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EXHIBIT 10.38
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CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") is entered into as of July 23,
1999 by and between Horseshoe Gaming, L.L.C. ("Horseshoe") and Empress
Entertainment, Inc., a Delaware corporation ("Empress").
RECITALS:
Horseshoe and Empress are parties to an Agreement and Plan of Merger dated
as of September 2, 1998, as amended on March 25, 1999 (the "First Amendment")
and on July 23, 1999 (the "Second Amendment") (collectively, the "Merger
Agreement"), pursuant to which the parties have agreed that Horseshoe will
acquire ownership of Empress Casino Joliet Corporation ("Empress Joliet") and
Empress Casino Xxxxxxx Corporation (the "Empress Acquisition"). Since September
3, 1998, legislation authorizing dockside gaming in the State of Illinois has
been enacted (the "Dockside Legislation"). The owners and officers of Empress
have substantial expertise in the area of casino construction, development and
marketing and in operating casinos in Illinois and Indiana, Horseshoe is
desirous of engaging Empress to consult with and advise Horseshoe in maximizing
the economic benefits which may be derived by Horseshoe from the Empress
Acquisition, including advertising in and building the greater Chicago market,
constructing hotels and additional amenities to be coordinated with the casinos
and exploiting in full the opportunities afforded as a result of Empress
Joliet's ability to conduct dockside gaming activities. In addition, it is
anticipated that there will be challenges seeking to repeal or narrow the
Dockside Legislation. Because of the extensive knowledge and understanding of
the owners and operators of Empress with respect to Illinois gaming matters,
Horseshoe is desirous of retaining Empress as a consultant to Horseshoe to
provide advice and share its expertise in (a) reviewing its options with respect
to dockside gaming, (b) positioning Empress Joliet's dockside gaming business,
(c) presenting Horseshoe's point of view in the case of legal challenges to the
Dockside Legislation, and (d) preserving the economic benefits to be derived by
Empress Joliet as a result of the Dockside Legislation. Although the economic
benefits to be derived by Horseshoe from operating in the greater Chicago market
and, in particular, by Empress Joliet, as a result of being able to conduct
dockside gaming cannot be quantified with any precision, Horseshoe believes that
such economic benefits may be substantial, and the parties hereto have
determined that the consideration to be paid by Horseshoe for the services to be
rendered by Empress is fair and equitable to both parties based on the savings
to be realized by the Empress Joliet since the commencement of Dockside
operations as evidenced by Attachment A.
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AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing and the covenants set
forth herein, the parties agree as follows:
1. Consulting Services. In consideration of the consulting payments to be
made pursuant to paragraph 2 below, Empress shall (a) provide Horseshoe and its
affiliates with such advice and counsel as is requested, and to consult with
Horseshoe and its affiliates, concerning (i) the Dockside Legislation, including
challenges and proposed changes or modifications to the Dockside Legislation,
(ii) Empress Joliet's dockside gaming business, including without limitation the
development and marketing of dockside gaming, (iii) construction and other
matters related to Empress Joliet's expansion into dockside gaming, (iv) such
other matters related to the Dockside Legislation and the expansion by Empress
Joliet into dockside gaming as is reasonably requested by Horseshoe, and (v)
conducting business generally in the greater Chicago market, and (b) make its
personnel available as reasonably requested to assist Horseshoe in analyzing and
responding to challenges and proposed changes to Dockside Legislation.
2. Consulting Payments.
a. Subject to subparagraph 2(b) below, for a period of five (5)
years following the closing of the Empress Acquisition (the
"Acquisition Date"), Horseshoe shall pay Empress a consulting fee
of up to $4 million per year payable in monthly installments in
arrears of $333,333 each until fully paid (the "Consulting
Payments"), said payments are based on the savings to be realized
by the Empress Joliet since the commencement of Dockside
operations as evidenced by Attachment A. Consulting Payments
will be made in the form directed by Empress from time to time.
All Consulting Payments shall accelerate and become immediately
due and payable upon such date as Xxxx Xxxxxx and members of his
family cease to own directly or indirectly a majority of the
outstanding equity interests of Horseshoe or any successor entity
of Horseshoe, unless by agreement, operation of law or otherwise
the successor entity or owner of the outstanding equity interests
of the successor entity assumes the obligation to make the
Consulting Payments in accordance with this Agreement.
b. The obligations of Horseshoe to make Consulting Payments to
Empress hereunder shall be suspended during any period during
which dockside gaming by Empress Casino Joliet Corporation is
prohibited as a result of the repealing of the Dockside
Legislation or as a result of any other governmental action of
any type. If the obligation to make Consulting Payments
following a suspension in accordance with the foregoing sentence
is resumed more than 15 days after the beginning of a calendar
month, the next Consulting Payment shall not be paid until the
end of the subsequent calendar month. No Consulting Payments
shall accrue or be due with respect to any period during which
the obligation to make the Consulting Payments is suspended. No
Consulting Payments shall be made after the date
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which is eight (8) years after the date of the Empress
Acquisition; provided further, that the aggregate amount of the
Consulting Payments to be made pursuant to this Agreement shall
not exceed $20,000,000.
3. General Terms. The recitals form an integral part of this Agreement.
Any capitalized terms not defined in this Agreement shall have the meanings
ascribed to them in the Merger Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes any previous oral or written
agreements relating to the subject matter hereof. The parties may amend, modify
or 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 and assigns. This Agreement may
be executed in any number of counterparts, each of which shall be deemed an
original. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to conflict of law principals.
Empress may not assign any of its obligations under this Agreement without the
prior written consent of Horseshoe; however, Empress may assign its rights to
payments under this Agreement subject to the prior consent of Horseshoe which
shall not be unreasonably withheld.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.
HORSESHOE GAMING, L.L.C. EMPRESS ENTERTAINMENT, INC.
By: HORSESHOE GAMING HOLDING
CORP., manager
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxx Xxxxx
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Chief Executive Officer Chief Executive Officer
