the event Borrower or any officer, employee, agent or
representative of Borrower has made any misrepresentation to us
or has withheld any information from us with regard to the
transaction contemplated hereby.
A Commitment Fee in the amount of $75,000 is required with
Borrower's acceptance of this Commitment. We acknowledge receipt
of the sum of $75,000 previously paid as an Application Fee, and
agree to apply it towards the Commitment Fee due hereunder.
As used in this Commitment, the terms "satisfactory to us" or
"acceptable to us" or "satisfactory to our counsel" or
"acceptable to our counsel" or terms of similar import mean
satisfactory or acceptable to us or our counsel in our or its
sole judgment and discretion.
This Commitment and the Loan Documents shall be governed by the
laws of the State of Arizona. Any dispute arising under this
Commitment shall be litigated by Borrower only in any federal or
state court located in the State of Arizona, or any state court
located in Maricopa County, Arizona; and Borrower hereby
irrevocably submits to the personal jurisdiction of such courts
and waive any objection that may exist as to venue or convenience
of such forums. Nothing contained herein shall preclude us from
commencing any action in any court having jurisdiction thereof.
In the event that the transaction contemplated hereunder does not
close prior to July 1, 1997 because of Borrower's failure to
satisfy the conditions for the Closing, or because of a material
adverse change in Borrower's financial, business or other
condition or Showboat, Inc.'s financial, business, or other
condition, has occurred this Commitment shall terminate and we
shall have no liability to Borrower and we shall retain, as
earned the Commitment Fee.
In the event we fail to complete this transaction and such
failure is not because of Borrower's inability to satisfy all the
conditions for closing or Borrower's failure to achieve its
projected financial condition, as modified by Borrower's
Satisfactory Subsequent Projections, in any material manner or a
material adverse change in Borrower's financial, business or
other condition or Showboat, Inc.'s financial business, or other
condition, has occurred our liability shall be limited to a
return of the Commitment Fee, less our out-of-pocket costs and
expenses.
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Please execute the extra copy of this letter acknowledging
Borrower's acceptance of the terms hereof and return it to us.
In the event that a copy of this Commitment executed by Borrower
is not received by us on or before November 25, 1996 this offer
shall be deemed withdrawn. This Commitment supersedes, replaces
and terminates all previous proposals and/or agreements
including, but not limited to, our proposal to SMP dated August
22, 1995, our offer to make a commitment to SMP dated October 13,
1995 and our offer to make a commitment to Borrower dated
November 7, 1996. Upon execution and delivery thereof the Loan
Documents shall supersede this Commitment.
Very truly yours,
FINOVA Capital Corporation
/s/ William Breitman
William Breitman
Vice President
AGREED AND ACCEPTED:
Showboat Marina Casino Partnership
By: Showboat Marina Partnership
Its General Partner
By: /s/ JOSEPH G. O'BRIEN
Title: V-P FINANCE
By: Showboat Marina Investment Partnership
Its General Partner
By: /s/ JOSEPH G. O'BRIEN
Title: V-P FINANCE
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