<PAGE>
<PAGE>
AMENDMENT 1
THIS IS AN AMENDMENT TO THE FORM 10-K FOR DECEMBER 31, 1993 AMENDED TO INCLUDE
EXHIBIT 10(i).14 AND EXHIBIT 10(I).15.
<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
{X} ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the fiscal year ended December 31, 1993
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number: 1-8540
BALLY'S PARK PLACE, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2264974
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
Park Place & The Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (609) 340-2000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if the disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
At March 24, 1994, all 100 outstanding shares of the registrant's common stock
were held by Bally's Casino Holdings, Inc., a subsidiary of Bally
Manufacturing Corporation.
The Registrant meets the conditions set forth in General Instruction J (1) (a)
and (b) of Form 10-K and is therefore filing this form with the reduced
disclosure format.<PAGE>
<PAGE>
PART I
Except as otherwise stated, the information contained in this Annual Report
is as of December 31, 1993, the end of the registrant's last fiscal year.
ITEMS 1 and 2. BUSINESS AND PROPERTIES
Introduction
The registrant, Bally's Park Place, Inc. (the "Company"), is incorporated
in Delaware and was a wholly owned subsidiary of Bally Manufacturing
Corporation ("BMC") until June 16, 1993, when BMC contributed all of the
capital stock of the Company to Bally's Casino Holdings, Inc. ("Casino
Holdings"). Casino Holdings was formed as a subsidiary of BMC in April 1993
to serve as a holding company for the Company and for acquiring and developing
gaming operations, including those in newly emerging gaming jurisdictions.
The Company, through its wholly owned subsidiary Bally's Park Place, Inc., a
New Jersey corporation ("Bally's Park Place--New Jersey"), operates a casino
hotel complex in Atlantic City, New Jersey. Unless otherwise specified in the
text, references to the Company include the Company and its subsidiaries.
Bally's Park Place
Bally's Park Place--New Jersey operates the Bally's Park Place Casino
Hotel and Tower ("Bally's Park Place") situated on an eight-acre site with
ocean frontage at the well-known intersection of Park Place and the Boardwalk
in Atlantic City, New Jersey. The casino hotel complex is centrally located
among the nine other casino hotels adjacent to the Boardwalk and is within
four blocks of Atlantic City's Convention Hall and the new convention corridor
currently under development, which will include a new convention facility.
The Company's strategic location on the Boardwalk contributes to its success
in attracting significant walk-in casino business, including strong crossover
business from competing casinos located nearby. Equipped with two multi-story
parking garages and surface valet parking lots, management believes that the
Company is also strongly positioned to attract the desirable drive-in
business.
The Company is one of the largest casino hotel facilities in Atlantic
City, currently encompassing approximately 2.2 million square feet of space,
including approximately 68,000 square feet of casino floor space, a 30-story
hotel tower, a 12-story hotel facility and two multi-story parking garages
providing over 2,000 parking spaces. The casino features approximately 2,000
slot machines and 115 table games including baccarat, blackjack, craps,
roulette and poker, among others. The Company employs the latest slot machine
technology and places particular emphasis on the location, design and lighting
of its slot machine areas in its efforts to further develop, expand and
compete for slot machine play, which generates higher margins than table game
play.
The Company has more than 1,250 rooms (including 77 suites), making it
the largest four-star hotel in New Jersey, and contains approximately 50,000
square feet of meeting and exhibition space and a 38,000 square foot health
spa facility. Dining areas include three specialty restaurants, a cocktail
lounge, a coffee shop, a buffet, a delicatessen, two fast food facilities and
a restaurant with a bar and lounge in the spa. The Company offers a variety
of other facilities and amenities to its patrons.
The Company's operating strategy capitalizes on its central location and
quality facilities and promotes the diversity of its casino games and
courteous approach to guests. Historically believed to be a leader in
Atlantic City's middle to upper-middle tier slot player segments, the Company
devotes significant managerial and promotional resources to the maintenance
and expansion of slot machine play, including higher denomination slot
business. The Company also targets middle-market table game players. The
marketing strategy of the Company is to generate a high volume of play from
casino customers from New York, Philadelphia and other northeastern
metropolitan areas, as well as to develop its position in all segments of the
Atlantic City hotel and convention market.
The Company plans to make capital expenditures of approximately $18
million during 1994 for the completion of suite rooms in the hotel tower,
casino expansion and reconfiguration, the purchase of data processing
equipment, construction of a new players lounge, restaurant and kitchen
renovations, the construction of a poker, horse race simulcasting and keno
area and other public area improvements necessary to maintain the facility in
a first-class condition.
The Company's revenues and earnings from its casino hotel peak during the
summer season, with less favorable operating results during the winter. The
Company employs approximately 4,100 persons.
Casino Hotel Competition
The Company faces intense competition in the Atlantic City market from
other companies in the gaming industry, some of which have significantly
greater financial resources than the Company. Since April 1990, there have
been 11 casino hotel facilities operating in Atlantic City in competition with
the Company, including GNAC, CORP. ("The Grand"), another wholly owned
subsidiary of BMC. There have been no public announcements concerning new
casino openings, however, several Atlantic City casinos have announced plans
for expansion or are currently in the process of expanding their facilities.
These expansions will increase competition in the Atlantic City market,
particularly as additional slot machines are added.
The Company believes that casino competition in Atlantic City is based
primarily on the location and physical design of the casino hotel, hotel
accommodations, the extent and quality of personalized service offered to
guests and casino customers, the price and quality of rooms and food and
beverages, the number and quality of its restaurants, convention and other
public facilities, promotional allowances, the entertainment offered, the
variety of table games and slot machines, table limits, casino credit granted
to customers and parking capacity. Management believes that the Company's
reputation as a first-class facility enhances its competitiveness in the
Atlantic City market. In addition, the Company's central location positively
affects its competitive position.
The Company faces significant competition from both established casinos
and newly emerging gaming operations. The Company believes that the
legalization of casino gaming in jurisdictions such as Mississippi, Louisiana,
South Dakota, Iowa, Illinois, and Colorado, and Indian gaming in Connecticut
and elsewhere, has not, to date, had a material adverse impact on its
operations. There have been proposals made for casinos in several
jurisdictions near New Jersey. The Company believes that the adoption of
legislation approving casino gaming in any of these jurisdictions
(particularly Maryland, New York or Pennsylvania) could have a material
adverse effect on its operations. The Company also competes with other forms
of legalized gaming, including state-sponsored lotteries, jai alai, off-track
wagering and card parlors.
New Jersey Regulation
Gaming activities in Atlantic City are subject to the New Jersey Casino
Control Act (the "Act"), regulations of the New Jersey Casino Control
Commission (the "CCC") and other applicable laws. No casino may operate
unless the required permits or licenses and approvals are obtained from the
CCC. The CCC is authorized under the Act to adopt regulations covering a
broad spectrum of gaming and gaming-related activities and to prescribe the
methods and forms of applications from all classes of licensees. These laws
and regulations concern primarily: (i) the financial stability, integrity,
responsibility, good character, honesty and business ability of casino service
suppliers and casino operators, their directors, officers and employees, their
security holders and others financially interested in casino operations, (ii)
the nature of casino hotel facilities, and (iii) the operating methods and
financial and accounting practices used in connection with the casino
operations. Taxes are imposed by the State of New Jersey on gaming operations
at the rate of 8% of gross gaming revenues. In addition, the Act provides for
an investment alternative tax of 2.5% of gross gaming revenues. This
investment alternative tax may be offset by investment tax credits, which are
obtained by purchasing bonds issued by or investing in housing or other
development projects approved by the New Jersey Casino Reinvestment
Development Authority (the "CRDA"), a state agency. New laws and regulations,
as well as amendments to existing laws and regulations, relating to gaming
activities in Atlantic City are periodically introduced or proposed and
sometimes adopted.
The CCC has broad discretion with regard to the issuance, renewal and
revocation or suspension of casino licenses. A casino license is not
transferable, is issued for a term of up to one year for the first two
renewals and thereafter for a term of up to two years (subject to
discretionary reopening of the licensing hearing by the CCC at any time), and
must be renewed by filing an application which must be acted on by the CCC
prior to the expiration of the license in force. At any time, upon a finding
of disqualification or noncompliance, the CCC may revoke or suspend a license
or impose fines.
The Act imposes certain restrictions on the ownership and transfer of
securities issued by a corporation that holds a casino license or is deemed
a holding company, intermediary company, subsidiary or entity qualifier (each,
an "affiliate") of a casino licensee. "Security" is defined by the Act to
include instruments that evidence either a beneficial ownership in an entity
(such as common stock or preferred stock) or a creditor interest in an entity
(such as a bond, note or mortgage). Pursuant to the Act, the corporate
charter of a publicly traded affiliate of a casino licensee must require that
a holder of the company's securities dispose of such securities if the
holder's continued holding would result in the company or any other affiliate
being no longer qualified to continue as a casino licensee under the Act. The
corporate charter of a casino licensee or any privately held affiliate of the
licensee must: (i) establish the right of prior approval by the CCC with
regard to a transfer of any security in the company and (ii) create the
absolute right of the company to repurchase at the market price or purchase
price, whichever is less, any security in the company in the event the CCC
disapproves a transfer of such security under the Act. The corporate charters
of the Company and the charters of its affiliates conform with the Act's
requirements described above for privately held companies.
If the CCC finds that an individual owner or holder of securities of a
corporate licensee or an affiliate of such corporate licensee is not qualified
under the Act, the CCC may propose remedial action. The CCC may require
divestiture of the securities held by any disqualified holder who is required
to be qualified under the Act (e.g., officers, directors, security holders and
key casino and other employees). In the event that disqualified persons fail
to divest themselves of such securities, the CCC may revoke or suspend the
license. However, if an affiliate of a casino licensee is a publicly traded
company and the CCC finds disqualified any holder of any security thereof who
is required to be qualified, and the CCC also finds that: (i) such company has
complied with aforesaid charter provisions, (ii) such company has made a good
faith effort, including the prosecution of all legal remedies, to comply with
any order of the CCC requiring the divestiture of the security interest held
by the disqualified holder, and (iii) such disqualified holder does not have
the ability to control the corporate licensee or any affiliate thereof, or to
elect one or more members of the board of directors of such affiliate, the CCC
will not take action against the casino licensee or its affiliate with respect
to the continued ownership of the security interest by the disqualified
holder.
For purposes of the Act, a security holder is presumed to have the
ability to control a publicly traded corporation, or to elect one or more
members of its board of directors, if such holder owns or beneficially holds
5% or more of the equity securities of such corporation, unless such
presumption of control or ability to elect is rebutted by clear and convincing
evidence. An "institutional investor," as that term is defined under the Act,
is entitled to a waiver of qualification if it holds less than 10% of the
equity securities of a publicly traded holding or intermediary company of a
casino licensee and: (i) the holdings were purchased for investment purposes
only, (ii) there is no cause to believe the institutional investor may be
found unqualified, and (iii) upon request by the CCC, the institutional
investor files a certified statement to the effect that it has no intention
of influencing or affecting the affairs of the issuer, the casino licensee or
its other affiliates. The CCC may grant a waiver of qualification to an
institutional investor holding 10% or more of such securities upon a showing
of good cause and if the conditions specified above are met.
With respect to debt securities, the CCC generally requires a person
holding 15% or more of a debt issue of a publicly traded affiliate of a casino
licensee to qualify as a "financial source" where the use of the proceeds from
the debt issue is related in any way to the financing of the casino licensee.
There can be no assurance that the CCC will continue to apply the 15%
threshold, and the CCC could at any time establish a lower threshold for
qualification. An exception to the qualification requirement is made for
institutional investors, in which case the institutional holder is entitled
to a waiver of qualification if the holder's position in the aggregate is less
than 20% of the total outstanding debt of the affiliate and less than 50% of
any outstanding publicly traded issue of such debt, and if the conditions
specified in the above paragraph are met. As with equity securities, a waiver
of qualification may be granted to institutional investors holding larger
positions upon a showing of good cause and if all conditions specified in the
above paragraph are met.
Generally, the CCC would require each institutional holder seeking a
waiver of qualification to execute a certificate to the effect that: (i) the
holder has reviewed the definition of institutional investor under the Act and
believes that it meets the definition of institutional investor, (ii) the
holder purchased the securities for investment purposes only and holds them
in the ordinary course of business, (iii) the holder has no involvement in the
business activities of, and no intention of influencing or affecting the
affairs of, the issuer, the casino licensee or any affiliate, and (iv) if the
holder subsequently determines to influence or affect the affairs of the
issuer, the casino licensee or any affiliate, it shall provide not less than
30 days' notice of such intent and shall file with the CCC an application for
qualification before taking any such action.
Commencing on the date the CCC serves notice on a corporate licensee or
an affiliate of such corporate licensee that a security holder of such
corporation has been found disqualified, it will be unlawful for the security
holder to: (i) receive any dividends or interest upon any such securities,
(ii) exercise, directly or through any trustee or nominee, any right conferred
by such securities, or (iii) receive any remuneration in any form from the
corporate licensee for services rendered or otherwise.
Persons who are required to qualify under the Act by reason of holding
debt or equity securities are required to place the securities into an Interim
Casino Authorization ("ICA") trust pending qualification. Unless and until
the CCC has reason to believe that the investor may not qualify, the investor
will retain the ability to direct the trustee how to vote, or whether to
dispose of, the securities. If at any time the CCC finds reasonable cause to
believe that the investor may be found unqualified, it can order the trust to
become "operative," in which case the investor will lose voting power, if any,
over the securities but will retain the right to petition the CCC to order the
trustee to dispose of the securities.
Once an ICA trust is created and funded, and regardless of whether it
becomes operative, the investor has no right to receive a return on the
investment until the investor becomes qualified. Should an investor
ultimately be found unqualified, the trustee would dispose of the trust
property, and the proceeds would be distributed to the unqualified applicant
only in an amount not exceeding the actual cost of the trust property. Any
excess proceeds would be paid to the State of New Jersey. If the securities
were sold by the trustee pending qualification, the investor would receive
only actual cost, with disposition of the remainder of the proceeds, if any,
to await the investor's qualification hearing.
In the event it is determined that a licensee has violated the Act or its
regulations, then under certain circumstances, the licensee could be subject
to fines or have its license suspended or revoked. In addition, if a person
required to qualify under the Act fails to qualify, or if a security holder
who is required to qualify fails to qualify and does not dispose of his
securities in the licensee or in any affiliate of the licensee, as may be
required by the Act, then, under certain circumstances, the licensee could
have its license suspended or revoked.
If a casino license were not renewed, were suspended for more than 120
days or were revoked, the CCC could appoint a conservator. The conservator
would be charged with the duty of conserving and preserving the assets so
acquired and continuing the operation of the hotel and casino of a suspended
licensee or with operating and disposing of the casino hotel facilities of a
former licensee. Such suspended licensee or former licensee, however, would
be entitled only to a fair return on its investment, to be determined under
New Jersey law, with any excess to go to the State of New Jersey, if so
directed by the CCC. Suspension or revocation of any licenses or the
appointment of a conservator by the CCC would have a material adverse effect
on the business of the Company.
In September 1992, the casino license of the Company was renewed by the
CCC for a two-year period. The Company anticipates a license renewal review
in June 1994 as requested by the CCC and is not aware of any reasons that the
license would not be renewed during 1994 for an additional two years.
Federal Registration
The Company is required to make annual filings with the Attorney General
of the United States in connection with the operation of slot machines. All
requisite filings for the present year have been made.
<PAGE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER
Item 4 is omitted pursuant to General Instruction J of Form 10-K.
<PAGE>
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Item 5 is inapplicable.
ITEM 6. SELECTED FINANCIAL DATA
Item 6 is omitted pursuant to General Instruction J of Form 10-K.
<PAGE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Item 7 is presented in the reduced disclosure format pursuant to
General Instruction J of Form 10-K.
RESULTS OF OPERATIONS
Revenues of the Company for 1993 were $352.8 million compared to $331.1
million for 1992, an increase of $21.7 million (7%). Casino revenues for 1993
were $297.7 million compared to $278.0 million for 1992, an increased of $19.7
million (7%). Slot revenues, which include the discontinuation of certain
progressive slot jackpots, increased $14.7 million (8%) due to an 11% increase
in slot handle (volume) offset, in part, by a decline in the slot win
percentage from 9.9% in 1992 to 9.6% in 1993. The Company added 112 slot
machines (a 6% increase) during 1993. Slot revenue represented 69% of the
Company's casino revenues in 1993 compared to 68% in 1992. Table games
revenue, excluding poker, increased $2.4 million (3%) from 1992 primarily due
to a 6% increase in the drop (amount wagered) offset, in part, by a decline
in the hold percentage from 17.0% in 1992 to 16.5% in 1993. The Company's
poker operations, which commenced in July 1993, contributed $2.6 million to
its casino revenues.
Rooms revenue increased $1.3 million (5%) due to an increase in rooms
occupied in 1993 compared to 1992 offset, in part, by a reduction in the
average room rate. Food and beverage revenue remained essentially unchanged.
Interest income from affiliates declined $.9 million due to the elimination
in 1992 of an intercompany loan.
Atlantic City city-wide casino revenues for all operators in 1993,
excluding poker and horse race simulcasting, increased approximately 2% from
1992, which was primarily attributable to a 5% increase in slot revenues
offset, in part, by a 3% decrease in table game revenues. Atlantic City's
1993 results were negatively impacted by severe weather conditions that
hampered attendance on several weekends in the first quarter. The number of
slot machines in Atlantic City increased approximately 8% during 1993, while
the number of Atlantic City table games, excluding poker tables, declined
approximately 1%. Slot revenues in 1993 represented 67% of total gaming
revenues in Atlantic City compared to 66% in 1992. Changes in gaming
regulations, including modifications allowing more slot machines on existing
casino floor space and permitting unrestricted 24-hour gaming effective July
1992, have aided Atlantic City slot revenue growth. In addition to the
ongoing slot revenue trend, the introduction in the second quarter of 1993 of
poker and horse race simulcasting has also improved the Atlantic City gaming
climate. The Company's competitors in Atlantic City intensified their
promotional slot marketing efforts during 1992 to expand their share of slot
revenues and this trend continued through 1993. The Company believes it is
well-positioned to compete for its share of casino revenues by continuing to
offer promotional slot and table game programs and special events. Also, the
Company plans a 13% expansion of its slot capacity and to introduce horse race
simulcasting and keno, if approved by the CCC, in 1994. However, the Company
believes that as a result of the aggressive competition for slot patrons, the
slot win percentage will continue to be subject to competitive pressure and
may further decline.
Operating income of the Company for 1993 was $85.8 million compared to
$62.7 million in 1992, an increase of $23.1 million (37%) due to the
aforementioned increase in revenues and, to a lesser extent, a $1.4 million
(1%) decrease in operating expenses. Casino expenses increased $.8 million
(1%) due to an increase in salaries, benefits and other costs associated with
expanded marketing and promotional efforts. Rooms expense increased $2.1
million (26%) mainly due to increased operating costs related to the higher
room occupancy. Food and beverage expenses increased $1.2 million (7%) due
to an increase in the cost of providing goods and services. Other operating
expenses were essentially unchanged. Selling, general and administrative
expenses decreased $4.1 million (10%) primarily due to a reduction in costs
associated with a management restructuring, legal, insurance and other
expenses. Depreciation and amortization expense were essentially unchanged.
In addition, operating costs and expenses include charges for BMC's corporate
overhead (including executive salaries and benefits, public company reporting
costs and other corporate headquarters' costs) allocated to the Company of
$4.1 million and $3.7 million for 1993 and 1992, respectively. Allocations
for 1993 and 1992 were, and management expects allocations in subsequent
years will be, based upon similar cost categories and allocation methods
subject to changes in circumstances which may warrant modifications.
Management of BMC has advised the Company that no significant changes are
presently contemplated.
Interest expense was $44.9 million for 1993 compared to $48.0 million for
1992. The decrease of $3.1 million (6%) reflects lower average line of credit
and intercompany borrowings and, to a lesser extent, lower average interest
rates charged on these borrowings.
Effective rates of the income tax provision were 45% in 1993 and 46% in
1992. The 1993 and 1992 income tax rates differ from the U.S. statutory tax
rates of 35% and 34%, respectively, due principally to state income taxes, net
of the related federal income tax benefit. A reconciliation of the income tax
provision with amounts determined by applying the U.S. statutory tax rate to
income before income taxes and cumulative effect on prior years of change in
accounting for income taxes is included in Notes to consolidated financial
statements.
Effective January 1, 1993, the Company changed its method of accounting
for income taxes as required by Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes." SFAS No. 109 retains the
requirement to record deferred income taxes for temporary differences that are
reported in different years for financial reporting and for tax purposes;
however, the methodology for calculating and recording deferred income taxes
has changed. Under the liability method adopted by SFAS No. 109, deferred tax
liabilities or assets are computed using the tax rates expected to be in
effect when the temporary differences reverse. Also, requirements for
recognition of deferred tax assets and operating loss and tax credit
carryforwards were liberalized by requiring their recognition when and to the
extent that their realization is deemed to be more likely than not. As
permitted by SFAS No. 109, the Company elected to use the cumulative effect
approach rather than to restate the consolidated financial statements of any
prior years to apply the provisions of SFAS No. 109. The cumulative effect
on prior years of this change in accounting for income taxes as of January 1,
1993 was a charge of $11.4 million. The effect of this change in accounting
for income taxes on the provision for income taxes for 1993 was to increase
the income tax provision by $.4 million as a result of applying the change in
the U.S. statutory tax rate from 34% to 35% to deferred tax balances.
<PAGE>
<PAGE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX
Reference
Report of independent auditors. . . . . . . . . . . . . . . . . . 11
Consolidated balance sheet. . . . . . . . . . . . . . . . . . . . 12
Consolidated statement of income. . . . . . . . . . . . . . . . . 14
Consolidated statement of stockholder's equity. . . . . . . . . . 15
Consolidated statement of cash flows. . . . . . . . . . . . . . . 16
Notes to consolidated financial statements. . . . . . . . . . . . 18
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholder
BALLY'S PARK PLACE, INC.
We have audited the accompanying consolidated balance sheet of Bally's
Park Place, Inc. (an indirect wholly owned subsidiary of Bally Manufacturing
Corporation) as of December 31, 1993 and 1992, and the related consolidated
statements of income, stockholder's equity, and cash flows for each of the
three years in the period ended December 31, 1993. Our audits also included
the financial statement schedules listed in the Index at Item 14(a). These
financial statements and schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedules 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Bally's Park Place, Inc. at December 31, 1993 and 1992, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1993, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
As discussed in the "Summary of significant accounting policies -- Income
taxes" note to the consolidated financial statements, in 1993 the Company
changed its method of accounting for income taxes.
ERNST & YOUNG
Philadelphia, Pennsylvania
February 25, 1994, except for the
"Long-term debt" note, as to which
the date is March 8, 1994
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
CONSOLIDATED BALANCE SHEET
(In thousands)
<CAPTION>
A S S E T S
December 31
--------------------
1993 1992
-------- --------
<S> <C> <C>
Current assets:
Cash and equivalents. . . . . . . . . . . . . $ 12,295 $ 12,275
Receivables:
Hotel and casino, less allowances of
$1,265 and $1,800 . . . . . . . . . . . . 3,964 2,346
Affiliates. . . . . . . . . . . . . . . . . 555 622
Notes and other . . . . . . . . . . . . . . 1,469 935
-------- --------
5,988 3,903
Inventories . . . . . . . . . . . . . . . . . 1,834 1,972
Deferred income taxes . . . . . . . . . . . . 6,161 7,611
Other current assets. . . . . . . . . . . . . 1,025 1,166
-------- --------
Total current assets . . . . . . . 27,303 26,927
Property and equipment, at cost:
Land. . . . . . . . . . . . . . . . . . . . . 82,825 82,844
Buildings and improvements. . . . . . . . . . 541,667 540,089
Furniture, fixtures and equipment . . . . . . 142,250 138,401
Construction in progress. . . . . . . . . . . 4,447 906
-------- --------
771,189 762,240
Accumulated depreciation. . . . . . . . . . . 284,691 262,847
-------- --------
Net property and equipment . . . . 486,498 499,393
Deferred finance costs, less accumulated
amortization of $7,388 and $5,676 . . . . . . 7,502 9,214
Casino Reinvestment Development Authority
investments . . . . . . . . . . . . . . . . . 11,314 9,964
Other assets. . . . . . . . . . . . . . . . . . 1,236 5,177
-------- --------
$533,853 $550,675
======== ========
<FN>
(Continued)
</TABLE>
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
<CAPTION
LIABILITIES AND STOCKHOLDER'S EQUITY
December 31
--------------------
1993 1992
-------- --------
<S> <C> <C>
Current liabilities:
Payable to affiliate . . . . . . . . . . . . . $ --- $ 16,000
Accounts payable . . . . . . . . . . . . . . . 5,423 3,782
Income taxes payable . . . . . . . . . . . . . 5,562 3,697
Accrued liabilities:
Compensation and payroll taxes . . . . . . . 7,895 6,335
Interest . . . . . . . . . . . . . . . . . . 15,655 15,649
Progressive slot jackpots. . . . . . . . . . 1,487 2,859
Other. . . . . . . . . . . . . . . . . . . . 15,960 15,635
Current maturities of long-term debt . . . . . 44 1,038
-------- --------
Total current liabilities . . . . . 52,026 64,995
Long-term debt, less current maturities. . . . . 354,727 355,779
Deferred income taxes. . . . . . . . . . . . . . 31,760 15,571
Pension liability. . . . . . . . . . . . . . . . 9,089 6,197
Deferred compensation. . . . . . . . . . . . . . --- 16,042
Other long-term liabilities. . . . . . . . . . . 1,071 1,261
Stockholder's equity:
Common stock, no par value, at stated value,
authorized 3,000 shares, issued and
outstanding 100 shares . . . . . . . . . . . 1 1
Additional paid in capital . . . . . . . . . . 85,179 90,829
Retained earnings. . . . . . . . . . . . . . . --- ---
-------- --------
Total stockholder's equity. . . . . 85,180 90,830
-------- --------
$533,853 $550,675
======== ========
<FN>
See accompanying notes.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
CONSOLIDATED STATEMENT OF INCOME
(In thousands)
<CAPTION>
Years Ended December 31
--------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Casino . . . . . . . . . . . . . . $297,688 $277,997 $265,698
Rooms. . . . . . . . . . . . . . . 25,019 23,724 23,454
Food and beverage. . . . . . . . . 20,993 20,515 21,150
Interest income from affiliates. . --- 881 4,471
Other. . . . . . . . . . . . . . . 9,107 8,015 8,030
-------- -------- --------
352,807 331,132 322,803
Operating costs and expenses:
Casino . . . . . . . . . . . . . . 117,718 116,879 111,920
Rooms. . . . . . . . . . . . . . . 10,116 8,049 8,327
Food and beverage. . . . . . . . . 18,993 17,844 18,737
Other operating expenses . . . . . 53,060 54,154 52,382
Selling, general and
administrative . . . . . . . . . 36,352 40,488 47,873
Depreciation and amortization. . . 26,581 27,358 28,147
Allocations from Bally
Manufacturing Corporation. . . . 4,141 3,660 1,000
-------- -------- --------
266,961 268,432 268,386
-------- -------- --------
Operating income . . . . . . . . . . 85,846 62,700 54,417
Interest expense . . . . . . . . . . 44,919 47,960 48,951
-------- -------- --------
Income before income taxes and
cumulative effect on prior years
of change in accounting for income
taxes. . . . . . . . . . . . . . . 40,927 14,740 5,466
Provision for income taxes . . . . . 18,500 6,800 3,700
-------- -------- --------
Income before cumulative effect on
prior years of change in
accounting for income taxes. . . . 22,427 7,940 1,766
Cumulative effect on prior years of
change in accounting for income
taxes. . . . . . . . . . . . . . . (11,377) --- ---
-------- -------- --------
Net income . . . . . . . . . . . . . $ 11,050 $ 7,940 $ 1,766
======== ======== ========
<FN>
See accompanying notes.
/TABLE
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(In thousands, except share data)
<CAPTION>
Number Additional Retained Total
of shares Common paid in earnings stockholder's
issued stock capital (deficit) equity
--------- ------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1990 . . . . . 100 $ 1 $128,640 $ 2,483 $131,124
Net income . . . . . . . . . . . . -- -- -- 1,766 1,766
----- ----- -------- -------- --------
Balance at December 31, 1991 . . . . . 100 1 128,640 4,249 132,890
Net income . . . . . . . . . . . . -- -- -- 7,940 7,940
Receivable due from Bally
Manufacturing Corporation
declared as a dividend . . . . . -- -- (37,811) (12,189) (50,000)
----- ----- -------- -------- --------
Balance at December 31, 1992 . . . . . 100 1 90,829 --- 90,830
Net income . . . . . . . . . . . . -- -- -- 11,050 11,050
Dividends paid . . . . . . . . . . -- -- (5,650) (11,050) (16,700)
----- ----- -------- -------- --------
Balance at December 31, 1993 . . . . . 100 $ 1 $ 85,179 $ --- $ 85,180
===== ===== ======== ======== ========
FN>
See accompanying notes.
/TABLE
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<CAPTION>
Years Ended December 31
------------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Operating:
Income before cumulative effect on
prior years of change in accounting
for income taxes . . . . . . . . . . . $ 22,427 $ 7,940 $ 1,766
Adjustments to reconcile to cash
provided-
Depreciation and amortization. . . . . 26,581 27,358 28,147
Deferred income taxes. . . . . . . . . 6,753 1,049 (1,461)
Provision for doubtful receivables . . 421 889 1,846
Write-off of property and
equipment. . . . . . . . . . . . . . --- --- 2,367
Changes in operating assets and
liabilities. . . . . . . . . . . . . (8,092) (5,089) 13,720
Other, net . . . . . . . . . . . . . . 1,712 3,209 1,524
-------- -------- --------
Cash provided by operating
activities . . . . . . . . . . . 49,802 35,356 47,909
Investing:
Purchases of property and equipment. . . (14,436) (10,268) (10,922)
Proceeds from disposal of property
and equipment. . . . . . . . . . . . . 750 345 191
Purchases of CRDA investments. . . . . . (1,350) (2,692) (2,235)
-------- -------- --------
Cash used in investing
activities . . . . . . . . . . . (15,036) (12,615) (12,966)
Financing:
Debt transactions -
Payments under revolving lines of
credit, net. . . . . . . . . . . . . (1,000) (22,000) (50,000)
Advances from (repayment to)
affiliates . . . . . . . . . . . . . (16,000) 1,700 17,000
Repayments of long-term debt . . . . . (1,046) (2,296) (537)
Debt issuance costs. . . . . . . . . . --- (375) ---
-------- -------- --------
Cash used in debt transactions . . (18,046) (22,971) (33,537)
Equity transactions -
Dividends paid . . . . . . . . . . . . (16,700) --- ---
-------- -------- --------
Cash used in financing
activities . . . . . . . . . . . (34,746) (22,971) (33,537)
-------- -------- --------
Increase (decrease) in cash and
equivalents. . . . . . . . . . . . . 20 (230) 1,406
Cash and equivalents, beginning of
year . . . . . . . . . . . . . . . . 12,275 12,505 11,099
-------- -------- --------
Cash and equivalents, end of year. . . . $ 12,295 $ 12,275 $ 12,505
======== ======== ========
<FN>
(Continued)
/TABLE
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<CATPTION>
Years Ended December 31
-------------------------------
1993 1992 1991
-------- -------- ---------
SUPPLEMENTAL CASH FLOWS INFORMATION
<S> <C> <C> <C>
Changes in operating assets and
liabilities:
(Increase) decrease in receivables . . $ (2,506) $ (189) $ 2,814
Decrease in inventories. . . . . . . . 138 151 2,805
(Increase) decrease in other assets. . 4,082 (612) (629)
Increase (decrease) in accounts
payable and accrued liabilities . . 2,160 (463) 5,125
Increase in income taxes payable . . . 1,374 1,956 1,176
Increase (decrease) in pension
liability and deferred
compensation. . . . . . . . . . . . (13,150) (5,764) 1,000
Increase (decrease) in other
long-term liabilities . . . . . . . (190) (168) 1,429
-------- -------- --------
$ (8,092) $ (5,089) $ 13,720
======== ======== ========
Operating activities include cash
payments for interest and income
taxes as follows:
Interest paid. . . . . . . . . . . . . $ 43,278 $ 45,141 $ 47,635
Interest capitalized . . . . . . . . . (71) (74) (149)
Income taxes paid. . . . . . . . . . . 10,373 3,795 3,985
Investing and financing activities
exclude the following non-cash
activities:
Receivable due from Bally
Manufacturing Corporation
declared as a dividend . . . . . . . $ --- $ 50,000 $ ---
Donation of CRDA funds, net. . . . . . 950 --- 15
<FN>
See accompanying notes.
/TABLE
<PAGE>
<PAGE>
BALLY'S PARK PLACE, INC.
(An Indirect Wholly Owned Subsidiary of Bally Manufacturing Corporation)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
Summary of significant accounting policies
Basis of presentation
The accompanying consolidated financial statements include the accounts
of Bally's Park Place, Inc., a Delaware corporation (the "Company") and its
subsidiaries. The Company was a direct wholly owned subsidiary of Bally
Manufacturing Corporation ("BMC") until June 16, 1993, when BMC contributed
all of the capital stock of the Company to Bally Casino Holdings, Inc.
("Casino Holdings"). Casino Holdings was formed as a subsidiary of BMC in
April 1993 to serve as a holding company for the Company and for acquiring and
developing gaming operations, including those in newly emerging gaming
jurisdictions. Unless otherwise specified in the text, references to the
Company include the Company and its subsidiaries.
The Company operates in one industry segment. All significant revenues
arise from its casino and supporting hotel operations.
Certain reclassifications have been made to prior years' financial
statements to conform with the 1993 presentation.
Cash equivalents
The Company considers all highly liquid investments with maturities of
three months or less when purchased to be cash equivalents.
Inventories
Inventories of provisions and supplies are stated at the lower of cost
(first-in, first-out basis) or market, which approximates replacement cost.
Property and equipment
Depreciation of property and equipment is provided principally on the
straight-line method over the estimated economic lives of the related assets
and the terms of the applicable leases for leasehold improvements.
Depreciation expense was $26,581, $26,462 and $26,306 for 1993, 1992 and 1991,
respectively.
Deferred finance costs
Deferred finance costs are being amortized over the terms of the related
debt using the bonds outstanding method.
<PAGE>
Revenue recognition
Casino revenues consist of the net win from gaming activities, which is
the difference between gaming wins and losses. Operating revenues exclude the
retail value of complimentary food, beverage and hotel services furnished to
customers, which were approximately $31,780, $36,809 and $36,654 for 1993,
1992 and 1991, respectively. The estimated costs of providing such
complimentary services, which are classified as casino expenses through
interdepartment allocations from the departments granting the services, are
as follows:
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Rooms................................... $ 4,919 $ 5,592 $ 4,625
Food and beverage....................... 17,449 16,478 14,399
Other................................... 513 630 800
-------- -------- --------
$ 22,881 $ 22,700 $ 19,824
======== ======== ========
</TABLE>
Income taxes
Taxable income or loss of the Company is included in the consolidated
federal income tax return of BMC. Under agreements between the Company, BMC
and Casino Holdings, income taxes are allocated to the Company based on
amounts the Company would pay or receive if it filed a separate consolidated
federal income tax return, except that the Company receives credit from BMC
for the tax benefit of the Company's net operating losses and tax credits, if
any, that can be utilized in BMC's consolidated federal income tax return,
regardless of whether these losses or credits could be utilized by the Company
on a separate consolidated federal income tax return basis. Payments to BMC
are due at such time and in such amounts as payments are required to be made
for income tax purposes. Payments by BMC for such tax benefits are due at the
time BMC files the applicable consolidated federal income tax return. Under
the tax sharing agreement, the Company had income taxes payable to BMC of
$5,562 and $3,697 at December 31, 1993 and 1992, respectively, which are
classified as income taxes payable on the accompanying consolidated balance
sheet.
Effective January 1, 1993, the Company changed its method of accounting
for income taxes as required by Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes." SFAS No. 109 retains the
requirement to record deferred income taxes for temporary differences that are
reported in different years for financial reporting and for tax purposes;
however, the methodology for calculating and recording deferred income taxes
has changed. Under the liability method adopted by SFAS No. 109, deferred tax
liabilities or assets are computed using the tax rates expected to be in
effect when the temporary differences reverse. Also, requirements for
recognition of deferred tax assets and operating loss and tax credit
carryforwards were liberalized by requiring their recognition when and to the
extent that their realization is deemed to be more likely than not. As
permitted by SFAS No. 109, the Company elected to use the cumulative effect
approach rather than to restate the consolidated financial statements of any
prior years to apply the provisions of SFAS No. 109. The cumulative effect
on prior years of this change in accounting for income taxes as of January 1,
1993 was a charge of $11,377. The effect of this change in accounting for
income taxes on the provision for income taxes for 1993 was to increase the
income tax provision by $427 as a result of applying the change in the U.S.
statutory tax rate from 34% to 35% to deferred tax balances.
Fair value of financial instruments
The fair value of the Company's financial instruments approximates their
recorded book values at December 31, 1993 and 1992, excluding the 11 7/8%
First Mortgage Notes due 1999 (the "11 7/8% Notes") whose fair market value,
based on quoted market prices, was approximately $378,875 and $363,125 at
December 31, 1993 and 1992, respectively.
Casino licensing
In September 1992, the New Jersey Casino Control Commission (the "CCC")
granted a two-year renewal of the Company's casino license to operate Bally's
Park Place. A New Jersey casino license is not transferable, is issued for
a term of one or two years and must be renewed by filing an application. The
CCC requires that dividends and other payments to BMC by the Company, other
than specifically defined payments made in the ordinary course of business,
receive prior notice. The Company is not aware of any reasons that the
license would not be renewed during 1994 for an additional two years.
Allocations from BMC and transactions with related parties
BMC is a holding company without significant operations of its own.
During 1992, BMC completed a major restructuring effort which began in late
1990 and which included the divestiture of several of its non-core businesses
including the businesses operated directly by BMC. The businesses operated
directly by BMC had previously supported BMC's overhead costs and made
measurement of costs associated with oversight of subsidiary operations
unnecessary. During 1991, BMC allocated costs to the Company consisting of
the Company's allocable share of BMC's director's and officer's insurance and
other BMC stockholder-related expenses primarily attributable to a
restructuring. During 1992 and 1993, BMC allocated costs to the Company
consisting of the Company's allocable share of BMC's corporate overhead
including executive salaries and benefits, public company reporting costs and
other corporate headquarters' costs. While the Company does not obtain a
measurable direct benefit from these allocated costs, management believes that
the Company receives an indirect benefit from BMC's oversight. BMC's method
for allocating costs to its subsidiaries is designed to apportion its costs
to its subsidiaries based upon many subjective factors including size of
operations and extent of BMC's oversight requirements. Management of BMC and
the Company believe that the methods used to allocate these costs are
reasonable and expect similar allocations in future years. Because of BMC's
controlling relationship with the Company and the allocation of certain BMC
costs, the operating results of the Company could be significantly different
from those that would have been obtained if the Company operated autonomously.
Certain executive officers of the Company function in a similar capacity
for GNAC, CORP. (a wholly owned subsidiary of BMC which owns and operates the
casino resort in Atlantic City known as the "The Grand"), and exercise
decision making and operational authority over both entities. No allocation
of cost is made from the Company to The Grand for these executive officers as
management deems the direct allocable cost to be immaterial. In addition,
certain administrative and support operations of the Company and The Grand are
consolidated, including legal services, purchasing, limousine services and
certain aspects of human resources. Costs of these operations are allocated
to or from the Company either directly or using various formulas based on
utilization estimates of such services. On a net basis, allocations from the
Company were $1,096, $2,568 and $2,486 in 1993, 1992 and 1991, respectively,
which management believes were reasonable.
The Company leases surface area parking lots to The Grand, and rental
income was $696 in each of 1993, 1992 and 1991. In addition, the Company paid
$869 and $2,557 to The Grand during 1992 and 1991, respectively, for New
Jersey Casino Reinvestment Development Authority ("CRDA") credits which were
used by the Company in satisfaction of a portion of its CRDA obligations.
In April 1990, the Company advanced BMC $50,000, with interest earned at
the prime rate of its agent bank. In October 1992, BMC petitioned the CCC to
allow the Company to declare the receivable due from BMC as a dividend. The
CCC approved this request in December 1992. No interest was paid to the
Company subsequent to April 1, 1992. Intercompany interest earned on this
advance was $808 and $4,243 in 1992 and 1991, respectively.
In December 1990, the Company advanced The Grand $2,700. This advance
was repaid in June 1992. The Company earned interest monthly on this advance
(at the prime rate of its agent bank) which totalled $73 and $228 in 1992 and
1991, respectively.
The Company and The Grand have a cash management arrangement whereby The
Grand advances excess funds to the Company which the Company uses to reduce
the outstanding balance under its revolving credit agreement. As of December
31, 1992, the Company owed The Grand $16,000 which was repaid during 1993.
These advances are payable on demand. The Company pays interest monthly on
these advances (at the prime rate of its agent bank) which totalled $432,
$1,249 and $862 in 1993, 1992 and 1991, respectively.
Discontinued motel operation
In December 1991, the Company made a decision to close and demolish the
motel operation of one of its subsidiaries. In connection with this decision,
the Company recorded a $3,500 charge against operations in 1991 to write-off
the remaining net book value of the property and equipment of this motel and
to provide for the demolition cost and other related closing costs. The
revenues and operating income of this motel operation were immaterial.
Casino Reinvestment Development Authority investments
The New Jersey Casino Control Act (the "Act") provides, among other
things, for an assessment of licensees equal to 1 1/4% of their gross casino
revenues. This assessment may be satisfied by the Company investing in
qualified eligible direct investments, by depositing funds with the CRDA
(which will be used to purchase bonds issued by the CRDA), by making qualified
contributions or, under certain circumstances, donating funds on deposit with
the CRDA in exchange for credits against future CRDA obligations. The
Company's investment obligation for 1993 was met by purchasing CRDA bonds,
donating funds on deposit with the CRDA, utilizing CRDA credits and depositing
funds with the CRDA. CRDA bonds have terms up to fifty years and bear
interest at below market rates. The Company records a charge to operations
when it deposits funds with the CRDA to reflect the estimated realizable value
of its CRDA investments. No gain or loss is recorded relating to the donation
of the CRDA obligations as the book value of the Company's investment in CRDA
obligations approximates the credits received.
The Company charged to operations $2,059, $2,228 and $2,950 in 1993, 1992
and 1991 respectively, to reflect the estimated realizable value of its CRDA
investments.
In January 1991, the Company received an assessment from the New Jersey
Department of the Treasury (the "Treasury") alleging, pursuant to the Act,
that the Company in 1983 failed to have sufficient qualified investments in
excess of casino revenues. The Act in effect in 1983 required in this
situation that a casino pay an assessment to satisfy its investment
obligation. In January 1992, the Company and the Treasury settled this
dispute, and the Company agreed to invest an additional $2,250 with the CRDA
as follows: $600 in 1992; $300 in 1993; $300 in 1994; $300 in 1995 and $750
in 1996, and to participate in certain CRDA approved low income mortgage
guarantee programs. The Company charged $1,100 to operations in 1991 as a
result of the settlement, representing the Company's estimated net cost of the
settlement obligation.
Long-term debt
<TABLE>
<CAPTION>
December 31,
1993 1992
--------- ---------
<S> <C> <C>
11 7/8% Notes.................................. $ 350,000 $ 350,000
Revolving credit agreement..................... 2,000 3,000
Other secured and unsecured debt............... 2,771 3,817
--------- ---------
354,771 356,817
Less current maturities 44 1,038
--------- ---------
$ 354,727 $ 355,779
========= =========
</TABLE>
On March 8, 1994, the Company issued $425,000 principal amount of 9 1/4%
First Mortgage Notes due 2004 (the "9 1/4% Notes"). The 9 1/4% Notes are not
subject to any sinking fund requirement, but may be redeemed beginning March
1999, in whole or in part, with premiums ranging from 4.5% in 1999 to zero in
2002 and thereafter. In addition, on or before March 15, 1997, a portion of
the 9 1/4% Notes may be redeemed at a premium of 9.25% out of the proceeds of
one or more public equity offerings by the Company or Casino Holdings if such
offerings were to occur, provided that at least $100,000 principal amount of
the 9 1/4% Notes remains outstanding after the redemption. The 9 1/4% Notes
are secured by a first mortgage on and security interest in substantially all
property and equipment of the Company. The Company used the net proceeds from
the sale of the 9 1/4% Notes to purchase and retire certain of its 11 7/8%
Notes, defease the remaining 11 7/8% Notes at a price of 104.45% of their
principal amount plus accrued interest through the redemption date, thereby
satisfying all obligations thereunder, and pay a $30,000 dividend to Casino
Holdings. The retirement and defeasance of the 11 7/8% Notes results in an
extraordinary loss in the first quarter of 1994 of approximately $20,500, net
of an income tax benefit of approximately $14,300. In connection with the
sale of the 9 1/4% Notes, the Company terminated its existing credit facility
and entered into an agreement for a new $50,000 revolving credit facility
which expires on December 31, 1996, at which time all amounts outstanding
become due. The new credit facility provides for interest on borrowings
payable, at the Company's option, at the agent bank's prime rate or the LIBOR
rate plus 2%, each of which increases as the balance outstanding increases.
The rate of interest on borrowings was previously based upon the agent bank's
prime rate or certain other short-term rates (6% at December 31, 1993). The
Company pays a fee of 1/2% on the unused commitment. The new credit facility
is secured by a pari passu lien on the collateral securing the 9 1/4% Notes.
At December 31, 1993, $595 was available under the indenture for the 11
7/8% Notes to pay dividends, which was paid in February 1994. The indenture
for the 9 1/4% Notes and the new credit facility imposes restrictions on the
Company's ability to incur debt and issue preferred stock, make acquisitions
and certain restricted payments, create liens, sell assets or enter into
transactions with affiliates. The new credit facility is, in certain
circumstances, more restrictive than the indenture for the 9 1/4 % Notes. In
connection with the sale of the 9 1/4% Notes, the CCC requires, among other
things, that dividends paid by the Company to Casino Holdings which are not
paid pursuant to a net income test (generally limited to 50% of aggregate
consolidated net income, as defined, earned since April 4, 1994) receive prior
approval from the CCC. The indenture for the 9 1/4% Notes limits these
dividends to $50,000 in aggregate.
The Company has aggregate annual maturities of long-term debt (adjusted
for the refinancing described above) for the five years after December 31,
1993 of $44, $46, $2,048, $50 and $52.
Income taxes
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
Liability
method Deferred method
-------- ---------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal.......................... $ 9,792 $ 4,539 $ 3,848
State............................ 1,955 1,212 1,313
-------- -------- --------
11,747 5,751 5,161
Deferred:
Federal.......................... 4,627 764 (1,012)
State............................ 2,126 285 (449)
-------- -------- --------
6,753 1,049 (1,461)
-------- -------- --------
$ 18,500 $ 6,800 $ 3,700
======== ======== ========
</TABLE>
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
and income tax purposes. Significant components of the Company's deferred tax
assets and liabilities as of December 31, 1993 and January 1, 1993, along with
their classification, are as follows:
<TABLE>
<CAPTION>
December 31, 1993 January 1, 1993
Assets Liabilities Assets Liabilities
------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Expenses which are not
currently deductible
for tax purposes:
Bad debts............... $ 500 $ --- $ 706 $ ---
Deferred compensation
and pension........... 3,739 --- 8,937 ---
Other................... 8,376 --- 9,857 ---
Depreciation and
capitalized costs......... --- 41,225 --- 38,437
State tax loss
carryforwards............. 109 --- 83 ---
Other, net.................. 2,917 --- 14 ---
------- ------- ------- -------
15,641 $41,225 19,597 $38,437
======= =======
Valuation allowance......... ( 15) ( 7)
------- -------
$15,626 $19,590
======= =======
Current..................... $ 6,161 $ --- $ 6,888 $ ---
Long-term................... 9,465 41,225 12,702 38,437
------- ------- ------- -------
$15,626 $41,225 $19,590 $38,437
======= ======= ======= =======
</TABLE>
At December 31, 1993, the Company had net operating loss carryforwards
for state income tax purposes of approximately $1,787. The loss carryforwards
begin to expire in 1997 and fully expire in 1999.
The deferred income tax provision (benefit) for 1992 and 1991 arises from
the tax effect of timing differences as follows:
<TABLE>
<CAPTION>
Deferred method
------------------
1992 1991
-------- --------
<S> <C> <C>
Deferred compensation and pension.................... $ 1,713 $ (402)
Depreciation and amortization........................ 1,427 1,150
Provision for bad debts.............................. 38 378
CRDA investments..................................... (320) (1,077)
Accrued expenses..................................... (1,633) (1,384)
Other, net........................................... (176) (126)
-------- --------
$ 1,049 $ (1,461)
======== ========
/TABLE
<PAGE>
A reconciliation of the provision for income taxes with amounts
determined by applying the U.S. statutory tax rate to income before income
taxes and cumulative effect on prior years of change in accounting for income
taxes is as follows:
<TABLE>
<CAPTION>
Liability
method Deferred method
-------- ------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Tax at U.S. statutory tax rate (35% in
1993 and 34% in 1992 and 1991)......... $ 14,324 $ 5,012 $ 1,858
Add (deduct):
State income taxes, net of related
federal income tax benefit........... 2,647 988 570
Effect of change is U.S. statutory tax
rate on deferred tax balances........ 427 --- ---
Write-off of property and equipment.... --- --- 698
Prior years' taxes..................... 1,107 380 (2)
Other, net............................. (5) 420 576
-------- -------- --------
Provision for income taxes................. $ 18,500 $ 6,800 $ 3,700
======== ======== ========
</TABLE>
Benefit plans
The Company has a noncontributory supplemental executive retirement plan
(the "SERP") for certain key executives. Normal retirement under the SERP is
age 60 and participants receive benefits based on years of service and
compensation. Pension costs of the SERP are unfunded. The net periodic
pension cost for the Company's SERP for 1993, 1992 and 1991 consists of the
following:
<TABLE>
<CAPTION>
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Amortization of transition costs........... $ 251 $ 126 $ 140
Service cost-benefits earned during
the period............................... 2,329 412 312
Interest cost on projected benefit
obligations.............................. 510 478 1,037
Other...................................... --- 220 ---
-------- -------- --------
Net periodic pension cost............. $ 3,090 $ 1,236 $ 1,489
======== ======== ========
</TABLE>
<PAGE>
The following sets forth the plan's obligation and funded status as of
December 31 for the SERP.
<TABLE>
<CAPTION>
1993 1992
-------- --------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits................................... $ 6,773 $ 2,969
Nonvested benefits................................ 694 1,046
-------- --------
Accumulated benefit obligations................... 7,467 4,015
Effect of projected salary increases.............. 4,235 3,038
-------- --------
Projected benefit obligations..................... 11,702 7,053
Unrecognized transition obligation.................. (603) (856)
Unrecognized obligation due to change in
assumptions....................................... (2,010) ---
-------- --------
Accrued pension liability........................... $ 9,089 $ 6,197
======== ========
</TABLE>
The discount rate was 6.0% in 1993 and 8.0% in 1992 and 1991, and the
rate of increase in future compensation levels used in determining the
actuarial present value of the projected benefit obligations was 6.0% in 1993,
1992 and 1991.
In 1991, the Company and one of its executives entered into an agreement
to terminate the executive's participation in a noncontributory supplemental
executive retirement plan sponsored by the Company. Pursuant to this
agreement, the Company agreed to pay the executive $27,600 over five years.
The Company recorded the settlement in an amount equal to the net present
value of the required payments. No charge against operations in 1991 was
required, as the Company had fully accrued in prior years the value of this
settlement as part of its pension liability. The net present value of the
remaining payments under this termination agreement was $16,042 at December
31, 1992. On January 8, 1993, the Company and BMC entered into a retirement
and separation agreement with this executive which, among other things,
reduced the remaining amount payable under the termination agreement to
$13,500, which the Company paid on such date.
In addition to the defined benefit pension plans described above, the
Company has a defined contribution plan which covers certain non-union
employees and which is considered part of the Company's overall retirement
program. The plan is a 401(k) plan to which the Company contributes an amount
allocable based on eligible participants' compensation and a percent of
eligible employees' contributions. The expense for the Company's defined
contribution plan was $3,129, $2,608 and $3,800 for 1993, 1992 and 1991,
respectively.
Certain employees of the Company are covered by union-sponsored,
collectively bargained, multiemployer defined benefit pension plans. The
contributions and charges to expense for these plans were $583, $562 and $567
in 1993, 1992 and 1991, respectively.
In April 1991, an insurance company that issued guaranteed interest
contracts ("GICs") that were purchased by both BMC's and the Company's
qualified 401(k) plans was declared insolvent by the State of California's
Insurance Commissioner (the "Commissioner"). Operations of this insurance
company were assumed by the Commissioner. Approximately $7,400 of these GICs
are held in a Master Trust for BMC's and its subsidiaries' employee benefit
plans, of which approximately 42% is attributable to the Company's 401(k)
plan. Although BMC and the Company had no legal obligation to fund any 401(k)
plan losses, BMC's Board of Directors, in June 1991, authorized BMC, and
therefore the Company, to ensure that participants in the Company's 401(k)
plan not suffer any loss in principal, as determined on March 31, 1991, to
their 401(k) account balances which might otherwise occur due to this
insolvency. During 1991, the Company charged $900 to operations for its
estimated cost of reimbursing any shortfall in the participants' 401(k)
account balances, which was included in the $3,800 defined contribution plan
expense.
<PAGE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Item 9 is inapplicable.
<PAGE>
<PAGE>
PART III
Part III is omitted pursuant to General Instruction J of Form 10-K.
<PAGE>
<PAGE>
PART IV
ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. Index to Financial Statements.
Reference
Report of independent auditors . . . . . . . . . . . . . . . . . . 11
Consolidated balance sheet at December 31, 1993 and 1992 . . . . . 12
For each of the three years in the period ended December 31, 1993:
Consolidated statement of income . . . . . . . . . . . . . . . . 14
Consolidated statement of stockholder's equity . . . . . . . . . 15
Consolidated statement of cash flows . . . . . . . . . . . . . . 16
Notes to consolidated financial statements . . . . . . . . . . . . 18
2. Index to Financial Statement Schedules.
Schedule II Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees Other
Than Related Parties for each of the three
years in the period ended December 31, 1993 . . . . . 33
Schedule V Property and Equipment for each of the three
years in the period ended December 31, 1993 . . . . . 34
Schedule VI Accumulated Depreciation and Amortization of
Property and Equipment for each of the three
years in the period ended December 31, 1993 . . . . . 35
Schedule VIII Valuation and Qualifying Accounts for each of
the three years in the period ended December 31,
1993. . . . . . . . . . . . . . . . . . . . . . . . . 36
Schedule X Supplementary Income Statement Information for
each of the three years in the period ended
December 31, 1993 . . . . . . . . . . . . . . . . . . 37
All other schedules specified under Regulation S-X are omitted because they
are not applicable, not required under the instructions or all information
required is set forth in the Notes to consolidated financial statements.
3. Index to Exhibits.
*3.1 Restated Certificate of Incorporation of the Company.
**3.2 Amended and Restated By-laws of the Company.
**3.3 Certificate of Incorporation of Bally's Park Place Funding, Inc.
**3.4 Amended and Restated By-laws of Bally's Park Place Funding, Inc.
*3.5 Amended and Restated Certificate of Incorporation of Bally's
Park Place-New Jersey.
*3.6 Amended and Restated By-laws of Bally's Park Place-New Jersey.
*4.1 Form of Indenture governing 11 7/8% First Mortgage Notes due
1999 of Bally's Park Place Funding, Inc.
*4.1.1 Form of First Mortgage Note.
*4.1.2 Form of Guaranty of the Company.
**4.2 Form of Indenture governing 9 1/4% First Mortgage Notes due 2004
of Bally's Park Place Funding, Inc.
**4.2.1 Form of Note (included as part of Article II of the
Indenture).
**4.2.2 Form of Guaranty of the Company of the Notes (included as part
of Article II of the Indenture).
***10(i).1 Intercorporate Agreement dated as of June 24, 1993 among Casino
Holdings, Bally's Park Place-New Jersey and BMC.
***10(i).2 Tax Sharing Agreement dated as of June 17, 1993 between BMC and
Casino Holdings.
***10(i).3 Tax Sharing Agreement dated as of June 17, 1993 between BMC and
Bally's Park Place-New Jersey.
*10(i).4 Amended and Restated Loan Agreement dated as of June 30, 1992
among Bally's Park Place-New Jersey, the Company, Bally's Park
Place Realty Co. ("Realty Co."), and the Senior Lender, as agent
and the other banks named therein governing the existing credit
facility (filed as an exhibit to the Annual Report on Form 10-K
for the Company for the year ended December 31, 1992).
**10(i).5 Form of Mortgage and Security Agreement with Assignment of Rents
among the Bally's Park Place-New Jersey, Realty Co., Bally's
Park Place Funding, Inc. and First Bank.
**10(i).6 Form of Assignment of Leases and Rents among Bally's Park Place-
New Jersey, Realty Co. and First Bank.
**10(i).7 Form of Note Pledge Agreement among the Bally's Park Place-New
Jersey, Bally's Park Place Funding, Inc. and First Bank.
**10(i).8 Form of Note.
**10(i).9 Form of Intercreditor Agreement.
*10(i).10 Mortgage and Security Agreement with Assignment of Rents dated
August 31, 1989 among Bally's Park Place-New Jersey, Realty Co.,
the Issuer and First Fidelity Bank.
*10(i).11 Assignment of Leases and Rents dated August 31, 1989 among
Bally's Park Place-New Jersey, Realty Co. and First Fidelity
Bank.
*10(i).12 Note Pledge Agreement dated August 31, 1989 among Bally's Park
Place-New Jersey, Realty Co. and First Fidelity Bank.
*10(i).13 $350,000,000 Note dated August 31, 1989.
10(i).14 Loan and Guaranty Agreement dated March 8, 1994 among Bally's
Park Place-New Jersey, Realty Co., Inc. and First Fidelity Bank,
as agent and lender and Midlantic National Bank as lender.
10(i).15 Mortgage and Security Agreement with Assignment of Rents dated
March 8, 1994 in connection with Exhibit 10(i).14.
*10(ii).1 Lease Agreement dated June 8, 1977, between Bally's Park Place-
New Jersey and the Palley Blatt Company respecting the
Marlborough-Blenheim Hotel Property (filed as an exhibit to the
Company's Registration Statement on Form S-1, Registration No.
2-65017).
*10(ii).2 Letter dated April 27, 1979, from Bally's Park Place-New Jersey
to Alexander K. Blatt and Norman Palley, as Trustees, agreeing
to the Purchase and modification of the First Peoples National
Bank of New Jersey's $4,000,000 mortgage loan to the Palley
Blatt Company (filed as an exhibit to the Company's Registration
Statement on Form S-1, Registration No. 2-65017).
*10(iii).1 Retirement and Separation Agreement dated January 8, 1993
between BMC, Bally's Park Place-New Jersey and Richard Gillman
(filed as an exhibit to the Company's Annual Report on Form 10K
for the year ended December 31, 1992).
*10(iii).2 Split-Dollar Life Insurance Agreements and Collateral
Assignments by and among the Company's, Bally's Park Place-New
Jersey, Richard Gillman and Scott Gillman dated February 1,
1985.
*10(iii).3 Split-Dollar Life Insurance Agreements and Collateral
Assignments by and among the Company's, Bally's Park Place-New
Jersey, Richard Gillman and Marc Gillman dated February 1, 1985.
*10(iii).4 Employee Incentive Stock Option Plan of Bally's Park Place-New
Jersey (filed as an exhibit to the Company's Registration
Statement on Form S-8, Registration No. 2-76757).
*10(iii).5 Amendment to Employee Incentive Stock Option Plan of Bally's
Park Place-New Jersey dated May 6, 1985.
*10(iii).6 Amendments to Employee Incentive Stock Option Plan of Bally's
Park Place-New Jersey dated January 24, 1986.
*10(iii).7 Supplemental Executive Retirement Plan of Bally's Park Place-New
Jersey effective as of January 1, 1987.
*10(iii).8 Group Travel Accident Policy between Bally's Park Place-New
Jersey and Hartford Insurance Group effective February 5, 1988.
*10(iii).9 Profit Sharing Plan and Trust Agreement of Bally's Park Place-
New Jersey.
*10(iii).10 Amended and Restated Profit Sharing Plan and Trust Agreement of
Bally's Park Place-New Jersey.
*10(iii).11 Amended and Restated Profit Sharing Plan and Trust Agreement of
Bally's Park Place-New Jersey dated as of January 1, 1987.
*10(iv).1 Employment Agreement dated as of November 1, 1990, as amended,
between BMC and Arthur Goldberg (filed as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December
31, 1991).
*10(iv).1.1 First Amendment to Employment Agreement effective as of November
1, 1991 between BMC and Arthur Goldberg (filed as an exhibit to
the Company's Annual Report on Form 10K for the year ended
December 31, 1992).
**10(iv).1.2 Second Amendment to Employment Agreement effective September 29,
1993 between BMC and Arthur Goldberg.
***10(iv).2 Employment Agreement effective as of January 1, 1993 between BMC
and Wallace R. Barr.
***10(iv).3 Employment Agreement effective as of July 1, 1992 between BMC
and Robert Conover.
**10(iv).4 Severance Agreement effective as of March 1, 1993 between
Bally's Park Place-New Jersey and C. Patrick McKoy.
***10(iv).5 Settlement Agreement and Release dated July 30, 1993 between
Bally's Park Place-New Jersey and Charles Tannenbaum.
**22 Subsidiaries of Bally's Park Place-New Jersey.
*Incorporated herein by reference and filed as an exhibit to Bally Park Place
Funding's, Inc. Registration Statement on Form S-1, Registration No. 33-26464,
unless otherwise indicated.
**Incorporated herein by reference and filed as an exhibit to Bally's Park
Place Funding's, Inc. Registration Statement on Form S-1, Registration No. 33-
51765.
***Incorporated herein by reference and filed as an exhibit to Bally's Casino
Holdings, Inc. Registration Statement on Form S-1, Registration No. 33-654438.
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
SCHEDULE II-AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
Years Ended December 31, 1993, 1992 and 1991
(In thousands)
<CAPTION> Balance at end
Balance at Amount of period
beginning collected --------------------------
Name of debtor of period Additions and other Current Non-current
- - -------------------- ---------- --------- --------- ------- -----------
<S> <C> <C> <C> <C> <C>
1993:
None
1992:
Bally Manufacturing
Corporation. . . . . $ 50,000 $ --- $ 50,000 $ --- $ ---
GNAC, CORP. . . . . . 2,700 --- 2,700 --- ---
1991:
Bally Manufacturing
Corporation. . . . . $ 50,000 $ --- $ --- $ --- $ 50,000
GNAC, CORP. . . . . . 2,700 --- --- --- 2,700
<FN>
Notes:
(a) All amounts are exclusive of accrued interest.
(b) $50,000 receivable due from Bally Manufacturing Corporation was declared a dividend in 1992.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
SCHEDULE V-PROPERTY AND EQUIPMENT
Years Ended December 31, 1993, 1992 and 1991
(In thousands)
<CAPTION>
Balance at Balance
beginning Additions Other at end
Classification of period at cost Retirements changes of period
- - ------------------------------------ --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
1993:
Land . . . . . . . . . . . . . . . $ 82,844 $ --- $ 19 $ --- $ 82,825
Buildings and improvements . . . . 540,089 543 542 1,577 541,667
Furniture, fixtures and equipment. 138,401 7,986 4,926 789 142,250
Construction in progress . . . . . 906 5,907 --- (2,366) 4,447
-------- -------- -------- --------- --------
$762,240 $ 14,436 $ 5,487 $ --- $771,189
======== ======== ======== ========= ========
1992:
Land . . . . . . . . . . . . . . . $ 82,844 $ --- $ --- $ --- $ 82,844
Buildings and improvements . . . . 536,391 122 261 3,837 540,089
Furniture, fixtures and equipment. 133,988 4,849 4,662 4,226 138,401
Construction in progress . . . . . 3,672 5,297 --- (8,063) 906
-------- -------- -------- --------- --------
$756,895 $ 10,268 $ 4,923 $ --- $762,240
======== ======== ======== ========= ========
1991:
Land . . . . . . . . . . . . . . . $ 82,844 $ 5 $ 5 $ --- $ 82,844
Buildings and improvements . . . . 538,112 565 5,534 3,248 536,391
Furniture, fixtures and equipment. 130,464 5,278 3,256 1,502 133,988
Construction in progress . . . . . 3,348 5,074 --- (4,750) 3,672
-------- -------- -------- --------- --------
$754,768 $ 10,922 $ 8,795 $ --- $756,895
======== ======== ======== ========= ========
<FN>
Notes:
(a) Property and equipment is depreciated principally on a straight-line method, over lives ranging from
3 to 40 years.
(b) Other changes for each of the years represent principally amounts transferred from construction in
progress to buildings and improvements and furniture, fixtures and equipment classifications.
(c) Retirements in 1991 include $6,288 relating to the closing and demolition of a subsidiary's
motel operations.
(d) Certain reclassifications have been made to the 1992 and 1991 amounts to conform to the 1993
presentation.
/TABLE
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
SCHEDULE VI-ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY AND EQUIPMENT
Years Ended December 31, 1993, 1992 and 1991
(In thousands)
<CAPTION>
Additions
Balance at charged to Balance at
beginning costs and end of
Classification of period expenses Retirements period
- - -------------------------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
1993:
Buildings and
improvements. . . . . $154,389 $17,318 $ 255 $171,452
Furniture, fixtures
and equipment . . . . 108,458 9,263 4,482 113,239
-------- ------- ------ --------
$262,847 $26,581 $4,737 $284,691
======== ======= ====== ========
1992:
Buildings and
improvements. . . . . $137,052 $17,514 $ 177 $154,389
Furniture, fixtures
and equipment . . . . 103,911 8,948 4,401 108,458
-------- ------- ------ --------
$240,963 $26,462 $4,578 $262,847
======== ======= ====== ========
1991:
Buildings and
improvements. . . . . $122,836 $17,392 $3,176 $137,052
Furniture, fixtures
and equipment . . . . 98,058 8,914 3,061 103,911
-------- ------- ------ --------
$220,894 $26,306 $6,237 $240,963
======== ======= ====== ========
<FN>
Notes:
(a) Retirements in 1991 include $3,921 relating to the closing and
demolition of a subsidiary's motel operations.
(b) Certain reclassifications have been made to the 1992 and 1991 amounts
to conform to the 1993 presentation.
/TABLE
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1993, 1992 and 1991
(In thousands)
<CAPTION>
Additions
--------------------
Balance at Charged to Charged Balance at
beginning costs and to other end of
Description of period expenses accounts Deductions period
- - -------------- ---------- ----------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful
receivables:
1993. . . . . $1,800 $ 421 $ --- $ 956 $1,265
====== ====== ====== ====== ======
1992. . . . . $6,210 $ 889 $ --- $5,299 $1,800
====== ====== ====== ====== ======
1991. . . . . $7,150 $1,846 $ --- $2,786 $6,210
====== ====== ====== ====== ======
<FN>
Note:
Deductions consist of write-offs of uncollectible amounts, net of
recoveries.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
BALLY'S PARK PLACE, INC.
SCHEDULE X-SUPPLEMENTARY INCOME STATEMENT INFORMATION
Years Ended December 31, 1993, 1992 and 1991
(In thousands)
<CAPTION>
Charged to costs and expenses
-----------------------------
Item 1993 1992 1991
---- -------- -------- --------
<S> <C> <C> <C>
Maintenance and repairs. . . . . . . . . . $ 17,308 $ 17,548 $ 16,536
======== ======== ========
Amortization . . . . . . . . . . . . . . . $ 1,712 $ 2,602 $ 3,543
======== ======== ========
Taxes other than payroll and income taxes:
State gaming taxes . . . . . . . . . . . $ 23,923 $ 22,396 $ 21,248
Real estate and personal property taxes. 12,344 12,196 11,474
-------- -------- --------
$ 36,267 $ 34,592 $ 32,722
======== ======== ========
Advertising. . . . . . . . . . . . . . . . $ 8,391 $ 9,032 $ 8,863
======== ======== ========
/TABLE
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Annual Report to be signed on its behalf by
the undersigned thereunto duly authorized.
Bally's Park Place, Inc.
Dated: March 31, 1994 /s/ Joseph A. D'Amato
---------------------------------
Joseph A. D'Amato
Vice President and Treasurer
(principal financial and accounting
officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated. This Annual
Report may be signed in multiple identical counterparts, all of which taken
together, shall constitute a single document.
Dated: March 31, 1994 /s/ Arthur M. Goldberg
---------------------------------
Arthur M. Goldberg
Chairman of the Board and
Chief Executive Officer
(principal executive officer)
(sole director)
Dated: March 31, 1994 /s/ Wallace R. Barr
---------------------------------
Wallace R. Barr
President, Chief Operating
Officer
Dated: March 31, 1994 /s/ Joseph A. D'Amato
---------------------------------
Joseph A. D'Amato
Vice President and Treasurer
(principal financial and accounting
officer)
Dated: March 31, 1994 /s/ Lee S. Hillman
---------------------------------
Lee S. Hillman
Director
Dated: March 31, 1994 /s/ J. Kenneth Looloian
---------------------------------
J. Kenneth Looloian
Director
LOAN AND GUARANTY AGREEMENT
by and among
BALLY'S PARK PLACE, INC., a New Jersey
Corporation, as Borrower, and
BALLY'S PARK PLACE, INC. a Delaware Corporation, and
BALLY'S PARK PLACE REALTY CO. as Guarantors,
and
FIRST FIDELITY BANK, NATIONAL ASSOCIATION and
MIDLANTIC NATIONAL BANK as Lenders, and
FIRST FIDELITY BANK, NATIONAL ASSOCIATION, as Agent.
Dated: March 8, 1994
<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms
SECTION 1.02 Other Definitional Provisions
ARTICLE II
THE REVOLVING CREDIT LOANS
SECTION 2.01. The Credits
SECTION 2.02. Notices
SECTION 2.03. The Revolving Credit Notes
SECTION 2.04. Fees
SECTION 2.05. Repayment and Conversion of Loans
SECTION 2.06 Termination or Reduction of the Commitments
SECTION 2.07 Interest
SECTION 2.08 Payments
SECTION 2.09 The Letters of Credit
SECTION 2.10 Reimbursement to Banks for Cost Increases
Imposed By Law
SECTION 2.11 Mandatory Repayments
SECTION 2.12 Special Provisions for LIBO Rate Loans
SECTION 2.13 Taxes Related to Agreement
SECTION 2.14. Conditions Precedent to All Disbursements
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Existence-
SECTION 3.02. Authorization; No Legal Bar; No Default
SECTION 3.03 Validity of the Loan Documents
SECTION 3.04. Financial Information
SECTION 3.05. Litigation
SECTION 3.06. Disclosure of Indebtedness and Contingent
Liabilities
SECTION 3.07. Taxes
SECTION 3.08. Liens
SECTION 3.09. Consents
SECTION 3.10. ERISA
SECTION 3.11. Ownership of Borrower
SECTION 3.12. Ownership of Guarantor
SECTION 3.13. Gaming Licenses
SECTION 3.14. Margin Stock
SECTION 3.15. Stock as Collateral
SECTION 3.16. Environmental Matters
SECTION 3.17. Burdensome Restrictions
SECTION 3.18. Projections; Budgets
SECTION 3.19. Compliance with Laws
SECTION 3.20. Intellectual Property
SECTION 3.21 Labor Matters
SECTION 3.22. Brokerage Commissions
SECTION 3.23. Investment Company Act
ARTICLE IV
AFFIRMATIVE COVENANTS
SECTION 4.01. Consolidated Net Worth
SECTION 4.02. Consolidated Income
SECTION 4.03. Consolidated Interet Coverage Ratio
SECTION 4.04. Consolidated Fixed Cost Ratio
SECTION 4.05. Financial Information
SECTION 4.06. Reports
SECTION 4.07. Insurance
SECTION 4.08. Taxes
SECTION 4.09. Compliance with Laws
SECTION 4.10. Inspection of Property; Books and Records;
Discussions
SECTION 4.11. ERISA
SECTION 4.12. Preservation of Corporate Existence, Etc.
SECTION 4.13. Maintaining Ownership of Properties
SECTION 4.14. Maintenance of Licenses, Permits, etc.
SECTION 4.15. Further Assurances
SECTION 4.16. Use of Proceeds
ARTICLE V
NEGATIVE COVENANTS
SECTION 5.01. Limitation on Restricted Payments
SECTION 5.02. Limitation on Liens
SECTION 5.03. Limitation on Indebtedness
SECTION 5.04. Limitation on Investments
SECTION 5.05. Limitation on Contingent Liabilities
SECTION 5.06. Limitation on Mergers; Sale of Assets
SECTION 5.07. Limitation on Change of Nature of Business
SECTION 5.08. Regulation U
SECTION 5.09. Transactions with Affiliates
SECTION 5.10. Limitation on Long-Term Leases; Sale and
Lease-Back Transactions
SECTION 5.11. Amendment of Articles of Incorporation
or By-Laws
SECTION 5.12. ERISA
SECTION 5.13. Maintenance of Property
SECTION 5.14. Amendment to Indenture
SECTION 5.15. No Additional Intangible Assets
ARTICLE VI
SECTION 6.01. Events of Default
SECTION 6.02. Suspension of Commitment
SECTION 6.03. Termination of Commitments; Acceleration
SECTION 6.04. Default Rate of Interest
SECTION 6.05. Remedies Not Exclusive
SECTION 6.06. Set-Off
SECTION 6.07 Rights Under Loan Documents
ARTICLE VII
GUARANTY
SECTION 7.01 The Guaranteed Obligations
SECTION 7.02 Further Undertakings
SECTION 7.03 Liabilities Not Affected
SECTION 7.04 SUBROGATION AND CONTRIBUTION
ARTICLE VIII
AGENT
SECTION 8.01. Appointment and Authorization.
SECTION 8.02. General Immunity.
SECTION 8.03. Delegation of Duties; Consultation with Counsel
SECTION 8.04. Documents
SECTION 8.05. Rights as a Bank
SECTION 8.06. Responsibility of Agent
SECTION 8.07. Action by Agent
SECTION 8.08. Notices of Event of Default, Etc
SECTION 8.09. Indemnification
SECTION 8.10. Non-Reliance on Agent and Other Banks
SECTION 8.11 Notice of Acceleration and Termination; Remedies
SECTION 8.12 Successor Agent
SECTION 8.13 No Benefit
ARTICLE IX
MISCELLANEOUS-
SECTION 9.01. Amendment or Waiver-
SECTION 9.02. Indemnification-
SECTION 9.03. Notices-
SECTION 9.04. Costs and Expenses
SECTION 9.05. Obligations Several
SECTION 9.06. Counterparts
SECTION 9.07. Assignments
SECTION 9.08. Participations
SECTION 9.09. Disproportionate Payments
SECTION 9.10 Waiver of Right to Punitive Damages
SECTION 9.11. Governing Law
SECTION 9.12. Headings
SECTION 9.13. Severability
SECTION 9.14. Confidential Information
SECTION 9.15. WAIVER OF TRIAL BY JURY
SCHEDULES
Schedule A Liens of the Borrower, Guarantors or any Subsidiaries
Schedule 3.05 Actions, Suits, Proceedings or Other Litigation Against
Borrower or any Guarantor
Schedule 3.06 Indebtedness or Contingent Liabilities of Park Place-
Delaware and/or its Subsidiaries
Schedule 3.16 Permits, Licenses and Other Authorizations under
Environmental Laws that have not been obtained by Park
Place-Delaware and/or its Subsidiaries
Schedule 3.17 Burdensome Restrictions
Schedule 3.21A Collective Bargaining Agreements or Labor Union Contracts
of the Borrower or any Guarantor
Schedule 3.21B Labor Strikes, Complaints or Petitions Against the
Borrower or any Guarantor
Schedule 5.06 Other Subsidiaries of Park Place-Delaware or any of its
Subsidiaries
Schedule 5.10 Long Term Leases of Park Place-Delaware and its
Subsidiaries
EXHIBITS
Exhibit 2.02A Notice of Borrowing
Exhibit 2.03 Form of Revolving Credit Note
Exhibit 4.05(C) Form of Certificate of the Independent Certified Public
Accountants
Exhibit 5.05B Form of Opinion regarding Guaranty
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THE SALE, ASSIGNMENT, TRANSFER, OR OTHER DISPOSITION OF ANY INTEREST
IN THE LOANS MADE UNDER THIS AGREEMENT OR OF ANY PARTICIPATION IN THE
LOANS MADE UNDER THIS AGREEMENT IS CONDITIONAL AND SHALL BE
INEFFECTIVE IF THE NEW JERSEY CASINO CONTROL COMMISSION DISAPPROVES.
CREDIT AND GUARANTY AGREEMENT (the "Agreement") dated as of March 8,
1994, among Bally's Park Place, Inc., a New Jersey corporation (the
"Borrower"); Bally's Park Place, Inc., a Delaware corporation ("Park Place-
Delaware"); Bally's Park Place Realty Co., a New Jersey corporation
("Realty"; Park Place-Delaware and Realty, each a "Guarantor" and
collectively the "Guarantors"); First Fidelity Bank, National Association
("First Fidelity"); Midlantic National Bank ("Midlantic") and First
Fidelity, as agent (the "Agent").
RECITALS
A. The Borrower and the Guarantors have requested that First
Fidelity and Midlantic agree to lend and otherwise extend credit to the
Borrower on a revolving basis in an aggregate amount up to $50,000,000
until December 31, 1996.
B. First Fidelity and Midlantic are willing to extend such credit on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the agreement of the
parties contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"Adjusted Base Rate" means an interest rate equal to the Base Rate
plus the Applicable Base Rate Margin.
"Adjusted LIBO Rate" means an interest rate equal to the LIBO Rate
plus the Applicable LIBO Rate Margin.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls or is controlled by, or is under common control with
such Person. For the purposes of the preceding sentence, "controls"
(including, with correlative meanings, the terms "controlling", "controlled
by" and "under common control with"), as used with respect to any Person,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise, and
in any case shall include direct or indirect ownership (beneficially or of
record) of, or direct or indirect power to vote, ten percent (10%) or more
(on a fully diluted basis) of the outstanding shares of any class of
capital stock of such Person (or in the case of any Person that is not a
corporation, ten percent (10%) or more (on a fully diluted basis) of any
class of equity interest).
"Agreement" means this Loan Agreement, as amended, supplemented or
modified from time to time in accordance with its terms.
"Amortization" means, for any Person during any period, all amounts
which would, in accordance with GAAP, be included under amortization on a
statement of cash flow for such Person during such period.
"Applicable Base Rate Margin" means (a) in the event the amounts
outstanding under the Commitment are $15,000,000 or less, zero percent, (b)
in the event that the amounts outstanding under the Commitment are greater
than $15,000,000 but less than $25,000,000, .5 percent, and (c) in the
event that the amounts outstanding under the Commitment are $25,000,000 or
more, 1.0 percent.
"Applicable LIBO Rate Margin" means (a) in the event the amounts
outstanding under the Commitment are $15,000,000 or less 2.0 percent, (b)
in the event the amounts outstanding under the Commitment are greater than
$15,000,000 but less than $25,000,000, 2.25 percent, and (c) in the event
the amounts outstanding under the Commitment are $25,000,000 or more, 2.75
percent.
"Assignment of Leases" means the Assignment of Leases and Rents
executed and delivered by the Borrower and Realty as collateral security
for the obligations of the Borrower under this Agreement.
"Bally Manufacturing" means Bally Manufacturing Corporation, a
Delaware corporation.
"Banks" means on the Closing Date First Fidelity and Midlantic, and
thereafter means First Fidelity, Midlantic and their successors or
permitted assignees.
"Base Rate" means the rate of interest announced by First Fidelity
from time to time as its reference rate in making loans, which is not
necessarily the rate of interest that it charges any particular class of
customers.
"Base Rate Loan" means a Loan to which the Adjusted Base Rate
applies.
"Board of Directors" of any Person means the Board of Directors of
such Person or any authorized committee of the Board of Directors.
"Burdensome Restriction" means as to any Person, any provision in any
Contractual Obligation that has a Material Adverse Effect.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks are authorized or required to close under the
laws of New Jersey.
"Capital Expenditures" means as to any Person all amounts which would
be defined as capital expenditures on the financial statement of such
Person in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations
or other equivalents (however designated) of capital stock of any Person,
any and all equivalent's ownership interests in a Person (other than a
corporation) whether now outstanding or issued after the date hereof and
any and all warrants or options to purchase any of the foregoing.
"Casino Control Commission" means the New Jersey Casino Control
Commission or any successor agency appointed pursuant to the Casino
Control Act.
"Casino Hotel" means the casino hotel presently known as Bally's Park
Place Casino Hotel and any additions thereto or improvements thereof.
"CEO" means the chief executive officer of any Person.
"CFO" means the chief financial officer of any Person.
"Closing Date" means March 8, 1994, or such other date to which the
parties may agree.
"Closing Dividend" has the meaning given for such term in Section
5.01 hereof.
"Code" means the Internal Revenue Code of 1986 and regulations
promulgated thereunder, all as amended from time to time.
"Collateral" means the real and personal property described in the
Mortgage and the Assignment of Leases as security for the obligations of
the Borrower and Park Place-Delaware hereunder.
"Commitment" means, with respect to any Bank, such Bank's undertaking
to make Revolving Credit Loans hereunder subject to the terms and
conditions hereof, in an aggregate outstanding principal amount as of the
Closing Date not to exceed the amount set forth next to the name of such
Bank in the table below:
Amount Percentage
First Fidelity $30,000,000 60%
Midlantic $20,000,000 40%
Upon the assignment of any Bank's obligations under the terms of this
Agreement the amount of such Bank's undertaking shall be adjusted
accordingly.
"Commitment Fees" has the meaning given to such term in Section 2.04
hereof.
"Commitment Percentage" means, with respect to any Bank, the
percentage of which such Bank's Commitment then constitutes of the
aggregate Commitments (or at any time after the Commitments shall have
expired or terminated, the percentage which the aggregate principal amount
of such Bank's Loans then outstanding constitutes of the aggregate
principal amount of the Loans then outstanding.
"Confidential Information" has the meaning given to such term in
Section 9.13 hereof.
"Consolidated" refers to the consolidation of the accounts of Park
Place-Delaware and its Subsidiaries in accordance with GAAP, including
principles of consolidation.
"Consolidating" refers to the separation of the accounts of Park
Place-Delaware and its Subsidiaries in accordance with GAAP.
"Contingent Liabilities" means as to any Person, all obligations
under standby letters of credit issued for the account of such Person and
any obligation of such Person guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary
obligations") of any other Person (the "primary obligor") 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 (except for obligations to purchase property which are
undertaken solely for the purpose of acquiring such property and not for
the purpose of indirectly guaranteeing the primary obligation), (b) to
advance or supply funds (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 solvency of the
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
or (d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
term Contingent Liabilities shall not include endorsements of instruments
for deposit or collection in the ordinary course of business.
"Contractual Obligation" means as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or
undertaking to which such Person or any of its property is bound.
"CRDA" means the Casino Reinvestment Development Authority.
"Depreciation" means for any Person all amounts which would, in
accordance with GAAP, be included under depreciation on a statement of
income or cash flows for any applicable determination period.
"Disqualified Preferred Stock" means, with respect to any Person, any
Capital Stock of such Person which, by its terms, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise (other than
in connection with the maintenance of Gaming Licenses), or redeemable at
the option of the holder thereof, in whole or in part, prior to the
Maturity Date.
"Effective Date" means the date the Borrower designates as the date
on which a LIBO Interest Period is to commence.
"Environmental Concern Materials" means (i) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollution, contaminate, or any related material,
raw material, substance, product or by-product of any substance, specified
in or regulated or otherwise affected by any Environmental Law (including,
but not limited to, any "hazardous substance" as defined in any
Environmental Law), (ii) any toxic chemical or other substance from or
related to industrial, commercial or institutional activities, specified in
or regulated or otherwise affected by any Environmental Law and (iii)
asbestos, gasoline, diesel fuel, motor oil, waste and used oil, heating oil
and other petroleum products or compounds, polychlorinated biphenyls, radon
and urea-formaldehyde, specified in or regulated or otherwise affected by
any Environmental Law.
"Environmental Laws" means all applicable laws, regulations and other
requirements of Governmental Authorities having jurisdiction over the
Borrower or any of the Guarantors relating to pollution or protection of
the environment, including laws relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, or hazardous or toxic
materials or wastes into ambient air, surface water, ground water, or land,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or hazardous or toxic material or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
any regulations promulgated thereunder, all as amended from time to time.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Borrower or a Guarantor would be
deemed to be a "single employer" within the meaning of Section 4001 of
ERISA.
"Event of Default" or "Events of Defaults" has the meaning given such
term in Section 6.01 of this Agreement.
"Financing Lease" means any lease of property, real or personal, if
the then-present value of the minimum rental commitment thereunder should,
in accordance with GAAP, be capitalized on a balance sheet of the lessee.
"Fiscal Quarter" means the following three month periods of each
Fiscal Year: January 1 through March 31, April 1 through June 30, July 1
through September 30, and October 1 through December 31.
"Fiscal Year" means that period commencing on January 1 and ending on
December 31 of each year or such other period as the Borrower or Park
Place-Delaware may designate and the Banks may approve.
"Fixed Cost Ratio" of any Person for any period means, the ratio of
(a) the sum of Net Income, Depreciation and Amortization of such Person for
such period (excluding extraordinary items in the first quarter of 1994) to
(b) the sum of principal payments on all Financing Leases and scheduled
principal payments on all Indebtedness of such Person for such period.
"Fronting Fee" has the meaning given to such term in Section 2.04
hereof.
"Funding" means Bally's Park Place Funding, Inc., a New Jersey
corporation.
"GAAP" means generally accepted accounting principles in the United
States of America, as in effect from time to time, as developed, modified
and set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and the Financial Accounting Standards Board.
"Gaming License" means any license, franchise or other authorization
required to be obtained from any Governmental Authority to conduct casino
gaming at the Casino Hotel.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranteed Obligations" has the meaning given to such term in
Section 7.01.
"Income Dividends" has the meaning given to such term in Section 5.01
hereof.
"Indebtedness" means with respect to any Person any indebtedness,
contingent or otherwise, 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
a portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or letters of credit or representing the balance deferred and
unpaid of the purchase price of any property purchased, except any such
balance that shall constitute a trade payable or an accrued liability
arising in the ordinary course of business, if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of
such Person prepared on a Consolidated basis in accordance with GAAP.
"Indebtedness" shall also include, to the extent not otherwise included,
(i) any Financing Lease obligations, (ii) obligations secured by a Lien to
which any property or asset owned by such Person is subject, whether or not
the obligations secured thereby shall have been assumed and (iii)
guaranties of items which would be included within this definition
(exclusive of whether such items would appear upon such balance sheet).
"Indemnification Fee" means an amount equal to the Indemnification
Rate times the amount of principal being prepaid times the remaining number
of days in the LIBO Interest Period divided by 360.
"Indemnification Rate" means the difference between the Adjusted LIBO
Rate and the U.S. Treasury Yield as determined by the Agent as of the date
of the prepayment for U.S. Treasury obligations having a maturity date of
on or about the termination of the LIBO Interest Period.
"Indemnified Party" and "Indemnified Parties" means the Banks and the
directors, officers, trustees, employees, agents, attorneys and controlling
shareholders of the Banks.
"Indenture" means the indenture dated as of March 8, 1994, by and
among Bally's Park Place Funding, Inc., a Delaware corporation as obligor,
Park Place-Delaware as guarantor, Realty, the Borrower, and the Trustee,
pursuant to which was issued certain notes in the principal amount of
$425,000,000 due in the year 2004.
"Independent Certified Public Accountant" means Ernst & Young or any
other independent certified public accountants selected by the Borrower or
Park Place-Delaware which accounting firm is reasonably satisfactory to the
Banks.
"Intellectual Property" of any Person means all trademarks,
tradenames, copyrights, patents, technology, know-how and processes
necessary for the conduct of such Person's business.
"Intercreditor Agreement" means an intercreditor agreement among the
Banks, the Borrower, the Guarantors and the Trustee in the form attached to
the Indenture as Schedule D.
"Interest Coverage Ratio" of any Person for any period, means the
ratio of (a) the sum of Net Income (excluding extraordinary items in the
first quarter of 1994), Taxes, Interest Expense, Depreciation, and
Amortization of such Person for such period to (b) Interest Expense of such
Person for such period.
"Interest Expense" of any Person for any period means any amount
which, in conformity with GAAP, is included as interest expense on a
consolidated income statement of such Person excluding (a) amortization of
debt issuance costs, and (b) amortization of original issue discount or
premium.
"Interest Period" means a LIBO Interest Period and any period during
which the Interest Rate is the Adjusted Base Rate.
"Investment" by any Person means, directly or indirectly, (a) any
advance, loan or other extension of credit or capital contribution to (by
means of any transfer of cash or other property to others or any payment
for property or services for the account or use of others for which such
Person has not been reimbursed) or any purchase or acquisition by such
Person of any stock, bonds, notes, debentures or other securities issued or
owned by, any other Person, and (b) the purchase of all or substantially
all of the assets of any Person.
"Issuing Bank" means First Fidelity or its successors or permitted
assigns.
"Letter of Credit" means any standby letter of credit issued pursuant
to this Agreement.
"Letter of Credit Fees" has the meaning given to such term in Section
2.04 hereof.
"Letter of Credit Obligations" means at any time the aggregate
principal amount of the then outstanding Letters of Credit issued pursuant
to this agreement.
"Letter of Credit Risk Participation" has the meaning given such term
in Section 2.09 hereof.
"LIBO Rate" means, for a selected LIBO Interest Period, the rate is
equal to:
X
1-Y
where "X" is the interest rate (expressed as a decimal) for deposits in
U.S. Dollars approximately equal in principal amount of the Loan for which
such LIBO Interest Period was selected (but not less than $500,000), and
for a period equal in length of such LIBO Interest Period, which rate
appears on the Telerate Page 3750 as of 11:00 a.m., London time, on the
date that is two Business Days prior to the first Business Day of such LIBO
Interest Period (If such rate does not appear on the Telerate Page 3750,
the rate utilized shall be the rate which appears, or if more than one such
rate appears, the average of the rates which appear on the Reuters Screen
LIBO Page as of 11:00 a.m., London time, on the day that is two Business
Days prior to such date) and "Y" is the percentage amount (expressed as a
decimal) of reserves that applicable U.S. laws would require the Agent to
maintain with respect to liabilities incurred on the London Interbank
Market including, without limitation, reserves required under Regulation D
of the Board of Governors of the Federal Reserve System for euro-currency
liabilities (as defined in such regulation and deemed, for purposes of this
Agreement, to include the Agent's liabilities incurred on the London
Interbank Market) without benefit of or credit for pro-ration, exception,
or offsets otherwise available from time to time under such regulation.
"LIBO Rate Loan" means a Loan to which the Adjusted LIBO Rate
applies.
"LIBO Interest Period" means a period of time, beginning on an
Effective Date, and ending one, two or three months thereafter, as selected
by the Borrower in its notice of borrowing (subject to availability) as
determined by the Agent, during which the Interest Rate is the Adjusted
LIBO Rate, provided, that the foregoing is subject to the following: (i) if
any LIBO Interest Period would otherwise end on a day which is not a
Business Day, such LIBO Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such LIBO Interest Period into another calendar month in which event
such LIBO Interest Period shall end on the immediately preceding Business
Day; (ii) no LIBO Interest Period shall extend beyond the Maturity Date;
and (iii) any LIBO Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBO Interest
Period) shall end on the last Business Day of a calendar month.
"Lien" means, with respect to the property of any Person, any
mortgage, pledge, hypothecation, assignment, deposit arrangement (excluding
demand deposit accounts maintained for operational purposes in the ordinary
course of business) encumbrance, lien (statutory or other), or any
preference, priority, charge or other security interest or preferential
arrangement of any kind or nature whatsoever that encumbers such property
(including, without limitation, any conditional sale or other title
retention agreement, any Financing Lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).
"Loan Documents" refers to this Agreement, the Mortgage, the
Assignment of Leases and the Revolving Credit Notes and any amendments,
supplements or modifications of any of the foregoing.
"Loans" means the Revolving Credit Loans.
"Long-Term Lease" means any lease of real or personal property by any
Person as lessee which expires more than five years from the date upon
which such lease becomes effective.
"Margin Stock" has the same meaning that Regulation U of the Board of
Governors of the Federal Reserve System gives to that term.
"Material Adverse Effect" means a material adverse effect on (i) the
financial condition, business, property or operations of the Borrower or
the Borrower and the Guarantors taken as a whole, (ii) the ability of the
Borrower or the Borrower and the Guarantors taken as a whole to perform
their obligations under this Agreement or any of the other Loan Documents,
(iii) the validity or enforceability of this Agreement, the notes or the
other Loan Documents, or (iv) the value of the Collateral or the ability of
the Agent to exercise its rights under the Loan Documents with respect to
the Collateral for the benefit of the Banks.
"Maturity Date" means December 31, 1996, or such other later date as
the Banks, in their sole discretion, may agree with the Borrower in
writing.
"Mortgage" means the mortgage, security agreement and assignment of
rents being executed simultaneously with this Agreement by the Borrower and
Realty, and securing the obligations of the Borrower under this Agreement
and under the Revolving Credit Notes.
"Mortgage Notes" means the notes issued pursuant to the Indenture.
"Mortgaged Property" means the property described in Exhibit A to the
Mortgage.
"Net Income" for any Person during any period, means the net income
(or deficit) of such Person for such period, determined in accordance with
GAAP.
"Net Worth" means with respect to any Person, as of any date, the
Stockholders' Equity of such Person after deducting each of the following:
(i) such portion of the assets which is attributable to interests held by
Persons other than such Person and its subsidiaries (to the extent not
already deducted from Stockholders' Equity), and (ii) treasury stock (to
the extent not already deducted from Stockholders' Equity).
"Participant Bank" means any bank to which a Bank has sold a
participation in the Loans under Section 9.08.
"Permitted Indebtedness" means (a) borrowings arising or funded under
the Indenture, (b) Revolving Credit Loans, (c) indebtedness outstanding on
December 31, 1993, (d) guaranties of amounts permitted pursuant to Section
5.05, (e) obligations arising under the Tax Sharing Agreement, (f)
Indebtedness of up to $15,000,000 due to GNOC, Inc. which, when added to
the aggregate amount of the Revolving Credit Loans and the Letters of
Credit outstanding under the Agreement, does not exceed $50,000,000, (g)
additional Indebtedness in an aggregate amount of not more than $2,500,000,
(h) Indebtedness owed to Park Place-Delaware or its Subsidiaries, and (i)
obligations to Affiliates of Park Place-Delaware incurred in connection
with services rendered in a manner consistent with past practices in an
aggregate amount of not more than $5,000,000.
"Permitted Investments" means (a) investments by Subsidiaries of the
Borrower or the Guarantors in the Borrower or Park Place-Delaware; (b)
commercial paper rated, on the date of acquisition, P-1 by Moody's or A-1
by Standard & Poor's with maturities not to exceed 180 days after the date
of acquisition; (c) certificates of deposit of United States commercial
banks (having a combined capital and surplus in excess of $300,000,000)
with maturities not to exceed 180 days after the date of acquisition; (d)
obligations of, or guaranteed by, the United States government or any
agency thereof with maturities not to exceed 180 days after the date of
acquisition; (e) money market funds organized under the laws of the United
States or any state thereof that invest substantially all their assets in
any of the types of investments described in subclause (b), (c) or (d) of
this definition; (f) any temporary investment deemed to be cash equivalents
under GAAP which is made by the Borrower with either of the Banks; (g)
negotiable instruments held for collection in the ordinary course of
business; (h) outstanding travel, moving and other like advances to
officers, employees and consultants; (i) lease, utility and other similar
deposits; (j) stock, obligations or securities received in settlement of
debts as a result of foreclosure, perfection or enforcement of any Lien, in
each of the foregoing cases in the ordinary course of business; (k) sales
of goods or services on credit terms consistent with past practices or as
otherwise consistent with credit terms in common use in the casino
industry; (l) loans to any employee in an amount not to exceed $250,000 for
any individual and $1,000,000 for all employees in the aggregate; (m)
deposits with, or bonds issued by the CRDA as may be required to comply
with the Borrower's obligations under the New Jersey Casino Control Act;
and (n) extensions of credit to customers of the Borrower pursuant to the
Borrower's existing credit policies and consistent with past historical
practices.
"Permitted Liens" means (a) Liens securing the obligations funded by
or arising under the Indenture, (b) Liens securing the Loans, (c) Liens for
Taxes not yet due and payable or being contested in good faith and by
appropriate proceedings diligently conducted and for which adequate
reserves as required by GAAP consistently applied have been established and
maintained, (d) deposits, Liens or pledges to secure payments of workers'
compensation, unemployment or other insurance, (e) Liens arising from
judgments in an aggregate amount (i) equal to or less than $500,000 entered
against the Borrower, any Subsidiary or the Guarantors, or (ii) greater
than $500,000 entered against the Borrower, any Subsidiary or the
Guarantors so long as such judgments are paid, discharged or bonded for
appeal within 30 days after the entry thereof, (f) Liens arising by
operation of law, such as those in favor of carriers, warehousemen and
landlords incurred in the ordinary course of business for sums not yet due
and payable (i) Liens securing Permitted Indebtedness, (j) easements,
rights of way, zoning and similar covenants and restrictions and other
similar encumbrances or defects or irregularities in title 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 or
materially interfere with the ordinary conduct of business, (k) liens which
may be contested pursuant to Article 10 of the Mortgage, (l) leases or
subleases granted to others not interfering in any material respect with
the business of the Borrower or the Guarantors, and (m) Liens listed on
Schedule A.
"Person" means any individual, corporation, partnership, joint
venture, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Plan" means an employee pension benefit plan within the meaning of
Section 3(2) of ERISA (other than a multiemployer Plan) covered by Title IV
of ERISA by reason of Section 4021 of ERISA, of which the Borrower, the
Guarantors or any ERISA Affiliate is or has been within the preceding five
years a "contributing sponsor" within the meaning of Section 4001(a)(13) of
ERISA, or which is or has been within the preceding five years maintained
for employees of the Borrower, the Guarantors or any ERISA Affiliate.
"Potential Default" means an event, condition or situation which with
the giving of notice, the passage of time, or any combination of the
foregoing, would constitute an Event of Default.
"Prohibited Transaction" has the meaning given to such term
in Section 406 of ERISA or Section 4975 of the Code.
"Reportable Event" has the meaning assigned to such term in Section
4043(b) of ERISA or regulations issued thereunder, excluding events as to
which the 30 day notice period is waived pursuant to the regulations issued
thereunder.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and each law, treaty, rule, regulation, interpretation or
determination of an arbitrator or a court or other Governmental Authority,
in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.
"Responsible Officer" means a CFO, CEO, President, Controller,
Treasurer or General Counsel of the Borrower or a Guarantor, as the context
requires.
"Restricted Payments" means (a) the declaration or payment by Park
Place-Delaware of any dividend on, or any distribution to holders of, any
shares of its Capital Stock, (b) the purchase, redemption, acquisition or
retirement by Park Place-Delaware for value of any of its Capital Stock or
any options, warrants or other rights to acquire such Capital Stock, or (c)
any prepayment of amounts due under the Indenture prior to the Maturity
Date.
"Reuters Screen LIBO Page" means the display designated as page
"LIBO" on the Reuter Monitor Rates Service (or such other page as may
replace the LIBO page on that service for the purpose of displaying London
interbank offering rates of major banks).
"Revolving Credit Loan" has the meaning given to such term in Article
II hereof.
"Revolving Credit Notes" has the meaning given to such term in
Section 2.03 hereof.
"Special Dividends" has the meaning given to such term in Section
5.01 hereof.
"Stockholders' Equity" as of any date means, with respect to any
Person, the amount of stockholders' equity (including all Capital Stock
other than Disqualified Preferred Stock) that would appear on the balance
sheet of such Person as of such date as determined in accordance with GAAP.
"Subsidiary" means any corporation or other entity, more than 50% of
the voting Capital Stock or other voting ownership interests of which is
owned, directly or indirectly, by Guarantor or Borrower (as the context
requires).
"Taxes" means any amounts paid by a Person to any Governmental
Authority and which would be classified as taxes, assessments, other
governmental charges or levies in accordance with GAAP.
"Tax Sharing Agreement" means the tax sharing agreement between the
Borrower, the Guarantors and Bally Manufacturing dated June 17, 1993.
"Telerate Page 3750" means the display designated as page 3750 on the
Dow Jones Telerate Service (or such other page as may replace the LIBO page
on that service for the purpose of displaying 8 London interbank offering
rates of major banks).
"Trustee" means the trustee under the Indenture.
"Unqualified Opinion" means the opinion of Independent Certified
Public Accountants opining that the financial statements of any Person were
prepared in accordance with GAAP, consistently applied by such Person,
without qualification as to (i) the scope of the audit undertaken with
respect to such opinion, (ii) such Person's status as a going concern, or
(iii) any other matter which the Banks reasonably deem to impact on facts
or conditions that could have a Material Adverse Effect.
"Upfront Fee" has the meaning given to such term in Section 2.04
hereof.
SECTION 1.02 Other Definitional Provisions.
(A) Unless otherwise specified therein, all terms defined in this
Agreement shall have the meanings defined herein when used in the Loan
Documents or any certificate or other document made or delivered pursuant
hereto.
(B) As used herein and in the Loan Documents and any certificate or
other document made or delivered pursuant hereto, accounting terms not
defined in Section 1.01, shall have the respective meanings given to them
under GAAP. If any changes in accounting principles are hereafter
occasioned by promulgation of rules, regulations, pronouncements or
opinions by or are otherwise required by the Financial Accounting Standards
Board , the Accounting Principles Board, or the American Institute of
Certified Public Accountants (or successors thereto or agencies with
similar functions), and any of such changes result in a change in the
method of calculation of, or affect the results of such calculation of, any
of the financial covenants and the definitions relating to such financial
covenants, then the parties hereto agree to enter into and diligently
pursue negotiations in order to amend such financial covenants or terms so
as to equitably reflect such changes, with the desired result that the
criteria for evaluating the financial condition and results of operations
of the Borrower or Park Place-Delaware and its Subsidiaries shall be the
same after such changes as if such changes had not been made.
(C) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified. The meaning of defined terms shall be equally
applicable to the singular and plural forms of the defined terms.<PAGE>
<PAGE>
ARTICLE II
THE REVOLVING CREDIT LOANS
SECTION 2.01. The Credits.
(A) The Revolving Credit Loans. Subject to the terms and conditions
hereof, each Bank severally agrees to extend credit in the form of
revolving credit loans (each a "Revolving Credit Loan" and collectively the
"Revolving Credit Loans") to the Borrower from time to time from the date
hereof until one Business Day prior to the Maturity Date, during which
period the Borrower may borrow, repay, and reborrow in accordance with the
provisions hereof. The aggregate unpaid principal amount of each Bank's
Revolving Credit Loans when added to such Bank's Commitment Percentage of
the then outstanding Letter of Credit Obligations shall not exceed such
Bank's Commitment. Each disbursement of the Revolving Credit Loans shall
be from all of the Banks ratably according to their respective Commitments.
Each Revolving Credit Loan shall be in an aggregate amount of not less than
$2,000,000 or multiples of $1,000,000 in excess thereof. Within the limits
of the amounts set forth above, the Borrower may borrow, repay and reborrow
Revolving Credit Loans under this Section.
(B) The Letters of Credit. Subject to the terms and conditions
hereof, the Issuing Bank shall issue Letters of Credit for the account of
the Borrower until the Maturity Date in such form and for the benefit of
such parties as the Issuing Bank may, in its reasonable discretion,
approve. No Letter of Credit shall have an expiration date later than a
date one year after the Maturity Date nor contain a term providing for an
automatic extension of the expiration, provided that Letters of Credit (i)
issued to insurance companies providing worker's compensation insurance in
connection with such insurance, and (ii) in an aggregate amount not to
exceed $50,000, may contain a term providing for such an automatic
extension. The aggregate unpaid principal amount of all of the Revolving
Credit Loans and the Letter of Credit Obligations at any one time
outstanding shall not exceed the aggregate amount of the Commitments
hereunder. The Letter of Credit Obligations shall not exceed in the
aggregate at any one time the amount of $2,000,000. Upon the issuance of
any Letter of Credit by the Issuing Bank each of the Banks shall be deemed
to have purchased, pursuant to the terms of this Agreement, from the
Issuing Bank a Letter of Credit Risk Participation in an amount equal to
the Letter of Credit multiplied by that Bank's Commitment Percentage. The
Issuing Bank shall not be obligated to issue any Letter of Credit hereunder
if the issuance of such letter would conflict with, or cause the Issuing
Bank or any Bank to exceed any limits imposed by, any applicable
Requirement of Law.
SECTION 2.02. Notices.
(A) Borrowings. Borrower shall notify the Agent by telephone by
11:00 A.M. at least one Business Day before the proposed borrowing date
(confirmed by a written notice in the form of Exhibit 2.02A, telecopied or
otherwise delivered to the Agent within twenty-four hours of the telephonic
notice) for each Base Rate Loan, specifying the date and amount of the
proposed Base Rate Loan, and the Agent in turn shall notify each other Bank
of the proposed Base Rate Loan by 3:00 p.m. of the same day. Borrower
shall notify the Agent by telephone by 11:00 A.M. at least three Business
Days before the proposed borrowing date (confirmed by a written notice in
the form of Exhibit 2.02A telecopied or otherwise delivered to the Agent
within twenty-four hours of the telephonic notice) for each LIBO Rate Loan,
specifying the date and amount of the proposed LIBO Rate Loan and the
length of the proposed LIBO Interest Period, and the Agent shall in turn
notify each other Bank by 11:00 A.M. on the second Business Day preceding
the proposed borrowing date. On the specified borrowing date each Bank
shall make available to the Agent by no later than 12:00 noon (Newark, New
Jersey time), at its offices located at 550 Broad Street, Newark, New
Jersey, in funds immediately available to the Agent, such Bank's ratable
share of such Loan. Upon receipt of such funds by the Agent and upon
fulfillment of the applicable conditions set forth in Section 2.14, the
Agent will immediately make such funds available to Borrower.
(B) Issuance of Letters of Credit. Borrower shall provide to
Issuing Bank at least seven (7) Business Days (or such shorter time as
Issuing Bank may agree in a particular instance) prior to the proposed date
of the issuance, a request for issuance of a Letter of Credit. Each
request for issuance of a Letter of Credit shall be by telecopy, confirmed
immediately in writing, in substantially the form of supplied by the
Issuing Bank which shall specify: (i) the proposed date of issuance (which
shall be a Business Day); (ii) the face amount of the Letter of Credit;
(iii) the date of expiration of the Letter of Credit which date shall not
be more than one year after the issuance of the Letter of Credit; (iv) the
name and address of the beneficiary thereof; (v) the documents to be
presented by the beneficiary of the Letter of Credit in case of any drawing
thereunder; and (vi) the full text of any certificate to be presented by
the beneficiary in case of any drawing thereunder.
SECTION 2.03. The Revolving Credit Notes. The obligation of
Borrower to repay the Revolving Credit Loans shall be evidenced by a
promissory note of Borrower (a "Revolving Credit Note"), dated the date of
this Agreement, payable to the order of each Bank in a principal amount
equal to such Bank's Commitment and otherwise substantially in the form of
Exhibit 2.03 attached hereto. Each Bank is hereby authorized to record on
its books and records, the date and amount of each Loan made by such Bank,
the date and amount of each payment or prepayment of principal thereof and
the interest rate with respect thereto. Any such recordation shall
constitute prima facie evidence of the accuracy of the information so
recorded; provided, however, that the failure to make any such recordation
or any incorrect recordation shall not affect the obligations of the
Borrower hereunder or under Revolving Credit Note. Each Revolving Credit
Note shall be stated to mature on the Maturity Date.
SECTION 2.04. Fees
(A) Upfront. Borrower shall pay on the date hereof a non-refundable
upfront fee (the "Upfront Fee") in the principal amount of $375,000 to the
Agent for the pro-rata distribution to the Banks.
(B) Commitment. Borrower shall pay to the Agent for distribution to
each of the Banks a non-refundable commitment fee (the "Commitment Fees")
computed at the rate of 1/2 of 1 percent (1/2%) per annum on the average
daily undisbursed portion of such Bank's Commitment (to the extent that
such Commitment has not been reduced or terminated pursuant to Section 2.05
hereof). The Commitment Fees shall be payable quarterly in arrears on the
last day of March, June, September and December in each year, commencing on
March 31, 1994, up to and including the Maturity Date.
(C) Letter of Credit. For each Letter of Credit issued hereunder
the Borrower shall pay to the Agent for the ratable benefit of the Banks an
annual fee computed at the rate of one and one quarter percent (1.25%) per
annum of the amount of the Letter of Credit (the "Letter of Credit Fee").
The Letter of Credit Fee shall be payable prior to the issuance of the
Letter of Credit and on the yearly anniversary of the issuance of the
Letter of Credit so long as the Letter of Credit remains outstanding. The
Letter of Credit Fee shall be nonrefundable.
(D) Fronting. For each Letter of Credit issued hereunder the
Borrower shall pay to the Issuing Bank as issuer of the Letter of Credit an
annual fee computed at the rate of one quarter of one percent (.25%) per
annum of the amount of the Letter of Credit (the "Fronting Fee"). The
Fronting Fee shall be payable prior to the issuance of the Letter of Credit
and on the yearly anniversary of the issuance of the Letter of Credit so
long as the Letter of Credit remains outstanding. The Fronting Fee shall
be nonrefundable.
(E) Other Letter of Credit Fees. In addition to the foregoing, the
Borrower shall pay or reimburse the Issuing Bank for such normal and
customary costs and expenses as are incurred or charged by the Issuing Bank
in issuing, effecting payment under, amending or otherwise administering
any Letter of Credit.
(F) Agent. Borrower shall pay to the Agent a fee in the amount, on
the dates and according to the terms of the Agent's fee letter.
SECTION 2.05. Repayment and Conversion of Loans. Borrower may at
any time repay, in whole or, in a minimum aggregate amount of $1,000,000 as
to any Revolving Credit Loan, in part, the outstanding principal amount of
the Revolving Credit Loans, upon one Business Day's notice to the Agent.
All such payments shall be applied pro rata between the Banks. Base Rate
Loans must be repaid on the Maturity Date if not repaid sooner, and may be
repaid at any time without penalty or premium. LIBO Rate Loans must be
repaid on the last day of the applicable LIBO Interest Period. LIBO Rate
Loans may be repaid from the proceeds of a new LIBO Rate Loan for which
notice pursuant to Section 2.02 has been given. If no notice is given
pursuant to Section 2.02 for a new LIBO Rate Loan, the LIBO Rate Loan has
not otherwise been repaid, and the last day of such LIBO Interest Period is
not the Maturity Date, the LIBO Rate Loan will be repaid by an automatic
conversion of the LIBO Rate Loan to a Base Rate Loan. LIBO Rate Loans may
be repaid prior to the last day of the applicable LIBO Rate Period,
provided that Borrower shall (i) provide not less than three Business Day's
notice to the Agent, and (ii) indemnify each Bank, in accordance with
Section 2.12 (D) hereof, against any loss or expense such Bank incurs as a
result of the prepayment of a LIBO Rate Loan. On the date of any such
repayment of any LIBO Rate Loan, the Borrower shall pay accrued interest on
the amount of the prepayment together with the Indemnification Fee.
SECTION 2.06 Termination or Reduction of the Commitments. Borrower
shall have the right at any time and from time to time, upon two (2)
Business Days' prior written notice to the Banks, to ratably terminate the
unused portions of the Commitments in whole or ratably reduce them in part,
without penalty or premium. Any partial reduction shall be in the minimum
aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in
excess thereof. Any termination or reduction of the Banks' respective
Commitments hereunder shall be permanent, and the Commitments cannot
thereafter be restored or increased without the written consent of the
Banks.
SECTION 2.07 Interest. (A) Base Rate Loans. Borrower shall pay
interest on the unpaid principal amount of each Base Rate Loan from the
date on which the Base Rate Loan is disbursed until such principal amount
has been repaid in full, payable monthly in arrears on the last Business
Day of each calendar month at an annual rate equal to the Adjusted Base
Rate, which annual rate shall change simultaneously with each change in the
Base Rate.
(B) LIBO Rate Loans. Borrower shall pay interest on the unpaid
principal amount of each LIBO Rate Loan, for the period that begins on the
applicable Effective Date and that ends on the last day of the applicable
LIBO Interest Period, payable on the last day of the applicable LIBO
Interest Period, at an annual rate equal to the Adjusted LIBO Rate.
(C) Computation of Interest and Commitment Fees. The Commitment
Fees and interest on the Base Rate Loans shall be computed on the basis of
a year of 365 days or 366 days, as the case may be, for the actual number
of days elapsed. Interest on the LIBO Rate Loans shall be computed on the
basis of a year of 360 days for the actual number of days elapsed.
SECTION 2.08 Payments. (A) Borrower will make all repayments and
prepayments of principal of the Loans, all payments of interest on the
Loans, and all payments of Commitment Fees to the Agent, for the account of
the Banks, at 550 Broad Street, Newark, New Jersey, in funds immediately
available to the Agent, and the Agent will, by wire transfer, immediately
distribute to each Bank, in funds immediately available to each Bank, each
Bank's ratable share of the amounts so received by the Agent. Funds
received by the Agent later than 1:00 p.m. (Newark, New Jersey time) on the
date due shall be deemed to have been paid on the next succeeding Business
Day. All payments will be applied first to fees and expenses due under
this Agreement, second to accrued and unpaid interest due under this
Agreement, and third, to principal due under this Agreement.
(B) Whenever any payment to be made hereunder or under the Revolving
Credit Notes shall be stated to be due on a day that is not a Business Day,
such payment may be made on the next succeeding Business Day, and such
extension of time shall be included in the computation of interest
hereunder or under the Revolving Credit Notes or the Commitment Fees, as
the case may be.
SECTION 2.09 The Letters of Credit.
(A) Reimbursement Obligation. The Borrower agrees to reimburse the
Issuing Bank on the day following the date on which the Issuing Bank
notifies the Borrower of the date and amount of a draft presented under any
Letter of Credit for the amount of (i) such draft so paid, (ii) interest on
the amount of the draft calculated at the Adjusted Base Rate from the date
of payment by the Issuing Bank on the draft, and (ii) any taxes, fees,
charges or other costs or expenses incurred by the Issuing Bank in
connection with such payment. The Borrower's obligation under this section
shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Bank, any Bank or any
beneficiary of such Letter of Credit. The Borrower agrees that the
Issuing Bank and the Banks shall not be responsible for, and the Borrower's
reimbursement obligations hereunder shall not be affected by, among other
things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower
against any beneficiary or transferee of such letter of credit. The Bank
shall not be liable for any error, omission, interruption or delay in
transmission, in connection with any Letter of Credit.
(B) Letter of Credit Risk Participations. Promptly after issuance
of each Letter of Credit, the Issuing Bank shall deliver to Borrower and
the Banks a copy of such Letter of Credit. Immediately upon the issuance of
each Letter of Credit, each Bank (other than the Issuing Bank) shall be
deemed to, and hereby agrees to, have irrevocably purchased from the
Issuing Bank a participation in such Letter of Credit and each drawing
thereunder in any amount equal to the Commitment Percentage of such Bank (a
"Letter of Credit Risk Participation"). In the event Borrower shall fail
to reimburse Issuing Bank for the full amount of any drawing on the date
following the date such drawing is honored by the Issuing Bank under the
Letter of Credit, the Borrower shall be deemed to have requested a Base
Rate Loan in the amount of such drawing and any interest and expenses
thereon, and the Agent shall pay to the Issuing Bank the proceeds of such
loan in reimbursement for the drawing under the Letter of Credit. Each
Bank agrees to perform its obligations to make a Base Rate Loan necessary
to fund an unreimbursed drawing under a Letter of Credit despite the
expiration of their Commitment to make a Revolving Credit Loan as such, the
occurrence of a Default or any Event of Default or any inability of
Borrower to require such Bank to fulfill its other obligations hereunder
including, without limitation, any inability resulting from the operation
of Bankruptcy Code Section 365(c)(2) (11 U.S.C. Section 365(c)(2)) or
otherwise. The obligation of each Bank to make a Base Rate Loan necessary
to fund an unreimbursed drawing under a Letter of Credit shall be absolute
and unconditional under any and all circumstances and irrespective of any
setoff, counterclaim or defense to payment which such Bank may have or have
had against the Issuing Bank (or any other Bank), including, without
limitation, any defense based on the failure of the demand for payment
under such Letter of Credit to conform to the terms of such Letter of
Credit or the legality, validity, regularity or enforceability of such
Letter of Credit or any defense based on the identity of the transferee of
such Letter of Credit or the sufficiency of the transfer if such Letter of
Credit is transferable.
(C) Obligation to Provide Cash Collateral. On the Maturity the
Borrower shall provide to the Issuing Bank cash in an amount equal to the
face amount of the Letters of Credit then outstanding to be held as cash
collateral until the termination of the obligations of the Issuing Bank
thereunder.
SECTION 2.10 Reimbursement to Banks for Cost Increases Imposed By
Law. (A) If any Bank shall determine that the adoption of any applicable
law, rule, regulation or guideline (including those regarding capital
adequacy), or any change therein, or any change in the interpretation or
administration thereof, by any Governmental Authority, central bank or
comparable authority charged with the interpretation or administration
thereof, or the effectiveness after the date hereof of any of the foregoing
which have been previously adopted but are not yet fully effective
(including, but not limited to, each phase in the effectiveness of the
"Risk-Based Capital Guidelines" which have been previously adopted by the
United States Office of the Comptroller of the Currency and certain other
United States banking regulatory agencies), or compliance by any Bank with
any direction, requirement or request regarding capital adequacy (whether
or not having the force of law) of any Governmental Authority, central bank
or comparable agency: (a) affects or would affect the amount of capital
required or expected to be maintained by such Bank or any corporation
controlling such Bank and such Bank determines that the amount of such
capital is increased as a consequence of such Bank's obligations under this
Agreement (taking into consideration such Bank's policies (in effect on the
date hereof) with respect to capital adequacy and such Bank's targeted
return on capital), or (b) subjects any Bank to any tax, duty or other
charge, or changes the basis of taxation of the Loans (other than income or
franchise taxes payable by the Banks); then, upon receiving notice as
described in subsection 2.10(B) from such Bank, the Borrower shall promptly
pay to such Bank, any additional amounts as will compensate such Bank
and/or any corporation controlling such Bank for such change.
(B) Each Bank will promptly notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will entitle
such Bank to compensation pursuant to this Section. A certificate of any
Bank claiming compensation under this Section and setting forth in
reasonable detail the basis for and the calculation of the additional
amount or amounts to be paid to it hereunder shall be conclusive in the
absence of material error. In determining such amount, such Bank may use
any reasonable averaging and attribution methods.
SECTION 2.11 Mandatory Repayments. If at any time the aggregate
unpaid principal amount of the Loans and the Letter of Credit shall be in
excess of $50,000,000 (or such lesser amount which may be in effect after
the Borrower shall have reduced the Commitments pursuant to Section 2.05),
the Borrower shall immediately make a repayment of principal on the Loans
in an amount equal to such excess, together with accrued interest, on each
amount being prepaid to and including the date of such repayment.
SECTION 2.12 Special Provisions for LIBO Rate Loans.
(A) Unavailability of Funds and Indeterminate Interest Rates.
If on or before the date the Banks are to make any LIBO Rate Loan or on or
before any Effective Date (1) the Agent determines in good faith that it is
unable to obtain funds at the LIBO Rate for an elected Interest Period,
including due to the unavailability of funds at such rate, any change in
existing law, any new law, the length of such Interest Period, or otherwise
or (2) no adequate means exists to determine the Adjusted LIBO Rate for
such Interest Period, then Borrower shall be required to elect an Interest
Period of a length for which Agent may obtain funds at the LIBO Rate or,
alternatively, to request that the Banks make a Base Rate Loan in lieu of a
LIBO Rate Loan.
(B) Changes Affecting Ability to Maintain Funds. If, during
any Interest Period, any change in existing law, any new law, or any other
factor prevents Agent in its good faith determination from maintaining
funds at the LIBO Rate for such Interest Period and requires Agent to cease
so maintaining funds actually so maintained prior to termination of such
Interest Period, then on the date of such required cessation, Borrower
shall be required to elect an Interest Period of a length for which Agent
may maintain funds at the LIBO Rate or, alternatively, to request that on
that date the Banks make a Base Rate Loan in the amount of the outstanding
LIBO Rate Loan, all of the proceeds of which shall be used to prepay the
outstanding LIBO Rate Loan. In addition, within 30 days after demand by
any Bank, Borrower shall reimburse such Bank against any loss or expense
such Bank has certified in writing to Borrower and Agent that such Bank has
incurred as a result of any such required cessation, including, but not
limited to, any interest or fees payable by such Banks to lenders of funds
obtained by them in order to make or maintain such LIBO Rate Loans.
(C) Ineligible Interest Periods. If, on any date Banks are to
make a LIBO Rate Loan or on any Effective Date, the period of time from
such date or such Effective Date to the Maturity Date is less than one
month, a Base Rate Loan shall be made on such date in lieu of a LIBO Rate
Loan.
(D) Reimbursement for Losses. Within 30 days after demand by
any Bank, Borrower shall reimburse by payment of an Indemnification Fee to
such Bank for any loss or expense (including, but not limited to, any
interest or fees payable by such Banks to lenders of funds obtained by them
in order to make or maintain such LIBO Rate Loans) which such Bank incurs
as a result of any prepayment, or conversion of a LIBO Rate Loan to a Base
Rate Loan, on a date other than the last day of the applicable Interest
Period. With each demand for reimbursement under this Section 2.12, such
Bank shall submit a certificate to Agent and Borrower setting forth the
basis for the demand.
(E) Funding Through Other Offices. Each Bank may fulfill its
Commitment for LIBO Rate Loans by causing a foreign branch or affiliate of
such Bank to make LIBO Rate Loans. Nevertheless, the Borrower shall owe
its obligations on LIBO Rate Loans to such Bank rather than to any foreign
branches or affiliates of such Bank. Each Bank shall repay its foreign
branches or affiliates.
(F) Discretion of Banks as to Manner of Funding.
Notwithstanding any other provision of this Agreement, each Bank may fund
or maintain its funding of all or any part of the Loans in any manner it
chooses.
SECTION 2.13 Taxes Related to Agreement. All payments of
principal, interest and fees to be made by the Borrower pursuant to this
Agreement shall be made free and clear of and without reduction or
withholding for or on account of any present or future income, excise, or
other taxes, levies, imposts, duties, charges, or fees of whatever nature
now or hereafter imposed by any governmental or other taxing authority of
or in the United States of America (including the Commonwealth of Puerto
Rico), unless the withholding or other payment of such taxes is required by
applicable law. In the event that the Borrower is required by applicable
law to make any such withholding or deduction of such taxes with respect to
any loan or fee, an amount equal to the amount withheld or deducted shall
be credited to the Borrower and treated as having been paid with respect to
such loan or fee.
SECTION 2.14. Conditions Precedent to All Disbursements. The
obligation of each Bank to make any Revolving Credit Loan or issue any
Letter of Credit is subject to the conditions precedent that:
(A) The representations and warranties contained in this Agreement
shall be true and correct in all material respects on and as of the date of
such Revolving Credit Loan as though made on and as of such date, except to
the extent that (i) such statements expressly are made only as of the
Closing Date, or (ii) the Borrower has previously provided to the Banks
written notice of any material change in the facts set forth in such
representations and warranties.
(B) No Potential Default or Event of Default shall have occurred and
be continuing, or will result from the making of such Revolving Credit
Loan.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement and to make
the Loans, the Borrower and each Guarantor hereby represents and warrants
to the Banks that the statements set forth in this Article III are true,
correct and complete.
SECTION 3.01. Existence. Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of New
Jersey. Park Place-Delaware is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
Realty is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of New Jersey. The Borrower and each
Guarantor have all requisite corporate power and authority to conduct its
business and to own its properties and each is duly qualified as a foreign
corporation in good standing in all jurisdictions, if any, in which its
failure so to qualify could reasonably be expected to produce have a
Material Adverse Effect.
SECTION 3.02. Authorization; No Legal Bar; No Default.
The execution, delivery and performance by the Borrower and the Guarantors
of the Loan Documents have been duly authorized by all necessary corporate
action, and do not and will not violate or conflict with any current
provision of any Requirement of Law, including the Casino Control Act and
any rules or regulations of the Casino Control Commission, or of the
charter or by-laws of Borrower or either of the Guarantors or result in a
breach of or constitute a default under any indenture (including the
Indenture), or other material instrument or agreement to which the Borrower
or a Guarantor is a party or by which any of them or their properties may
be bound or affected.
SECTION 3.03 Validity of the Loan Documents. The Loan Documents
when duly executed and delivered will constitute, valid and legally binding
obligations of Borrower and each of the Guarantors enforceable in
accordance with their respective terms, except as such enforceability may
be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally or general principles of equity.
SECTION 3.04. Financial Information. The Guarantors and the
Borrower have previously furnished to the Banks true and complete copies of
the Consolidated balance sheet and statements of income, Stockholders'
Equity and cash flows of Park Place-Delaware and its Subsidiaries as of
December 31, 1992, audited by Ernst & Young. The Guarantors and the
Borrower have previously furnished to the Bank an unaudited Consolidated
balance sheet and statements of income, stockholder's equity and cash flows
of Park Place - Delaware and its subsidiaries as of December 31, 1993
prepared by Park Place - Delaware. The aforementioned financial statements
show all material liabilities, direct and contingent, and present fairly
the financial position, the results of operations and cash flows at such
dates and for the periods ended on such dates, all in accordance with GAAP
consistently applied. From December 31, 1993 to the Closing Date, there
has been no material adverse change in the business, financial condition,
operations or prospects of the Borrower and the Guarantors taken as a
whole.
SECTION 3.05. Litigation. Except as disclosed in Schedule 3.05
attached hereto, there are no actions, suits or proceedings pending or to
their knowledge threatened against Borrower or any Guarantor or any of
their respective properties before any court or governmental department,
commission, board, bureau, agency, instrumentality (domestic or foreign)
or other Governmental Authority that, if determined adversely to Borrower
or a Guarantor, could reasonably be expected to produce a Material Adverse
Effect.
SECTION 3.06. Disclosure of Indebtedness and Contingent Liabilities.
Except for Indebtedness and Contingent Liabilities which in the aggregate
total $500,000 or less, as of the date of this Agreement there are no
Contingent Liabilities or Indebtedness of Park Place-Delaware and its
Subsidiaries that are not disclosed on the financial statements mentioned
in Section 3.04, permitted by Section 5.05 or by Schedule 3.06 attached
hereto.
SECTION 3.07. Taxes. Borrower and each Guarantor have been included
in all Consolidated federal income tax returns and unitary state income and
franchise tax returns required to be filed with respect to each entity
before the date of this Agreement and all Taxes, assessments and charges
shown to be due thereon have been paid, to the extent they were required to
be paid before the date of this Agreement. Borrower and each of the
Guarantors have each filed all other tax returns and reports required to be
filed before the date of this Agreement and each has paid all Taxes,
assessments and charges shown to be due thereon, to the extent that they
were required to be paid before the date of this Agreement. To the extent
that Taxes, assessments or charges for periods before the date of this
Agreement are imposed on Borrower or a Guarantor, which additional Taxes,
assessments or charges exceed those amounts previously paid by Borrower or
such Guarantor, adequate reserves for such amounts have been accrued in
accordance with GAAP in the financial statements of Borrower and the
Guarantors.
SECTION 3.08. Liens. The property and assets of Borrower and each
Guarantor are not subject to any Lien other than Permitted Liens.
SECTION 3.09. Consents. No authorization, consent, approval,
license, exemption by or filing or registration with any court or
Governmental Authority (including the Casino Control Commission and the
Board of Governors of the Federal Reserve System) is or will be necessary
for the valid execution, delivery or performance by Borrower or the
Guarantors of the Loan Documents (except as may have been obtained prior to
the execution of this Agreement).
SECTION 3.10. ERISA. Each Plan maintained for employees of Borrower
and each Guarantor and covered by Title IV of ERISA is in good standing.
No Reportable Event or material failure of compliance with the Code has
occurred and is continuing with respect to any Plan.
SECTION 3.11. Ownership of Borrower. Park Place - Delaware owns
100% of the voting securities of Borrower.
SECTION 3.12. Ownership of Guarantor. Bally's Casino Holdings, Inc.
owns 100% of the voting securities of Park Place-Delaware.
SECTION 3.13. Gaming Licenses. As of the date hereof, all Gaming
Licenses of the Borrower have been obtained and are in full force and
effect. The Borrower's Gaming Licenses are renewed periodically but
generally every 2 years, and the next date for such renewal is June 30,
1994.
SECTION 3.14. Margin Stock. Borrower does not engage in the
business of making loans to purchase or carry Margin Stock and none of the
proceeds of the Loans will be used to purchase or carry Margin Stock.
SECTION 3.15. Stock as Collateral. The Collateral does not include
any stock in any corporation.
SECTION 3.16. Environmental Matters. Except as set forth in
Schedule 3.16 attached hereto, Park Place-Delaware and each of its
Subsidiaries have to the best of their knowledge obtained all permits,
licenses and other authorizations which are required with respect to their
businesses under all applicable Environmental Laws. Park Place-Delaware
and each of its Subsidiaries are in compliance with all Environmental Laws,
and all terms and conditions of the required permits, licenses and
authorizations, except where a failure to comply will not result in a
Material Adverse Effect, and are also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in those laws
or contained in any regulation, code, plan, order, decree, judgment, notice
or demand letter issued, entered, promulgated or approved thereunder,
except where a failure to comply will not result in a Material Adverse
Effect. Neither Park Place-Delaware nor any of its Subsidiaries has
received from any Person or Governmental Authority written notice of any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with or prevent
continued compliance except where the lack of such continued compliance
would not have a Material Adverse Effect, or which may give rise to any
liability, or otherwise form the basis of any claim, action, suit,
proceeding, hearing or investigation reasonably expected to have a Material
Adverse Effect, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or
the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, or hazardous or toxic material
or waste. Neither Park Place-Delaware nor any of its Subsidiaries are
aware of any past, present or future events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with
or prevent continued substantial compliance in a way that would reasonably
be expected to have a Material Adverse Effect, or which may give rise to
any liability, or otherwise form the basis of any claim, action, suit,
proceeding, hearing or investigation reasonably expected to have a Material
Adverse Effect, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or
the emission, discharge, release or threatened release into the
environment, of any pollutant, contaminant, or hazardous or toxic material
or waste.
SECTION 3.17. Burdensome Restrictions. Except as reflected on
Schedule 3.17, the Borrower and Guarantors are not subject to any
Burdensome Restriction or Potential Default under any material contract to
which they are a party.
SECTION 3.18. Projections; Budgets. All of the projections and
budgets submitted to the Banks by the Borrower and/or each Guarantor were
prepared and submitted in good faith.
SECTION 3.19. Compliance with Laws. The Borrower and each of the
Guarantors is in compliance with all laws including, without limitation,
all tax laws, Environmental Laws and ERISA except (a) where noncompliance
would not have a Material Adverse Effect, and (b) such compliance is being
contested under Article 10 of the Mortgage.
SECTION 3.20. Intellectual Property. The Borrower and each of the
Guarantors has the right to use its Intellectual Property. No claim has
been asserted and is pending by any Person challenging or questioning the
use of any such Intellectual Property or the validity or effectiveness of
such Intellectual Property, nor does it know of any valid basis for any
such claim. To its knowledge, the use of such Intellectual Property does
not infringe on the rights of any Person.
SECTION 3.21 Labor Matters. Except as set forth on Schedule 3.21A
attached hereto, neither the Borrower nor any Guarantor is a party to any
labor union or collective bargaining agreements. The Borrower and each
Guarantor are in compliance with all applicable laws respecting employment
and employment practices, including, without limitation, laws, regulations,
and judicial and administrative decisions relating to wages, hours,
conditions of work, collective bargaining, health and safety, payment of
social security, payroll, withholding and other Taxes, worker's
compensation, insurance requirements, as well as requirements of ERISA and
the Consolidated Omnibus Budget Reconciliation Act, except to the extent
that noncompliance would not have a Material Adverse Effect on the
business, operations or financial condition of the Borrower or the Borrower
and the Guarantor taken as a whole. Except as disclosed on Schedule 3.21B,
hereto, there are no (a) unfair labor practice complaints pending or, to
the best knowledge of the Borrower or any Guarantor, threatened against the
Borrower or a Guarantor before the National Labor Relations Board or any
court nor any pending or, to the best knowledge of the Borrower or any
Guarantor, threatened sexual harassment or wrongful discharge claims which
could result in a cessation of the operations of the Borrower, (b) labor
strike, dispute, slowdown, or stoppage pending or, to the best knowledge of
the Borrower or any Guarantor, threatened against the Borrower or a
Guarantor which could result in a cessation of the operations of the
Borrower, or (c) representation or petition, respecting the employees of
the Borrower or a Guarantor filed or threatened to be filed with the
National Labor Relations Board which could reasonably be expected to have a
Material Adverse Effect.
SECTION 3.22. Brokerage Commissions. Except for fees paid to the
Banks hereunder, no Person is entitled to receive from the Borrower or any
Guarantor any brokerage commission, finder's fee or similar fee or payment
in connection with the consummation of the transactions contemplated by
this Agreement. No brokerage or other fee, commission or compensation is
to be paid by the Banks by reason of any act, alleged act or omission of
the Borrower or any Guarantor with respect to the transactions contemplated
hereby.
SECTION 3.23. Investment Company Act. Neither Park Place-Delaware
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.<PAGE>
<PAGE>
ARTICLE IV
AFFIRMATIVE COVENANTS
So long as any amount due any Bank hereunder remains unpaid, or any
Bank shall have any Commitment hereunder, Park Place-Delaware and its
Subsidiaries on a Consolidated basis or the Borrower shall comply with the
following affirmative covenants:
SECTION 4.01. Consolidated Net Worth. Park Place-Delaware and its
Subsidiaries, on a Consolidated basis, shall maintain at all times a Net
Worth of not less than (a) $1,000,000 during the period from the Closing
Date to December 30, 1994, (b) $5,000,000 during the period from December
31, 1994 to September 29, 1995, (c) $10,000,000 during the period from
September 30, 1995 to June 29, 1996, (d) $15,000,000 during the period from
June 30, 1996 to September 29, 1996, and (e) $17,500,000 thereafter.
SECTION 4.02. Consolidated Income. Park Place-Delaware and its
Subsidiaries, on a Consolidated basis, shall have Net Income greater than
$1 for the following periods: (a) July 1, 1994 through December 31, 1994,
(b) January 1, 1995 through June 30, 1995, (c) July 1, 1995 through
December 31, 1995, (d) January 1, 1996 to June 30, 1996, and (e) July 1,
1996 through December 31, 1996.
SECTION 4.03. Consolidated Interest Coverage Ratio. Park Place-
Delaware and its Subsidiaries, on a Consolidated basis, shall have a
Consolidated Interest Coverage Ratio of not less than 1.75 to 1 as of the
end of each Fiscal Quarter, commencing with the Fiscal Quarter ending March
31, 1994, calculated for the four Fiscal Quarters then ending.
SECTION 4.04. Consolidated Fixed Cost Ratio. Park Place-Delaware
and its Subsidiaries on a Consolidated basis, shall have at the end of each
Fiscal Quarter, a Consolidated Fixed Cost Ratio of not less than 2 to 1
calculated for the four Fiscal Quarters then ending.
SECTION 4.05. Financial Information. The Borrower and each of the
Guarantors will furnish to the Banks the following financial information
and notices:
(A) as soon as available, but in any event within 60 days
after the end of the first three Fiscal Quarters of each Fiscal Year,
unaudited quarterly Consolidated financial statements of Park Place-
Delaware and its Subsidiaries certified by the CFO of Park Place-Delaware;
(B) as soon as available, but in any event within 120 days
after the end of each Fiscal Year, (i) annual audited Consolidated
financial statements of Park Place-Delaware and its Subsidiaries
accompanied by an Unqualified Opinion, and (ii) unaudited Consolidating
financial statements of Park Place-Delaware and its Subsidiaries certified
by the CFO of Park Place-Delaware;
(C) with the annual audited Consolidated financial statements,
commencing with respect to the period ending December 31, 1994, a
certificate, substantially in the form attached as Exhibit 4.05(C), of the
Independent Certified Public Accountants reporting on such financial
statements stating to the effect that in making the examination necessary
therefor no knowledge was obtained of any Potential Default or Event of
Default under the Loan Documents;
(D) no later than 30 days after delivery of the annual audited
financial statements referred to above, a management letter executed and
delivered by the Independent Certified Public Accountants reporting on such
financial statements or a letter stating that there was no management
letter by such accountants;
(E) concurrently with the delivery of the quarterly financial
statements referred to above, a certificate of the CFO of Park Place-
Delaware stating that no Potential Default or Event of Default under the
Loan Documents is in existence except as specified in such certificate, and
setting forth in reasonable detail the calculations pursuant to which
compliance with financial covenants was determined;
(F) within five (5) days following their filing, copies of all
documents filed with the Securities and Exchange Commission by Park Place-
Delaware or the Borrower; and
(G) promptly after approval by the Board of Directors of Park
Place-Delaware, annual budgets, projections and forecasts with assumptions
prepared by the Borrower or Park Place-Delaware, or any changes or
adjustments to any such budgets, projections, forecasts or assumptions if
submitted to the Board of Directors of Park Place - Delaware;
SECTION 4.06. Reports. The Borrower and each Guarantor will furnish
to the Banks:
(A) as soon as practical and in any event within 5 Business
Days after a Responsible Officer becomes aware of the occurrence of any
Potential Default or Event of Default, a written statement by the CEO or
CFO of the Borrower or Guarantors setting forth details of such default,
stating whether or not the same is continuing and, if so, the action that
the Borrower or Guarantors propose to take with respect thereto;
(B) as soon as practical and in any event within 5 Business
Days after a Responsible Officer receives knowledge thereof, notice in
writing of all actions, investigations, suits and proceedings before any
court, governmental department, commission, board, bureau, agency,
instrumentality, or other Governmental Authority, domestic or foreign,
affecting the Borrower or either Guarantor that could reasonably be
expected to have a Material Adverse Effect;
(C) as soon as practical and in any event within 5 Business
Days after a Responsible Officer knows or has reason to know that any
Reportable Event has occurred with respect to any Plan, a written statement
by its CEO or CFO setting forth details of the Reportable Event and
indicating what action, if any, the Borrower or Guarantors propose to take
with respect thereto, together with a copy of any required notice of such
Reportable Event to the Pension Benefit Guaranty Corporation;
(D) as soon as practical and in any event within 5 Business
Days after a Responsible Officer becomes aware of the occurrence of a
change or event concerning the Borrower or either Guarantor that has or
could reasonably be expected to have a Material Adverse Effect, a statement
from its CEO or CFO setting forth the details of such change or event and
the action that it proposes to take with respect thereto;
(E) as soon as practical and in any event with 1 Business Day
after a Responsible Officer receives knowledge thereof, notice in writing
of the revocation, suspension or loss of any of its Gaming Licenses;
(F) as soon as practical and in any event within 5 Business
Days after a Responsible Officer learns of any labor dispute that could
reasonably be expected to have a Material Adverse Effect or the
termination, prior to scheduled expiration, of any collective bargaining
agreement or labor contract to which Park Place-Delaware or its
Subsidiaries is a party or by which one or all of them is bound;
(G) as soon as practical, such other information respecting
its business, properties, operations, conditions (financial or otherwise)
or prospects as the Banks may at any time and from time to time reasonably
request be furnished to them.
SECTION 4.07. Insurance. Borrower and each of the Guarantors will
maintain at all times the following insurance:
(A) "All-Risk" fire and hazard insurance in an amount of at
least the full replacement value of the Collateral and otherwise on terms
customary in the casino industry and naming the Agent as collateral agent
as loss payees as its interest may appear under a standard mortgagee
endorsement clause;
(B) commercial liability insurance (broad form) covering
injury and damage to Persons and property in amounts and on terms customary
in the casino industry and naming the Banks as an additional insured as
their interests may appear;
(C) flood insurance in an amount equal to the maximum
available amount under the Federal Flood Insurance Program; and
(D) such other insurance as may be from time to time customary
in the casino industry.
All such insurance policies will include a provision that such policy will
not be canceled, altered or in any way limited in coverage or reduced in
amount unless the Banks are notified in writing at least thirty (30) days
prior to such change. Each insurance policy will be written by insurance
companies authorized or licensed to do business in the New Jersey, having
an Alfred M. Best Company, Inc. rating of A or higher and a financial size
category of not less than VII.
SECTION 4.08. Taxes. Borrower and each of the Guarantors will pay
when due all Taxes, assessments and charges imposed upon them or their
respective properties or that they are required to withhold and pay over,
except where the same are being contested in good faith and adequate
reserves have been set aside, which do not result in any Liens other than
Permitted Liens.
SECTION 4.09. Compliance with Laws. Borrower and each of the
Guarantors will comply with all Requirements of Law, including without
limitation, all Tax laws, Environmental Laws and ERISA, except where the
lack of such compliance would not have a Material Adverse Effect.
SECTION 4.10. Inspection of Property; Books and Records;
Discussions. Borrower and each of the Guarantors will keep proper books
and records of accounts in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its businesses and activities.
Borrower and each of the Guarantors shall permit the Banks, upon reasonable
notice from the Banks or their representatives (a) to visit and inspect any
of its properties and examine and make abstracts from any of its books and
records during normal business hours, as often as may reasonably be
desired, (b) to discuss its business, operations, properties, financial and
other conditions with its CEO, CFO and such other officers and employees as
the Banks may from time to time reasonably request, (c) to discuss its
affairs with the Borrowers' Independent Certified Public Accountants
together with the Borrower's CEO or CFO; provided, however, that if a
Potential Default exists or an Event of Default has been declared, the
Banks shall not be required to provide notice to carry out the activities
set forth above in (a), (b) and (c). Any inspection conducted by the Banks
shall not relieve the Borrower or the Guarantors of any obligation to
provide any notices required under the terms of this Agreement or any of
the Loan Documents.
SECTION 4.11. ERISA. The Borrower and each Guarantor will comply
with the provisions of ERISA and the Code with respect to each Plan, except
where the lack of such compliance would not have a Material Adverse Effect.
SECTION 4.12. Preservation of Corporate Existence, Etc. The
Borrower and each Guarantor will preserve and maintain its corporate
existence, good standing and compliance with its certificate of
incorporation, by-laws and other corporate documents executed by the
Borrower or any of the Guarantors.
SECTION 4.13. Maintaining Ownership of Properties. The Borrower and
each Guarantor will maintain or cause to be maintained in all material
respects in good repair and working order and condition, excepting ordinary
wear and tear, or make diligent efforts to repair, as the case may be, all
of its properties material to its operations, will make or cause to be made
in all material respects all appropriate repairs, renewals and replacements
thereof, consistent with past practice.
SECTION 4.14. Maintenance of Licenses, Permits, etc. The Borrower
and each Guarantor shall maintain in full force and effect all licenses,
permits, governmental approvals, franchises, authorizations or other rights
necessary for the operation of its business, except where the failure to
maintain any of the foregoing would not have a Material Adverse Effect.
SECTION 4.15. Further Assurances. At any time and from time to time
on or after the date of this Agreement, upon the reasonable request of a
Bank, the Borrower or any Guarantor will do, execute, acknowledge, and
deliver or cause to be done, executed, acknowledged, and delivered all such
further instruments, acts, deeds, and assurances as may be reasonably
required by a Bank for the purpose of carrying out the provisions and
intent of the Loan Documents.
SECTION 4.16. Use of Proceeds. The Borrower shall use the proceeds
of the Revolving Credit Loans for (a) working capital, or (b) until June
30, 1995 to fund Special Dividends (subject to the restrictions contained
in Section 5.01.<PAGE>
<PAGE>
ARTICLE V
NEGATIVE COVENANTS
So long as any amount due any Bank hereunder remains unpaid, or any
Bank shall have any Commitment hereunder, the Borrower, the Guarantors and
each of them shall, and shall cause their Subsidiaries to comply with the
following negative covenants:
SECTION 5.01. Limitation on Restricted Payments. Restricted
Payments made after the date hereof shall be limited to the sum (a)
dividends (i) paid on or about the Closing Date, or (ii) from any payment
returned by the Trustee under the indenture related to Funding's 11 7/8%
First Mortgage Notes in connection with the defeasance of those Notes, of
an amount not in excess of $35,000,000 (the "Closing Dividends"), (b) 50%
of Net Income of Park Place-Delaware earned after April 1, 1994 (the
"Income Dividend"), and (c) dividends at or after the closing of the
Indenture in the aggregate amount of $50,000,000 (the "Special Dividends")
provided (i) no more than $30,000,000 at any one time outstanding of
proceeds from the Facility may be used to fund the payment of Special
Dividends, and (ii) that after June 30, 1995 the proceeds of the Revolving
Credit Loans may not be used to fund the Special Dividends.
SECTION 5.02. Limitation on Liens. Park Place-Delaware and its
Subsidiaries will not incur, create, assume or permit to exist any Liens
except Permitted Liens, provided that in the event that a Lien other than a
Permitted Lien should exist (a) which Lien does not have a Material Adverse
Effect, and (b) is other than as a result of the intentional acts of Park
Place- Delaware or its Subsidiaries, such party shall have 30 days after
the receipt of written notice from one or more of the Banks to remove such
Lien.
SECTION 5.03. Limitation on Indebtedness. Park Place-Delaware and
its Subsidiaries will not create, incur, assume or permit to exist any
Indebtedness except Permitted Indebtedness.
SECTION 5.04. Limitation on Investments. Park Place-Delaware and
its Subsidiaries will not make any Investments other than Permitted
Investments.
SECTION 5.05. Limitation on Contingent Liabilities. Park Place-
Delaware and its Subsidiaries will not undertake or otherwise become
responsible for any Contingent Liabilities except for:
(A) obligations under the Indenture or the Revolving Credit Loans
and this Loan Agreement;
(B) obligations of Bally Manufacturing to the holders of certain
shares of preferred stock of Bally Manufacturing, whether or not issued on
the date hereof and one of which holders may be an officer of Park Place-
Delaware, in an amount up to $10,000,000 (the "Preferred Stock Guaranty")
under a written agreement satisfactory to the Lenders, which agreement
provides, among other things, that it will be a condition precedent to the
payment under the Preferred Stock Guaranty that (i) there are no Revolving
Credit Loans then outstanding under the Facility, (ii) payment is within
ten to twenty days following the delivery of the latest quarterly financial
statements of Park Place-Delaware to the Banks (the "Guaranty Enforcement
Period"), (iii) no Event of Default shall have occurred or be continuing
during the Guaranty Enforcement Period, and (iv) during the Guaranty
Enforcement Period Park Place-Delaware is not aware of any event that is
likely to occur before the end of the next fiscal quarter or the next 90
days, whichever is later, which would cause there to be an Event of
Default. If payment under the Preferred Stock Guaranty is to be made,
satisfaction of the two conditions listed as (iii) and (iv), above, shall
be evidenced by a certificate of the Chief Executive Officer of Park Place-
Delaware delivered during the Guaranty Enforcement Period. Prior to the
issuance of the Preferred Stock Guaranty Park Place-Delaware shall provide
to the Lenders an opinion of Counsel containing customary exclusions and
exceptions, and acceptable in form and substance to the Lenders in the form
of Exhibit 5.05B.
(C) obligations of Affiliates of Park Place-Delaware up to an
amount of $20,000,000 of guaranties of performance related to construction.
provided, that in no event shall the total obligations arising under
subsections (B) and (C) at any time exceed an aggregate amount of
$20,000,000.
SECTION 5.06. Limitation on Mergers; Sale of Assets. Park Place-
Delaware, and its Subsidiaries will not (a) consolidate with or be a party
to a merger with any other Person, (b) purchase all or substantially all of
the assets of any Person, (c) purchase stock in any Person, (d) create,
acquire or have any Subsidiaries other than those listed on Schedule 5.06,
or (e) sell, lease or otherwise dispose of all or any substantial part of
its assets.
SECTION 5.07. Limitation on Change of Nature of Business. Park
Place-Delaware and its Subsidiaries will not make any material change in
the nature of their businesses as conducted on the date of this Agreement.
SECTION 5.08. Regulation U.
(A) Borrower will not use the proceeds of the Loans to
purchase or carry any Margin Stock.
(B) Borrower will not engage in the business of making loans
to purchase or carry Margin Stock.
(C) No more than 25% of the Borrower's assets will consist of
Margin Stock.
SECTION 5.09. Transactions with Affiliates. Subject to compliance
with the other terms and conditions of this Agreement and except for (i)
Permitted Investments, (ii) guaranties allowed pursuant to Section 5.05,
(iii) the payment of reasonable and customary fees to the directors of the
Borrower and its Subsidiaries, (iv) loans and advances to and other
employment arrangements with any officer or employee of the Borrower or its
Subsidiaries , and (v) transactions with Affiliates in effect of the
Closing Date, Park Place-Delaware and its Subsidiaries will not enter into
any transaction (whether constituting a loan, lease, financing, sale or
otherwise) with an Affiliate, unless such transaction occurs in the
ordinary course of business and upon terms and conditions which are not
materially less favorable to it than other comparable arms length
transactions between it and a Person other than an Affiliate.
SECTION 5.10. Limitation on Long-Term Leases; Sale and Lease-Back
Transactions. Except for the transactions listed on Schedule 5.10,
attached hereto, and leases of retail shops, Park Place-Delaware and its
Subsidiaries will not (a) become obligated as lessee or otherwise under any
Long-Term Lease; and (b) enter into any arrangement with any Person
providing for the leasing of any real or personal property, which property
has been or is to be sold or transferred by it to such Person.
SECTION 5.11. Amendment of Articles of Incorporation or By-Laws.
The Borrower and each Guarantor shall not amend, modify or supplement their
respective articles of incorporation or By-Laws, except upon at least ten
(10) days prior express written notice to the Banks.
SECTION 5.12. ERISA. Neither the Borrower nor any Guarantor shall
permit any of its ERISA Affiliates to do any of the following to the extent
that such act or failure to act would result in the aggregate, after taking
into account any other such acts or failure to act except where the lack of
such compliance would not have a Material Adverse Effect:
(A) Engage, or permit an ERISA Affiliate to engage in any
Prohibited Transaction for which a statutory or class exemption is not
available or a private exemption has not been obtained from the United
States Department of Labor;
(B) Permit to exist any accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or
not waived;
(C) Fail, or permit an ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Plan;
(D) Terminate, or permit an ERISA Affiliate to terminate, any
benefit Plan which would result in any liability of the Borrower, Guarantor
or an ERISA Affiliate under Title IV of ERISA; or
(E) Fail, or permit any ERISA Affiliate to fail, to pay any
required installment under section (m) of Section 412 of the Code or any
other payment required under Section 412 of the Code on or before the due
date for such installment or other payment.
SECTION 5.13. Maintenance of Property. Neither the Borrower nor the
Guarantors shall demolish, destroy, replace or build any major structures
without the prior written consent of the Banks.
SECTION 5.14. Amendment to Indenture. Park Place-Delaware and its
Subsidiaries will not amend the Indenture.
SECTION 5.15. No Additional Intangible Assets. After the Closing
Date Park Place-Delaware and its subsidiaries will not engage in any
transaction which would cause the addition of intangible assets to their
balance sheets.
<PAGE>
ARTICLE VI
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default. Each of the following shall be an
Event of Default, whatever the reason therefor, upon the giving of written
notice by one or more of the Banks to the Borrower:
(A) Borrower shall fail to make any payment or payments of
principal under this Agreement on the date when any such payment becomes
due and payable.
(B) Borrower shall fail to make any payment or payments of
interest under this Agreement within 2 Business Days after the date when
any such payment may become due and payable.
(C) Any representation or warranty made in the Loan Documents
or in any certificate, agreement, affidavit, instrument, statement, opinion
or report of the Borrower or any Guarantor contemplated hereby or made or
delivered pursuant hereto or in connection herewith, shall prove to have
been incorrect in any material respect on or as of the date made or deemed
made pursuant to Section 2.14.
(D) There shall be a default in the observance or performance
of any agreement contained in Article V of this Agreement.
(E) There shall be a default in the observance or performance
of any covenant in this Agreement or any Loan Document other than as
provided for in paragraphs (A) to (D) of this Article, and such default
shall continue unremedied for a period of 30 days.
(F) Borrower or any of its Subsidiaries shall fail to pay any
obligation for the repayment of borrowed money or the installment purchase
price of property, or any interest or premium thereon, when due (taking
into account any applicable grace periods), in an aggregate amount in
excess of $250,000, whether such obligation shall become due by scheduled
maturity, by required prepayment, by acceleration, by demand or otherwise,
except if and so long as the Borrower or any of its Subsidiaries shall in
good faith dispute such obligation and provide suitable financial assurance
demonstrating its ability to meet such obligation.
(G) There has been an Event of Default and the Trustee has
made a declaration of acceleration under the terms of the Indenture.
(H) Bally Manufacturing ceases to own or control, directly or
indirectly, a majority of the voting securities of Park Place-Delaware.
(I) Park Place-Delaware ceases to own or control a majority of
the voting securities of the Borrower.
(J) (i) Park Place-Delaware or any of its Subsidiaries
commence any case, proceeding or other action (a) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (b) seeking appointment
of a receiver, trustee, custodian or other similar official for it or for
all or any substantial part of its assets, or Park Place-Delaware or its
Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Park Place-Delaware or
any of its Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which shall not have been vacated or
discharged within 60 days from the commencement thereof; or (iii) there
shall be commenced against Park Place-Delaware or any of its Subsidiaries
any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or (iv) the
Board of Directors of Park Place-Delaware or any of its Subsidiaries shall
pass any resolution in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) Park Place-Delaware or any of its Subsidiaries
shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due.
(K) (i) Park Place-Delaware or any ERISA Affiliate shall engage
in any Prohibited Transaction involving any Plan, (ii) any "accumulated
funding deficiency" (as defined in Section 302 of ERISA) shall exist with
respect to any Plan, (iii) a Reportable Event shall occur with respect to,
or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed to administer or to terminate, any single employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Banks, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any single
employer Plan shall terminate for purposes of Title IV of ERISA, (v) Park
Place-Delaware, any of its Subsidiaries or any ERISA Affiliate shall, or in
the reasonable opinion of the Banks is likely to, incur any liability in
connection with a withdrawal from, or the insolvency or reorganization of,
a multiemployer Plan or (vi) any other event or condition shall occur or
exist, with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material Adverse
Effect.
(L) One or more judgments or decrees shall be entered against
Park Place-Delaware and any of its Subsidiaries involving in the aggregate
a liability (not paid when due) in excess of $1,000,000, unless such
judgments or decrees are fully covered by insurance, and all such judgments
or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 30 days from the entry thereof.
(M) The casino license held by Borrower is suspended, revoked
or not renewed, unless the Borrower regains its license within 7 days of
the date of such suspension, revocation or non-renewal or the Casino
Control Commission appoints a conservator with respect to the operation of
the Casino Hotel.
(N) Park Place-Delaware or any of its Subsidiaries contest the
validity of the any of the Loan Documents or the extent and priority of the
liens granted in favor of the Banks.
SECTION 6.02. Suspension of Commitment. If a Potential Default
shall occur, the obligation of the Banks to make Revolving Credit Loans
shall be immediately suspended without notice to the Borrower, but is
subject to reinstatement if the Potential Default is cured within any time
period which is applicable to such Potential Default.
SECTION 6.03. Termination of Commitments; Acceleration. If an Event
of Default shall occur and be continuing, the Agent shall upon notice from
any of the Banks, by notice to Borrower,
(A) declare the Commitments to be terminated, whereupon the
Commitments and the obligations of Banks to make disbursements of Loans
shall be immediately terminated; and
(B) declare the entire unpaid principal amount of the
Revolving Credit Loans, all interest accrued and unpaid thereon and all
other amounts payable hereunder and under the other Loan Documents to be
forthwith due and payable, whereupon (i) the entire unpaid principal amount
of the Revolving Credit Loans, all interest accrued and unpaid thereon and
all other amounts payable hereunder and under the other Loan Documents
shall be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
Borrower, and (ii) and the Borrower shall immediately be obligated pay to
the Issuing Bank an amount equal to its Letter of Credit Obligations to be
held as cash collateral pending any draw on or termination of the Letters
of Credit, provided however, even if there is no notice to the Borrower,
the occurrence of the events described in Subsection 6.01 (J) shall result
in an immediate termination of the Commitments of the Banks and an
immediate acceleration of all amounts due by the Borrower under the
Revolving Credit Notes.
SECTION 6.04. Default Rate of Interest. If an Event of Default
occurs and continues, interest on all amounts due under the Revolving
Credit Notes shall accrue at a rate equal to the higher of the following:
(1) the Base Rate plus three percent (3%), or (2) 9.25%.
SECTION 6.05. Remedies Not Exclusive. The remedies provided herein
in this Article and in the other Loan Documents are cumulative and not
exclusive of any remedies provided by law. Each Bank is entitled to
exercise any remedies simultaneously or in whatever order the Bank deems
appropriate. The exercise of remedies by each Bank against the Collateral
is subject to the terms of the Intercreditor Agreement.
SECTION 6.06. Set-Off. Each Bank shall have a right of setoff
against, a Lien upon and a security interest in all property of Borrower
and Guarantors now or at any time in the possession of the Bank in any
capacity whatever, including, but not limited to, interests in any deposit
account, as security for all liabilities of Borrower and Guarantors to the
Bank.
SECTION 6.07 Rights Under Loan Documents. Upon the occurrence and
during the continuance of any Event of Default, the Banks may take any
lawful action against the Borrower or any Guarantor to collect the payments
then due and thereafter to become due under the Loan Documents.
<PAGE>
ARTICLE VII
GUARANTY
SECTION 7.01 The Guaranteed Obligations.
(A) Each Guarantor hereby irrevocably, unconditionally and
absolutely guaranties, jointly and severally, to each Bank and their
successors, endorsees and assigns, (i) the prompt payment when due, whether
at maturity or upon earlier acceleration, by the Borrower to the Banks of
all Indebtedness, obligations and liabilities of any kind and nature
arising under or in connection with this Agreement and the Loan Documents,
whether primary or secondary, direct or indirect, absolute or contingent,
sole, joint or several, secured or unsecured; and (ii) the prompt and
complete compliance with and performance by the Borrower of all covenants,
agreements, indemnities and other obligations of the Borrower to the Banks
under the terms of the Loan Documents. The payment, compliance and
performance obligations hereinabove guaranteed by the Guarantor are
hereinafter collectively referred to as the "Guaranteed Obligations".
(B) The obligation of each Guarantor shall constitute an
absolute and unconditional undertaking by such Guarantor with respect to
the payment and performance of the Guaranteed Obligations by the Borrower.
The liability of the Guarantor shall be direct, joint and several with that
of any other guarantor for the Loans (to the extent of such other
guarantor's or guarantors' liability for the Guaranteed Obligations), and
may be enforced without the Banks being required to resort to any other
right, remedy or security. This Agreement shall be enforceable against the
Guarantor, its successors and assigns, without the necessity of any notice
(i) of acceptance of this Agreement or of the Banks' intention to act in
reliance hereon, or (ii) of any loan to or other transaction between the
Banks and the Borrower, or (iii) of any default by the Borrower, all of
which the Guarantor hereby expressly waives.
SECTION 7.02 Further Undertakings.
(A) The Guarantors expressly:
(i) agree that the validity of their obligation shall in
no way be terminated, affected or impaired by reason of the assertion of or
the failure to assert by the Banks, or their successors or assigns, any of
the rights or remedies reserved pursuant to the Loan Documents or otherwise
available to the Banks at law or in equity;
(ii) waive any right which they might otherwise have
under any statute, rule of law or practice or custom to require them to
take any action against the Borrower or to proceed against or exhaust any
security before proceeding against either Guarantor;
(iii) waive any notice of (x) any presentment, demand,
protest, notice of protest, notice of dishonor, notices of default and all
other notices with respect to any of the Guaranteed Obligations except as
expressly set forth in the Loan Documents, and (y) the commencement or
prosecution of any enforcement proceeding, including any proceeding in any
court, against either of the Borrower or any other person or entity with
respect to any of the Guaranteed Obligations;
(iv) agree that any failure by any Bank to exercise any
right hereunder shall not be construed as a waiver of the right to exercise
the same or any other right at any other time and from time to time
thereafter;
(v) waive the defense of any statute of limitation
affecting the obligation of each Guarantor hereunder or the enforcement
thereof, to the extent permitted by law;
(vi) waive any right to require any Bank to advise the
Guarantor of any information known to the Banks regarding the financial
condition of the Borrower (it being agreed that the Guarantor assumes the
responsibility for being and keeping informed regarding such condition);
(vii) waive any defense arising by reason of any election
by the Banks pursuant to Section 1111(b)(2) of the United States Bankruptcy
Code or any similar or successor section or based upon any borrowing or
grant of a security interest under Section 364 of such Code or any similar
or successor section; and
(viii) agree to pay any Bank on demand all costs and
expenses (including reasonable counsel fees and reasonable expenses)
incurred by any Bank in the administration, amendment, enforcement or
collection of any of the Guaranteed Obligations under this Agreement,
including such costs, expenses and fees incurred after as well as before
the entry of any judgment.
(B) Until all of the Guaranteed Obligations are indefeasibly
paid in full and each Bank and each and every one of the terms, covenants,
and conditions of this Agreement are fully performed, the liability of the
Guarantors hereunder shall not be released, discharged or in any way
impaired by:
(i) any amendment or modification of or supplement to or
extension or renewal of the Revolving Credit Notes or any other Loan
Document or any agreements between the Banks and any other guarantor with
respect to the Guaranteed Obligations;
(ii) any exercise or non-exercise by any Bank of any
right, power, remedy or privilege under or with respect to the Revolving
Credit Notes or any other Loan Document or this Agreement or any waiver,
consent or approval by any Bank with respect to any of the covenants,
terms, conditions or agreements contained in the Revolving Credit Notes or
any other Loan Document, or any indulgence, forbearance or extension of
time for performance or observance allowed to the Borrower from time to
time and for any length of time;
(iii) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar proceeding
relating to the Borrower or its successors, assigns, properties or
creditors; or
(iv) any act or circumstances which might, but for the
terms and provisions of this Section, be deemed a legal or equitable
discharge of such Guarantor.
(C) Each Guarantor hereby expressly waives and surrenders any
defenses to such Guarantor's liability hereunder based upon any of the
foregoing acts, omissions, agreements, or waivers of any Bank, it being the
purpose and intent of this Agreement that the obligations of the Guarantor
hereunder be absolute and unconditional.
(D) Each Guarantor hereby further agrees and consents that any
Bank may, without affecting the liability of such Guarantor hereunder:
(i) exchange or surrender any property pledged by the
Borrower or any other guarantor or accept additional security for the
Guaranteed Obligations;
(ii) renew and change the terms of any of the liabilities
of the Borrower;
(iii) waive any Bank's rights or remedies against the
Borrower or any other guarantor or surety for the above liabilities;
(iv) release, substitute or add any one or more
guarantors or sureties; or
(v) proceed against either Guarantor without first
resorting to, utilizing or invoking the remedies available against the
Borrower or the other Guarantor under the Loan Documents whether at law or
in equity.
The Banks shall not be obligated to marshall remedies or assets as a
condition to enforcing the liabilities incurred hereunder against the
Guarantors. The liability of the Guarantors hereunder shall be in addition
to that stated in any other guaranty agreement, if any, heretofore or
hereafter delivered by any other Person to the Banks.
SECTION 7.03 Liabilities Not Affected.
(A) This Agreement shall be a continuing, absolute, and
unconditional guarantee regardless of the validity, regularity,
enforceability, or legality of:
(i) any of the Guaranteed Obligations;
(ii) any Collateral or interest in Collateral that may
secure the Guaranteed Obligations; or
(iii) any term of any document evidencing or relating to
any of the Guaranteed Obligations, including, but not limited to, the Loan
Documents. In the event that for any reason one or more of the provisions
of this Agreement or their application to any Person or circumstance shall
be held to be invalid, illegal, or unenforceable in any respect or to any
extent, such provisions shall nevertheless remain valid, legal, and
enforceable in all other respects and to such extent as may be permissible,
and such invalidity, illegality, or unenforceability shall not affect any
other provision hereof. Any failure by any Bank to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the
same or any other right at any other time and from time to time.
(B) Except to the extent that the following is prohibited by
statute or case law, no exercise or non-exercise by any Bank of any rights
given the Banks under the Loan Documents, no dealing by the Banks with the
Guarantor or any other guarantor, the Borrower or any other Person, and no
change, impairment, release or suspension of any right or remedy of the
Banks against any Person or entity, including the Borrower and any other
guarantor, shall in any way affect any of the obligations of the Guarantor
hereunder or any security furnished by Guarantor, give the Guarantor any
recourse or offset against the Banks or be construed as a waiver of the
right to exercise the same or any other right at any time and from time to
time thereafter.
(C) This Agreement and Guarantor's payment obligations
hereunder shall continue to be effective or be reinstated, as the case may
be, if at any time payment of any of the Guaranteed Obligations is
rescinded or must otherwise be restored or returned by any Bank, all as
though such payments had not been made. The good faith determination by
any Bank as to whether a payment must be restored or returned shall be
binding on the Guarantor provided that any Bank makes such restoration or
return in accordance with its determination.
SECTION 7.04. SUBROGATION AND CONTRIBUTION
EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY
HAVE AT ANY TIME (WHETHER ARISING DIRECTLY OR INDIRECTLY, BY OPERATION OF
LAW OR CONTRACT) TO ASSERT ANY CLAIM AGAINST THE BORROWER OR ANY OTHER
GUARANTOR ON ACCOUNT OF PAYMENTS MADE UNDER THIS AGREEMENT, THE REVOLVING
CREDIT NOTES OR ANY OF THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION,
ANY AND ALL RIGHTS OF SUBROGATION, REIMBURSEMENT, EXONERATION, CONTRIBUTION
OR INDEMNITY.
<PAGE>
ARTICLE VIII
AGENT
SECTION 8.01. Appointment and Authorization. Each Bank hereby
irrevocably appoints and authorizes the Agent to take such action on its
behalf and to exercise such powers under this Agreement and the Loan
Documents as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Agent shall not
have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or otherwise exist against the Agent.
SECTION 8.02. General Immunity. In performing its duties as Agent
hereunder, the Agent will take the same care as it takes in connection with
loans in which it alone is interested. However, neither the Agent nor any
of its directors, officers, agents, attorneys, employees shall be liable
for any action taken or omitted to be taken by it or them hereunder or in
connection herewith except for its or their own gross negligence or willful
misconduct.
SECTION 8.03. Delegation of Duties; Consultation with Counsel. The
Agent may consult with legal counsel selected by it and shall not be liable
for any action taken or suffered in good faith by it in accordance with the
advice of such counsel. The Agent may execute any of its duties under this
Agreement or the Loan Documents by and through agents or attorneys-in-fact.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it.
SECTION 8.04. Documents. The Agent shall not be under a duty to
examine into or pass upon the effectiveness, genuineness or validity of
this Agreement or any of the Notes or any other instrument or document
furnished pursuant hereto or in connection herewith, and the Agent shall be
entitled to assume that the same are valid, effective and genuine and what
they purport to be.
SECTION 8.05. Rights as a Bank. With respect to its Commitment and
its portion of the Loan, the Agent shall have the same rights and powers
hereunder as any Bank and may exercise the same as though it were not the
Agent, and the terms "Bank" and "Banks" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent may
accept deposits from, lend money to and generally engage in any kind of
banking or trust business with Borrower and its affiliates as if it were
not the Agent.
SECTION 8.06. Responsibility of Agent. It is expressly understood
and agreed that the obligations of the Agent hereunder are only those
expressly set forth in this Agreement and that the Agent shall be entitled
to assume that no Event of Default, and no event that with notice or lapse
of time or both would, if unremedied, constitute an Event of Default, has
occurred and is continuing, unless the Agent has actual knowledge of such
fact or has received notice from a Bank that such Bank considers that an
Event of Default or such event has occurred and is continuing and
specifying the nature thereof.
SECTION 8.07. Action by Agent. So long as the Agent shall be
entitled, pursuant to Section 8.06 hereof, to assume that no Event of
Default, and no event that with notice or lapse of time or both would, if
unremedied, constitute an Event of Default, has occurred and is continuing,
the Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights that may be vested in
it by, or with respect to taking or refraining from taking any action or
actions that it may be able to take under or in respect of, this Agreement.
The Agent shall incur no liability under or in respect of this Agreement by
acting upon any notice, consent, certificate, warranty or other paper or
instrument believed by it to be genuine or authentic or to be signed by the
proper party or parties, or with respect to anything that it may do or
refrain from doing in the reasonable exercise of its judgment, or that may
seem to it to be necessary or desirable under the circumstances.
SECTION 8.08. Notices of Event of Default, Etc. In the event that
the Agent or any Bank shall have acquired actual knowledge of any Event of
Default or Potential Default, the Agent or such other Bank shall promptly
give notice thereof to the Banks and the Agent. Upon receipt of such
notice, the Agent may, consistent with the terms of this Agreement, take
such action and assert such rights as it deems to be advisable in its
discretion for the protection of the interests of Banks.
SECTION 8.09. Indemnification. Banks agree to indemnify the Agent
(to the extent not reimbursed by Borrower), ratably according to the
respective amounts of their Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
that may be imposed on, incurred by or asserted against the Agent in any
way relating to or arising out of this Agreement or any action taken or
omitted by the Agent under this Agreement, provided that no Bank shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct.
SECTION 8.10. Non-Reliance on Agent and Other Banks. Each Bank
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representation or warranty to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Guarantors or the
Borrower, shall be deemed to constitute any representation or warranty by
the Agent to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent or any other Bank and
based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, operations,
property, financial and other condition and creditworthiness of the
Guarantors and the Borrower and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Bank also represents that it
will, independently and without reliance upon the Agent or any other Bank,
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Guarantors and Borrower. Except for notices,
reports and other documents expressly required to be furnished to the Banks
by the Agent hereunder, the Agent shall not have any duty or responsibility
to provide any Bank with any credit or other information concerning the
business, operations, property, financial and other condition or
creditworthiness of the Guarantor or Borrower which may come into the
possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
SECTION 8.11 Notice of Acceleration and Termination; Remedies.
(A) Banks with Commitment Percentages which total 100% may, by
written notice, instruct the Agent to send a notice to the Borrower under
Section 6.03 terminating the Commitments of the Banks and accelerating the
obligations of the Borrower hereunder. Upon receipt of such instructions,
the Agent shall act as soon as practical to send such notice to the
Borrower.
(B) Any Bank, or combination of Banks, with Commitment
Percentages which total 40% or more may, upon the occurrence and during the
continuance of an Event of Default, by written notice to the Agent, with
copies to each of the other Banks, instruct the Agent to send a notice to
the Borrower under Section 6.03 terminating the Commitments of the Banks
and accelerating the obligations of the Borrower hereunder. The Agent
shall, 5 Business Days after receipt of such instructions, send such notice
to the Borrower unless it receives instructions to the contrary from a Bank
or combination of Banks with Commitment Percentages which total more than
60%. The Banks providing instructions to the Agent to terminate the
Commitments shall, upon written notice from any other Bank, be required to
assign to such Bank all of their Commitments and Revolving Credit Loans in
consideration of the payment of the amounts then due to the assigning Banks
under the Loan Documents.
(C) Any Bank may exercise any right of setoff without prior
notice to the Agent or any other Bank.
(D) Banks with Commitment Percentages which total 100% may, by
written notice, instruct the Agent to exercise any remedies which may arise
under the Loan Documents.
(E) Any Bank, or combination of Banks, with Commitment
Percentages which total 40% or more may, upon the occurrence and during the
continuance of an Event of Default, by written notice to the Agent, with
copies to each of the other Banks, instruct the Agent to exercise any
remedies arising under the Loan Documents. The Agent may not commence to
exercise such remedies until 5 Business Days after receipt of such
instructions, but shall do so thereafter. The Agent shall cease to
exercise remedies arising under the Loan Documents if it receives
instructions to such effect from a Bank or combination of Banks with
Commitment Percentages which total more than 60%. The Banks instructing
the Agent to exercise notice remedies arising under this Agreement shall,
upon written notice from any other Bank, be required to assign to such Bank
all of their Commitments and Revolving Credit Loans in consideration of
payment of the amounts then due to the assigning Banks under the Loan
Documents.
SECTION 8.12 Successor Agent.
(A) The Agent may resign as Agent upon 30 days notice to the
Borrower and the Banks. If the Agent shall so resign, then the Banks
shall, with the consent of the Borrower (which consent shall not be
unreasonably withheld) appoint a successor agent under this Agreement.
Such successor agent, upon acceptance of such appointment, shall succeed to
the rights, powers and duties of the Agent. If an Event of Default shall
have occurred and be continuing, then the consent of the Borrower to the
appointment of the successor agent shall not be required. Any successor
agent shall be a commercial bank. The Agent shall continue to serve as
Agent until a successor agent has been appointed and accepts such
appointment. The term "Agent" shall mean such successor agent effective
upon its appointment, and the former Agent's rights, power and duties as
Agent shall be terminated, without any further act or deed on the part of
such former Agent or any of the parties to this Agreement. The appointment
of any successor agent shall be subject to the approval by the Casino
Control Commission as may be required by law. Any former Agent shall
continue to be entitled to the benefit of Sections 9.02 and 8.09 hereof.
(B) The Agent may be removed at any time by a vote of Banks
which either (i) are obligated under more than 67% of the aggregate
Commitments arising under this Agreement, or (ii) hold more than 67% of the
aggregate Revolving Credit Loans outstanding under this Agreement. If the
Agent shall be so removed, then the Banks shall appoint a successor agent
under this Agreement whereupon such successor agent, upon acceptance of
such appointment, shall succeed to the rights, powers and duties of the
Agent, the term "Agent" shall mean such successor agent effective upon its
appointment, and the former Agent's rights, power and duties as Agent shall
be terminated, without any further act or deed on the part of such former
Agent or any of the parties to this Agreement. Any former Agent shall
continue to be entitled to the benefit of Sections 9.02 and 8.09 hereof.
SECTION 8.13 No Benefit. The provisions of this Article are for the
sole benefit of the Banks and shall not be enforceable by, or inure to the
benefit of, the Borrower, the Guarantors or any third Person. <PAGE>
<PAGE>
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendment or Waiver. No failure or delay on the part
of any Bank in exercising any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. No
waiver of any provision hereof shall be effective unless the same shall be
in writing and signed by all Banks which have a Commitment under this
Agreement, and no amendment of any provision hereof shall be effective
unless the same shall be in writing and signed by each such Bank and the
Borrower. No such waiver or amendment shall extend to or affect any
obligation not expressly waived or amended, or impair any right of the
Banks related to such obligation. Any amendments to or waivers of any
provisions of the Loan Documents shall require the agreement of all Banks
which have a Commitment under this Agreement. If the Banks cannot agree as
to whether to grant a waiver or amendment of any provision of this
Agreement, then the Banks in favor of granting the waiver or amendment may
require that the Banks or Banks not in favor of granting such waiver or
amendment, upon the payment of all amounts due under the Loan Documents to
such Bank or Banks, assign all its Commitment and Revolving Credit Loans.
SECTION 9.02. Indemnification. The Borrower and the Guarantors
jointly and severally agree to defend, protect, indemnify, and hold
harmless the Indemnified Parties from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the reasonable fees and disbursements of
counsel for the Indemnified Parties in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified
Parties shall be designated a party thereto), imposed on, incurred by, or
asserted against the Indemnified Parties (whether direct, indirect or
consequential and whether based on any Federal or state laws or other
statutory regulations, including, without limitation, securities and
commercial laws and regulations, under common law or at equitable cause, or
on contract or otherwise, including any liability and costs under Federal,
state or local Environmental Laws, health or safety laws, regulations, or
common law principles, arising from or in connection with the past, present
or future environmental condition of the Borrower or a Guarantor's real or
personal property, the presence of asbestos-containing materials thereon,
or the release or threatened release of any Environmental Concern Material
into the environment from such property) in any manner relating to or
arising out of this Agreement, or the other Loan Documents, or any act,
event or transaction related or attendant thereto, and the management of
such Loans, or the use or intended use of the proceeds of the Loans
hereunder excluding therefrom the costs and expenses relating to the
routine administration of the Loans and any matters relating to the
participation or assignment of the Loans by the Banks (collectively, the
"Indemnified Matters"): provided, however, that the Borrower and the
Guarantors shall not have any obligation to an Indemnified Party hereunder
with respect to Indemnified Matters caused by or resulting from the willful
misconduct or gross negligence of that Indemnified Party. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law
or public policy, the Borrower shall contribute the maximum portion which
it is permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all Indemnified Matters incurred by the Indemnified
Parties.
SECTION 9.03. Notices. Unless this Agreement specifically provides
otherwise, all notices, requests, demands and other communications that
this Agreement requires or permits any party to give any other party shall
be in writing (including telecopy) and shall be given to such party at its
address or telecopy number specified on the signature pages of this
Agreement or at such other address or telecopy number as shall be
designated by such party in a notice to each other party complying with the
terms of this Section. Unless this Agreement specifically provides
otherwise, all notices, requests, demands and other communications provided
for hereunder shall be effective (A) if given by mail, when received, (B)
if given by telecopy, when such telecopy is transmitted to the aforesaid
telecopy number and the appropriate confirmation of receipt is received by
the sender or (C) if given by any other means permitted by this Agreement,
when delivered orally or in writing at the aforesaid address, except that
notices from Borrower to the Banks pursuant to any of the provisions of
Article II shall not be effective until received by the Banks.
SECTION 9.04. Costs and Expenses. Borrower agrees to pay on demand
(A) all reasonable out-of-pocket fees, costs and expenses of the Agent and
the Banks, including without limitation, appraisal fees and the cost of
environmental studies, in connection with the preparation, execution,
delivery and administration of the Loan Documents and other instruments and
documents to be delivered hereunder (including the reasonable fees and out-
of-pocket expenses of McCarter & English, counsel for First Fidelity as
lender and agent, and Robinson, St. John and Wayne, Counsel for Midlantic
as lender), whether or not the transactions referred to herein are
ultimately consummated; (B) all reasonable costs and expenses, if any, of
the Agent and the Banks in connection with the amendment, supplement or
enforcement of the Loan Documents (including the reasonable fees and out-
of-pocket expenses of legal counsel with respect thereto).
SECTION 9.05. Obligations Several. The obligations of the Banks
hereunder are several and not joint. Nothing contained in this Agreement
and no action taken by any Bank pursuant hereto shall be deemed to
constitute the Banks a partnership, association, joint venture or other
entity.
SECTION 9.06. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
and the same instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart. This Agreement shall not be
effective until each of the Banks has received a copy of this Agreement
executed by all of the parties hereto.
SECTION 9.07 Assignments.
(A) The Borrower and the Guarantors shall not have the right
to assign their rights hereunder, any portion thereof, or any interest
therein.
(B) Any Bank may at any time, without the approval of the
Borrower or the Guarantors, assign all or a portion of its Commitment and
outstanding Loans hereunder to any other entity that is a Bank under this
Agreement immediately prior to the time of the assignment. Upon acceptance
of the Commitment by the assignee, the assigning Bank shall be relieved of
any obligations to the Borrower or the Guarantors under the Loan Documents.
(C) Any Bank may at any time, with the prior written approval
of the Borrower and all the other Banks (which approval shall not to be
unreasonably withheld), assign all or a portion of its Commitment and/or
outstanding Loans hereunder; provided, that if an Event of Default has
occurred and is continuing, then the approval of the Borrower to any
assignment shall not be required. Upon the approval by the Borrower and
the other Banks, and the acceptance of the Commitment by the assignee, the
assigning Bank shall be relieved of any obligations to the Borrower or the
Guarantors under the Loan Documents with respect to the portion of its
Commitment so assigned.
(D) The Borrower may continue to make payments due hereunder
to and deal with the assigning Bank until the Borrower receives notice of
the assignment from the assigning Bank.
(E) Nothing herein shall prohibit any Bank from pledging or
assigning its Note to any Federal Reserve Bank in accordance with
applicable law.
All assignments shall be subject to the approval, if required, of the
Casino Control Commission or other applicable Government Authority.
SECTION 9.08. Participations. Each Bank may sell participations in
its Commitment and/or outstanding Loans hereunder to one or more other
banks (each a "Participant Bank") without the approval of the Borrower;
provided that (a) any agreement pursuant to which any Bank may grant such a
participation shall provide that such Bank shall retain the sole right and
responsibility to receive payments from, communicate with and enforce the
obligations of the Borrower under the Loan Documents including the right to
approve any amendment, modification or waiver of any provision except with
respect to any waiver that varies the maturity of, amount of, or interest
rate on such obligation, (b) such Bank shall notify the Borrower and the
other Bank promptly upon the sale by such Bank of a participation, and (c)
such Bank shall remain responsible to the Borrower for all of its
obligations hereunder. Sales of participations shall be subject to the
approval, if required of the Casino Control Commission. Each Participant
Bank shall be deemed to have a right of setoff in respect of its
participating interest in the amounts owing under this Agreement to the
same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
SECTION 9.09. Disproportionate Payments. If at any time, as the
result of exercising such rights or otherwise, any Bank receives a payment
on account of its portion of the Loans in a proportion greater than similar
payments on account of the portions of the Loans held by the other Banks,
the Bank so receiving such greater proportionate payment will purchase a
participation in the portions of the Loans held by the other Banks in such
amount that after such purchase each Bank shall hold a proportionate share
in the aggregate outstanding principal balance of Loans equal to its
respective proportionate shares in the outstanding principal balance of
Loans before the disproportionate payment. If, however, any payment on
account of the Loans is rescinded or invalidated or must otherwise be
restored or returned by the recipient in a bankruptcy or insolvency
proceeding or otherwise, then any participations purchased as a result of
such payment will be rescinded.
SECTION 9.10 Waiver of Right to Punitive Damages. The Borrower,
the Guarantors, the Banks and the Agent waive any right to punitive damages
arising out of or related to any matter arising under or related to this
Agreement or the other Loan Documents.
SECTION 9.11. Governing Law. This Agreement, the Revolving Credit
Notes and the other Loan Documents shall be governed by, and construed and
interpreted in accordance with, the law of the State of New Jersey.
SECTION 9.12. Headings. Article and Section headings used in this
Agreement are for convenience only and shall not affect the construction of
this Agreement.
SECTION 9.13. Severability. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect
in such jurisdiction and shall be liberally construed in favor of the Banks
in order to carry out the intentions of the parties hereto as nearly as may
be possible; and (ii) the invalidity or enforceability of any provision
hereof in any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction.
SECTION 9.14. Confidential Information. Each Bank represents that
it will maintain the confidentiality of any written or oral information
provided under the Loan Documents by or on behalf of the Borrower or either
Guarantor that has been identified in writing by its source as confidential
(hereinafter collectively called "Confidential Information"), subject to
each Bank's (a) obligation to disclose any such Confidential Information
pursuant to a request or order under applicable laws and regulations or
pursuant to a subpoena or other legal process; (b) right to disclose any
such Confidential Information to its bank examiners, Affiliates, auditors,
counsel and other professional advisors to the Banks; (c) right to disclose
any such Confidential Information in connection with any litigation or
dispute involving the Banks and the Borrower or the Guarantors; and (d)
right to provide such information to Participant Banks or Assignees and
prospective Participant Banks or Assignees; provided that such parties
listed in this Subsection (d) shall have agreed in writing to be bound by
the within limitations. Notwithstanding the foregoing, any such
information supplied to a Bank, a Participant Bank or an Assignee under the
Loan Documents shall cease to be Confidential Information if it is or
becomes known to such Bank, Participant Bank or Assignee by other than
unauthorized disclosure, or if it becomes a matter of public knowledge.
SECTION 9.15. WAIVER OF TRIAL BY JURY. EACH OF THE GUARANTORS, THE
BORROWER, EACH BANK AND THE AGENT HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, THE REVOLVING CREDIT
NOTES AND/OR ANY OF THE OTHER LOAN DOCUMENTS. THIS WAIVER SHALL EXTEND TO
ANY COUNTERCLAIMS, CROSSCLAIMS OR THIRD PARTY COMPLAINTS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of
the date first above written.
Address and Telecopier Nos.
BALLY'S PARK PLACE, INC., Park Place and the Boardwalk
a New Jersey corporation, Atlantic City, NJ 08401
as Borrower Telecopier: 609-340-2647
By_________________________
Joseph A. D'Amato
Vice President
BALLY'S PARK PLACE, INC., Park Place and the Boardwalk
a Delaware corporation, Atlantic City, NJ 08401
as Guarantor Telecopier: 609-340-2647
By_________________________
Joseph A. D'Amato
Vice President
BALLY'S PARK PLACE REALTY CO., Park Place and the Boardwalk
a New Jersey corporation, Atlantic City, NJ 08401
as Guarantor Telecopier: 609-340-2647
By_________________________
Joseph A. D'Amato
Vice President
MIDLANTIC NATIONAL BANK 499 Thornall Street
as lender Metro Park Plaza
Edison, N.J. 08137
By_______________________ Telecopier: 908-321-2144
Edward M. Tessalone Attention: Edward M. Tessalone
Vice President
FIRST FIDELITY BANK, 550 Broad Street
NATIONAL ASSOCIATION, Newark, N.J. 07102
as lender and Agent Telecopier: 201-565-6681
Attention: Robert K. Strunk, II
By_________________________
Robert K. Strunk, II
Vice President
<PAGE>
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
THIS MORTGAGE AND SECURITY AGREEMENT WITH
ASSIGNMENT OF RENTS, made as of the 8th day of March 1994, by and between
Bally's Park Place, Inc., a New Jersey corporation, having an office at
Park Place and the Boardwalk, Atlantic City, New Jersey, 08401, as
leasehold and fee mortgagor ("Mortgagor"), and Bally's Park Place Realty
Co., a New Jersey corporation, having an office at Park Place and the
Boardwalk, Atlantic City, New Jersey, 08401, as fee mortgagor ("Bally's"
and, together with Mortgagor, "Mortgagors") and First Fidelity Bank,
National Association as collateral agent (in such capacity, the
"Mortgagee") for the several banks and other financial institutions from
time to time parties to the Credit Agreement (hereinafter defined), dated
as of the date hereof. All references to the "Trustee" as used herein
shall mean First Bank National Association as Trustee under the Indenture
(hereinafter defined) or any successor trustee appointed in accordance with
the terms of the Indenture. All capitalized terms that are not otherwise
defined herein shall have the meaning given to such term in the Credit
Agreement. If a capitalized term is not defined herein or in the Credit
Agreement, then it shall have the meaning given to it in the Indenture.
It is the intention of the Mortgagors that this instrument be a "Pari
Passu Mortgage" within the meaning of the Indenture, dated as of March 8,
1994 (the "Indenture"), between Bally's Park Place Funding, Inc., a
Delaware Corporation, Bally's Park Place, Inc., a Delaware Corporation,
Mortgagor, Bally's and the Trustee. Therefore pursuant to the terms of the
Indenture and with the intent that the Mortgagee be entitled to all of the
benefits of a holder of a Pari Passu Mortgage as defined in the Indenture,
Mortgagors make the following statement:
Pursuant to the Mortgage and Security Agreement with Assignment of
Rents dated as of March 8, 1989 between Bally's Park Place, Inc.,
Bally's Park Place Realty Co. and Bally's Park Place Funding, Inc.,
as mortgagor, and First Fidelity Bank, National Association, New
Jersey, as mortgagee, the lien created by this instrument ranks pari
passu with the lien created by said Mortgage (the "Trustee's
Mortgage").
It is also the intent that all the rights and remedies granted in this
Mortgage will be subject to, and where inconsistent superseded by, the
terms of the Intercreditor Agreement entered into by the Trustee, the
Mortgagors and the Mortgagees on even date.
WITNESSETH:
To secure the following obligations and liabilities: (a) the
payment to the holders of the Revolving Credit Notes (the "Notes"), issued
pursuant to the provisions of the Credit and Guaranty Agreement dated as of
March 8, 1994 (the "Credit Agreement"), between the Mortgagors, Bally's
Park Place, Inc., a Delaware corporation, as guarantor ("Guarantor"), First
Fidelity Bank, National Association ("First Fidelity"), Midlantic National
Bank ("Midlantic") and Mortgagee as agent, of (i) the principal amount of
an indebtedness of Fifty Million Dollars ($50,000,000), evidenced by the
Notes to be issued pursuant to the provisions of the Credit Agreement, (ii)
any and all interest due or to become due on the Notes in accordance with
the provisions of the Credit Agreement and the Notes, (iii) any amounts
that are due or will become due under the reimbursement obligation arising
with respect to the letters of credit issued pursuant to the Credit
Agreement, and (iv) and all other sums due or to become due under the
Credit Agreement, the Notes, this Mortgage or any of the Loan Documents
(hereinafter defined) and further or subsequent advances or expenditures
made under any other Loan Document by Mortgagee pursuant to the provisions
hereof (the items set forth in clauses (i) to (iv) above being hereinafter
collectively referred to as the "Indebtedness"), and (b) the performance of
all of the terms, covenants, conditions, agreements, obligations, and
liabilities of Mortgagors (collectively, the "Obligations") under (i) this
Mortgage, (ii) the Credit Agreement, (iii) the Notes, (iv) the Assignment
of Leases and Rents (the "Assignment"), dated as of the date hereof, by
Mortgagors for the benefit of Mortgagee, (v) all of the other Loan
Documents, and (vi) any extensions, renewals, replacements or modifications
of any of the foregoing (this Mortgage, the Credit Agreement, the
Assignment, the Notes, and all other documents executed in connection with
the foregoing being hereinafter collectively referred to as the "Loan
Documents" and, individually, as a "Loan Document"), and in consideration
of the agreements of First Fidelity and Midlantic contained in the Credit
Agreement the legal sufficiency of which are hereby acknowledged
(A) Mortgagor does hereby encumber, give, grant, bargain,
sell, warrant, alienate, remise, release, convey, assign, transfer,
hypothecate, deposit, pledge, set over, create and grant a security
interest in and confirm to Mortgagee the following described real property,
tangible personal property, rights, collateral and all substitutions for
and all replacements, reversions and remainders of such tangible personal
property, whether now owned or held or hereafter acquired by Mortgagor
(collectively, the "Leasehold Encumbered Property"):
The Mortgagor's leasehold interest in all those plots, pieces
or parcels of land more particularly described in Exhibit A annexed hereto
and made a part hereof, together with the right, title and interest of
Mortgagor, if any, in and to the streets and in and to the land lying in
the bed of any streets, roads or avenues, open or proposed, public or
private, in front of, adjoining or abutting said land to the center line
thereof, the air space and development rights pertaining to said land and
the right to use such air space and development rights, all rights of way,
privileges, liberties, tenements, hereditaments and appurtenances
belonging, or in any way appertaining thereto, all easements now or
hereafter benefiting said land and all royalties and rights appertaining to
the use and enjoyment of said land, including, but without limiting the
generality of the foregoing, all alley, vault, drainage, mineral, water,
oil, coal, gas and other similar rights (all of the foregoing being
hereinafter collectively referred to as the "Land");
TOGETHER with Mortgagor's right, title and interest in and to
that certain Lease (the "Ground Lease"), dated June 8, 1977, between the
Palley-Blatt Company, as ground lessor, and Bally Manufacturing of New
Jersey, Inc., a New Jersey corporation, currently known as Mortgagor, as
ground lessee, as assigned by that certain Assignment of Lease dated April
27, 1979 between Palley-Blatt Company, as assignor, and Norman Palley,
trustee under Declaration of Trust dated April 10, 1979, and Alexander K.
Blatt, trustee under Declaration of Trust dated April 6, 1979, as
assignees, and by that certain Assignment of Lease dated April 27, 1979 by
Norman Palley, trustee under Declaration of Trust dated April 10, 1979, and
Alexander K. Blatt, trustee under Declaration of Trust dated April 6, 1979,
as assignors, and Bally Manufacturing Corporation, as assignee and by
assignment to Bally's and the leasehold estate created thereby (the
"Leasehold Estate");
TOGETHER with Mortgagor's fee interest, right and title in and
to the buildings and other improvements now or hereafter erected on the Fee
and Leasehold Estate (as hereinafter defined) (such buildings and other
improvements being hereinafter collectively referred to as the "Buildings"
and the Leasehold Estate together with the Buildings and the Personal
Property (hereinafter defined) located on or used in connection with the
Leasehold Estate, being hereinafter collectively referred to as the
"Leasehold Real Estate");
TOGETHER with all and singular the reversion or reversions,
remainder or remainders, rents and revenues produced in connection with the
Ground Lease and all of the estate, right, title, interest, property,
possession, claim and demand whatsoever, both in law and at equity, of
Mortgagor of, in and to the Leasehold Real Estate and of, in and to every
part and parcel thereof, with the appurtenances, at any time belonging or
in any way appertaining thereto;
TOGETHER with Mortgagor's right, title and interest in and to
all chattels, furnishings, goods, equipment, fixtures, tangible personal
property, materials, and all other contents of every kind and
nature,including, without limitation, all tangible personal property used
in connection with the hotel and restaurant facilities located on the
Leasehold Real Estate and all gaming equipment, tables and slots that shall
be owned or hereafter acquired, used in connection with or placed prior to
the satisfaction of the Indebtedness and Obligations on the Leasehold Real
Estate, including machinery, fixtures, systems, apparatus, fittings,
materials and equipment now or which may hereafter be used in the operation
of the Leasehold Real Estate, including, but without limiting the
generality of the foregoing, all heating, electrical, mechanical, lighting,
lifting, plumbing, ventilating, air conditioning and air-cooling fixtures,
systems, machinery, apparatus and equipment, refrigerating, incinerating
and power fixtures, systems, machinery, apparatus and equipment, loading
and unloading fixtures, systems, machinery, apparatus and equipment,
escalators, elevators, boilers, communication systems, casino gambling
equipment, switchboards, sprinkler systems and other fire prevention and
extinguishing fixtures, systems, machinery, apparatus and equipment, and
all engines, motors, dynamos, machinery, wiring, pipes, pumps, tanks,
conduits and ducts constituting a part of any of the foregoing, and all
additions to, substitutions for, renewals and proceeds of any of the
foregoing, together with all attachments, substituted parts, accessories,
accessions, improvements and replacements thereof, including the equity of
Mortgagor in any such item that is subject to a purchase money or other
prior security interest (all such tangible personal property, fixtures,
additions, substitutions and proceeds being sometimes hereinafter
collectively referred to as the "Leasehold Personal Property");
TOGETHER with Mortgagor's right, title and interest to and
under all leases, subleases, underlettings, licenses and other occupancy
agreements which now or hereafter may affect the Real Estate (hereinafter
defined) or any portion thereof and under any and all guarantees,
modifications, renewals and extensions thereof as listed in Exhibit B
(collectively, the "Leases"), and to and under all documents and
instruments made or hereafter made in respect of the Leases, and in and to
any and all deposits made or hereafter made as security under the Leases
(excluding, however, any sums paid as "key money" in connection with the
execution or renewal thereof or any sums paid in connection with the
execution or renewal of a Lease as advance rental, to the extent the same
has been paid prior to the occurrence of an Event of Default (hereinafter
defined)), subject to the legal rights under the Leases of the persons or
entities making such deposits, together with any and all of the benefits,
rentals, revenues, issues, profits, income and rents due or to become due
or to which Mortgagor is now or hereafter may become entitled arising out
of the Leases (collectively, the "Rents");
TOGETHER with all plans, specifications, engineering reports,
land planning maps, surveys, and any other reports, exhibits or plans used
or to be used in connection with the operation or maintenance of the Real
Estate, together with all amendments and modifications thereof;
TOGETHER with (a) subject to the provisions of Article 6
hereof, Mortgagor's interest in and to all proceeds which now or hereafter
may be paid under any insurance policies now or hereafter obtained by
Mortgagor in connection with the conversion of the Encumbered Property
(hereinafter defined) or any portion thereof into cash or liquidated
claims, together with the interest payable thereon and the right to collect
and receive the same, including, but without limiting the generality of the
foregoing, proceeds of casualty insurance, title insurance, business
interruption insurance and any other insurance now or hereafter maintained
with respect to the Real Estate or in connection with the use or operation
thereof (collectively, the "Insurance Proceeds"), and (b) subject to the
provisions of Article 7 hereof, all of Mortgagor's right, title and
interest in and to all awards, payments and/or other compensation, together
with the interest payable thereon and the right to collect and receive the
same, which now or hereafter may be made with respect to the Encumbered
Property as a result of (i) a taking by eminent domain, condemnation or
otherwise, (ii) the change of grade of any street, road or avenue or the
widening of any streets, roads or avenues adjoining or abutting the Land,
or (iii) any other injury to or decrease in the value of the Encumbered
Property or any portion thereof (collectively, the "Awards"), in any of the
foregoing circumstances described in clauses (a) or (b) above to the extent
of the entire amount of the Indebtedness outstanding as of the date of
Depositary's (hereinafter defined) receipt of any such Insurance Proceeds
or Awards, notwithstanding that the entire amount of the Indebtedness may
not then be due and payable, and also to the extent of reasonable
attorneys' fees, costs and disbursements incurred by Depositary or
Mortgagee in connection with the collection of any such Insurance Proceeds
or Awards. Subject to the provisions of Articles 6 and 7 hereof, Mortgagor
hereby assigns to Mortgagee, and Depositary is hereby authorized to collect
and receive, all Insurance Proceeds and Awards and to give proper receipts
and acquittances therefor and to apply the same in accordance with the
provisions of this Mortgage. Mortgagor hereby agrees to make, execute and
deliver, from time to time, upon demand, further documents, instruments or
assurances to confirm the assignment of the Insurance Proceeds and the
Awards to Depositary and Mortgagee, free and clear of any interest of
Mortgagor whatsoever therein, except as specifically permitted in this
Mortgage, and free and clear of any other liens, claims or encumbrances of
any kind or nature whatsoever;
TOGETHER with all right, title and interest of Mortgagor in and
to all improvements, betterments, renewals and all substitutes and
replacements of, and all additions and appurtenances to, the Leasehold Real
Estate, and in each such case, the foregoing shall be deemed a part of the
Leasehold Real Estate and shall become subject to the lien of this Mortgage
as fully and completely, and with the same priority and effect, as though
now owned by Mortgagor and specifically described herein, without any
further mortgage, conveyance, assignment or other act by Mortgagor; and
(B) Mortgagors do hereby encumber, give, grant, bargain, sell,
warrant, alienate, remise, release, convey, assign, transfer, hypothecate,
deposit, pledge, set over, create and grant a security interest in and
confirm to Mortgagee the following described real property, tangible
personal property, rights, collateral and all substitutions for and all
replacements, reversions and remainders of such tangible personal property,
whether now owned or held or hereafter acquired by Mortgagors, (the "Fee
Encumbered Property", and together with the Leasehold Encumbered Property,
the "Encumbered Property"):
The Mortgagors' fee interest in the Land;
TOGETHER with Bally's right, title and interest in the Ground
Lease (the "Fee Interest", and together with the Land, the "Fee Estate";
the Leasehold Estate and the Fee Estate collectively referred to as the
"Fee and Leasehold Estate");
TOGETHER with Mortgagors' fee interest, right and title in and
to the Buildings (the Fee Estate together with the Buildings and the
Personal Property located on or used in connection with the Fee Estate,
being hereinafter collectively referred to as the "Fee Real Estate"; the
Fee Real Estate together with the Leasehold Real Estate collectively
referred to as the "Real Estate");
TOGETHER with all and singular the reversion or reversions,
remainder or remainders, rents and revenues produced in connection with the
Fee Estate and all of the estate, right, title, interest, property,
possession, claim and demand whatsoever, both in law and at equity, of
Mortgagors of, in and to the Fee Real Estate and of, in and to every part
and parcel thereof, with the appurtenances, at any time belonging or in any
way appertaining thereto;
TOGETHER with Mortgagors' right, title and interest in and to
all chattels, furnishings, goods, equipment, fixtures, tangible personal
property, materials, and all other contents of every kind and nature,
including, without limitation, all tangible personal property used in
connection with the hotel and restaurant facilities located on the Fee Real
Estate and all gaming equipment, tables and slots that shall be owned or
hereinafter acquired, used in connection with or placed prior to the
satisfaction of the Indebtedness and Obligations on the Fee Real Estate,
including machinery, fixtures, systems, apparatus, fittings, materials and
equipment now or which may hereafter be used in the operation of the Fee
Real Estate, including, but without limiting the generality of the
foregoing, all heating, electrical, mechanical, lighting, lifting,
plumbing, ventilating, air conditioning and air-cooling fixtures, systems,
machinery, apparatus and equipment, refrigerating, incinerating and power
fixtures, systems, machinery, apparatus and equipment, loading and
unloading fixtures, systems, machinery, apparatus and equipment,
escalators, elevators, boilers, communication systems, casino gambling
equipment, switchboards, sprinkler systems and other fire prevention and
extinguishing fixtures, systems, machinery, apparatus and equipment, and
all engines, motors, dynamos, machinery, wiring, pipes, pumps, tanks,
conduits and ducts constituting a part of any of the foregoing, and all
additions to, substitutions for, renewals and proceeds of any of the
foregoing, together with all attachments, substituted parts, accessories,
accessions, improvements and replacements thereof, including the equity of
Mortgagors in any such item that is subject to a purchase money or other
prior security interest (all such tangible personal property, fixtures,
additions, substitutions and proceeds being sometimes hereinafter
collectively referred to as the "Fee Personal Property", and together with
the Leasehold Personal Property, the "Personal Property");
TOGETHER with Mortgagors' right, title and interest to and
under all Leases, and in and to any and all deposits made or hereafter made
as security under the Leases (excluding, however, any sums paid as "key
money" in connection with the execution or renewal thereof or any sums paid
in connection with the execution or renewal of a Lease as advance rental,
to the extent the same has been paid prior to the occurrence of an Event of
Default), subject to the legal rights under the Leases of the persons or
entities making such deposits, together with any and all Rents to which
Mortgagors are now or hereafter may become entitled and together with
Bally's right, title and interest in any rents paid under the Ground Lease
to which Bally's is now or hereafter may become entitled;
TOGETHER with all plans, specifications, engineering reports,
land planning maps, surveys, and any other reports, exhibits or plans used
or to be used in connection with the operation or maintenance of the Real
Estate, together with all amendments and modifications thereof;
TOGETHER with (a) subject to the provisions of Article 6
hereof, Bally's interest in and to all Insurance Proceeds, and (b) subject
to the provisions of Article 7 hereof, all of Bally's right, title and
interest in and to all Awards, in any of the foregoing circumstances
described in clauses (a) or (b) above to the extent of the entire amount of
the Indebtedness outstanding as of the date of Depositary's receipt of any
such Insurance Proceeds or Awards, notwithstanding that the entire amount
of the Indebtedness may not then be due and payable, and also to the extent
of reasonable attorneys' fees, costs and disbursements incurred by
Depositary or Mortgagee in connection with the collection of any such
Insurance Proceeds or Awards. Subject to the provisions of Articles 6 and
7 hereof, Bally's hereby assigns to Mortgagee, and Depositary is hereby
authorized to collect and receive, all such Insurance Proceeds and Awards
and to give proper receipts and acquittances therefor and to apply the same
in accordance with the provisions of this Mortgage. Bally's hereby agrees
to make, execute and deliver, from time to time, upon demand, further
documents, instruments or assurances to confirm the assignment of the
Insurance Proceeds and the Awards to Depositary and Mortgagee, free and
clear of any interest of Bally's whatsoever therein, except as specifically
permitted in this Mortgage, and free and clear of any other liens, claims
or encumbrances of any kind or nature whatsoever;
TOGETHER with all right, title and interest of Mortgagors in
and to all improvements, betterments, renewals and all substitutes and
replacements of, and all additions and appurtenances to, the Fee Real
Estate, and in each such case, the foregoing shall be deemed a part of the
Fee Real Estate and shall become subject to the lien of this Mortgage as
fully and completely, and with the same priority and effect, as though now
owned by Mortgagors and specifically described herein, without any further
mortgage, conveyance, assignment or other act by Mortgagors.
TO HAVE AND TO HOLD the Encumbered Property and the rights and
privileges hereby encumbered or intended so to be unto Mortgagee and its
successors and assigns for the uses and purposes herein set forth.
Mortgagor, for itself and its successors and assigns, and
Bally's, for itself and its successors and assigns, further represent,
warrant, covenant and agree with Mortgagee as follows:
1. Warranty of Title.
(a) Mortgagor warrants to Mortgagee that (i) it has good
and marketable title to the Leasehold Estate, (ii) it has good and
marketable fee simple title to the Buildings located on the Leasehold Real
Estate and good title to the Personal Property located on or used in
connection with the Leasehold Real Estate, (iii) it has the right to
mortgage the Leasehold Real Estate in accordance with the provisions set
forth in this Mortgage, and (iv) this Mortgage is a valid and enforceable
lien on the Leasehold Encumbered Property, subject only to the exceptions
to title more particularly described in Exhibit C annexed hereto and made a
part hereof (collectively, the "Permitted Encumbrances"). Mortgagor shall
(i) preserve such title and the validity and priority of the lien of this
Mortgage and shall forever warrant and defend the same, subject to the
Permitted Encumbrances, unto Mortgagee against the claims of all and every
person or persons, corporation or corporations and parties whomsoever, and
(ii) make, execute, acknowledge and deliver all such further or other
deeds, documents, instruments or assurances and cause to be done all such
further acts and things as may at any time hereafter be reasonably required
to confirm and fully protect the lien and priority of this Mortgage.
(b) Mortgagors warrant to Mortgagee that (i) they have
good and marketable title to their respective interests in the Fee Real
Estate, (ii) they have good and marketable fee simple title to their
respective interests in the Buildings located on the Fee Real Estate and
good title to their respective interests in the Personal Property located
or used in connection with the Fee Real Estate, (iii) they have the right
to mortgage the Fee Real Estate in accordance with the provisions set forth
in this Mortgage, and (iv) this Mortgage is a valid and enforceable lien on
the Fee Encumbered Property, subject only to the exceptions to title more
particularly described in Exhibit C. Mortgagors shall (i) preserve such
title and the validity and priority of the lien of this Mortgage and shall
forever warrant and defend the same, subject to the Permitted Encumbrances
unto Mortgagee, against the claims of all and every person or persons,
corporation or corporations and parties whomsoever, and (ii) make, execute,
acknowledge and deliver all such further or other deeds, documents,
instruments or assurances and cause to be done all such further acts and
things as may at any time hereafter be reasonably required to confirm and
fully protect the lien and priority of this Mortgage.
2. Payment of Indebtedness.
(a) Mortgagors shall pay the Indebtedness at the times
and places and in the manner specified in the Loan Documents and shall
perform all of the Obligations in accordance with the provisions set forth
herein and in the other Loan Documents.
(b) Any payment made in accordance with the terms of this
Mortgage by any person at any time liable for the payment of the whole or
any part of the Indebtedness, or by any subsequent owner of the Encumbered
Property, or by any other person whose interest in the Encumbered Property
might be prejudiced in the event of a failure to make such payment, or by
any stockholder, officer or director of a corporation or by any partner of
a partnership which at any time may be liable for such payment or may own
or have such an interest in the Encumbered Property, shall be deemed, as
between Mortgagee and all persons who at any time may be liable as
aforesaid or may own the Encumbered Property, to have been made on behalf
of all such persons.
3. Requirements; Proper Care and Use.
(a) Subject to the right of Mortgagors to contest a
Legal Requirement (hereinafter defined) as provided in Article 10 hereof,
Mortgagors promptly shall comply with, or cause to be complied with, in all
material respects, all present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
restrictions and requirements (collectively, "Legal Requirements") of every
Governmental Authority (hereinafter defined) having jurisdiction over
Mortgagors or the Encumbered Property or the use, manner of use, occupancy,
possession, operation, maintenance, alteration, repair or Restoration
(hereinafter defined) of the Encumbered Property, without regard to the
nature of the work to be done or the cost of performing the same, whether
foreseen or unforeseen, ordinary or extraordinary, and shall perform, or
cause to be performed, in all material respects, all obligations,
agreements, covenants, restrictions and conditions now or hereafter of
record which may be applicable to Mortgagors or to the Encumbered Property
or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration, repair or Restoration of the Encumbered Property;
provided, however, that Mortgagors shall not be required to comply with any
Legal Requirement which, by its terms, does not require that the Encumbered
Property so comply, or if such failure would not have material adverse
effect on Mortgagor and its subsidiaries taken as a whole or Bally's and
its subsidiaries taken as a whole or the Encumbered Property or be
disadvantageous in any material respect to the Mortgagee.
(b) Mortgagor, with respect to the Leasehold Real
Estate, and Mortgagors, with respect to the Fee Real Estate, shall (i) not
abandon the Leasehold Real Estate or the Fee Real Estate or any portion
thereof, (ii) maintain, in all material respects, the Leasehold Real Estate
and the Fee Real Estate in good repair, order and condition, reasonable
wear and tear excepted, and supplied with all necessary equipment, (iii)
promptly make all necessary repairs, renewals, replacements, additions and
improvements to the Leasehold Real Estate and the Fee Real Estate which, in
the reasonable judgment of Mortgagors, may be necessary so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times, (iv) refrain from impairing or
diminishing in any material manner the value of the Leasehold Encumbered
Property and the Fee Encumbered Property or the priority or security of the
lien of this Mortgage, (v) not remove or demolish any of the Leasehold Real
Estate or Fee Real Estate if such removal or demolition might materially
impair the value of the Real Estate, except that Mortgagors shall have the
right to remove and dispose of, free of the lien of this Mortgage, such
Personal Property as may, from time to time, become worn out or obsolete or
which, in accordance with good business practices, should be removed or
disposed of, provided that if such removal shall materially adversely
affect the value of the Leasehold Encumbered Property or the Fee Encumbered
Property, simultaneously with, or prior to, such removal, any such Personal
Property shall be replaced with other Personal Property which shall have a
value and utility at least equal to that of the replaced Personal Property
and which shall be free of any security agreements or other liens or
encumbrances of any kind or nature whatsoever except as permitted in
Article 8 herein; (vi) not make, install or permit to be made or installed
any alterations or additions to the Leasehold Real Estate or the Fee Real
Estate if doing so would materially impair the value of the Leasehold
Encumbered Property or the Fee Encumbered Property; (vii) not make, suffer
or permit any nuisance (it being acknowledged that casino use shall not be
deemed to be a nuisance) to exist on the Leasehold Real Estate or the Fee
Real Estate or any portion thereof, and (viii) subject to the rights of
tenants and other persons or entities in possession, permit Mortgagee and
its agents, at all reasonable times and with reasonable prior notice
(except in the case of an emergency), to enter upon the Real Estate for the
purpose of inspecting and appraising the Real Estate or any portion
thereof.
(c) Mortgagors shall not, by any act or omission, permit
any building or other improvement located on any property which is not
subject to the lien of this Mortgage to rely upon the Real Estate or any
portion thereof or any interest therein to fulfill any Legal Requirement,
except to the extent that such reliance exists as of the date hereof, and
Mortgagors hereby assign to Mortgagee any and all rights to give consent
for all or any portion of the Real Estate or any interest therein to be so
used. Mortgagors shall not, by any act or omission, impair the integrity
of the Real Estate, as it exists today, as a single or multiple zoning lot
or lots, as the case may be, separate and apart from all other premises.
Any act or omission by Mortgagors which would result in a violation of any
of the provisions of this Article 3 shall be null and void.
(d) Mortgagors have and will maintain in effect at all
times until the Obligations are satisfied in full, all necessary licenses
(including without limitation all licenses necessary under the Act
(hereinafter defined) or otherwise to operate the casino portion of the
Encumbered Property as a casino), authorizations, registrations and
approvals to own, use, occupy and operate the Real Estate, and Mortgagors
have full power and authority to carry on its business at the Real Estate
as currently conducted and have not received any notice of any violation of
any Legal Requirement that materially impairs the value of the Real Estate.
(e) During the term this Mortgage an any renewals or
extensions hereof, as to any (i) "license," as such term is defined in
N.J.S.A. 5:12-30, issued pursuant to the New Jersey Casino Control Act and
regulations promulgated thereunder (collectively being referred to herein
as the "Act") which is material to the continued lawful operation of
Mortgagor as a casino licensed pursuant to the provisions of the Act, and
(ii) any material requirements of the "Operation Certificate," as such term
is defined in N.J.S.A. 5:12-35, issued with regard to the Encumbered
Property (the foregoing subparagraphs (i) and iii) are herein collectively
referred to as the "Operational Requirements"):
(1) The Operational Requirements are to the best of
Mortgagor's knowledge in good standing, free of material violations, and
all conditions under which they have been issued or renewed have been or
are being satisfied and fulfilled.
(2) Mortgagor will keep, maintain and preserve the
Operational Requirements in full force and effect and in good standing.
(3) Mortgagor will not knowingly violate, nor will it
knowingly suffer any violation of, the Operational Requirements.
(4) In the event Mortgagor knows of any fact,
circumstances, or occurrence which may result in a violation of the
Operational Requirements, Mortgagor shall promptly give Mortgagee written
notice thereof.
4. Taxes on Mortgagee.
(a) If the United States of America, the State of New
Jersey or any political subdivision thereof or any city, town, county or
municipality in which the Real Estate is located or any agency, department,
bureau, board, commission or instrumentality of any of the foregoing now
existing or hereafter created (collectively, "Governmental Authorities"
and, individually, a "Governmental Authority") shall, at any time after the
date hereof (whether or not the lien of this Mortgage shall have been
released), levy, assess or charge any tax, assessment or imposition upon
this Mortgage or any other Loan Document, the Indebtedness, the Obligations
or the interest of Mortgagee in the Encumbered Property by reason of this
Mortgage or any other Loan Document, the Indebtedness or the Obligations
(excepting therefrom any income tax on payments made under the Credit
Agreement and any franchise tax), Mortgagors shall pay all such taxes,
assessments and impositions to, for, or on account of, Mortgagee, as they
become due and payable and, on demand, shall furnish proof of such payment
to Mortgagee. If Mortgagors shall fail to pay any such tax, assessment or
imposition, then Mortgagee, at its option (but without any obligation to do
so), upon thirty (30) days' notice to Mortgagor (or such shorter period as
Mortgagee may deem reasonable if Mortgagee believes that failure to pay any
such tax, assessment or imposition promptly may subject the Encumbered
Property (or any portion thereof) to loss, forfeiture or a material
diminution in value), may pay such tax, assessment or imposition and, in
such event, the amount so paid (i) shall be deemed to be Indebtedness, (ii)
shall be a lien on the Encumbered Property prior to any right or title to,
interest in, or claim upon, the Encumbered Property subordinate to the lien
of this Mortgage and (iii) immediately shall be due and payable, on demand,
together with interest thereon at the rate of interest then payable under
the Credit Agreement, including, in calculating such rate of interest, any
additional interest which may be imposed under the Credit Agreement by
reason of any default thereunder (such rate of interest being hereinafter
referred to as the "Interest Rate"), from the date of any such payment by
Mortgagee to the date of repayment to Mortgagee. In the event of the
passage of any law or regulation permitting, authorizing or requiring any
such tax, assessment or imposition to be levied, assessed or charged, which
law or regulation, may prohibit Mortgagors from paying the tax, assessment
or imposition to, for, or on account of, Mortgagee, then Mortgagee, upon
written notice, may declare the entire amount of Indebtedness due and
payable one hundred eighty (180) days after such notice.
(b) If any Governmental Authority shall at any time
require revenue, documentary or similar stamps to be affixed to this
Mortgage or any other Loan Document or shall require the payment of any tax
with respect to the ownership or recording of this Mortgage or any other
Loan Document, Mortgagors, upon demand, shall pay for such stamps in the
required amount and shall deliver the same to Mortgagee, together with a
copy of the receipted bill therefor. If Mortgagors shall fail to pay for
any such stamps, then Mortgagee, at its option (but without any obligation
to do so), upon thirty (30) days' notice to Mortgagor (or such shorter
period as Mortgagee may deem reasonable if Mortgagee believes that failure
to pay for any such stamps promptly may subject the Encumbered Property (or
any portion thereof) to loss, forfeiture or a material diminution in
value), may pay for the same and, in such event, the amount so paid (i)
shall be deemed to be Indebtedness, (ii) shall be a lien on the Encumbered
Property prior to any right or title to, or interest in, or claim upon, the
Encumbered Property subordinate to the lien of this Mortgage and (iii)
immediately shall be due and payable, on demand, together with interest
thereon at the Interest Rate, from the date of any such payment by
Mortgagee to the date of repayment to Mortgagee.
(c) In the event of the passage, after the date of this
Mortgage, of any law of the jurisdiction in which the Real Estate is
located which shall deduct from the value of the Encumbered Property, for
purposes of taxation, any lien thereon or shall change in any way the laws
for the taxation of mortgages or debts secured by mortgages for state or
local purposes or the manner of the collection of any such taxes and shall
impose a tax, either directly or indirectly, on this Mortgage or any other
Loan Document, then, so long as Mortgagors, Mortgagee, this Mortgage or the
Credit Agreement is not exempt from payment of such tax and if Mortgagors
shall be permitted by law to pay the whole of such tax in addition to all
other payments required hereunder and under the other Loan Documents,
Mortgagors shall pay such tax when the same shall be due and payable and
shall agree in writing to pay such tax when thereafter levied or assessed
against the Encumbered Property. In the event that any law or regulation
may prohibit Mortgagors from paying such tax, then Mortgagee, upon written
notice, may declare the entire amount of Indebtedness due and payable one
hundred eighty (180) days after such notice.
5. Payment of Impositions.
(a) Subject to the provisions of Article 10 hereof, not
later than the date on which payment of the same shall be due, that is, the
day before the date on which any fine, penalty, interest, late charge or
loss may be added thereto or imposed by reason of the nonpayment thereof,
Mortgagors shall pay and discharge all taxes (including, but without
limiting the generality of the foregoing, all real property taxes and
assessments and personal property taxes), charges for any easement or
agreement maintained for the benefit of the Encumbered Property or any
portion thereof, general and special assessments and levies, permit,
inspection and license fees, water and sewer rents and charges and any
other charges of every kind and nature whatsoever, foreseen or unforeseen,
ordinary or extraordinary, public or private, which, at any time, are
imposed upon or levied or assessed in connection with the Encumbered
Property or any portion thereof, or which arise with respect to, or in
connection with, the use, manner of use, occupancy, possession, operation,
maintenance, alteration, repair or Restoration of the Encumbered Property
or any portion thereof, together with any penalties, interest or late
charges which may be imposed in connection with any of the foregoing (all
of the foregoing taxes, assessments, levies and other charges, together
with such interest, penalties and late charges, being hereinafter
collectively referred to as "Impositions" and, individually, as an
"Imposition"); provided, however, that Mortgagors shall have the right to
file for an extension in connection with the payment of any Imposition and,
if granted, to pay the Imposition on or before the date specified in the
extension, together with any interest or penalty which may be imposed as a
result of such extension. If, however, any Legal Requirement shall allow
that any Imposition may, at Mortgagors' option, be paid in installments
(whether or not interest shall accrue on the unpaid balance of such
Imposition), Mortgagors may exercise the option to pay such Imposition in
such installments, and, in such event, Mortgagors shall be responsible for
the payment of all such installments, together with the interest, if any,
thereon, in accordance with the provisions of the applicable Legal
Requirement. Not later than thirty (30) days after request therefor by
Mortgagee, Mortgagors shall deliver to Mortgagee evidence reasonably
acceptable to Mortgagee showing the payment of such Imposition. Mortgagors
also shall deliver to Mortgagee, within thirty (30) days after request
therefor, copies of all settlements and notices pertaining to any
Imposition which may be issued by any Governmental Authority.
(b) Upon the occurrence of an Event of Default or in the
event that Mortgagor shall fail, for two consecutive quarters, to make
payments on real property taxes and assessments on a timely basis,
Mortgagee may, but shall not be obligated to, require Mortgagors to deposit
with Mortgagee, monthly, one-twelfth (1/12th) of the annual charges for
real property taxes and assessments and other charges which might become a
lien upon the Encumbered Property or any portion thereof (each, an "Escrow
Deposit"). If the amounts so required to be deposited are estimated, based
upon charges for the preceding year, and Mortgagee determines, in its
reasonable good faith judgment, that the aggregate of the sums to be
deposited in escrow as aforesaid will be insufficient to make each of the
payments aforementioned, Mortgagors shall, on demand by Mortgagee,
simultaneously therewith deposit or cause to be deposited with Mortgagee, a
sum of money which, together with the monthly installments aforementioned,
due subsequent to the date of such demand, will be sufficient to make such
payments at least ten (10) days prior to the date such payments are due.
Should said charges not be ascertainable at the time any Escrow Deposit is
required to be made with Mortgagee, the Escrow Deposit shall be made on the
basis of the charges for the prior year, and when the charges are fixed for
the then current year, Mortgagors shall deposit any deficiency with
Mortgagee. All funds so deposited with Mortgagee shall be deposited in a
federally insured interest bearing account or liquid assets account in any
state in the United States or the District of Columbia, may be commingled
by Mortgagee with its general funds and, provided that Mortgagee shall not
otherwise have used a portion of such funds in accordance with the
provisions of this Mortgage, such funds (less the amounts, if any, which
are payable into the escrow fund to be used to pay real property taxes and
assessments not yet due and payable) shall be applied in payment of the
aforementioned charges when and as payable, to the extent Mortgagee shall
have such funds on hand. In the event that there shall occur an Event of
Default, the funds deposited with Mortgagee, as aforementioned, may be
applied in payment of the charges for which such funds shall have been
deposited or the payment of the Indebtedness or any other charges affecting
the security of this Mortgage, as Mortgagee determines, in its sole
discretion, but no such application shall be deemed to have been made by
operation of law or otherwise until actually made by Mortgagee as herein
provided. If Escrow Deposits are being made with Mortgagee as aforesaid,
Mortgagors shall furnish Mortgagee with bills for the charges for which
such deposits are required to be made hereunder and/or such other documents
necessary for the payment of same, on the later to occur of (i) fifteen
(15) days prior to the date on which the charges first become due and
payable and (ii) the date on which such bills are received by Mortgagors.
(c) Nothing contained in this Mortgage shall affect any
right or remedy of Mortgagee under this Mortgage or otherwise to pay, upon
thirty (30) days' notice to Mortgagor (or such shorter period as Mortgagee
may deem reasonable if Mortgagee believes that the failure to pay any such
Imposition promptly may subject the Encumbered Property (or any portion
thereof) to loss, forfeiture or a material diminution in value), any
Imposition from and after the date on which such Imposition shall have
become due and payable and, in such event and provided Mortgagee shall not
have paid such Imposition with sums being held by Mortgagee pursuant to
subparagraph (b) of this Article 5 (provided, however, that Mortgagee shall
have no right to pay such Imposition while Mortgagors are contesting the
validity, enforceability or application of the same pursuant to the
provisions of Article 10 hereof or are otherwise paying such Imposition in
installments in accordance with the provisions hereof), the amount so paid
(i) shall be deemed to be Indebtedness, (ii) shall be a lien on the
Encumbered Property prior to any right or title to, interest in, or claim
upon, the Encumbered Property subordinate to the lien of this Mortgage and
(iii) shall be immediately due and payable, on demand, together with
interest thereon at the Interest Rate, from the date of any such payment by
Mortgagee to the date of repayment to Mortgagee.
6. Insurance.
(a) Mortgagors shall provide and keep in full force and
effect, or require to be provided and kept in full force and effect, for
the benefit of Mortgagee as hereinafter provided:
(i) insurance for the Buildings and the Personal
Property (t) against loss or damage by fire, lightning, windstorm, tornado,
hail and such other further and additional hazards of whatever kind or
nature as are now or hereafter may be covered by standard extended
coverage, (u) with "all risk" endorsements (including, but without limiting
the generality of the foregoing, vandalism, malicious mischief and damage
by water), (v) against war risks as, when and to the extent such insurance
is obtainable from the United States of America or an agency thereof, (w)
against flood disaster pursuant to the Flood Disaster Protection Act of
1973, 84 Stat. 572, 42 U.S.C. 4001, if the Real Estate is located in an
area identified by the United States Department of Housing and Urban
Development as a flood hazard area (it being understood and agreed that
Mortgagors may obtain such insurance from a private carrier satisfactory to
the Mortgagee), (x) against earthquakes (including subsidence), (y) against
loss of rentals and business interruption due to any of the foregoing
causes for a minimum period of nine (9) months, and (z) against any other
risk commonly insured against by persons operating properties similar to
the Encumbered Property and located in the vicinity of the Encumbered
Property or conducting operations similar to the operations conducted at
the Real Estate;
(ii) demolition and increased cost of construction
coverage;
(iii) if a sprinkler system shall be located in
the Buildings, sprinkler leakage insurance;
(iv) commercial general liability insurance in
respect to the operation of the Real Estate with limits of not less than
$100,000,000 combined single limit for bodily injury per occurrence and/or
property damage liability per occurrence (collectively, the "Minimum
Liability Coverage"); provided, however, that the Minimum Liability
Coverage may be reduced from time to time, but in no event to limits of
less than $25,000,000 on a "claims made" basis, provided that Mortgagors
shall deliver to Mortgagee, within thirty (30) days after the expiration of
the policy or policies containing the Minimum Liability Coverage and
thereafter within thirty (30) days after the end of each fiscal year of
Mortgagor until the Minimum Liability Coverage shall be reinstated, an
Officer's Certificate stating that Mortgagors were unable to obtain
commercial general liability insurance coverage in excess of the amount
actually obtained or on other than a "claims made" basis; and
(v) such other insurance in such amounts as may
from time to time be commonly insured against in the case of properties
similar to the Encumbered Property and located in the vicinity of the Real
Estate or conducting operations similar to the operations conducted at the
Real Estate.
All insurance provided hereunder shall be in such form as is commonly
obtained by owners of property similar to the Real Estate and located in
the vicinity of the Real Estate or conducting operations similar to the
operations conducted at the Real Estate, shall not contain a coinsurance
provision whereby Mortgagors in the event of loss become a co-insurer,
shall, in the case of casualty insurance, name Mortgagee as a named insured
under a standard New York mortgagee endorsement or its equivalent, which
shall be acceptable to Mortgagee, shall name Mortgagee as a named insured
in the case of insurance other than casualty insurance, shall provide for
loss payable to Mortgagee, except policies insuring against damage by fire
or other casualty, which shall provide for loss payable as more
particularly set forth in Paragraph 6(j) hereof, shall be provided by
insurance companies which have a then current Alfred M. Best Company, Inc.,
general policyholder's rating of at least "A-12" or a financial rating
reasonably acceptable to Mortgagee or by such other insurance companies as
are reasonably acceptable to Mortgagee, shall be cancelable only upon
thirty (30) days' prior written notice to Mortgagee, may provide for a
standard deduction not to exceed $500,000 in the case of all insurance
other than commercial general liability insurance, and $1,000,000 in the
case of commercial general liability insurance, and otherwise shall be
acceptable to Mortgagee in its reasonable discretion. For purposes hereof,
"Depositary" shall mean a depositary designated by the Trustee to serve as
Depositary pursuant to the Trustee's Mortgage or if none shall be
designated then it shall mean a bank, trust company, insurance company,
savings bank or governmental pension, retirement or welfare fund,
reasonably acceptable to Mortgagor and designated by Mortgagee to serve as
Depositary pursuant to this Mortgage. Anything contained herein to the
contrary notwithstanding, in no event shall the insurance provided under
clause (t) of Paragraph 6(a) (i) hereof be in an amount which is less than
One Hundred Percent (100%) of the full replacement cost of the Buildings
and the Personal Property, including the cost of debris removal, but
excluding the value of foundations and excavations, as determined from time
to time by Mortgagee. Mortgagors shall assign and deliver to Mortgagee all
such certificates, policies of insurance or duplicate originals thereof, as
collateral and further security for payment of the Indebtedness and
performance of the Obligations. If any insurance required to be provided
hereunder shall expire, be withdrawn, become void by breach of any
condition thereof by Mortgagors or by any lessee of the Real Estate or any
portion thereof, or become void or questionable by reason of the failure or
impairment of the capital of any insurer, or if for any other reason
whatsoever any such insurance shall become unsatisfactory to Mortgagee, as
determined in its reasonable judgment, Mortgagors immediately shall obtain
new or additional insurance which shall be satisfactory to Mortgagee in its
reasonable discretion. If any insurance required to be provided hereunder
shall become unavailable to property owners in the area in which the
Encumbered Property is located, then Mortgagors shall, within thirty (30)
days after demand by Mortgagee, obtain such other types of insurance, in
such amounts as may be reasonably required by Mortgagee. Mortgagors shall
not take out any separate or additional insurance which is contributing in
the event of loss unless it is properly endorsed and otherwise reasonably
satisfactory to Mortgagee in all respects.
(b) Mortgagors shall (i) pay as they become due all
premiums for the insurance required hereunder (it being understood that
Mortgagors may pay all such premiums in installments), and (ii) not later
than thirty (30) days prior to the expiration of each such policy, deliver
to Mortgagee a renewal policy or a duplicate original thereof or a
certificate evidencing the insurance required to be provided hereunder,
accompanied by such evidence of payment of the initial installment as shall
be satisfactory to Mortgagee in its reasonable discretion.
(c) If Mortgagors shall be in default of its obligation
to so insure or deliver any such prepaid policy or policies or certificate
or certificates of insurance to Mortgagee in accordance with the provisions
hereof, Mortgagee, at its option (but without any obligation to do so) and
upon twenty-four (24) hours' notice, may effect such insurance from year to
year, and pay the premium or premiums therefor, and, in such event, the
amount of all such premium or premiums (i) shall be deemed to be
Indebtedness, (ii) shall be a lien on the Encumbered Property prior to any
right or title to, or interest in, or claim upon, the Encumbered Property
subordinate to the lien of this Mortgage and (iii) shall be immediately due
and payable, on demand, together with interest thereon at the Interest
Rate, from the date of any such payment by Mortgagee to the date of
repayment to Mortgagee.
(d) Mortgagors shall adjust the amount of insurance
required to be provided pursuant to the provisions of clause (t) of
Paragraph 6(a) (i) hereof at the time that each such policy of insurance is
renewed (but, in no event, less frequently than once during each twelve
(12) month period) by using the F. W. Dodge Building Index to determine
whether there shall have been an increase in the replacement cost of the
Buildings and the Personal Property since the most recent adjustment to any
such policy and, if there shall have been any such increase, the amount of
insurance required to be provided hereunder shall be adjusted accordingly.
(e) Mortgagors promptly shall comply with, and shall
cause the Buildings and the Personal Property to comply with, (i) all of
the provisions of each such insurance policy, and (ii) all of the
requirements of the insurers thereunder applicable to Mortgagors or to any
of the Buildings or the Personal Property or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or
Restoration of any of the Buildings or Personal Property, even if such
compliance would necessitate structural changes or improvements or would
result in interference with the use or enjoyment of the Encumbered Property
or any portion thereof. If Mortgagors shall use the Encumbered Property or
any portion thereof in any manner which would permit the insurer to cancel
any insurance required to be provided hereunder, Mortgagors immediately
shall obtain a substitute policy which shall be reasonably satisfactory to
Mortgagee and which shall be effective on or prior to the date on which any
such other insurance policy shall be canceled.
(f) If the Buildings or the Personal Property or any
portion thereof shall be damaged, destroyed or injured by fire or any other
casualty, Mortgagors shall give immediate notice thereof to Mortgagee and
Mortgagors promptly shall commence and diligently shall continue and
complete the repair, restoration, replacement or rebuilding of the
Buildings ("Restoration") and the Personal Property so damaged, destroyed
or injured substantially to their value, condition and character
immediately prior to such damage, destruction or injury, in full compliance
with all Legal Requirements. In addition, if the Restoration to be done may
materially impair the structural integrity of a material portion of the
Buildings or if the cost of the Restoration as estimated by Mortgagee shall
exceed the sum of Ten Million Dollars ($10,000,000) (in either case, "Major
Restoration"), then Mortgagors shall, prior to the commencement of the
Major Restoration, furnish or cause to be furnished to Mortgagee: (l)
complete plans and specifications for the Major Restoration, bearing the
signed approval thereof by an architect reasonably satisfactory to
Mortgagee (the "Architect") and accompanied by the Architect's signed
estimate, bearing the Architect's seal, of the entire cost of completing
the work (the "Plans"), which Plans shall be submitted to Mortgagee for
approval, which approval shall be granted or denied within twenty-one (21)
days of Mortgagee's receipt thereof (it being understood that if Mortgagee
shall fail to respond within such twenty-one (21)-day period, Mortgagee
shall be deemed to have granted its approval) and which approval shall not
be unreasonably withheld; provided, however, that Mortgagee's approval of
the Plans shall not be required in the case of (i) Major Restoration
consisting primarily of demolition or construction of the Buildings for
safety purposes, (ii) Major Restoration for which no permits or approvals
by Governmental Authorities are required by law, (iii) Major Restoration
consisting primarily of temporary, non-permanent construction, or (iv)
Major Restoration consisting primarily of painting or other items of
decorative work; (2) certified or photostatic copies of all permits and
approvals required by law in connection with the commencement and conduct
of the Major Restoration; and (3) either (x) a payment and performance bond
for, and/or guaranty of the payment for and completion of, the Major
Restoration, which bond or guaranty shall be in form reasonably
satisfactory to Mortgagee, and shall be signed by a surety or sureties, or
guarantor or guarantors, as the case may be, who are reasonably acceptable
to Mortgagee, and shall be in an amount not less than One Hundred Ten
Percent (110%) of the Architect's estimate of the entire cost of
completing the Major Restoration, less the amount of Insurance Proceeds, if
any, then held by Depositary for application toward the cost of the Major
Restoration, or, at Mortgagor's option, (y) such other security as may be
reasonably satisfactory to Mortgagee. Notwithstanding anything to the
contrary contained herein, Mortgagee acknowledges that Major Restoration
may be performed on a "fast track" basis and, in such event, Mortgagors
shall not be required to submit full and complete Plans for approval prior
to the commencement of the Major Restoration, but shall submit such Plans
as and when they are prepared and submitted for approval to the applicable
Governmental Authorities.
(g) Mortgagors shall not commence any of the Major
Restoration until Mortgagors shall have complied with the applicable
requirements referred to in clause (f) above, and after commencing Major
Restoration, Mortgagors shall perform the Major Restoration diligently in a
good and workmanlike manner and in good faith substantially in accordance
with the Plans, if applicable, and in compliance with all applicable laws.
(h) Any Insurance Proceeds received by Depositary
attributable to business interruption insurance shall be promptly paid over
to Mortgagor upon receipt of the same by Depositary. All Insurance
Proceeds delivered to Depositary as aforesaid, other than proceeds
attributable to business interruption insurance, together with all
Insurance Proceeds or portions thereof paid directly to Depositary on
account of damage or destruction to the Buildings and/or the Personal
Property (all of which Insurance Proceeds or portions thereof, other than
proceeds attributable to business interruption insurance, shall be
deposited by Depositary in an interest-bearing account), together with any
interest thereon, less the cost, if any, to Mortgagee and Depositary of
such recovery and of paying out such Insurance Proceeds (including
reasonable attorneys' fees and costs allocable to inspecting the work and
reviewing the Plans therefor), upon the written request of Mortgagor and
subject to compliance with the provisions of this Article 6, shall be made
available for application by Depositary to the payment of the cost of the
Major Restoration referred to in clause (f) above and shall be paid out
from time to time to Mortgagor and/or, at Mortgagee's or Depositary's
option, exercisable from time to time, directly to the contractor,
subcontractors, materialmen, laborers, engineers, architects and other
persons rendering services or materials in connection with the Major
Restoration, as said Major Restoration progresses, except as otherwise
hereinafter provided, but subject to the following conditions, any of which
Mortgagee and Depositary may waive:
(i) If the Restoration to be done is Major
Restoration, as determined by Mortgagee, the Architect shall be in
charge of the Restoration.
(ii) Each request for payment shall be made at
least ten (10) days prior to the requested date of disbursement and
shall be accompanied by a certificate of the Architect stating (l)
that all of the Major Restoration completed has been done in a good
and workman-like manner and in substantial compliance with the
approved Plans, if any be required under clause (f) hereof, and in
accordance with the provisions of all applicable laws; (2) the sum
requested is justly required to reimburse Mortgagor for payments by
Mortgagor to, or is justly due to, the contractor, subcontractors,
materialmen, laborers, engineers, architects or other persons
rendering services or materials in connection with the Major
Restoration (giving a brief description of such services and
materials), and that when added to all sums previously paid out by
Depositary, if any, does not exceed the value of the Major
Restoration (including the value of any "soft costs", such as
engineers' or architects' fees incurred in connection therewith) done
to the date of such certificate; and (3) that the amount of Insurance
Proceeds remaining in the hands of Depositary, together with other
funds otherwise available to Mortgagor, provided that Mortgagor
certifies to the Architect that such funds are available, will be
sufficient on completion of the Major Restoration to pay for the same
in full (giving in such reasonable detail as Mortgagee or Depositary
may require an estimate of the cost of such completion and if such
other funds are required, including a certificate of an officer of
Mortgagor, as to the sources of such funds).
(iii) Each request shall be accompanied by waivers
or releases of liens, satisfactory to Mortgagee and Depositary,
covering that part of the Major Restoration previously paid for, if
any, and by a search prepared by a title company or by other evidence
reasonably satisfactory to Mortgagee and Depositary that there has
not been filed with respect to the Encumbered Property, or any part
thereof, any mechanic's lien or other lien or instrument for the
retention of title not discharged of record (by bonding or otherwise)
in respect of any part of the work and that there exist no
encumbrances on or affecting the Encumbered Property, or any part
thereof, other than Permitted Encumbrances and those which may have
been approved by Mortgagee.
(iv) There shall be no Event of Default under this
Mortgage or the Credit Agreement or any other Loan Document.
(v) The request for any payment after the Major
Restoration has been completed shall be accompanied by a copy of any
certificate or certificates required by law to render occupancy and
operation of the Encumbered Property legal.
Upon completion of the Restoration and payment in full therefor
and provided there shall then be continuing any Event of Default hereunder,
any Insurance Proceeds (together with any interest earned thereon)
remaining promptly shall be paid by Depositary to the Trustee for deposit
in the Collateral Account or be paid over for the benefit of the Mortgagee
as provided for in the Indenture. Any Insurance Proceeds remaining after
completion of such Restoration shall be paid to Mortgagor, provided that
there shall not then be continuing any Event of Default hereunder. Upon
failure on the part of Mortgagors promptly to commence or diligently to
continue the Restoration, and upon twenty-four (24) hours' notice by
Mortgagee to Mortgagor, Mortgagee may apply the amount of any Insurance
Proceeds (together with any interest earned thereon) then or thereafter in
the hands of Depositary to the payment of the Indebtedness; provided,
however, that nothing herein contained shall prevent Mortgagee from
applying at any time the whole or any part of such Insurance Proceeds
(together with any interest earned thereon), and Mortgagee may so apply
such Insurance Proceeds (together with any interest earned thereon), to the
curing of any Event of Default under this Mortgage or the Credit Agreement
or any other Loan Document.
(i) If within one (1) year after the occurrence of any
damage or destruction to the Buildings and Personal Property or any portion
of either thereof requiring Major Restoration in order to restore the
Buildings and Personal Property, Mortgagor shall not have submitted to
Mortgagee and received Mortgagee's approval, which approval shall not be
unreasonably withheld or delayed, as set forth above, of Plans for the
Major Restoration of the Buildings and the Personal Property so damaged or
destroyed, or if, after such Plans are approved by all necessary
Governmental Authorities and Mortgagee, Mortgagors shall fail to commence
promptly such Major Restoration, or if thereafter Mortgagors fail
diligently to continue such Major Restoration or is delinquent in the
payment to mechanics, materialmen or others of the costs incurred in
connection with such Major Restoration (other than those costs which
Mortgagors are, in good faith, disputing), or, in the case of any damage or
destruction to the Buildings and/or the Personal Property or any part of
either thereof not requiring Major Restoration, as reasonably determined by
Mortgagee, in order to restore the Encumbered Property, if Mortgagors shall
fail to repair, restore and rebuild promptly the Buildings and Personal
Property so damaged or destroyed, or in any other respect fails to comply
with its obligations under this Article 6, then, in addition to all other
rights herein set forth, and after giving Mortgagor thirty (30) days'
written notice of the nonfulfillment of one or more of the foregoing
conditions, and provided that such non-fulfillment shall not be cured
within said thirty (30)-day period, Mortgagee, or any lawfully appointed
receiver of the Buildings and Personal Property may, at their respective
options (but without any obligation to do so), perform or cause to be
performed such Major Restoration and may take such other steps as they deem
advisable to perform such work; provided, however, that Mortgagee shall be
permitted to give such shorter notice (and in such manner) as is reasonably
practical in case of emergency or other special circumstances. In such
event, Depositary shall pay over the Insurance Proceeds (together with any
interest earned thereon) held by it to Mortgagee or such receiver, as the
case may be, upon request, to the extent not previously paid to Mortgagor
hereunder. Mortgagor and Bally's hereby waive, for themselves and all
others holding under them, any claim against Mortgagee and such receiver
arising out of anything done by Mortgagee or such receiver pursuant hereto,
other than due to the negligence or wilful misconduct of, Mortgagee or such
receiver, and Mortgagee may apply all or a portion of the Insurance
Proceeds (without the need to fulfill any other requirements of this
Article 6) to reimburse Mortgagee and/or such receiver, for all amounts
reasonably expended or incurred by them, respectively, in connection with
the performance of such Major Restoration, and any excess costs shall be
paid by Mortgagor to Mortgagee upon demand.
(j) Insurance Proceeds which are payable in connection
with any damage to, or destruction of, or injury to, the Buildings or the
Personal Property (i) in the case of a loss equal to or in excess of Twelve
Million Dollars ($12,000,000), shall all be paid to Depositary and
disbursed in accordance with the provisions hereof; (ii) in the case of a
loss in excess of Ten Million Dollars ($10,000,000), but less than Twelve
Million Dollars ($12,000,000), the first Ten Million Dollars ($10,000,000)
shall be paid to Mortgagor and the remaining Insurance Proceeds shall be
paid to Depositary and disbursed in accordance with the provisions hereof;
and (iii) in the case of a loss of Ten Million Dollars ($10,000,000) or
less, shall be paid directly to Mortgagor. Mortgagor is hereby authorized
to settle all claims under all policies of insurance and to execute and
deliver all necessary proofs of loss, receipts, vouchers and releases
required by the insurers, however, Mortgagee shall have the right, but not
the obligation, to join with Mortgagors in settling, and approving the
settlement of, any such claims except in the event of a claim where the
amount of insurance reasonably anticipated to be received with respect to
such claim is less than Ten Million Dollars ($10,000,000). Each insurer is
hereby authorized and directed to make payment of any Insurance Proceeds or
the portion thereof, as described in this Paragraph 6 (j), under any
policies of insurance in connection with a loss in excess of Twelve Million
Dollars ($12,000,000) directly to Depositary instead of to Mortgagor and
Depositary jointly, and Depositary is hereby authorized to endorse any
draft therefor as Mortgagors' attorney-in-fact if Mortgagors shall fail to
do so for ten (10) days (or such lesser period of time as Mortgagee may
reasonably believe to be required) after request therefor by Mortgagee or
Depositary. If, prior to the receipt by Depositary or Mortgagors or any of
them, as the case may be, of any Insurance Proceeds or portion thereof, the
Encumbered Property or any portion thereof shall have been sold by
Mortgagee pursuant to the power of sale provided herein, Mortgagee shall
have the right to receive the Insurance Proceeds to the extent of any
deficiency found to be due upon such sale, whether or not a deficiency
judgment on this Mortgage shall have been sought or recovered or denied,
together with interest thereon at the Interest Rate, and the reasonable
attorneys' fees, costs and disbursements incurred by Mortgagee in
connection with the collection of the Insurance Proceeds.
(k) The insurance required by this Mortgage may, at the
option of Mortgagor, be effected by blanket and/or umbrella policies issued
to Mortgagor covering the Buildings and the Personal Property as well as
other properties (real and personal) which are owned or leased by
Mortgagor, provided that, in each case, the policies otherwise comply with
the provisions of this Mortgage and allocate to the Buildings and the
Personal Property, from time to time, the coverage specified by Mortgagee,
without possibility of reduction or coinsurance by reason of, or damage to,
any other property (real or personal) named therein. If the insurance
required by this Mortgage shall be effected by any such blanket or umbrella
policies, Mortgagor shall furnish to Mortgagee original policies or
duplicate originals thereof or certificates, with schedules attached
thereto showing the amount of the insurance provided under such policies
which is applicable to the Buildings and the Personal Property.
(l) Any conveyance or foreclosure of the Encumbered
Property pursuant to the Mortgagee's rights in accordance with the
provisions hereof shall transfer therewith all of Mortgagors' interest in
all insurance policies then covering the Buildings and the Personal
Property or the operations conducted at the Real Estate.
(m) Mortgagors hereby acknowledge that in the event
Mortgagee is permitted or required to exercise any discretion under this
Article, Mortgagee shall not be deemed to have abused such discretion
provided that Mortgagee shall have relied, at the expense of Mortgagors, on
a recognized insurance consultant with regard to insurance matters, a
recognized construction consultant with regard to restoration matters or
such other recognized consultants as may be appropriate or necessary to
fulfill its obligation hereunder. Any consultants referred to herein shall
have not less than 10 years' experience.
7. Condemnation/Eminent Domain.
(a) Notwithstanding (i) any taking by eminent domain,
condemnation or otherwise of all or any portion of the Encumbered Property,
or (ii) the change of grade of any street or the widening of streets, roads
or avenues adjoining or abutting the Land, or (iii) any other injury to or
decrease in value of the Encumbered Property by any Governmental Authority
(any of the foregoing events being hereinafter referred to as a "Taking"),
Mortgagors shall continue to make all payments due under this Mortgage and
under the Credit Agreement and the other Loan Documents in accordance with
the provisions of this Mortgage, the Credit Agreement and the applicable
provisions of the other Loan Documents. Mortgagors shall notify Mortgagee
immediately upon obtaining knowledge of the institution of any proceedings
for any Taking or of any contemplated Taking of which Mortgagor or Bally's
as the case may be, is aware. No such proceeding with respect to any
Taking shall be settled without the express written prior consent of
Mortgagee, which consent shall not be unreasonably withheld or delayed, it
being agreed that if Mortgagee shall have failed to have either granted or
denied its consent thereto within twenty-one (21) days after request
therefor, the same shall be deemed to have been given; provided, however,
that a proceeding where the amount reasonably anticipated to be received by
the Mortgagors collectively is less than Ten Million Dollars ($10,000,000)
shall not require such consent. Mortgagors are hereby authorized to
execute and deliver all necessary proofs of loss, receipts, vouchers and
releases required in connection with any Taking. Each Governmental
Authority is hereby authorized and directed to make payment of any Award
made in connection with any Taking directly to Mortgagors or Depositary in
accordance with the provisions of the next succeeding sentence and
paragraph 7(b) hereof instead of to Mortgagors and Depositary jointly, and
Depositary is hereby authorized to endorse any draft therefor as
Mortgagors' attorney-in-fact if Mortgagors shall fail to endorse any such
draft for ten (10) days after request therefor by Mortgagee or Depositary.
Anything contained in any Legal Requirement, this Mortgage, or the Ground
Lease to the contrary notwithstanding, if there shall be a Taking of less
than the entire Encumbered Property and if there shall remain a sufficient
portion of the Encumbered Property so that it shall be possible for
Mortgagors to continue to conduct their business at such remaining
Encumbered Property (a "Partial Taking"), (i) in the event that the Award
is less than Ten Million Dollars ($10,000,000), the same shall be paid to
Mortgagor, (ii) in the event that the Award shall be equal to or be in
excess of Ten Million Dollars ($10,000,000), but shall be less than Twelve
Million Dollars ($12,000,000), the first Ten Million Dollars ($10,000,000)
of such Award shall be paid to Mortgagor and the remaining portion of the
Award shall be paid to Depositary, or (iii) in the event that the Award
shall be equal to or greater than Twelve Million Dollars ($12,000,000), the
entire Award shall be paid to Depositary and, in the case of (i) and (ii)
above, Depositary shall pay the Award or portion thereof received (after
deducting therefrom all costs and expenses, including, but without limiting
the generality of the foregoing, reasonable attorneys' fees, costs and
disbursements incurred by Mortgagee in connection with the collection
thereof and any expenses of Depositary) to Mortgagor, in accordance, and
upon there being compliance, with the provisions of Article 6 hereof, for
the sole purpose of Mortgagor's Restoration of the Buildings and the
Personal Property remaining after any such Partial Taking, it being
understood and agreed, however, that neither Mortgagee nor Depositary shall
have any obligation whatsoever to see to the proper application of any
Award so paid to Mortgagor. Mortgagors promptly shall commence and
diligently shall continue and complete the Restoration of the Buildings and
the Personal Property remaining after such Partial Taking substantially to
their value, condition and character immediately prior to such Partial
Taking, in accordance with the provisions of Article 6 hereof, as if such
Partial Taking had resulted in "damage or destruction to the Buildings or
Personal Property" (within the meaning of Paragraph 6 (f) hereof), with
Mortgagors, Mortgagee and Depositary each having the same rights and
obligations with respect to the Award and Restoration as are set forth in
Paragraphs 6(f) through 6(j) hereof with respect to Insurance Proceeds,
except that, notwithstanding the provisions of Paragraph 6(f) hereof,
Mortgagors shall restore the Buildings and the Personal Property
substantially to their value, condition and character immediately prior to
such Partial Taking, only to the extent practicable, but otherwise in
accordance with the provisions of Paragraph 6(f). Any Award remaining
after completion of such Restoration shall be paid to Mortgagor, provided
that there shall not then be continuing any Event of Default hereunder. If
there shall then be continuing an Event of Default hereunder, any such
Award shall be paid to the Mortgagee, and shall be applied to the payment
of the Indebtedness then outstanding.
(b) Notwithstanding anything contained herein to the
contrary, in the event of a total Taking or a Taking other than a Partial
Taking, each Governmental Authority is hereby authorized and directed to
make payment of any Award made in connection with any such Taking to
Mortgagee.
(c) Reduction of the outstanding amount of the
Indebtedness resulting from the application of any such Award by Mortgagee
in accordance with the provisions hereof shall be deemed to take effect
only on the date of Mortgagee's receipt of such Award in accordance with
the terms of this Mortgage and in such order of priority as Mortgagee may
elect. If, prior to the receipt by Mortgagee of any Award, the Encumbered
Property or any portion thereof shall have been sold by Mortgagee pursuant
to the power of sale provided herein, Mortgagee shall have the right to
receive the Award to the extent of any deficiency found to be due upon such
sale, whether or not a deficiency judgment on this Mortgage shall have been
sought or recovered or denied, together with interest thereon at the
Interest Rate and the reasonable attorneys' fees, costs and disbursements
incurred by Mortgagee in connection with the collection of the Award.
(d) Mortgagors hereby acknowledge that in the event
Mortgagee is permitted or required to exercise any discretion under this
Article, Mortgagee shall not be deemed to have abused such discretion
provided that Mortgagee shall have relied, at the expense of Mortgagors, on
a recognized construction consultant, an appraiser who is a member of the
American Institute of Real Estate Appraisers and who has been designated a
"Member American Institute", or such other recognized consultants as may be
appropriate or necessary to fulfill its obligations hereunder. Any
consultants referred to herein shall have not less than 10 years'
experience.
8. Sale of Encumbered Property; Additional Financing. Except
as permitted under the terms of the Credit Agreement Mortgagors shall not,
at any time, assign, transfer or convey all or any part of the Encumbered
Property or any interest therein.
9. Discharge of Liens. Subject to the provisions of Article
10 hereof and except as permitted by the Credit Agreement or this Mortgage,
Mortgagors at all times shall keep the Encumbered Property free from the
liens of mechanics, laborers, contractors, subcontractors and materialmen
and, except for the Permitted Encumbrances, and any new or additional
mortgages which may be made to Mortgagee, free from any and all other
liens, claims, charges or encumbrances of any kind or nature whatsoever.
If any such liens, claims, charges or encumbrances shall be recorded,
Mortgagors shall forthwith deliver copies thereof to Mortgagee and
Mortgagors shall, within thirty (30) days after request therefor by
Mortgagee, cause the same to be discharged of record by payment or bonding.
10. Right of Contest. Mortgagors, at their sole cost and
expense, may, in good faith, contest, by proper legal actions or
proceedings, the validity of any Legal Requirement or the application
thereof to Mortgagors or the Encumbered Property, or the validity or amount
of any Imposition or the validity of the claims of any mechanics, laborers,
subcontractors, contractors or materialmen ("Contractor's Claims"). During
the pendency of any such action or proceeding, compliance with such
contested Legal Requirement or payment of such contested Imposition or
payment of such contested Contractor's Claim may be deferred, provided
that, in each case, at the time of the commencement of any such action or
proceeding, and during the pendency of such action or proceeding, (a) no
Event of Default shall exist hereunder and no other event shall have
occurred which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default hereunder, (b) adequate reserves with
respect thereto are maintained on Mortgagors' books in accordance with
generally accepted accounting principles and the applicable provisions of
the Credit Agreement, and (c) Mortgagor reasonably believes that
noncompliance with the contested Legal Requirement or non-payment of the
contested Imposition or non-payment of such contested Contractor's Claim
would not have a material adverse effect upon the business of Mortgagors,
the Encumbered Property or the operation thereof or the Mortgagee.
Notwithstanding any such reserves or the furnishing of any bond or other
security, thirty (30) days after notice from Mortgagee, Mortgagors shall
comply with any contested Legal Requirement or shall pay any contested
Imposition or Contractor's Claim, and compliance therewith or payment
thereof shall not be deferred, if, at any time, such deferral would have a
material adverse effect on Mortgagors and their subsidiaries taken as a
whole or be disadvantageous in any material respect to the Mortgagee. If
such action or proceeding is terminated or discontinued adversely to
Mortgagors and is not subject to appeal, Mortgagors shall, within thirty
(30) days of receiving request therefor, deliver to Mortgagee evidence
reasonably satisfactory to Mortgagee of Mortgagors' compliance with such
contested Legal Requirement or payment of such contested Imposition or
Contractor's Claim, as the case may be. Notwithstanding the foregoing,
Mortgagee shall have no obligation to request any matters referred to
herein and shall request such matters in Mortgagee's reasonable discretion.
11. Leases.
(a) Each Lease entered into from and after the date
hereof including, without limitation, all Leases which provide for an
annual "base" or "minimum" rent in excess of - $100,000 (a "Major Lease")
shall (i) not permit the lessee thereunder to terminate or invalidate the
terms thereof as a result of any action taken by Mortgagee to enforce this
Mortgage, including, without limitation, any sale of the Encumbered
Property or any portion thereof by Mortgagee pursuant to the power of sale
provided herein or otherwise, (ii) include a subordination clause providing
that the Lease and the interest of the lessee in the Encumbered Property
are in all respects subject and subordinate to this Mortgage, (iii) provide
that, at the option of Mortgagee or the purchaser at a sale by Mortgagee
pursuant to the power of sale provided herein or otherwise or the grantee
in a voluntary conveyance in lieu of such Mortgagee's sale, the lessee
thereunder shall attorn to Mortgagee or to such purchaser or grantee under
all of the terms of the Lease and recognize such entity as the lessor under
the Lease for the balance of the term of the Lease, and (iv) provide that,
in the event of the enforcement by Mortgagee of the remedies provided by
law or in equity or by this Mortgage, any person succeeding to the interest
of Mortgagee as a result of such enforcement shall not be bound by or
liable for any (A) prepayment of installments of Rent for more than thirty
(30) days in advance of the time when the same shall become due (excluding,
however, any payments of "key money" made by any lessee in connection with
the execution or renewal of its Lease or any other sums paid in connection
with the execution or renewal of a Lease as advance rental, to the extent
the same has been paid prior to the occurrence of an Event of Default) or
(B) prior act or omission of any prior landlord.
(b) Mortgagor shall (i) promptly perform all of the
provisions of the Leases on the part of the lessor thereunder to be
performed, (ii) appear in and defend any action or proceeding arising
under, growing out of, or in any manner connected with, the Leases or the
obligations of the lessor or the lessees thereunder, (iii) exercise, within
thirty (30) days after demand by Mortgagee, any right to request from the
lessee under any Major Lease a certificate with respect to the status
thereof, (iv) deliver to Mortgagee, within thirty (30) days after demand by
Mortgagee, a written statement containing the names of all lessees, the
terms of all Leases and the spaces occupied and rentals payable thereunder
and a statement of all Leases which are then in default of any monetary
obligation, including the magnitude of any such monetary default and, in
the case of any non-monetary default, a statement of all Leases which, to
the best of Mortgagor's knowledge, are then in default of any non-monetary
obligation, including the nature and magnitude of any such non-monetary
default, (v) promptly deliver to Mortgagee, a fully executed copy of each
Lease upon the execution of the same. Notwithstanding the foregoing,
Mortgagee shall have no obligation to request any matters referred to
herein and shall request such matters in Mortgagee's reasonable discretion.
(c) Mortgagor hereby assigns to Mortgagee, from and
after the date hereof, primarily on a parity with the Encumbered Property,
and not secondarily, as further security for the payment of the
Indebtedness and the performance of the Obligations, the Leases and the
Rents. Nothing contained in this Article 11 shall be construed to bind
Mortgagee to the performance of any of the terms, covenants, conditions or
agreements contained in any Lease or otherwise impose any obligation on
Mortgagee (including, but without limiting the generality of the foregoing,
any liability under the covenant of quiet enjoyment contained in any Lease
in the event that any lessee shall have been joined as a party defendant in
any action commenced by reason of an Event of Default hereunder or in the
event of the sale of the Encumbered Property by Mortgagee pursuant to the
power of sale contained herein or otherwise or in the event lessee shall
have been barred and foreclosed of any or all right, title and interest and
equity of redemption in the Encumbered Property), except that Mortgagee
shall be accountable for any money actually received pursuant to the
aforesaid assignment. Mortgagor hereby further grants to Mortgagee the
right, but not the obligation, (i) to enter upon and take possession of the
Encumbered Property for the purpose of collecting the Rents, (ii) to
dispossess by the usual summary proceedings any lessee defaulting in making
any payment due under any Lease to Mortgagee or defaulting in the
performance of any of its other obligations under its Lease, (iii) to let
the Encumbered Property or any portion thereof, (iv) to apply the Rents on
account of the Indebtedness, it being understood that the excess Rents, if
any, remaining after all such payments shall have been made shall be the
property of and paid to Mortgagor, provided there exists no Event of
Default, and (v) to perform such other acts as Mortgagee is entitled to
perform pursuant to this Article 11. Such assignment and grant shall
continue in effect until the entire amount of the Indebtedness shall have
been fully paid pursuant to the terms hereof and the other Loan Documents,
and all Obligations shall have been fully performed in accordance with all
provisions hereof and the other Loan Documents, the execution of this
Mortgage constituting and evidencing the irrevocable consent of Mortgagor
to the entry upon and taking possession of the Encumbered Property by
Mortgagee pursuant to such grant, subject, however, to the rights of any
and all parties in possession thereof, whether or not the Encumbered
Property shall have been sold by Mortgagee pursuant to the power of sale
contained herein or otherwise and without applying for a receiver.
Mortgagee, however, grants to Mortgagor, not as a limitation or condition
hereof, but as a personal covenant available only to Mortgagor and its
successors and not to any lessee or other person, a license, revocable upon
the occurrence of an Event of Default upon five (5) days' written notice to
Mortgagor, to collect all of the Rents and to retain, use and enjoy the
same and to do all acts and perform such Obligations as Mortgagor is
required to perform under the Leases.
(d) Upon notice and demand, Mortgagor shall, from time
to time, execute, acknowledge and deliver to Mortgagee, or shall cause to
be executed, acknowledged and delivered to Mortgagee, in form reasonably
satisfactory to Mortgagee, one or more separate assignments (confirmatory
of the general assignment provided in this Article 11, subject to
Mortgagor's license) of the lessor's interest in any Lease. Mortgagor shall
pay to Mortgagee the reasonable expenses incurred by Mortgagee in
connection with the preparation and recording of any such instrument.
12. Provisions Regarding the Ground Lease.
(a) With respect to the Ground Lease, Mortgagors
covenant and agree as follows: (i) promptly and faithfully to observe,
perform and comply with all the terms, covenants and provisions of the
Ground Lease on their part to be observed, performed and complied with, at
the applicable times set forth in the Ground Lease, within any applicable
grace periods; (ii) to refrain from doing anything, as a result of which,
there could be a default or breach of any of the terms of the Ground Lease;
(iii) not to do, permit or suffer any event or omission as a result of
which there could occur a default or breach under the Ground Lease; (iv)
not to modify, amend or in any way alter or permit the alteration of any of
the terms of the Ground Lease and not to exercise any right it may have
under the Ground Lease to cancel or surrender the same; (v) to give
Mortgagee immediate notice of any default by anyone under the Ground Lease
and promptly to deliver to Mortgagee a copy of each notice of default and
all other notices, communications, plans, specifications and other
statements (including financial statements), responses, similar instruments
received or delivered by Mortgagors in connection with the Ground Lease;
and (vi) to furnish to Mortgagee copies of such information and evidence as
Mortgagee may reasonably require concerning Mortgagors' due observance,
performance and compliance with the terms, covenants and provisions of the
Ground Lease.
(b) In the event of the occurrence of any event which,
with the giving of notice, the passage of time or both, would constitute a
default by Mortgagors in the performance of any of their obligations under
the Ground Lease and not cured within any applicable grace period,
including, without limitation, any default in the payment of any sums
payable thereunder, then, in each and every case, Mortgagee may (but shall
have no obligation to do so), at its option, cause the default or defaults
to be remedied and otherwise exercise any and all of the rights of the
Mortgagors thereunder in the name of and on behalf of Mortgagors.
Mortgagors shall, on demand, reimburse Mortgagee for all advances made and
expenses incurred by Mortgagee in curing any such default (including,
without limitation, reasonable attorney's fees and disbursements), together
with interest thereon at the Interest Rate from the date of any such
payment by Mortgagee, to the date of repayment to Mortgagee.
(c) With respect to the Ground Lease, Mortgagors hereby
warrant and represent as follows: (i) the Ground Lease is in full force and
effect, unmodified by any writing or otherwise; (ii) all rent, additional
rent and/or other charges reserved in or payable under the Ground Lease
have been paid to the extent that they are payable to the date hereof;
(iii) Mortgagor enjoys the quiet and peaceful possession of the Leasehold
Estate; (iv) Mortgagors are not in default under any of the material terms
of the Ground Lease and, to the best of their knowledge, are not in default
under any other term of the Ground Lease and there are no circumstances
which, with the passage of time or the giving of notice or both, would
constitute a default under the Ground Lease; (v) the execution and delivery
of this Mortgage is permitted by the provisions of the Ground Lease and
does not violate any of the terms of the Ground Lease; and (vi) Mortgagors
have delivered to Mortgagee a true, accurate and complete copy of the
Ground Lease.
(d) If the Ground Lease is canceled or terminated, and
if Mortgagee or its nominee shall acquire an interest in any new lease of
the Land, Mortgagors shall have no right, title or interest in or to the
new lease or the leasehold estate created by such new lease.
(e) Bally's hereby assigns to Mortgagee, from and after
the date hereof, primarily on a parity with the Encumbered Property, and
not secondarily, as further security for the payment of the Indebtedness
and the performance of the Obligations, the rents under the Ground Lease.
Nothing contained in this Article 12 shall be construed to bind Mortgagee
to the performance of any of the terms, covenants, conditions or agreements
contained in the Ground Lease or otherwise impose any obligation on
Mortgagee (including, but without limiting the generality of the foregoing,
any liability under the covenant of quiet enjoyment contained in the Ground
Lease in the event that the lessee shall have been joined as a party
defendant in any action commenced by reason of an Event of Default
hereunder or in the event of the sale of the Encumbered Property by
Mortgagee pursuant to the power of sale contained herein or otherwise or in
the event lessee shall have been barred and foreclosed of any or all right,
title and interest and equity of redemption in the Encumbered Property),
except that Mortgagee shall be accountable for any money actually received
pursuant to the aforesaid assignment. Bally's hereby further grants to
Mortgagee the right, but not the obligation (i) to enter upon and take
possession of the Real Estate for the purpose of collecting the rents under
the Ground Lease, (ii) to dispossess by the usual summary proceedings any
lessee defaulting in making any payment due under the Ground Lease to
Mortgagee or defaulting in the performance of any of its other obligations
under the Ground Lease, (iii) to let the Real Estate or any portion
thereof, (iv) to apply the rents under the Ground Lease on account of the
Indebtedness, it being understood that the excess rents under the Ground
Lease, if any, remaining after all such payments shall have been made shall
be the property of and paid to Bally's, provided there exists no Event of
Default, and (v) to perform such other acts as Mortgagee is entitled to
perform pursuant to this Article 12. Such assignment and grant shall
continue in effect until the entire amount of the Indebtedness shall be
paid in full and all of the Obligations relating to the Credit Agreement
and the Notes shall be fully performed in accordance with this Mortgage and
the other Loan Documents, the execution of this Mortgage constituting and
evidencing the irrevocable consent of Bally's to the entry upon and taking
possession of the Real Estate by Mortgagee pursuant to such grant, subject,
however, to the rights of any and all parties in possession thereof,
whether or not the Encumbered Property shall have been sold by Mortgagee
pursuant to the power of sale contained herein or otherwise and without
applying for a receiver. Mortgagee, however, grants to Bally's, not as a
limitation or condition hereof, but as a personal covenant available only
to Bally's and its successors and not to any lessee or other person, a
license, revocable by the Mortgagee upon five (5) days' written notice to
Bally's of such revocation, to collect all of the Rents and to retain, use
and enjoy the same, unless and until an Event of Default shall exist
hereunder or unless and until any event shall have occurred which, with the
giving of notice or the lapse of time, or both, would constitute an Event
of Default hereunder.
(f) Upon notice and demand, Bally's shall, from time to
time, execute, acknowledge and deliver to Mortgagee, or shall cause to be
executed, acknowledged and delivered to Mortgagee, in form reasonably
satisfactory to Mortgagee, one or more separate assignments (confirmatory
of the general assignment provided in this Article 12) of the lessor's
interest in the Ground Lease. Mortgagors shall pay to Mortgagee the
reasonable expenses incurred by Mortgagee in connection with the
preparation and recording of any such instrument.
(g) Notwithstanding anything to the contrary contained
herein, this Mortgage shall not constitute an assignment of the Ground
Lease within the meaning of any provision thereof prohibiting its
assignment and the Mortgagee shall have no liability or obligation
thereunder by reason of its acceptance of this Mortgage. The Mortgagee
shall be liable for the obligations of the tenant arising under the Ground
Lease for only that period of time during which the Mortgagee is in
possession of the Real Estate or has acquired, by foreclosure or otherwise,
and is holding, all of the Mortgagors' right, title and interest therein.
13. Estoppel Certificates. Mortgagors and Mortgagee, within
thirty (30) business days after request by the other, shall deliver, in
form reasonably satisfactory to the other, a written statement, duly
executed and acknowledged, setting forth the amount of the Indebtedness
then outstanding and whether, to the best knowledge of the affiant, any
offsets, claims, counterclaims or defenses exist against the Indebtedness
secured by this Mortgage.
14. Loan Document Expenses. Mortgagors shall pay, together
with any interest or penalties imposed in connection therewith, all
reasonable expenses of Mortgagee incident to the preparation, execution,
acknowledgement, delivery and/or recording of this Mortgage, the Assignment
and UCC-1 financing statements executed in connection with this Mortgage,
including, but without limiting the generality of the foregoing, all
filing, registration and recording fees and charges, documentary stamps,
intangible taxes and all federal, state, county and municipal taxes,
duties, imposts, assessments and charges now or hereafter required by
reason of, or in connection with, this Mortgage, the Assignment, such UCC-1
financing statements and UCC-3 continuation statements, and, in any event,
otherwise shall comply with the provisions set forth in Article 4 hereof.
15. Mortgagee's Right to Perform. In the event of any Event
of Default hereunder, Mortgagee may (but shall be under no obligation to),
at any time, without waiving or releasing Mortgagors from any Obligations
or any Event of Default under this Mortgage, perform the Obligations and,
in such event, the cost thereof, including, but without limiting the
generality of the foregoing, reasonable attorneys' fees, costs and
disbursements incurred in connection therewith, (a) shall be deemed to be
Indebtedness secured by this Mortgage, (b) shall be a lien on the
Encumbered Property prior to any right or title to, interest in, or claim
upon, the Encumbered Property subordinate to the lien of this Mortgage, and
(c) shall be payable, on demand, together with interest thereon at the
Interest Rate, from the date of any such payment by Mortgagee to the date
of repayment to Mortgagee. No payment or advance of money by Mortgagee
pursuant to the provisions of this Article 15 shall cure, or shall be
deemed or construed to cure, any such Event of Default by Mortgagors
hereunder or waive any rights or remedies of Mortgagee hereunder or at law
or in equity by reason of any such Event of Default.
16. Mortgagee's Costs and Expenses. If (a) Mortgagors shall
fail to perform any of the Obligations under this Mortgage, beyond
applicable grace periods, if any, or any other Loan Document, including the
Credit Agreement, beyond any applicable grace period, or (b) Mortgagee
shall exercise any of its rights or remedies hereunder, or (c) any action
or proceeding is commenced in which it becomes necessary to defend or
uphold the lien or priority of this Mortgage or any action or proceeding
relating to this Mortgage or any other Loan Document is commenced to which
Mortgagee is or becomes a party, or (d) the taking, holding or servicing of
this Mortgage by or on behalf of Mortgagee is alleged to subject Mortgagee
to any civil or criminal fine or penalty, or (e) Mortgagee's review and
approval of any document, including, but without limiting the generality of
the foregoing, any Major Lease (but excluding Leases that are not Major
Leases), is requested by Mortgagors or required by Mortgagee, then, in any
such event, all such reasonable costs, expenses and fees incurred by
Mortgagee in connection therewith (including, but without limiting the
generality of the foregoing, any civil or criminal fines or penalties and
attorneys' fees, costs and disbursements) (i) shall be deemed to be
Indebtedness secured by this Mortgage, (ii) shall be a lien on the
Encumbered Property prior to any right or title to, interest in, or claim
upon, the Encumbered Property subordinate to the lien of this Mortgage, and
(iii) shall be payable, on demand, together with interest thereon at the
Interest Rate, from the date of any such payment by Mortgagee to the date
of repayment to Mortgagee. In any action to enforce any remedy under this
Mortgage, including, but without limiting the generality of the foregoing,
sale of the Encumbered Property by Mortgagee pursuant to the power of sale
contained herein or otherwise, or to recover or collect the Indebtedness or
any portion thereof, the provisions of this Article 16 with respect to the
recovery of costs, expenses, disbursements and penalties shall prevail
unaffected by the provisions of any Legal Requirement with respect to the
same to the extent that the provisions of this Article 16 are not
inconsistent therewith or violative thereof.
17. Events of Defaults. The occurrence of an "Event of
Default" under the terms of the Credit Agreement shall be an Event of
Default hereunder.
18. Remedies.
(a) Upon the occurrence of any Event of Default
hereunder, Mortgagee may, without further notice, presentment, demand or
protest, all of which are hereby expressly waived by Mortgagors, take such
action as Mortgagee deems advisable, in its sole discretion, to protect and
enforce the rights of Mortgagee against the Mortgagors and in and to the
Encumbered Property or any part thereof, including, but without limiting
the generality of the foregoing, the following actions, each of which may
be pursued concurrently or otherwise, at such time and in such manner as
Mortgagee may determine, in its sole discretion, without impairing or
otherwise affecting the other rights and remedies of Mortgagee hereunder or
at law or in equity:
(i) Mortgagee may elect to cause the Encumbered
Property or any portion thereof to be sold in accordance with the
provisions hereof and applicable law.
(ii) Mortgagee may, without releasing Mortgagors
from any Obligation under this Mortgage or any other obligation under
any other Loan Document and without waiving any Event of Default,
exercise any of its rights and remedies under Article 15 hereof.
(iii) If the Indebtedness shall have been declared
due and payable in accordance with the provisions of the Credit
Agreement, then Mortgagee may (x) institute and maintain an action
with respect to the Encumbered Property under any other Loan
Document, or (y) take such other action as may be allowed at law or
in equity for the enforcement of this Mortgage and the other Loan
Documents. Mortgagee may proceed in any such action to final
judgment and execution thereon for the whole of the Indebtedness,
together with interest thereon at the Interest Rate, from the date on
which Mortgagee shall declare the same to be due and payable to the
date of repayment to Mortgagee, and all costs of any such action,
including, but without limiting the generality of the foregoing,
reasonable attorneys' fees, costs and disbursements.
(iv) Mortgagee, if it has not already revoked the
license granted pursuant to Articles 11 and 12 hereof, may revoke the
license and may, without releasing Mortgagors from any Obligation
under this Mortgage, and without waiving any Event of Default, enter
upon and take possession of the Encumbered Property or any portion
thereof, either personally or by its agents, nominees or attorneys,
and dispossess Mortgagors and their agents and servants therefrom
and, thereupon, Mortgagee may (w) use, manage, operate, control,
insure, maintain, repair, restore and otherwise deal with all and
every part of the Encumbered Property, (x) complete any construction
on the Real Estate, in such manner and form as Mortgagee deems
advisable, (y) make alterations, additions, renewals, replacements
and improvements to or on the Encumbered Property and (z) exercise
all rights and powers of Mortgagors with respect to the Encumbered
Property, either in the name of Mortgagors or otherwise, including,
but without limiting the generality of the foregoing, the right to
make, cancel, enforce or modify Leases, obtain and evict lessees,
establish or change the amount of any Rents and the manner of
collection thereof and perform any acts which Mortgagee deems proper,
in its sole discretion, to protect the security of this Mortgage.
Mortgagee may, but shall not be obligated to, take any action
pursuant to the Laws of the State of New Jersey to enforce the
provisions of any Operational Requirements and to secure continued
operation of the Encumbered Property as a licensed casino operation.
After deduction of all reasonable costs and expenses of operating and
managing the Encumbered Property, including, but without limiting the
generality of the foregoing, attorneys' fees, costs and
disbursements, administration expenses, management fees and brokers'
commissions, satisfaction of liens on any of the Encumbered Property,
payment of Impositions, claims and insurance premiums, invoices of
persons who may have supplied goods and services to or for the
benefit of any of the Encumbered Property and all costs and expenses
of the maintenance, repair, Restoration, alteration or improvement of
any of the Encumbered Property, Mortgagee may apply the Rents
received by Mortgagee to payment of the Indebtedness or performance
of the Obligations. Mortgagee may apply the Rents received by
Mortgagee to the payment of any or all of the foregoing in such order
and amounts as Mortgagee, in its sole discretion, may elect.
Mortgagee may, in its sole discretion, determine the method by which,
and extent to which, the Rents will be collected and the obligations
of the lessees under the Leases enforced and Mortgagee may waive or
fail to enforce any right or remedy of the lessor under any Lease.
(v) Mortgagee may disaffirm and cancel any Lease
affecting the Encumbered Property or any portion thereof at any time
during the period that it is exercising its remedies under this
Article 18, even though Mortgagee shall have enforced such Lease,
collected Rents thereunder or taken any action that might be deemed
by law to constitute an affirmance of such Lease. Such disaffirmance
shall be made by notice addressed to the lessee at the Real Estate
or, at Mortgagee's option, such other address of the lessee as may be
set forth in such Lease.
(vi) Mortgagee may declare the entire unpaid
Indebtedness to be immediately due and payable.
(vii) Mortgagee may institute proceedings for the
complete foreclosure of this Mortgage in which case the Encumbered
Property or the Mortgagors' interest therein may be sold for cash or
upon credit in one or more portions.
(viii) Mortgagee may, with or without entry, to
the extent permitted and pursuant to the procedures provided by
applicable law, institute proceedings for the partial foreclosure of
this Mortgage for the portion of the Indebtedness then due and
payable, subject to the continuing lien of this Mortgage for the
balance of the Indebtedness not then due.
(ix) Mortgagee may sell for cash or upon credit
the Encumbered Property or any part thereof and all estate, claim,
demand, right, title and interest of Mortgagors therein and rights of
redemption thereof, pursuant to power of sale or otherwise, at one or
more sales, in its entirety or in portions, at such time and place,
upon such terms and after such notice thereof as may be required or
permitted by law, and in the event of a sale, by foreclosure or
otherwise, of less than all of the Encumbered Property this Mortgage
shall continue as a lien on the remaining portion of the Encumbered
Property.
(x) Mortgagee may institute an action, suit or
proceeding in equity for the specific performance of any covenant,
condition or agreement contained herein or in the Notes or in the
Assignment or in any other Loan Document or Document.
(xi) Mortgagee may recover judgment on the Notes
either before, during or after any proceedings for the enforcement of
this Mortgage.
(xii) Mortgagee shall be entitled to the
appointment of a trustee, receiver, liquidator or conservator of the
Encumbered Property, without regard for the adequacy of the security
for the Indebtedness and without regard for the solvency of the
Mortgagor or Bally's, any guarantor or of any person, firm or the
entity liable for the payment of the Indebtedness.
(xiii) Mortgagee may cure such Event of Default,
without relieving Mortgagors of any liability in connection with such
Event of Default, and (1) Mortgagor, on demand, shall reimburse
Mortgagee for any and all costs and expenses incurred by Mortgagee in
connection with the curing of any Event of Default, together with
interest thereon at the Interest Rate from the date such costs and
expenses are incurred to the date of repayment to Mortgagee, and (2)
Mortgagee shall be entitled to apply any sums then held by Mortgagee
pursuant to the provisions of this Mortgage to the curing of such
Event of Default or to reimburse the Mortgagee for costs and expenses
incurred in connection therewith; and/or
(xiv) Mortgagee may pursue such other remedies as
the Mortgagee may have under any applicable law.
(b) The purchase money proceeds or avails of any sale
made under or by virtue of this Article 18, together with any other sums
which then may be held by Mortgagee under this Mortgage, whether under the
provisions of this Article 18 or otherwise, shall be applied as follows:
First: To the payment of the costs and expenses of any such
sale, including reasonable compensation to Mortgagee's agents and
counsel, and of any judicial proceedings wherein the same may be
made, and of all expenses, liabilities and advances made or incurred
by Mortgagee under this Mortgage and together with interest as
provided herein on all advances made by Mortgagee and all taxes or
assessments, except any taxes, assessments or other charges subject
to which the Encumbered Property shall have been sold.
Second: To the payment of amounts then due and unpaid for
principal and interest on the Notes.
Third: To the payment of the amount of Indebtedness then
outstanding and performance of all of the other Obligations, in such
a manner and order of priority or preference as Mortgagee may, in its
sole discretion, determine.
Fourth: To the payment of outstanding Impositions.
Fifth: To the payment of the surplus, if any, to whomsoever may
lawfully be entitled to receive the same, including, without
limitation, Mortgagors. Mortgagee and any receiver of the Encumbered
Property, or any part thereof, shall be liable to account for only
those rents, issues and profits actually received by it.
(c) Mortgagee, in any action to enforce this Mortgage,
shall be entitled to the appointment of a receiver by a court of competent
jurisdiction or may, in connection with any foreclosure proceeding
hereunder, request the Casino Control Commission, to petition a court of
the State of New Jersey for the appointment of a supervisor to conduct the
normal gaming activities on the Real Estate following such foreclosure
proceeding. If it shall become necessary, or in the opinion of Mortgagee
advisable, for Mortgagee or an agent or representative of Mortgagee to
become licensed under the provisions of the laws of the State of New
Jersey, or rules and regulations adopted pursuant thereto, as a condition
to receiving the benefit of the Real Estate, the Personal Property or other
collateral hereby encumbered for the benefit of Mortgagee, Mortgagor and
Bally's do hereby give their consent to the granting of such license or
licenses and agree to execute such further documents as may be reasonably
required in connection with the evidencing of such consent.
(d) The remedies and rights granted to Mortgagee
hereunder are cumulative and are not in lieu of, but are in addition to,
and shall not be affected by the exercise of, any other remedy or right
available to Mortgagee whether now or hereafter existing either at law or
in equity or under this Mortgage or any other Loan Document.
(e) Mortgagee may adjourn from time to time any sale by
it to be made under or by virtue of this Mortgage by announcement at the
time and place appointed for such sale or for such adjourned sale or sales;
and, except as otherwise provided by any applicable provision of law,
Mortgagee, without further notice or publication, may make such sale at the
time and place to which the same shall be so adjourned.
(f) Upon the completion of any sale or sales made by
Mortgagee under or by virtue of this Article 18, Mortgagee, or an officer
of any court empowered to do so, shall execute and deliver to the accepted
purchaser or purchasers a good and sufficient instrument, or good and
sufficient instruments, conveying, assigning and transferring all estate,
right, title and interest in and to the property and rights sold. Mortgagee
is hereby irrevocably appointed the true and lawful attorney of Mortgagor
and Bally's, in their name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Encumbered Property and rights
so sold and for that purpose Mortgagee may execute all necessary
instruments of conveyance, assignment and transfer, and may substitute one
or more persons with like power, Mortgagor and Bally's hereby ratifying and
confirming all that their said attorney or such substitute or substitutes
shall lawfully do by virtue hereof. Any such sale or sales made under or
by virtue of this Article 18, whether made under the power of sale herein
granted or under or by virtue of judicial proceedings or of a judgment or
decree of foreclosure and sale, shall operate to divest all the estate,
rights, title, interest, claim and demand whatsoever, whether at law or in
equity, of Mortgagor and Bally's in and to the properties and rights so
sold, and shall be a perpetual bar both at law and in equity against
Mortgagor and Bally's and against any and all persons claiming or who may
claim the same, or any part thereof from, through or under Mortgagor and
Bally's.
(g) Anything contained in the Credit Agreement or in
this Mortgage to the contrary notwithstanding, in the event of any sale
made under or by virtue of this Article 18 (whether made under the power of
sale herein granted or under or by virtue of judicial proceedings or a
judgment or decree of foreclosure and sale) the entire Indebtedness, if not
previously due and payable, immediately thereupon shall become due and
payable.
(h) Upon any sale made under or by virtue of this
Article 18 (whether made under the power of sale herein granted or under or
by virtue of judicial proceedings or of a judgment or decree of foreclosure
and sale), Mortgagee may bid for and acquire the Encumbered Property or any
part thereof and in lieu of paying cash therefor may make settlement for
the purchase price by crediting against the sales price the Indebtedness
and the expenses of the sale, and the costs of the action and any other
sums which Mortgagee is authorized to deduct under this Mortgage.
(i) No recovery of any judgment by Mortgagee and no
levy of an execution under any judgment upon the encumbered Property or
upon any property of Mortgagor and Bally's shall affect in any manner or to
any extent, the lien of this Mortgage upon the Encumbered Property or any
part thereof, or any liens, rights, powers or remedies of Mortgagee
hereunder, but such liens, rights, powers and remedies of Mortgagee shall
continue unimpaired as before.
(j) Upon the occurrence of any Event of Default and the
acceleration of the maturity hereof, if, at any time prior to the
foreclosure sale, Mortgagor or Bally's or any other person tenders payment
of the amount necessary to satisfy the Indebtedness, the same shall
constitute an evasion of the payment terms hereof and shall be deemed to be
a voluntary prepayment hereunder, in which case such payment must include
the premium required under the prepayment provisions, if any.
(k) Upon the occurrence of any Event of Default
hereunder, it is agreed that Mortgagor, if it is an occupant of the Real
Estate or any part thereof, shall immediately surrender possession of the
Real Estate so occupied to the Mortgagee, and if such occupant is permitted
to remain in possession, the possession shall be as tenant of Mortgagee
and, on demand such occupant, subject to applicable law (a) shall pay to
Mortgagee, monthly, in advance, a reasonable rental for the space occupied
and (b) in default thereof may be dispossessed by the usual summary
proceedings. The covenants herein contained may be enforced by a receiver
of the Encumbered Property or any part thereof.
(l) If any payment due hereunder or under the Credit
Agreement and the Notes is not paid when due after any applicable grace
period, either at stated or accelerated maturity or pursuant to any of the
terms hereof, then and in such event, the Mortgagors shall pay or shall
cause to be paid interest thereon at the Interest Rate from and after the
date on which such payment first becomes due and such interest shall be due
and payable, on demand, at the Interest Rate until the entire amount due is
paid to Mortgagee, whether or not any action shall have been taken or
proceeding commenced to recover the same or to foreclose this Mortgage.
Nothing in this Section or in any other provision of this Mortgage shall
constitute an extension of the time of payment of the Indebtedness.
(m) After the happening of any Event of Default and
immediately upon the commencement of any action, suit or other legal
proceedings by Mortgagee to obtain judgment for the Indebtedness, or of any
other nature in aid of the enforcement of the Credit Agreement, the Notes
or of this Mortgage, Mortgagor and Bally's shall (a) waive the issuance and
service of process and enter their voluntary appearance in such action,
suit or proceeding, and (b) if required by Mortgagee, consent to the
appointment of a receiver or receivers of the Encumbered Property and of
all the profits thereof.
(n) Notwithstanding the appointment of any receiver,
liquidator or trustee of Mortgagor or Bally's, or of any of their property,
or of the Encumbered Property or any part thereof, Mortgagee shall be
entitled to retain possession and control of all property now and hereafter
covered by this Mortgage.
19. Security Agreement under Uniform Commercial Code. It is
the intention of Mortgagors and Mortgagee that this Mortgage shall
constitute and this Mortgage does hereby constitute a Security Agreement
among Mortgagors and Mortgagee within the meaning of the Uniform Commercial
Code of the State of New Jersey. Notwithstanding the filing of a financing
statement covering any of the Encumbered Property in the records normally
pertaining to personal property, all of the Encumbered Property, for all
purposes and in all proceedings, legal or equitable, shall be regarded, at
Mortgagee's option (to the extent permitted by law), as part of the
Encumbered Property whether or not any such item is physically attached to
the Real Estate or serial numbers are used for the better identification of
certain items. The mention in any such financing statement of any of the
Encumbered Property shall never be construed in any way as derogating from
or impairing this declaration and hereby stated intention of Mortgagors and
Mortgagee that such mention in the financing statement is hereby declared
to be for the protection of Mortgagee in the event any court shall at any
time hold that notice of Mortgagee's priority of this Mortgage, to be
effective against any third party, including the Federal government or any
authority or agency thereof, must be filed in the Uniform Commercial Code
records. Pursuant to the provisions of the Uniform Commercial Code, if
Mortgagors shall fail to execute any such financing or continuation
statements for twenty (20) days after request therefor is made by
Mortgagee, Mortgagors hereby authorize Mortgagee, without the signature of
Mortgagors, to execute and file financing and continuation statements if
Mortgagee shall determine, in its sole discretion, that such financing or
continuation statements are necessary or advisable in order to preserve or
perfect its security interest in the Personal Property covered by this
Mortgage, and Mortgagor shall pay to Mortgagee, on demand, any reasonable
expenses incurred by Mortgagee in connection with the preparation,
execution and filing of such statements that may be filed by Mortgagee.
20. No Waivers, Etc. No failure by Mortgagee to insist upon
the strict performance by each of the Mortgagors of any of the terms and
provisions of this Mortgage shall be deemed to be a waiver of any of the
terms, covenants, conditions and provisions hereof and Mortgagee,
notwithstanding any such failure, shall have the right thereafter to insist
upon the strict performance by each of the Mortgagors of any and all of the
terms, covenants, conditions and provisions of this Mortgage to be
performed by such Mortgagor. Mortgagee may release, regardless of
consideration and without the necessity for any notice to or consent by the
holder of any subordinate lien on the Encumbered Property, any part of the
security held for payment of the Indebtedness or any portion thereof or for
the performance of the Obligations secured by this Mortgage without, as to
the remainder of the security, in any manner whatsoever, impairing or
affecting the lien of this Mortgage or the priority of the lien of this
Mortgage over any subordinate lien. In the event of an occurrence of an
Event of Default hereunder, Mortgagee may resort for the payment of the
Indebtedness secured by this Mortgage to any other security therefor held
by Mortgagee in such order and manner as Mortgagee may elect.
21. Brokerage. Mortgagors and Mortgagee each hereby
represent and warrant that they have dealt with no broker, finder or like
agent in connection with the Credit Agreement or the Notes or this
Mortgage.
22. Mortgage Subject to the Provisions of the Act. Each
provision of this Mortgage is subject to the provisions of the Act, as
defined in Section 3, paragraph (e).
23. Environmental Matters.
(a) Mortgagor and Bally's each represent
and warrant that, to the best of Mortgagor's or Bally's knowledge:
(i) Environmental Matters. (i) Each of the
Mortgagors and all real property owned and/or occupied by either of
the Mortgagors in the state of New Jersey, including, but not limited
to, the Encumbered Property, are and have been in compliance with,
and there are no outstanding allegations by any person or entity that
any of them is or has not been in compliance with, all applicable
federal, state and local laws, regulations and rules (including
common law relating to personal injury and damage to, or interference
with, property), permits, licenses, registrations and other
governmental authorizations, judgments, decrees and orders relating
to pollution, the preservation of the environment (including
historical preservation and endangered species) and the release or
disposal of, or exposure to, materials (including noise, radiation
and odors) in the environment or work place ("Environmental Laws"),
except for failures to be in compliance and allegations of
noncompliance which would not have a material adverse effect on
Mortgagor and its subsidiaries taken as a whole or Bally's and its
subsidiaries taken as a whole or the Encumbered Property or be
disadvantageous in any material respect to the Mortgagee.
(ii) There are no past or present actions,
conditions or occurrences that could form the basis of any claim
under Environmental Laws against, or liability or obligation under
such laws of, each of the Mortgagors or any real property owned
and/or occupied by either of the Mortgagors in the state of New
Jersey, including, but not limited to, the Encumbered Property, or,
to the knowledge of Mortgagor, against or of any person or entity
whose liability for such claim, liability or obligation may have been
retained or assumed by either of the Mortgagors under contract or law
except for such claim, liability or obligation which would not have a
material adverse effect on Mortgagor and its subsidiaries taken as a
whole or, Bally's and its subsidiaries taken as a whole or the
Encumbered Property or be disadvantageous in any material respect to
the Mortgagee. Without limiting the foregoing:
(A) None of the real property owned and/or
occupied by either of the Mortgagors and located in the State of New
Jersey, including, but not limited to, the Encumbered Property, has
ever been used by previous owners and/or operators as a "Major
Facility," as such term is defined in N.J.S.A. 58:10-23.llb(l), and
said real property, including, but not limited to, the Encumbered
Property, is not now and will not be used in the future as a "Major
Facility."
(B) There are and have been no underground
storage tanks located upon the Real Estate other than the two
underground banks which were used to store heating oil. There is no
friable, or damaged non-friable, asbestos-containing material, urea
formaldehyde foam insulation, polychlorinated biphenyls or
lead-exposed water pipes in or on the Real Estate.
(iii) Each of the Mortgagors has provided
Mortgagee copies of all environmental reports, investigations and
studies in its possession or control relating to the Real Estate, and
has identified to Mortgagee all other such environmental reports,
investigations and studies not in its possession or control of which
it has knowledge.
(b) Mortgagor and Bally's each covenant and agree that:
(i) In the event that there shall be filed a lien
against the Encumbered Property by the New Jersey Department of
Environmental Protection, pursuant to and in accordance with the
provisions of N.J.S.A. 58:10-23.11f(f), or by any other person or
entity arising from an intentional or unintentional action or
omission of Mortgagor or Bally's, resulting in the releasing,
spilling, pumping, pouring, emitting, emptying or dumping of
materials regulated under Environmental Laws, then Mortgagor shall,
within thirty (30) days from the date that Mortgagor or Bally's is
given notice that the lien has been placed against the Encumbered
Property or within such shorter period of time in the event that the
State of New Jersey or any other person or entity has commenced steps
to cause the Encumbered Property to be sold pursuant to the lien,
either (l) pay the claim and remove the lien from the Encumbered
Property, or (2) furnish (x) a bond satisfactory to Mortgagee in the
amount of the claim out of which the lien arises, (y) a cash deposit
in the amount of the claim out of which the lien arises, or (z) other
security reasonably satisfactory to Mortgagee in an amount sufficient
to discharge the claim out of which the lien arises.
(ii) Each of the Mortgagors shall comply fully
with all applicable Environmental Laws including without limitation
by promptly, diligently and expeditiously containing, reporting (as
required by Environmental Laws) and cleaning up any spill, leak,
pumping, pour, emission, emptying or dumping of materials regulated
under Environmental Laws for which either of the Mortgagors is
responsible.
(iii) If either of the Mortgagors shall fail to
take any action required by this Section 23(b), upon notice to either
of the Mortgagors (which may be telephonic or by any other means of
communication), Mortgagee may make advances or payments towards
performance or satisfaction of the same but shall be under no
obligation to do so; and all sums so advanced or paid, including,
without limitation, reasonable counsel fees, fines, penalties,
payments or sums advanced or paid in connection with any judicial or
administrative investigation or proceeding relating thereto (1) shall
be deemed to be Indebtedness, (2) shall be a lien on the Encumbered
Property pari passu with the Indebtedness and (3) immediately shall
be due and payable, on demand. Mortgagor and Bally's shall execute
and deliver promptly after request, such instruments as Mortgagee may
deem useful or required to permit Mortgagee to take any such action.
(iv) Each of the Mortgagors absolutely and
unconditionally agrees to indemnify and to hold Mortgagee harmless
from and against any and all loss, liability, cost or expense
incurred by Mortgagee as a result of or arising in connection with:
(A) such Mortgagor's breach of any representation, warranty or
covenant contained herein; (B) such Mortgagor's failure to comply
with Environmental Laws, including, without limitation, those related
to the presence of asbestos affecting the Encumbered Property; and
(C) any liability under Environmental Laws in any way related to the
operations, acts or omission to act of either of the Mortgagors or
the Real Estate, which indemnification, notwithstanding the
provisions of this Mortgage or the Loan Documents, shall survive the
release and discharge of this Mortgage of record, and foreclosure or
sale of the Encumbered Property under this Mortgage, payment of the
Notes, the Credit Agreement, or any other discharge of the
Indebtedness by operation of law or otherwise.
24. Waivers by Mortgagors.
(a) Mortgagors hereby waive all error and
imperfections, to the extent permitted by law, in any proceedings
instituted by Mortgagee under this Mortgage, the Credit Agreement or any
other Loan Document and all benefit of any present or future statute of
limitations or any other present or future statute, law, stay, moratorium,
appraisal or valuation law, regulation or judicial decision, nor shall
Mortgagors at any time insist upon or plead, or in any manner whatsoever,
claim or take any benefit or advantage of any such statute, law, stay,
moratorium, regulation or judicial decision which (i) provides for the
valuation or appraisal of the Encumbered Property prior to any sale or
sales thereof which may be made pursuant to any provision herein or
pursuant to any decree, judgment or order of any court of competent
jurisdiction, (ii) exempts any of the Encumbered Property or any other
property, real or personal, or any part of the proceeds arising from any
sale thereof, from attachment, levy or sale under execution, (iii) provides
for any stay of execution, moratorium, marshalling of assets, exemption
from civil process, redemption or extension of time for payment, (iv)
requires Mortgagee to institute proceedings in foreclosure against the
Encumbered Property before exercising any other remedy afforded Mortgagee
hereunder in the event of an Event of Default, (v) affects any of the
terms, covenants, conditions or provisions of this Mortgage or (vi)
conflicts with or may affect, in a manner which may be adverse to
Mortgagee, any provision, covenant, condition or term of this Mortgage, the
Credit Agreement or any other Loan Document, nor shall Mortgagors at any
time after any sale or sales of the Encumbered Property pursuant to any
provision herein, claim or exercise any right under any present or future
statute, law, stay, moratorium, regulation or judicial decision to redeem
the Encumbered Property or the portion thereof so sold.
(b) Mortgagors hereby waive the right, if any, to
require any sale to be made in parcels, or the right, if any, to select
parcels to be sold, and there shall be no requirement for marshalling of
assets.
25. Notices. Whenever it is provided herein that any notice,
demand, request, consent, approval, declaration or other communication
shall or may be given to or served upon either Mortgagors or Mortgagee, or
whenever either Mortgagors or Mortgagee shall desire to give or serve upon
the other any such communication with respect to this Mortgage or the
Encumbered Property, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
(a) If to Mortgagee,
First Fidelity Bank, National Association
550 Broad Street
Newark, New Jersey 07101
Attn: Robert K. Strunk
With a copy to
Midlantic National Bank
499 Thornall Street
Metro Park Plaza
Edison, N.J. 08837
Attn: Edward M. Tessalone
(b) If to Mortgagor
Park Place and the Boardwalk,
Atlantic City, New Jersey 08401
With a copy to
Benesch, Friedlander, CopIan &
Aronoff
1100 Citizens Building
Cleveland, Ohio 44114
Attention: Chairperson,
Real Estate Department
(c) If to Bally's,
Park Place and the Boardwalk,
Atlantic City, New Jersey 08401
With a copy to
Benesch, Friedlander, CopIan &
Aronoff
1100 Citizens Building
Cleveland, Ohio 44114
Attention: Chairperson,
Real Estate Department
(d) or to such other address as Mortgagors or Mortgagee
may substitute by notice given as herein provided. Every notice, demand,
request, consent, approval, declaration or other communication hereunder
shall be deemed to have been duly given or served on the date on which
personally delivered, with receipt acknowledged, or on the date of actual
receipt or the date on which the same shall be returned to the sender by
the Post Office as unclaimed. Failure or delay in delivering copies of any
notice, demand, request, consent, approval, declaration or other
communication to the persons designated herein to receive copies shall in
no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
26. Conflict with Credit Agreement. If there shall be any
inconsistencies between the terms, covenants, conditions and provisions set
forth in this Mortgage and the terms, covenants, conditions and provisions
set forth in the Credit Agreement, then, unless this Mortgage expressly
provides otherwise by specific reference to the Credit Agreement, the
terms, covenants, conditions and provisions of the Credit Agreement shall
prevail.
27. No Modification; Binding Obligations. This Mortgage may
not be modified, amended, discharged or waived in whole or in part except
by an agreement in writing signed by Mortgagors and Mortgagee. The
covenants of this Mortgage shall run with the Land and shall bind
Mortgagors and their respective successors and assigns and all present and
subsequent encumbrancers, lessees and sublessees of any of the Encumbered
Property and shall inure to the benefit of Mortgagee and its respective
successors, assigns and endorsees.
28. Miscellaneous.
(a) The Article headings in this Mortgage are used only
for convenience and are not part of this Mortgage and are not to be used in
determining the intent of the parties or otherwise in interpreting this
Mortgage. As used in this Mortgage, the singular shall include the plural
as the context requires and the following words and phrases shall have the
following meanings:(a) "provisions" shall mean "provisions, terms,
covenants and/or conditions"; (b) "lien" shall mean "lien, charge, pledge,
security interest, mortgage, deed of trust or other encumbrance of any
kind"; (c) "obligation" shall mean "obligation, duty, covenant and/or
condition"; (d) "any of the Encumbered Property" shall mean "the Encumbered
Property or any portion thereof or interest therein", and "any of the
Leasehold Encumbered Property" shall mean "the Leasehold Encumbered
Property or any portion thereof or interest therein", and "any of the Fee
Encumbered Property" shall mean "the Fee Encumbered Property or any portion
thereof or interest therein"; and (e) "the Real Estate" shall mean "the
Real Estate or any portion thereof or interest therein." Any act which
Mortgagee is permitted to perform under this Mortgage, the Credit Agreement
or any other Loan Document may be performed at any time and from time to
time by Mortgagee or by any person or entity designated by Mortgagee. Each
appointment of Mortgagee as attorney-in-fact for Mortgagors under this
Mortgage, the Credit Agreement or any other Loan Document shall be
irrevocable and coupled with an interest. If Mortgagee shall fail or refuse
to consent, approve, accept or indicate its satisfaction, Mortgagors shall
not be entitled to any damages for any withholding or delay of such
consent, approval, acceptance or indication of satisfaction by Mortgagee,
it being intended that Mortgagors' sole remedy shall be to bring an action
for an injunction or specific performance, which remedy of an injunction or
specific performance shall be available only in those cases where Mortgagee
has expressly agreed hereunder or under any other Loan Document not to
unreasonably withhold or delay its consent, approval, acceptance or
indication of satisfaction.
(b) No director, officer, employee, stockholder or
incorporator, as such, past, present or future, of Mortgagors or any
successor corporation shall have any liability for any obligations of
Mortgagors hereunder or for any claim based on, in respect of or by reason
of such obligations or their creation. Mortgagee, by accepting this
Mortgage, waives and releases all such liability.
29. Enforceability. This Mortgage shall be construed,
interpreted, enforced and governed by and in accordance with the laws of
the State of New Jersey. Nothing contained in this Mortgage or in any
other Loan Documents shall require either of the Mortgagors to pay, or
Mortgagee to accept, interest in an amount which would subject Mortgagee to
penalty under applicable law. In the event that the payment of any interest
due hereunder or under the Credit Agreement or any other Loan Document
would subject Mortgagee to penalty under applicable law, then, ipso facto,
the obligation of such Mortgagors to make such payment shall be reduced to
the highest rate then permitted under applicable law without penalty.
30. Satisfaction/Defeasance. At such time as the entire
amount of the Indebtedness shall have been fully paid pursuant to the terms
hereof and the other Loan Documents, and all Obligations shall have been
fully performed in accordance with all provisions hereof and the other Loan
Documents, then Mortgagee shall deliver to Mortgagors a satisfaction of
this Mortgage in recordable form.
31. Receipt of Copy. Each of Mortgagors acknowledges that it
has true copy of this Mortgage.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Mortgage to be
duly executed and acknowledged under seal as of the day and year first
above written.
Mortgagor: BALLY'S PARK PLACE,
INC., a New Jersey corporation
By: _______________________
Joseph A. D'Amato
Vice President
Bally's: BALLY'S PARK PLACE
REALTY CO.
By: _______________________
Joseph A. D'Amato
Vice President
Mortgagee:
First Fidelity Bank, National
Association as collateral agent
By: _________________________
Robert K. Strunk
Vice President
<PAGE>
<PAGE>
STATE OF NEW YORK
SS:
COUNTY OF NEW YORK
On the 7th day of March, 1994, before me personally came Joseph
A. D'Amato, to me known, who, being by me duly sworn, did depose and say
that he is a Vice President of Bally's Park Place, Inc., a New Jersey
corporation, the corporation described in and which executed the foregoing
instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed
by order of the board of directors of said corporation; and that he signed
his name thereto by like order.
Notary Public ______________________
STATE OF NEW
SS:
COUNTY OF NEW YORK
On the 7th day of March, 1994, before me personally came Joseph
A. D'Amato, to me known, who, being by me duly sworn, did depose and say
that he is a Vice President of Bally's Park Place Realty Co., the
corporation described in and which executed the foregoing instrument; that
he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the
board of directors of said corporation; and that he signed his name thereto
by like order.
Notary Public _____________________
<PAGE>
STATE OF NEW YORK
SS:
COUNTY OF NEW YORK
On the 7th day of March, 1994, before me personally came Robert
K. Strunk, to me known, who, being by me duly sworn, did depose and say
that he is the Vice President of First Fidelity Bank, National Association,
the corporation described in and which executed the foregoing instrument;
that he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the
board of directors of said corporation; and that he signed his name thereto
by like order.
Notary Public ________________________
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
by and between
Bally's Park Place, Inc., a New Jersey corporation,
Mortgagor
and
Bally's Park Place Realty Co., a New Jersey corporation,
Bally's
and
First Fidelity Bank, N.A. as collateral agent
Mortgagee
Dated as of March 8, 1994
Record and Return to:
Curtis A. Johnson
McCarter & English
Gateway 4
100 Mulberry Street
Newark, New Jersey 07102
<PAGE>
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
by and between
Bally's Park Place, Inc., a New Jersey corporation,
Assignor
and
Bally's Park Place Realty Co., a New Jersey corporation,
Bally's
and
First Fidelity Bank, N.A. as collateral agent
Assignee
Dated as of March 8, 1994
Record and Return to:
Curtis A. Johnson
McCarter & English
Gateway 4
100 Mulberry Street
Newark, New Jersey 07102
<PAGE>
<PAGE>
TABLE OF CONTENTS
l. Warranty of Title
2. Payment of Indebtedness
3. Requirements; Proper Care and Use
4. Taxes on Mortgaged
S. Payment of Impositions
6. Insurance
7. Condemnation/Eminent Domain
8. Sale of Encumbered Property; Additional Financing
9. Discharge of Liens
10. Right of Contest
11. Leases
12. Provisions Regarding the Ground Lease
13. Estoppel Certificates
14. Loan Document Expenses
15. Mortgagee's Right to Perform
16. Mortgagee's Costs and Expenses
17. Events of Defaults
18. Remedies
19. Security Agreement Under Uniform Commercial Code
20. No Waivers, Etc.
21. Brokerage
22. Mortgage Subject to the Provisions of the Act
23. Environmental Matters
24. Waivers by Mortgagors
25. Notices
26. Conflict with Credit Agreement
27. No Modification; Binding Obligations
28. Miscellaneous
29. Enforceability
30. Satisfaction/Defeasance
31. Receipt of Copy
Signature Page
<PAGE>
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
This Agreement (hereinafter referred to as this ("Assignment"), made
as of the 8th day of March, 1994, between Bally's Park Place, Inc., a New
Jersey corporation, having an office at Park Place and the Boardwalk, Atlantic
City, New Jersey 08401, as leasehold and fee assignor, ("Assignor"), and
Bally's Park Place Realty Co., a New Jersey corporation, having an office at
Park Place and the Boardwalk, Atlantic City, New Jersey 08401, as fee
assignor, ("Bally's", and, together with Assignor, ("Assignors") and First
Fidelity Bank, National Association, as collateral agent, having an office at
550 Broad Street, Newark, New Jersey 07102 ("Assignee").
W I T N E S S E T H:
Whereas, Assignor is (a) the tenant of certain real property
situated in Atlantic City, New Jersey, more particularly described and
indicated as the "Leased Land" on Exhibit "A" annexed hereto and made a part
hereof (the "Leased Land") pursuant to that certain Lease (the "Ground
Lease"), dated June 8, 1977, between the Palley-Blatt Company, as ground
lessor, and Bally Manufacturing of New Jersey, Inc., a New Jersey corporation,
currently known as Assignor, as ground lessee, as assigned by that certain
Assignment of Lease dated April 27, 1979 between Palley-Blatt Company, as
assignor, and Norman Palley, trustee under Declaration of Trust dated April
10, 1979, and Alexander K. Blatt, trustee under Declaration of Trust dated
April 6, 1979, as assignees, and by that certain Assignment of Lease dated
April 27, 1979 by Norman Palley, trustee under Declaration of Trust dated
April 10, 1979, and Alexander K. Blatt, trustee under Declaration of Trust
dated April 6, 1979, as assignors, and Bally Manufacturing Corporation, as
assignee, and by assignment to Bally's and (b) the owner of certain real
property situated in Atlantic City, New Jersey, more
particularly described and indicated as the "Owned Land" on Exhibit "A"
annexed hereto and made a part hereof (the "Owned Land", and together with the
Leased Land, the "Land"); and
WHEREAS, Bally's is the owner of the Leased Land and ground lessor
under the Ground Lease; and
WHEREAS, Assignor is the owner of the buildings and other
improvements now or hereafter erected on the Land (such buildings and other
improvements being hereinafter collectively referred to as the "Buildings",
and the Land, together with the Buildings being hereinafter collectively
referred to as the "Property"); and
WHEREAS, Assignor, Bally's, Bally's Park Place Funding, Inc., a
Delaware corporation ("Funding") as obligor, Bally's Park Place, Inc., a
Delaware corporation ("Park Place-Delaware"), as guarantor, and First Bank,
National Association as trustee ("Trustee"), have entered into an Indenture
(the "Indenture"), dated as of March 8, 1994, pursuant to which Funding will
execute and deliver its First Mortgage Notes due 2004 (the "Notes") in the
principal amount of up to $425,000,000; and
WHEREAS, to secure the Indenture and the Notes, the Assignor, Bally's
and Funding have executed and delivered to the Trustee a Mortgage and Security
Agreement with Assignment of Rents covering the Property (the "Trustee's
Mortgage"); and
WHEREAS, to further secure the Indenture and the Notes, the Assignor and
Bally's have executed and delivered to the Trustee an Assignment of Leases and
Rents covering the Property (the "Trustee's Assignment"); and
WHEREAS, Assignor, Bally's and Park Place-Delaware have entered into a
credit and guaranty agreement (the "Loan Agreement") dated as of March 7,
1994, in which the Assignee, as Agent for First Fidelity Bank, N.A. and
Midlantic National Bank, has agreed to lend up to $50,000,000 and under which
Assignor has issued notes evidencing its obligations to the Assignee (the
"Revolving Credit Notes"); and
WHEREAS, to secure the obligations of the Assignors and Park Place-
Delaware under the Loan Agreement and the Revolving Credit Notes, Assignors
have executed and delivered to the Assignee a Mortgage and Security Agreement
with Assignment of Rents dated March 7, 1994, covering the Property (the
"Mortgage"); and
WHEREAS, the Trustee and the Assignee has, as of the date hereof,
entered into an agreement (the "Intercreditor Agreement") governing the
exercise of remedies under the Trustee's Mortgage, the Mortgage, the Trustee's
Assignment and this Assignment and governing the disposition of any proceeds
received from the Property; and
WHEREAS, Assignee is unwilling to enter into the Loan Agreement and
accept the Revolving Credit Notes unless Assignors make, execute and deliver
this Assignment.
NOW THEREFORE, in consideration of the premises and in consideration of
the sum of Ten Dollars ($10.00) and other good and valuable consideration paid
by Assignee to Assignors the receipt and sufficiency of which are hereby
acknowledged, and to better secure the payment to Assignee of (i) all monies
that may be due and Payable under the Loan Agreement, the Revolving Credit
Notes and the Mortgage and (ii) all monies which may be advanced by Assignee
on behalf of Assignor and/or Bally's under the terms of the Mortgage, Assignor
and Bally's hereby agree as follows:
1. (a) Assignor hereby grants, transfers, bargains, sells,
assigns, conveys, and sets over unto Assignee, its successors and assigns,
from and after the date hereof (including any period allowed by law for
redemption after any sale), all right, title and interest of Assignor in and
to (i) all leases, subleases, licenses and other occupancy agreements which
now or hereafter affect the Property or any part or parts thereof and all
guarantees, modifications, renewals and extensions thereof (collectively, the
"Leases"), and (ii) all documents and instruments made or hereafter made in
respect of the Leases, together with all of the rents and issues and profits,
due and to become due or to which Assignor is now or may hereafter become
entitled, arising out of the Leases and any of the Property covered by the
Leases (the "Leased Property"), excluding, however, any sums paid as "key
money" in connection with the execution or renewal of Leases or any sums paid
in connection with the execution or renewal of a Lease as advance rental
("Advance Rental") to the extent the same has been paid prior to the
occurrence of an Event of Default (as defined in the Mortgage) (collectively,
the "Rents").
(b) Bally's hereby grants, transfers, bargains, sells,
assigns, conveys, and sets over unto Assignee, its successors and assigns,
from and after the date hereof (including any period allowed by law for
redemption after any sale), all right, title and interest of Bally's in and to
(i) the Ground Lease and all guarantees, modifications, renewals, and
extensions thereof and (ii) all documents and instruments made or hereafter
made in respect of the Ground Lease, together with all of the rents and issues
and profits, due and to become due or to which Bally's is now or may hereafter
become entitled, arising out of the Ground Lease and the Land, excluding,
however, any sums paid as "key money" in connection with the execution or
renewal of the Ground Lease or any sums paid in connection with the execution
or renewal of the Ground Lease as advance rental ("Ground Lease Advance") to
the extent the same has been paid prior to occurrence of an Event of Default
(as defined in the Mortgage) (collectively, the "Ground Rents").
2. (a) Assignor further gives and grants Assignee the power and
authority to:
(i) enter upon and take possession of the Leased
Property and manage the same, subject to the rights of any and all parties in
possession thereof;
(ii) enforce, modify, cancel or accept a surrender of
any or all of the Leases;
(iii) (A) subject to and in accordance with the terms
of the Leases, demand, collect, sue for, attach, levy, recover, receive,
compromise, and (B) adjust and make, execute, and deliver receipts and
releases for, Rents which may be or may hereafter become due, owing or payable
from any present or future lessees, sublessees, licensees or other occupants
of the Leased Property or any part thereof (the "Lessees");
(iv) receive, endorse and deposit for collection in
the name of Assignor or Assignee any checks, promissory notes or other
evidences of indebtedness, whether made payable to Assignor or Assignee, which
are given in payment or on account of Rent for the Leased Property or any part
or parts thereof, or by way of compromise or settlement of any indebtedness
for such Rents;
(v) give acquittances for Rents received;
(vi) institute, prosecute, settle or compromise any
summary or other proceedings for the recovery of Rents or for removing any and
all of the Lessees upon their default under their respective Leases;
(vii) subject to and in accordance with the Leases,
institute, prosecute, intervene in, settle or compromise any proceedings for
the protection of the Leased Property, for the recovery of any damage done to
the Leased Property or for the abatement of any nuisance, including Hazardous
Waste (as defined in the Mortgage), thereon or thereabouts;
(viii) defend, settle or compromise any legal
proceedings brought, or claims made against, Assignee or its agents, employees
or servants which may affect the Leased Property, and, at the option of
Assignee, defend, settle or compromise any claims made or legal proceedings
brought against Assignor which may affect the Leased Property or any part
thereof;
(ix) lease or rent the Leased Property or any part
thereof for such time and at such rentals as Assignee, in its reasonable
discretion, may deem advisable;
(x) make any changes or improvements, structural or
otherwise, on, in or to the Leased Property or any part thereof which Assignee
may deem reasonably necessary or expedient for the leasing, renting or
preservation thereof;
(xi) keep and maintain the Leased Property in
tenantable and rentable condition and in a good state of repair;
(xii) purchase such equipment and supplies as may be
reasonably necessary or desirable in the opinion of Assignee for use in
connection with the operation of the Leased Property;
(xiii) pay, from and out of the Rents collected by
Assignee hereunder, or from or out of any other funds, all taxes, assessments,
water charges, sewer rents and other governmental charges levied, assessed or
imposed against the Property or any part thereof, and any and all other
charges, costs and expenses which Assignee may deem necessary or advisable to
pay in connection with the management and operation of the Property
(including, without limitation, brokers' fees and any accrued and unpaid
interest, principal and other payments due on any and all loans secured by
mortgages or deeds of trust on the Property, including the Mortgage, the Loan
Agreement, the Revolving Credit Notes, and Additional Mortgages (as defined in
the Mortgage)), it being understood that the excess Rents, if any, remaining
after all such payments shall have been made shall be the property of and paid
to Assignor, provided there exists no Event of Default;
(xiv) contract for and purchase such insurance as
Assignee may deem advisable or necessary for the protection of Assignee and
the Leased Property and as required to be maintained under the Mortgage,
including, without limitation, fire, general liability, boiler, plate glass,
rent, demolition and workers' compensation insurance;
(xv) execute and comply with all laws, rules, orders,
ordinances and requirements of the United States, the state in which the
Property is located and any political subdivision thereof, and any agency,
department, bureau, board, commission or instrumentality of any of them
(collectively, "Governmental Authorities"), and remove any and all violations
which may be filed against the Leased Property;
(xvi) enforce, enjoin or restrain the violation of any
of the terms, provisions and conditions of the Leases; and
(xvii) do or perform such other acts as may be
reasonably necessary to increase the Rents or to diminish the expense of
operating the Leased Property, whether herein expressly authorized or not, and
in all respects act in the place and stead of Assignor and have all of the
powers as owner as possessed by Assignor for the purposes aforesaid.
All of the foregoing powers and rights may be executed by Assignee
or by its agents, servants or attorneys, in the name of Assignee or in the
name of Assignor, and in such manner as Assignee, its agents, servants, or
attorneys consider to be necessary, desirable, expedient, or appropriate;
provided, however, that under no circumstances shall Assignee be under any
obligation to exercise any of the foregoing powers or rights and Assignee
shall not, except in the case of negligence and/or wilful misconduct of
Assignee, be liable to Assignor or any other party for failure to exercise
such powers and rights.
(b) Bally's further gives and grants unto Assignee the power
and authority to:
(i) enter upon and take possession of the Leased Land
and manage the same, subject to the rights of any ground tenant thereof;
(ii) enforce, modify, cancel or accept a surrender of
the Ground Lease;
(iii) (A) subject to and in accordance with the terms
of the Ground Lease, demand, collect, sue for, attach, levy, recover, receive,
compromise, and (B) adjust and make, execute, and deliver receipts and
releases for, Ground Rents which may be or may hereafter become due, owing or
payable from any present or future ground tenant thereof (the "Ground
Tenant");
(iv) receive, endorse and deposit for collection in
the name of Bally's or Assignee any checks, promissory notes or other
evidences of indebtedness, whether made payable to Bally's or Assignee, which
are given in payment or on account of Ground Rents for the Land or any part or
parts thereof, or by way of compromise or settlement of any indebtedness for
such Ground Rents;
(v) give acquittances for Ground
Rents received;
(vi) institute, prosecute, settle or compromise any
summary or other proceedings for the recovery of Ground Rents or for removing
the Ground Tenant upon its default under its respective Ground Lease;
(vii) subject to and in accordance with the Ground
Lease, institute, prosecute, intervene in, settle or compromise any
proceedings for the protection of the Leased Land, fop the recovery of any
damage done to the Leased Land or for the abatement of any nuisance, including
Hazardous Waste, thereon or thereabouts;
(viii) defend, settle or compromise any legal
proceedings brought, or claims made against, Assignee or its agents, employees
or servants which may affect the Leased Land, and, at the option of Assignee,
defend, settle or compromise any claims made or legal proceedings brought
against Bally's which may affect the Leased Land or any part thereof;
(ix) lease or rent the Leased Land or any part thereof
for such time and at such rentals as Assignee, in its reasonable discretion,
may deem advisable;
(x) make any changes or improvements, structural or
otherwise, on, in or to the Leased Land or any part thereof reasonably
necessary or expedient for the leasing, renting or preservation thereof;
(xi) keep and maintain the Leased Land in tenantable
and rentable condition and in a good state of repair;
(xii) purchase such equipment and supplies as may be
reasonably necessary or desirable in the opinion of Assignee for use in
connection with the operation of the Leased Land;
(xiii) pay, from and out of the Ground Rents collected
by Assignee hereunder, or from or out of any other funds, all taxes,
assessments, water charges, sewer rents and other governmental charges levied,
assessed or imposed against the Leased Land or any part thereof, and any and
all other charges, costs and expenses which Assignee may deem necessary or
advisable to pay in connection with the management and operation of the Leased
Land (including, without limitation, brokers' fees and any accrued and unpaid
interest, principal and other payments due on any and all loans secured by
mortgages or deeds of trust on the Leased Land, including the Mortgage, the
Loan Agreement, the Revolving Credit Notes, and Additional Mortgages), it
being understood that the excess Ground Rents, if any, remaining after all
such payments shall have been made shall be the property of and paid to
Bally's, provided there exists no Event of Default;
(xiv) contract for and purchase such insurance as
Assignee may deem advisable or necessary for the protection of Assignee and
the Leased Land and as required to be maintained under the Mortgage,
including, without limitation, fire, general liability, boiler, plate glass,
rent, demolition and workers' compensation insurance;
(xv) execute and comply with all laws, rules, orders,
ordinances and requirements of any Governmental Authority, and remove any and
all violations which may be filed against the Leased Land;
(xvi) enforce, enjoin or restrain the violation of any
of the terms, provisions and conditions of the Ground Lease; and
(xvii) do or perform such other acts as may be
reasonably necessary to increase the Ground Rents or to diminish the expense
of operating the Leased Land, whether herein expressly authorized or not, and
in all respects act in the place and stead of Bally's and have all of the
powers as owner as possessed by Bally's for the purposes aforesaid.
All of the foregoing powers and rights may be executed by Assignee
or by its agents, servants or attorneys, in the name of Assignee or in the
name of Bally's, and in such manner as Assignee, its agents, servants, or
attorneys consider to be necessary, desirable, expedient, or appropriate;
provided, however, that under no circumstances shall Assignee be under any
obligation to exercise any of the foregoing powers or rights and Assignee
shall not, except in the case of negligence and/or wilful misconduct of
Assignee, be liable to Bally's or any other party for failure to exercise such
powers and rights.
3. Assignee shall have the unqualified right, subject to the
provisions of applicable law, to receive, use and apply the Rents and Ground
Rents collected and received by it under this Agreement (a) for the payment of
any and all costs and expenses incurred in connection with (i) enforcing the
terms of this Assignment, (ii) upholding and defending the rights of Assignee
hereunder, and (iii) collecting Rents due under the Leases and Ground Rents
due under the Ground Lease; and (b) for the operation and maintenance of the
Property and the payment of all costs and expenses in connection therewith,
including, without limitation, the payment of (i) accrued and unpaid interest
and principal due on any and all loans secured by mortgages or deeds of trust
on the Property including the Mortgage, the Loan Agreement, and the Revolving
Credit Notes, (ii) taxes, assessments, water charges and sewer rents and other
governmental charges levied, assessed or imposed against the Property or any
part thereof, which may then be due and payable, (iii) insurance premiums,
(iv) costs and expenses in prosecuting or defending any litigation referred to
herein, and (v) wages and salaries of employees, commissions of agents and
attorneys' fees. After the payment of all such costs and expenses and after
Assignee shall have set up such reserves necessary for the proper management
of the Leased Property, Assignee, subject to the provisions of Subsections
2(a) (xiii) and 2(b) (xiii) hereof, shall apply all remaining Rents and Ground
Rents collected and received by it to the reduction of the indebtedness
secured by the Mortgage.
4. (a) Assignor hereby irrevocably constitutes and appoints
Assignee its true and lawful attorney, to undertake and execute any or all of
the powers described herein with the same force and effect as if undertaken or
executed by Assignor, and Assignor hereby ratifies and confirms any and all
things done or omitted to be done, other than those things done or omitted to
be done with negligence or wilful misconduct, by Assignee, its agents,
servants, employees or attorneys in, to or about the Property. The
appointment contained herein shall be effective only upon the termination by
Assignee of the license granted to Assignor pursuant to Article 13 hereof.
(b) Bally's hereby irrevocably constitutes and appoints
Assignee its true and lawful attorney, to undertake and execute any or all of
the powers described herein with the same force and effect as if undertaken or
executed by Bally's, and Bally's hereby ratifies and confirms any and all
things done or omitted to be done, other than those things done or omitted to
be done with negligence or wilful misconduct, by Assignee, its agents,
servants, employees or attorneys in, to or about the Leased Land. The
appointment contained herein shall be effective only upon the termination by
Assignee of the license granted to Bally's pursuant to Article 13 hereof.
5. (a) Assignee shall not in any way be liable to Assignor for
any act done or anything omitted to be done by it in good faith in connection
with the management of the Property, except for the consequences of its own
negligence or wilful misconduct, nor shall Assignee be liable for any act or
omission of its agents, servants, employees or attorneys, provided that due
care is used by Assignee in the selection of such agents, servants, employees
and attorneys. Assignee shall be accountable to Assignor only for monies
actually received by it pursuant to this Assignment.
(b) Assignee shall not in any way be liable to Bally's for
any act done or anything omitted to be done by it in good faith in connection
with the management of the Leased Land, except for the consequences of its own
negligence or wilful misconduct, nor shall Assignee be liable for any act or
omission of its agents, servants, employees or attorneys, provided that due
care is used by Assignee in the selection of such agents, servants, employees
and attorneys. Assignee shall be accountable to Bally's only for monies
actually received by it pursuant to this Assignment.
6. (a) Assignor hereby covenants and agrees:
(i) to perform faithfully every obligation which
Assignor is required to perform under the Leases within the applicable grace
periods, if any, set forth therein;
(ii) to exercise its reasonable business judgment in
determining whether to enforce, or to secure the performance of, any material
obligation to be performed by any Lessee under any Lease requiring a "minimum"
or "base" rent of - $100,000 or more per annum (a "Major Lease");
(iii) except in connection with the initial execution
or renewal of a Lease, not to collect any Rent under the Leases for more than
thirty (30) days in advance of the time when the same shall become due, or
anticipate the rents thereunder, except for security deposits, "key money" and
Advance Rental;
(iv) subject to the right of Assignor to contest and
to not comply with a Legal Requirement (as defined in and as provided in the
Mortgage), to comply with, in all material respects, all present and future
laws, rules, orders, ordinances, restrictions and requirements of all
Governmental Authorities;
(v) to deliver to Assignee, upon request, copies of
all existing Leases and all Leases entered into after the date hereof;
(vi) to appear in and defend, at Assignor's sole cost
and expense, any action or proceeding arising under, growing out of, or in any
manner connected with, the Leases or the obligations, duties or liabilities of
the lessor, Lessees or guarantors thereunder; and
(vii) to comply with all of the provisions of the Loan
Agreement, the Revolving Credit Notes, the Mortgage and any other Loan
Documents (as such term is defined in the Mortgage).
(b) Bally's hereby covenants and agrees:
(i) to perform faithfully every obligation which
Bally's is required to perform under the Ground Lease within the applicable
grace periods, if any, set forth therein;
(ii) to exercise its reasonable business judgment in
determining whether to enforce, or to secure the performance of, any material
obligation to be performed by the Ground Tenant under the Ground Lease;
(iii) except in connection with the initial execution
or renewal of the Ground Lease, not to collect any Ground Rent under the
Ground Lease for more than thirty (30) days in advance of the time when the
same shall become due, or anticipate the rents thereunder, except for security
deposits, "key money" and Ground Lease Advance Rental;
(iv) subject to the right of Bally's to contest and to
not comply with a Legal Requirement (as defined in and as provided in the
Mortgage), to comply with, in all material respects, all present and future
laws, rules, orders, ordinances, restrictions and requirements of all
Governmental Authorities;
(v) to deliver to Assignee, upon request, a copy of
the Ground Lease and all amendments, assignments, and modifications thereto;
(vi) to appear in and defend, at Bally's sole cost and
expense, any action or proceeding arising under, growing out of, or in any
manner connected with, the Land and the Ground Lease or the obligations,
duties or liabilities of the ground landlord, Ground Tenant or guarantors
thereunder; and
(vii) to comply with all of the provisions of the Loan
Agreement, the Revolving Credit Notes, the Mortgage and any other Loan
Documents.
7. (a) Except as otherwise set forth in Schedule I annexed
hereto and made a part hereof, Assignor hereby represents and warrants the
following to Assignee:
(i) to the best of Assignor's knowledge, the Major
Leases which now affect the Leased Property are valid, subsisting and in full
force and effect, and have been duly executed and unconditionally delivered by
Assignor and, to the best of Assignor's knowledge, have been duly executed and
unconditionally delivered by the tenants under such Leases;
(ii) Assignor has not executed or granted any
modifications or amendments of the Major Leases, other than as set forth on
Exhibit B to the Mortgage;
(iii) to the best of Assignor's knowledge, there are no
material defaults now existing under any of the Major Leases and no event has
occurred which, with the delivery of notice or the passage of time or both,
would constitute a material default or which could entitle the landlord under
the Major Leases or the Lessees of the Major Leases to cancel the same or
otherwise avoid their obligations thereunder;
(iv) Assignor has not accepted Rent under the Major
Leases for more than thirty (30) days in advance of the time the same shall
become due except for security deposits, "key money", Advance Rental and such
other sums payable in connection with the execution or renewal of any Major
Lease; and
(v) Assignor has not executed, and will not execute,
an assignment of any of the Leases or of its right, title and interest therein
or the Rents to accrue thereunder, except as provided in the Mortgage.
(b) Except as otherwise set forth in Schedule I annexed
hereto and made a part hereof, Bally's hereby represents and warrants the
following to Assignee:
(i) to the best of Bally's knowledge, the Ground
Lease is valid, subsisting and in full force and effect, and has been duly
executed and unconditionally delivered by Bally's and, to the best of Bally's
knowledge, has been duly executed and unconditionally delivered by the Ground
Tenant;
(ii) Bally's has not executed or granted any
modifications or amendments of the Ground Lease;
(iii) to the best of Bally's knowledge, there are no
material defaults now existing under the Ground Lease and no event has
occurred which, with the delivery of notice or the passage of time or both,
would constitute a material default or which could entitle Bally's or Ground
Tenant to cancel the Ground Lease or otherwise avoid its obligations
thereunder;
(iv) Bally's has not accepted Ground Rents under the
Ground Lease for more than thirty (30) days in advance of the time the same
shall become due except for security deposits, "key money", Advance Rental and
such other sums payable in connection with the execution or renewal of the
Ground Lease; and
(v) Bally's has not executed, and will not execute,
an assignment of the Ground Lease or of its right, title and interest therein
or the Ground Rents to accrue thereunder, except as provided in the Mortgage.
8. It is understood and agreed that nothing contained in this
Assignment shall prejudice or be construed to prejudice the right of Assignee
under any of the other Loan Documents, without notice, to institute, prosecute
and compromise any action which it would deem advisable to protect its
interest in the Property, including any sale by the Assignee, as trustee,
pursuant to the power of sale contained in the Mortgage or otherwise, and in
such sale or action, to move for the appointment of a receiver of the Rents or
Ground Rents, or prejudice any rights which Assignee shall have by virtue of
any default under the Loan Agreement, the Revolving Credit Notes or the
Mortgage. Assignee, however, hereby agrees that it will use reasonable efforts
to promptly give notice (the "Informational Notice", to Assignor and Bally's,
provided that failure to give such notice or any defects in the manner in
which such notice is given shall not preclude Assignee from exercising any of
its rights hereunder. This Assignment shall survive, however, the
commencement of any such action or sale.
9. Assignor and Bally's jointly and severally agree to indemnify
and hold Assignee harmless from and against any and all liability, loss,
damage, cost and expense, including reasonable attorneys' fees and
disbursements, other than those which arise as a result of the negligence or
wilful misconduct of Assignee, which Assignee may or shall incur under any of
the Leases or the Ground Lease, or by reason of this Assignment, or by reason
of any action taken by Assignee hereunder, and from and against any and all
claims and demands whatsoever, other than those arising from the negligence or
wilful misconduct of Assignee, which may be asserted against Assignee by
reason of any alleged obligation or undertaking on its part to perform or
discharge any of the terms, covenants and conditions contained in any of the
Leases or the Ground Lease. Should Assignee incur any such liability, loss,
damage, cost or expense, the amount thereof, together with interest thereon at
the rate of interest then payable under the Indenture, including, in
calculating such rate of interest, any additional interest which may be
imposed under the Indenture by reason of any default thereunder (such rate of
interest being hereinafter referred to as the "Interest
Rate"), from the date such amount was suffered or incurred by Assignee until
the same is paid by Assignor or Bally's to Assignee, shall be jointly and
severally payable by Assignor and Bally's to Assignee immediately upon demand,
or, at the option of Assignee, Assignee may reimburse itself therefor out of
any Rents or Ground Rents collected by Assignee. Nothing contained herein
shall operate or be construed to obligate Assignee to perform any of the
terms, covenants or conditions contained in the Leases or the Ground Lease or
otherwise to impose any obligation upon Assignee with respect to any of the
Leases or the Ground Lease.
10. Upon request of Assignee, Assignor and Bally's shall execute
and deliver to Assignee such further instruments as Assignee may deem
reasonably necessary to effect this Assignment and the covenants of Assignor
and Bally's contained herein. Assignor, at its sole cost and expense, shall
cause such further instruments to be recorded in such manner and in such
places as may be required by Assignee. Notwithstanding the foregoing,
Assignee shall have no obligation to request any matters referred to herein
and shall request such matters in Assignee's reasonable discretion.
11. Assignor shall, upon thirty (30) days' notice thereof, pay all
required recording and filing fees in connection with this Assignment and any
agreements, instruments and documents made pursuant to the terms hereof or
ancillary hereto, as well as any and all taxes which may be due and payable on
the recording of this Assignment and any taxes hereafter imposed on this
Assignment. Should Assignor fail to pay the same within said thirty (30) day
notice period, all such recording and filing fees and taxes may be paid by
Assignee on behalf of Assignor and the amount thereof, together with interest
at the Interest Rate, shall be payable by Assignor to Assignee immediately
upon demand, or, at the option of Assignee, Assignee may reimburse itself
therefor out of the Rents or Ground Rents collected by Assignee.
12. Failure of Assignee to avail itself of any of the terms,
covenants and conditions of this Assignment shall not be construed or deemed
to be a waiver of any of its rights hereunder. The rights and remedies of
Assignee under this Assignment are cumulative and are not in lieu of but are
in addition to, and shall not be affected by the exercise of, any other rights
and remedies which Assignee shall have under or by virtue of law or equity,
the Loan Agreement, the Revolving Credit Notes, the Mortgage or the Loan
Documents (collectively, the "Other Rights"). The rights and remedies of
Assignee hereunder may be exercised concurrently with any of the Other Rights.
13. (a) Assignee hereby gives Assignor a license to collect all
the Rents, to retain, use and enjoy the same and to do all acts and perform
such obligations as Assignor is required to perform under the Leases,
including, without limitation, all items listed in paragraph 2(a) hereof.
Assignor agrees to collect and receive said Rents and to use said Rents in
payment of principal and interest becoming due under the Loan Agreement, the
Revolving Credit Notes, the Mortgage and any Additional Mortgages (as defined
in the Mortgage). Subject to the provisions of Subsection 2(a) (xiii) hereof,
the balance of Rents, if any, remaining after all such payments shall have
been made shall belong to and be the property of Assignor. Such license hereby
granted to Assignor to collect and receive said Rents and to retain, use and
enjoy the same and to do all acts and perform such obligations as Assignor is
required to perform under the Leases shall be revoked automatically upon the
occurrence of any Event of Default (as such term is defined under the
Mortgage) without any required action by Assignee. This Assignment shall
continue in full force and effect until (a) all sums due and payable under the
Loan Agreement, the Revolving Credit Notes and the Mortgage shall have been
fully paid and satisfied, together with any and all other sums which may
become due and owing under this Assignment, and (b) all other obligations of
Assignor under the Loan Agreement, the Revolving Credit Notes, the Mortgage,
this Assignment and the Loan Documents are satisfied. Upon termination of
this Assignment as hereinbefore provided, this Assignment and the authority
and powers herein granted by Assignor to Assignee shall cease and terminate,
and, in that event, Assignee shall (i) execute and deliver to Assignor such
instrument or instruments effective to evidence the termination of this
Assignment and the reassignment to Assignor of the rights, powers and
authorities granted herein, and (ii) deliver to Assignor all monies held by
Assignee for the benefit of Assignor. Assignor agrees that upon termination
of this Assignment it shall assume payment of all reasonable unmatured or
unpaid charges, expenses or obligations (including reasonable attorney's fees)
incurred or undertaken by Assignee in connection with the management of the
Property.
(b) Assignee hereby gives Bally's a license to collect all
the Ground Rents, to retain, use and enjoy the same and to do all acts and
perform such obligations as Bally's is required to perform under the Ground
Lease, including without limitation, all items listed in paragraph 2(b)
hereof. Bally's agrees to collect and receive said Ground Rents and to use
said Ground Rents in payment of principal and interest becoming due under the
Loan Agreement, the Revolving Credit Notes, the Mortgage and any Additional
Mortgages. Subject to the provisions of Subsection 2(b) (xiii) hereof, the
balance of Ground Rents, if any, remaining after all such payments shall have
been made shall belong to and be the property of Bally's. Such license hereby
granted to Bally's to collect and receive said Ground Rents and to retain, use
and enjoy the same and to do all acts and perform such obligations as Bally's
is required to perform under the Ground Lease shall be revoked automatically
upon the occurrence of any Event of Default (as such term is defined under the
Mortgage) without any required action by Assignee. This Assignment shall
continue in full force and effect until (a) all sums due and payable under the
Loan Agreement, the Revolving Credit Notes and the Mortgage shall have been
fully paid and satisfied, together with any and all other sums which may
become due and owing under this Assignment, and (b) all other obligations of
Bally's under the Loan Agreement, the Revolving Credit Notes, the Mortgage,
this Assignment and the Loan Documents are satisfied. Upon termination of
this Assignment as hereinbefore provided, this Assignment and the authority
and powers herein granted by Bally's to Assignee shall cease and terminate,
and, in that event, Assignee shall (i) execute and deliver to Bally's such
instrument or instruments effective to evidence the termination of this
Assignment and the reassignment to Bally's of the rights, powers and
authorities granted herein, and (ii) deliver to Bally's all monies held by
Assignee for the benefit of Bally's. Bally's agrees that upon termination of
this Assignment it shall assume payment of all reasonable unmatured or unpaid
charges, expenses or obligations (including reasonable attorney's fees)
incurred or undertaken by Assignee in connection with the management of the
Land.
14. All of the representations, warranties, covenants, agreements
and provisions in this Assignment by or for the benefit of Assignee shall bind
and inure to the benefit of its successors and assigns.
15. Nothing in this Assignment shall be construed to give to any
person other than Assignee and its successors and assigns any legal or
equitable right, remedy or claim under this Assignment and this Assignment
shall be held to be for the sole and exclusive benefit of Assignee and its
successors and assigns.
16. If there shall be any conflict between the terms, covenants,
conditions and provisions set forth herein and the terms, covenants,
conditions and provisions set forth in the Credit Agreement, then, unless this
Assignment specifically provides otherwise by specific reference to the Loan
Agreement, the terms, covenants, conditions and provisions of the Loan
Agreement shall prevail.
17. All notices, demands or requests made pursuant to this
Assignment must be in writing and personally delivered or mailed to the party
to which the notice, demand or request is being given by certified or
registered mail, return receipt requested, as follows, and shall be deemed
given on the date of actual receipt or the date on which the same shall be
returned to the sender by the Post Office as unclaimed, or upon personal
delivery with receipt acknowledged:
if to Assignee, at the address set forth above, to the attention of:
Robert K. Strunk, II
With a copy to
Midlantic National Bank
499 Thornall Street
Metro Park Plaza
Edison, N.J. 08837
Attn:Edward M. Tessalone
if to Assignor, at the address set forth above, to the attention of:
Corporate Secretary
with a copy to:
Benesch, Friedlander, Coplan & Aronoff
1100 Citizens Building
Cleveland, Ohio 44114
Attention: Chairperson, Real Estate Department
if to Bally's at the address set forth above, to the attention of:
Corporate Secretary
with a copy to:
Benesch, Friedlander, Coplan & Aronoff
1100 Citizens Building
Cleveland, Ohio 44114
Attention: Chairperson, Real Estate Department
or at such different address as Assignor, Bally's or Assignee shall hereafter
specify by written notice as provided herein.
18. This Assignment may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
19. Assignee acknowledges and agrees that it will not assign this
Assignment separate and apart from a sale or assignment of the Revolving
Credit Notes and the Mortgage.
20. No director, officer, employee, stockholder or incorporator,
as such, past, present or future, of Assignor or any successor corporation, or
Bally's or any successor corporation, shall have any liability for any
obligations of Assignor or Bally's, as the case may be, under this Assignment
or for any claim based on, in respect of or by reason of such obligations or
their creation. Assignee, by accepting this Assignment, waives and releases
all such liability.
21. This Assignment shall be construed, interpreted, enforced and
governed by and in accordance with the laws of the State of New Jersey.
Whenever possible, each provision of this Assignment shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Assignment shall be prohibited by, or invalid under,
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remaining provisions of
this Assignment.
22. Each provision of this Assignment of Leases and Rents is
subject to the provisions of the New Jersey Casino Control Act and regulations
promulgated thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Assignment as of
the day and year first above written.
Bally's Park Place, Inc.
By:________________________
Joseph A. D'Amato
Vice President
Bally's Park Place Realty Co.
By:_______________________
Joseph A. D'Amato
Vice President
First Fidelity Bank, National
Association as collateral
agent
By:________________________
Robert K. Strunk, II
Vice President
<PAGE>
<PAGE>
State of New York
County of New York
On the 7th day of March, 1994, before me personally came Joseph A.
D'Amato, to me known, who, being by me duly sworn, did depose and say that he
is a Vice President of Bally's Park Place, Inc., the corporation described in
and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the board of directors of said corporation;
and that he signed his name thereto by like order.
____________________________
Notary Public
State of New York
ss.:
County of New York
On the 7th day of March 1994, before me personally came Joseph A.
D'Amato, to me known, who, being by me duly sworn, did depose and say that he
is the Vice President of Bally's Park Place Realty Co., the corporation
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the board of directors of
said corporation; and that he signed his name thereto by like order.
_____________________________
Notary Public
<PAGE>
<PAGE>
State of New York
County of New York ss.:
On the 7th day of March, 1994, before me personally came Robert K.
Strunk, II to me known, who, being by me duly sworn, did depose and say that
he is the Vice President of First Fidelity Bank National Association, the
national association described in and which executed the foregoing instrument;
that he knows the seal of said national association; that the seal affixed to
said instrument is such seal; that it was so affixed by order of the board of
directors of said national association; and that he signed his name thereto by
like order.
___________________________
Notary Public
