<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED MARCH 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 1-8531
GNOC, CORP.
(Exact name of registrant as specified in its charter)
New Jersey 22-2494608
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Boston Avenue at Pacific Avenue, Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 347-7111
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 .
At April 30, 1996, all 3,002,510 outstanding shares of the registrant's common
stock were held by Bally Entertainment Corporation.
The registrant meets the conditions set forth in General Instruction H(1)(a)
and (b) of Form 10-Q, and is therefore filing this form with the reduced dis-
closure format.
<PAGE>
GNOC, CORP.
(A Wholly Owned Subsidiary of Bally Entertainment Corporation)
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial statements:
Condensed consolidated balance sheet (unaudited)
March 31, 1996 and December 31, 1995 ................ 1
Consolidated statement of operations (unaudited)
Three months ended March 31, 1996 and 1995........... 2
Consolidated statement of cash flows (unaudited)
Three months ended March 31, 1996 and 1995........... 3
Notes to condensed consolidated financial statements
(unaudited).......................................... 5
Item 2. Management's discussion and analysis of results of
operations.............................................. 7
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K................... 9
SIGNATURE PAGE................................................. 10
<PAGE>
<TABLE>
GNOC, CORP.
(A Wholly Owned Subsidiary of Bally Entertainment Corporation)
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
<CAPTION>
March 31, December 31,
1996 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents....................... $ 30,137 $ 23,903
Receivables, less allowances of $5,557
and $5,573.............................. 5,390 6,040
Income taxes receivable.................... - 886
Inventories................................ 2,181 2,398
Deferred income taxes...................... 5,677 5,658
Other current assets....................... 2,791 2,172
-------- --------
Total current assets.................... 46,176 41,057
Property and equipment, less accumulated
depreciation of $123,985 and $119,874...... 279,612 281,736
Cost in excess of acquired assets, less
accumulated amortization of $27,081
and $26,318................................ 94,395 95,158
Deferred finance costs, less accumulated
amortization of $4,539 and $4,179.......... 9,107 9,467
Other assets.................................. 5,561 3,692
-------- --------
$434,851 $431,110
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable........................... $ 3,390 $ 3,399
Payable to affiliates...................... 412 323
Income taxes payable....................... 1,037 -
Accrued liabilities........................ 30,382 23,374
-------- --------
Total current liabilities............... 35,221 27,096
Long-term debt, less unamortized discount
of $1,639 and $1,678....................... 273,361 273,322
Deferred income taxes......................... 54,062 57,258
Stockholder's equity:
Common stock............................... 30 30
Additional paid-in capital................. 123,421 123,421
Accumulated deficit........................ (51,244) (50,017)
-------- --------
Total stockholder's equity.............. 72,207 73,434
-------- --------
$434,851 $431,110
======== ========
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
GNOC, CORP.
(A Wholly Owned Subsidiary of Bally Entertainment Corporation)
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
1996 1995
<S> <C> <C>
Revenues:
Casino..................................... $59,647 $57,365
Rooms...................................... 1,080 1,107
Food and beverage.......................... 1,996 2,036
Other...................................... 1,519 1,312
------- -------
64,242 61,820
Costs and expenses:
Casino..................................... 39,038 33,296
Rooms...................................... 525 596
Food and beverage.......................... 1,830 1,876
Other operating expenses................... 7,498 6,913
Selling, general and administrative........ 4,973 6,719
Depreciation and amortization.............. 4,894 4,357
Allocations from Bally Entertainment
Corporation............................. 273 284
------- -------
59,031 54,041
------- -------
Operating income.............................. 5,211 7,779
Interest expense.............................. 7,730 7,732
------- -------
Income (loss) before income taxes............. (2,519) 47
Income tax provision (benefit)................ (1,292) 29
------- -------
Net income (loss)............................. $(1,227) $ 18
======= =======
<FN>
See accompanying notes.
</FN>
<PAGE>
</TABLE>
<TABLE>
GNOC, CORP.
(A Wholly Owned Subsidiary of Bally Entertainment Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
1996 1995
<S> <C> <C>
OPERATING:
Net income (loss).......................... $(1,227) $ 18
Adjustments to reconcile to cash provided -
Depreciation and amortization........... 4,894 4,357
Other amortization included in interest
expense.............................. 399 399
Deferred income taxes................... (3,215) (1,719)
Provision for doubtful receivables...... 210 577
Change in operating assets and
liabilities.......................... 9,049 8,744
------- -------
Cash provided by operating activities... 10,110 12,376
INVESTING:
Purchases of property and equipment........ (1,987) (6,985)
Increase in construction-related
liabilities............................. - 3,152
Casino Reinvestment Development Authority
investment obligations, net.............. (1,889) 141
------- -------
Cash used in investing activities....... (3,876) (3,692)
------- -------
Increase in cash and equivalents............. 6,234 8,684
Cash and equivalents, beginning of period.... 23,903 14,177
------- -------
Cash and equivalents, end of period.......... $30,137 $22,861
======= =======
<FN>
(Continued)
</FN>
<PAGE>
</TABLE>
<TABLE>
GNOC, CORP.
(A Wholly Owned Subsidiary of Bally Entertainment Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Three Months Ended March 31,
1996 1995
<S> <C> <C>
SUPPLEMENTAL CASH FLOWS INFORMATION
Changes in operating assets and liabilities
were as follows:
Decrease in receivables.................... $ 440 $ 452
Decrease in income taxes receivable........ 886 -
Decrease in inventories.................... 217 141
(Increase) decrease in other current
assets.................................. (619) 1,694
Increase in accounts payable, payable to
affiliates and accrued liabilities...... 7,088 4,709
Increase in income taxes payable........... 1,037 1,748
------ ------
$9,049 $8,744
====== ======
Operating activities include cash payments
for interest as follows:
Interest paid.............................. $ 4 $ 42
Investing activities exclude the following
non-cash activity:
Donation of Casino Reinvestment
Development Authority investment
obligations, net........................ $ - $1,242
<FN>
See accompanying notes.
</FN>
<PAGE>
GNOC, CORP.
(A Wholly Owned Subsidiary of Bally Entertainment Corporation)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(All dollar amounts in thousands)
(Unaudited)
Basis of presentation
The accompanying condensed consolidated financial statements include the
accounts of GNOC, CORP., a New Jersey corporation (the "Company"), which is
a wholly owned subsidiary of Bally Entertainment Corporation ("BEC"), and its
subsidiary. The Company owns and operates the casino hotel resort in Atlantic
City, New Jersey known as "The Grand." The Company operates in one industry
segment and all significant revenues arise from its casino and supporting
hotel operations. Unless otherwise specified in the text, references to the
Company include the Company and its subsidiary. These condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
All adjustments have been recorded which are, in the opinion of
management, necessary for a fair presentation of the condensed consolidated
balance sheet of the Company at March 31, 1996 and its consolidated statements
of operations and cash flows for the three months ended March 31, 1996 and
1995. All such adjustments were of a normal recurring nature.
The accompanying condensed consolidated financial statements have been
prepared in conformity with generally accepted accounting principles which
require the Company's management to make estimates and assumptions that affect
the amounts reported therein. Actual results could vary from such estimates.
In addition, certain reclassifications have been made to prior period
financial statements to conform with the 1996 presentation.
Seasonal factors
The Company's operations are subject to seasonal factors and, therefore,
the results of operations for the three months ended March 31, 1996 and 1995
are not necessarily indicative of the results of operations for the full year.
Allocations from BEC and transactions with related parties
BEC allocates costs to the Company consisting of the Company's allocable
share of BEC'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
BEC's oversight. BEC's method for allocating costs is designed to apportion
the majority of its operating costs to its subsidiaries and is generally based
upon many subjective factors including various measures of operational size
and extent of BEC's oversight requirements. Management of BEC believes that
the methods used to allocate these costs are reasonable and expects similar
allocations in future years. Because of BEC's controlling relationship with
the Company and the allocation of certain BEC costs, the operating results of
the Company could be significantly different if the Company operated
autonomously. In addition, certain of the Company's insurance coverage is
obtained by BEC pursuant to corporate-wide programs. In these circumstances,
BEC charges the Company its proportionate share of the respective insurance
premiums.
Certain executive officers of Bally's Park Place, Inc. ("Bally's Park
Place"), an indirect wholly owned subsidiary of BEC which owns and operates
the casino hotel resort in Atlantic City known as "Bally's Park Place Casino
Resort", function in a similar capacity for the Company and exercise decision-
making and operational authority over both entities. No allocation of cost
is made from Bally's Park Place to the Company 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 Bally's Park
Place are consolidated, including limousine services, legal services and
purchasing. Costs of these operations are allocated to or from the Company
either directly or using various formulas based on estimates of utilization
of such services. On a net basis, allocations from Bally's Park Place were
$108 and $61 for the three months ended March 31, 1996 and 1995, respectively,
which management believes were reasonable. The Company also leases land from
Bally's Park Place, and rental expense was $174 for each of the three month
periods ended March 31, 1996 and 1995.
Long-term debt and revolving credit agreement
The indenture for the Company's public indebtedness and the $20,000
revolving credit agreement (the entire amount was unused at March 31, 1996)
contain certain covenants limiting indebtedness and other payments. Payments
of dividends by the Company are limited to 50% of its aggregate consolidated
net income (as defined) earned since June 1, 1993. As of March 31, 1996, no
dividends were available for payment. In May 1996, the Company amended its
revolving credit agreement to extend the expiration date from December 31,
1996 to June 30, 1998.
Income taxes
Taxable income or loss of the Company is included in the consolidated
federal income tax return of BEC. Under a tax sharing agreement between BEC
and the Company, 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 BEC for the
tax benefit of the Company's net operating losses and tax credits, if any,
that can be utilized in BEC'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 BEC
for tax liabilities are due at such time and in such amounts as payments are
required to be made to the Internal Revenue Service. Payments from BEC for
tax benefits are due at the time BEC files the applicable consolidated federal
income tax return. Under the tax sharing agreement, the Company had income
taxes receivable from BEC of $222 and $2,145 at March 31, 1996 and December
31, 1995, respectively.
<PAGE>
GNOC, CORP.
(A Wholly Owned Subsidiary of Bally Entertainment Corporation)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
Comparison of the Three Months Ended March 31, 1996 and 1995
Revenues of the Company for the first quarter of 1996 were $64.2 million
compared to $61.8 million for the 1995 quarter, an increase of $2.4 million
(4%) primarily due to a $2.3 million (4%) increase in casino revenues. Slot
revenues increased $.8 million (2%) due to a 6% increase in slot handle
(volume) offset, in part, by a decline in the win percentage from 8.5% in the
1995 quarter to 8.2% in 1996. On average, the Company had 309 (20%) more
slot machines for the first quarter of 1996 than in 1995. Slot revenues
approximated 58% of the Company's casino revenues for the first quarter of
1996 compared to 59% in 1995. Table game revenues, excluding poker,
increased $.4 million (2%) due to a 5% increase in the drop (amount wagered)
offset, in part, by a decrease in the hold percentage from 18.2% in the 1995
quarter to 17.6% in 1996. Poker, horse race simulcasting and keno, all of
which commenced in April 1995, contributed $1.1 million to casino revenues in
the first quarter of 1996.
Atlantic City casino revenues (excluding poker, horse race simulcasting
and keno) for all operators for the first quarter of 1996 increased
approximately 4% from 1995 due to a 7% increase in table game revenues and a
3% increase in slot revenues. The revenue increase for the first quarter of
1996 occurred despite severe weather in the northeastern United States. Since
March 31, 1995, the number of slot machines in Atlantic City increased
approximately 7% and the number of table games, excluding poker tables,
increased approximately 5%. Slot revenues approximated 68% of total casino
revenues in Atlantic City for 1996 and 1995. Management believes that the
expansion of several casino hotel facilities in Atlantic City, which includes
additional hotel rooms and slot machines, has caused and will continue to
cause intense promotional efforts to attract slot players as both the Company
and its competitors continue to seek to expand their share of slot revenues
and maximize the utilization of their slot machines. Further, as a result of
the aggressive competition for slot patrons, the Atlantic City slot win
percentage has declined. Management believes that the slot win percentage
will continue to be subject to competitive pressure and may decline further.
In addition, proposals for several new casino hotel resorts were recently
announced for the marina district in Atlantic City and, if and when such
resorts are opened, capacity and competition will further increase. However,
management believes The Grand is well-positioned to compete for additional
casino revenues in the Atlantic City market through the attractive promotional
gaming programs and special events it offers, and because of the appearance
and comfort of its gaming space and hotel accommodations. In April 1995, the
Company completed an expansion which increased its casino floor and other
gaming space by nearly 30% to accommodate approximately 400 additional slot
machines, poker, horse race simulcasting and keno. In November 1995, the
Company opened The Grand Theater, an 18,000 square-foot arena with seating
capacity of up to 2,000 used for headline entertainment, sports events and
production shows. Additionally, the Company broke ground in March 1996 for
construction of a 300-room hotel tower, including restaurants, meeting rooms
and other related amenities. The Company anticipates completing the tower in
the second quarter of 1997.
Operating income of the Company for the first quarter of 1996 was $5.2
million compared to $7.8 million for the 1995 quarter, a decrease of $2.6
million (33%) as the aforementioned 4% revenue increase was more than offset
by a 9% increase in operating expenses. Casino expenses increased $5.7
million (17%) primarily due to increased promotional expenses and costs of
providing complimentary services to increase gaming activity. In addition,
other operating expenses increased $.6 million (8%) and depreciation and
amortization increased $.5 million (12%). These increases in operating
expenses were offset, in part, by a $1.7 million (26%) decrease in selling,
general and administrative expenses primarily due to an increase in the
estimated realizable value of certain funds on deposit with the Casino
Reinvestment Development Authority in the first quarter of 1996 resulting from
the approved use of such funds the reimbursement of certain tower construction
costs. Operating costs and expenses include allocations from BEC of its
overhead (including executive salaries and benefits, public company reporting
costs and other corporate headquarters' costs) of $.3 million for each of the
1996 and 1995 first quarters. Management of BEC believes that the methods
used to allocate these costs are reasonable and expects similar allocations
subject to changes in circumstances which may warrant modification in future
years.
For the three months ended March 31, 1996 and 1995, the effective rates
of the income tax provision (benefit) varied from the U.S. statutory tax rate
(35%) due principally to nondeductible amortization of cost in excess of
acquired assets and state income taxes.
<PAGE>
GNOC, CORP.
(A Wholly Owned Subsidiary of Bally Entertainment Corporation)
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.17 Amended and Restated Ground Lease dated May 2, 1996 between
the Company and Bally's Park Place, Inc.
10.18 Mortgage and Security Agreement with Assignment of Rents
dated May 2, 1996 between the Company and Amalgamated Bank
of Chicago, as Trustee.
10.19 Assignment of Leases and Rents dated May 2, 1996 among the
Company and Amalgamated Bank of Chicago, as Trustee.
10.20 Intercreditor Agreement among the Company, GNAC, CORP.,
First Fidelity Bank, N.A., Midlantic National Bank, N.A.
and Amalgamated Bank of Chicago, as Trustee.
10.21 Modification of Intercreditor Agreement among the Company,
First Union National Bank, Midlantic National Bank, N.A.
and Amalgamated Bank of Chicago, as Trustee.
10.22 Second Amended and Restated Loan Agreement dated as of May 2,
1996 among the Company, First Union National Bank and
Midlantic Bank, National Association.
10.23 Mortgage and Security Agreement with Assignment of Rents
dated as of April 16, 1993 among the Company, GNAC, CORP.,
First Fidelity Bank, N.A. and Midlantic National Bank, N.A.
10.24 Agreement for Modification of Mortgage and Assignment of
Leases dated November 1, 1994, among the Company, GNAC,
CORP., First Fidelity Bank, N.A. and Midlantic National
Bank, N.A.
10.25 Second Mortgage Modification Agreement dated May 2, 1996
among the Company, First Union National Bank and
Midlantic National Bank, N.A.
10.26 Mortgage and Security Agreement with Assignment of Rents
dated May 2, 1996 among the Company, First Union National
Bank and Midlantic National Bank, N.A.
10.27 Assignment of Leases and Rents among the Company, GNAC, CORP.,
First Fidelity Bank, N.A. and Midlantic National Bank, N.A.
10.28 Assignment of Leases and Rents among the Company, First Union
National Bank and Midlantic National Bank, N.A.
27 Financial Data Schedule (filed electronically only).
(b) Reports on Form 8-K:
None.
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GNOC, CORP.
Registrant
/s/ Donna M. Graham
Donna M. Graham
Vice President of Finance/Treasurer
(Principal Financial and Chief Accounting Officer)
Dated: May 14, 1996
<PAGE>
</TABLE>
AMENDED AND RESTATED GROUND LEASE
THIS LEASE, is made as of the _____ day of May, 1996 between Bally's
Park Place Inc., a New Jersey corporation having an office at Park Place and
The Boardwalk, Atlantic City, New Jersey 08401 ("Landlord") and GNOC, Corp., a
New Jersey corporation having an office at Boston Avenue and Pacific Avenue,
Atlantic City, New Jersey 08401 ("Tenant").
W I T N E S S E T H:
A. Landlord and Tenant entered into that certain Lease Agreement
dated March 8, 1993 ("1993 Lease Agreement") with respect to the "Demised
Premises" (hereinafter defined), which Lease Agreement was not recorded.
B. Landlord and Tenant desire to amend and restate the 1993 Lease
Agreement as set forth herein.
NOW, THEREFORE, intending to be legally bound, Landlord and Tenant hereby
amend and restate the 1993 Lease Agreement as set forth herein.
ARTICLE I
Demised Premises - Term of Lease
Landlord hereby demises and leases to Tenant, and Tenant hereby hires and
takes from Landlord, the following described premises (hereinafter called the
"Demised Premises");
All that certain plot, piece or parcel of land, lying and being in
Atlantic City, County of Atlantic and State of New Jersey, more particularly
bounded and described on Exhibit "A" attached hereto and made a part hereof.
TOGETHER with the buildings and improvements erected or to be erected
thereon.
TOGETHER with all the right, title and interest, if any, of Landlord in
and to:
1. Any strips and gores of land adjoining the Demised Premises on any
side thereof;
2. Any land lying in the bed of any street or avenue abutting the
Demised Premises, to the center line thereof;
3. Any easements or other rights in adjoining property enuring to
Landlord by reason of ownership of the Demised Premises; and
4. All fixtures and articles of personal property and any
replacements thereof, attached to or used in connection with the use,
occupation and operation of the Demised Premises and all alterations,
additions and improvements hereafter made to the Demised Premises title to
which may vest in Landlord;
5. Any public park or the like adjoining said tract, piece or parcel
of land; and
6. Rights, if any, in the Atlantic Ocean, beach and Boardwalk.
TO HAVE AND TO HOLD for a term that shall begin on the date hereof (the
"Commencement Date") and shall end on December 31, 1996; provided, however,
that the term hereof shall automatically be renewed from year to year
thereafter for successive terms of one calendar year each, subject to
termination as hereinafter provided, and further subject to Article 17 hereof;
provided, however, that if and to the extent that the term of this Lease
and/or any renewals thereof and/or any of the covenants or other provisions of
this Lease would otherwise be unlawful or void for violation of (a) the rule
against perpetuities, (b) the rule restricting restraints on alienation, or
(c) any other applicable statute or common law rule analogous thereto or
otherwise imposing limitations upon the time for which such term, renewal
terms, covenants or other provisions may be valid, then the term or provision
in question shall continue and endure only until the expiration of a period of
twenty-one (21) years after the death of the last to survive of the class of
persons consisting of all of the lawful descendants of Al Gore, Vice President
of the United States, living at the date of this Lease. Until the occurrence,
if ever, of the Long Term Renewal of this Lease, Landlord and Tenant shall
each have the right to terminate the automatic renewal of the then-current
term for the next calendar year by delivering written notice of such
termination ("Lease Termination Notice") to the other party not later than
June 30 of the then-current term, whereupon the term of this Lease shall
expire on December 31 of the then-current term.
SUBJECT, however, to the following:
(a) The state of facts as set forth on that certain survey
("Survey") of the Demised Premises and certain real property presently
owned by Tenant adjoining the Demised Premises, dated April 29, 1996,
prepared by Arthur W. Ponzio Co. & Associates, Inc. and identified as
Project Nos. 20068-3 and 20068-4.
(b) The exceptions set forth on Exhibit "B" attached hereto and made
a part hereof;
(c) Party walls, if any; and
(d) Present and future zoning laws, ordinances, resolutions and
regulations of Atlantic City and all present and future ordinances,
laws, regulations and orders of all boards, bureaus, commissions and
bodies of any municipal, county, state or federal sovereigns now or
hereafter having or acquiring jurisdiction of the Demised Premises and
the use and improvement thereof;
This Lease is granted and accepted upon the foregoing and upon the
following covenants and conditions, and subject to the following restrictions,
to all and every one of which the parties consent; and each of the parties
hereby expressly covenants and agrees to keep, perform and observe all the
terms, covenants and conditions herein contained on its part to be kept,
performed and observed:
ARTICLE 2
Rent
Section 2.01. Subject to the operation of Section 2.02 and Article 17
hereof, Tenant shall pay to Landlord, in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts, in the manner and at the address
specified in Section 2.03 hereof, during the term, a net rent, over and above
the other payments to be made by Tenant as hereinafter provided, as follows:
(a) Commencing with the Commencement Date and continuing until
December 31, 1996, the sum of Twenty Thousand Five Hundred Dollars
($20,500.00) per calendar month, prorated for any partial month; and
(b) Commencing January 1, 1997 and continuing for each renewal year
thereafter until the expiration of the term of this Lease, the sum of
Two Hundred Forty-six Thousand Dollars ($246,000.00) per year, payable
in equal monthly installments of Twenty Thousand Five Hundred Dollars
($20,500.00) each.
Section 2.02.
(a) Subject to the operation of Article 17 hereof, Landlord reserves
the right at any time and from time to time to adjust (increase or
decrease) the rent payable under this Lease, effective as of the first
(1st) day of the applicable calendar month, by delivering written notice
thereof ("Rent Adjustment Notice") to Tenant and to any First Leasehold
Mortgagee (as defined in Article 17 hereof) not less than one calendar
month prior to the date upon which such rental adjustment is to take
effect ("Rent Adjustment Date"); provided, however, that Landlord shall
not have the right to increase the rent to an amount that exceeds the
fair market rent for the Demised Premises at the time such increase is
to take effect.
(b) If Tenant or any First Leasehold Mortgagee reasonably disputes
whether the amount of rent specified in a Rent Adjustment Notice exceeds
the fair market rent for the Demised Premises, then Tenant or such First
Leasehold Mortgagee, as the case may be, shall give written notice of
such dispute ("Objection Notice") to Landlord within fifteen (15) days
after such party's receipt of the Rent Adjustment Notice. Upon
Landlord's receipt of the Objection Notice, Landlord, Tenant and the
First Leasehold Mortgagee, if any, shall attempt in good faith to agree
upon the fair market rent for the Demised Premises. If the foregoing
parties fail to agree upon the fair market rent within thirty (30) days
after Landlord's receipt of the Objection Notice, then the fair market
rent for the Demised Premises shall be determined in accordance with the
arbitration process set forth in Section 17.07(b) hereof and the parties
shall be bound by such determination.
(c) In the event that an adjustment to rent is in dispute pursuant
to Subsection 2.02(b) hereof and such dispute is not resolved prior to
the Rent Adjustment Date, then the monthly rent payable by Tenant shall
be the amount of the rental payable in the calendar month immediately
preceding such Rent Adjustment Date; provided, however, that when the
dispute is resolved and the appropriate adjustment to rent is finally
determined, then the Landlord and the Tenant shall be charged or
credited, as the case may be, with the actual rental, as so determined,
commencing with the Rent Adjustment Date.
(d) As used in this Lease, the phrase "fair market rent for the
Demised Premises" (and variations of such phrase) shall have the meaning
set forth in Section 17.09 hereof.
Section 2.03. The net rent described in Section 2.01 hereof, as the same
may be adjusted pursuant to Section 2.02 hereof, is hereinafter called the
"Base Annual Rent." The Base Annual Rent shall be payable in advance on the
first day of each calendar month of the Term, commencing on the Commencement
Date. If the Commencement Date is any day other than the first (1st) day of a
calendar month, then Tenant shall pay Landlord on the Commencement Date the
proportionate amount of rent due for the balance of the first month of the
Term. All rental payments shall be payable at the office of Landlord first
above set forth or at such other place of which Landlord shall have given
Tenant at least thirty (30) days prior written notice.
Section 2.04. It is the purpose and intent of Landlord and Tenant that
this Lease be a net lease and that the net rent shall, except as herein
otherwise provided, be absolutely net to Landlord, so that this Lease shall
yield, net to Landlord, the net rent specified in Section 2.01 hereof in each
month and each year during the term of this Lease and that all costs, expenses
and obligations of every kind and nature whatsoever relating to the Demised
Premises, except as herein otherwise provided, that may arise or become due
during or out of the term of this Lease shall be paid by Tenant, and that
Landlord shall be indemnified and saved harmless by Tenant from and against
the same; provided, however, that nothing herein contained shall be construed
to require Tenant to pay the principal of, or interest on, any indebtedness
secured by any fee mortgage. Landlord shall pay the principal and interest of
any such fee mortgage.
Section 2.05. The net rent shall be paid to Landlord without notice or
demand and without abatement, deduction or set-off, except as herein otherwise
provided.
Section 2.06. Except as herein otherwise provided Tenant shall also pay
without notice, except as may be required in this Lease, and without
abatement, deduction or set-off, as additional rent, all sums, Impositions (as
defined in Article 3 hereof), costs, expenses and other payments that Tenant,
in any of the provisions of this Lease, assumes or agrees to pay and, in the
event of any non-payment thereof, Landlord shall have (in addition to all
other rights and remedies) all the rights and remedies provided for herein or
by law in the case of non-payment of the net rent.
ARTICLE 3
Payment of Taxes, Assessments, Etc.
Section 3.01. Tenant shall pay or cause to be paid (except as provided
in Section 3.02 hereof), before any fine, penalty, interest or cost may be
added thereto for the non-payment thereof, all taxes, assessments, water and
sewer rents, rates and charges, levies, license and permit fees and other
governmental charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, of any kind and nature whatsoever which at any time
during the term of this Lease may be assessed, levied, confirmed, imposed
upon, or grow or become due and payable out of or in respect of, or become a
lien on, the Demised Premises, or any part thereof or any appurtenance thereto
(all such taxes, assessments, water and sewer rents, rates and charges,
levies, license and permit fees and other governmental charges being
hereinafter referred to as "Impositions", and any of the same being
hereinafter referred to as an "Imposition"); provided, however, that:
(a) If, by law, any Imposition may at the option of the taxpayer be
paid in installments, then Tenant may pay the same in equal installments
over a period of not more than ten (10) years. Tenant shall pay only
such installments as shall become due during the term of this Lease; and
(b) All Impositions for the fiscal or tax years in which the term of
this Lease shall begin and end shall be apportioned so that Tenant shall
pay only those portions thereof which correspond with the portion of
said years as are within the terms hereby demised.
Section 3.02. Nothing herein contained shall require Tenant to pay
municipal, state or federal income taxes assessed against Landlord, municipal,
state or federal capital levy, gift, estate, succession, inheritance or
transfer taxes of Landlord, or corporation excess profits or franchise taxes
imposed upon any corporate owner of the fee of the Demised Premises, or any
income, profits, or revenue tax, assessment or charge imposed upon rent as
such, payable by Tenant under this Lease; provided, however, that if at any
time during the term of this Lease the methods of taxation prevailing at the
commencement of the term hereof shall be altered so that in lieu of or as a
substitute for the whole or any part of the taxes, assessments, levies,
impositions or charges now levied, assessed or imposed on real estate and the
improvements thereon, there shall be levied, assessed and imposed a tax,
assessment, levy, imposition or charge, wholly or partially as a capital levy
or otherwise, on the rents received therefrom, or measured by or based in
whole or in part upon the Demised Premises and imposed upon Landlord, then all
such taxes, assessments, levies, impositions or charges or the part thereof so
measured or based, shall be deemed to be included within the term
"Impositions" for the purposes hereof (but only to the extent that such
substitution shall relieve Tenant in whole or in part from the payment of any
Imposition enumerated in Section 3.01 hereof), to the extent that such
Impositions would be payable if the Demised Premises were the only property of
Landlord subject to such Impositions, and Tenant shall pay and discharge the
same as herein provided in respect of the payment of Impositions. In addition
to the foregoing, Tenant shall also pay the following (or shall reimburse
Landlord immediately upon demand for the cost of the following, as the case
may be): (a) any new tax of a nature not presently in effect, but which may be
hereafter levied, assessed or imposed upon Landlord or the Demised Premises,
to the extent such tax shall be based on or arise out of the ownership, use or
operation of the Demised Premises; (b) any Tax, excise, levy, imposition
and/or assessment levied, assessed or imposed upon Tenant by any governmental
taxing authority, acting under any present or future law, ordinance or
regulation, for the rental payable by Tenant to Landlord pursuant to this
Lease, either by way of substitution for or in addition to any existing tax on
land, buildings or otherwise; and (c) any New Jersey state tax levied upon the
rent paid by Tenant to Landlord.
Section 3.03. Tenant, upon request of Landlord, shall furnish to
Landlord or, if requested by Landlord, to any fee mortgagee, within
thirty (30) days after the date when any Imposition would become delinquent,
official receipts of the appropriate taxing authority, or other evidence
satisfactory to Landlord or such mortgagee, evidencing the payment thereof.
Section 3.04. Tenant shall be have the right to seek a reduction in the
valuation of the Demised Premises for tax purposes and to contest in good
faith by appropriate proceedings, at Tenant's expense, the amount or validity
in whole or in part of any Imposition; and may defer payment thereof.
Section 3.05. Landlord shall have a right to seek a reduction in the
valuation of the Demised Premises assessed for tax purposes and to prosecute
any action or proceeding theretofore commenced by Tenant, if such assessed
valuation or valuations shall in whole or in part relate and pertain to any
period of time subsequent to the expiration or termination of this Lease. To
the extent to which any tax refund payable as a result of any proceeding in
the nature of certiorari that Landlord or Tenant may institute, or payable by
reason of compromise or settlement of any such proceeding, may be based upon a
payment made by anyone other than Landlord and shall not relate to a period as
to which apportionment thereof has been made with Landlord, Tenant shall be
authorized to collect the same, subject, however, to Tenant's obligation to
reimburse Landlord forthwith for any expense incurred by Landlord in
connection therewith.
Section 3.06. Landlord shall not be required to join in any proceedings
referred to in Section 3.04 hereof unless the provisions of any law, rule or
regulation at the time in effect shall require that such proceedings be
brought by or in the name of Landlord or any owner of the Demised Premises, in
which event Landlord shall join in such proceedings or permit the same to be
brought in its name. Landlord shall not ultimately be subjected to any
liability for the payment of any costs or expenses in connection with any such
proceedings, and Tenant shall indemnify and save harmless Landlord from any
such costs and expenses. Tenant shall be entitled to any refund of any
Imposition and penalties or interest thereon received by Landlord which have
been paid by Tenant, or which have been paid by Landlord but previously
reimbursed in full by Tenant.
Section 3.07. The certificate, advice, receipt or bill of the
appropriate official designated by law to make or issue the same or to receive
payment of any Imposition, of non-payment of such Imposition shall be prima
facie evidence that such Imposition is due and unpaid or has been paid, as the
case may be, at the time of the making or issuance of such certificate,
advice, receipt or bill.
Section 3.08. Landlord appoints Tenant the attorney-in-fact of Landlord
for the purpose of making all payments to be made by Tenant pursuant to any of
the provisions of this Lease to persons or entities other than Landlord. In
case any person or entity to whom any sum is directly payable by Tenant under
any of the provisions of this Lease shall refuse to accept payment of such sum
from Tenant, Tenant shall thereupon give written notice of such fact to
Landlord and shall pay such sum directly to Landlord at the address specified
in, or pursuant to, Section 22.01 hereof, and Landlord shall thereupon pay
such sum to such person or entity.
ARTICLE 4
Surrender
Section 4.01. Except as is herein otherwise provided, Tenant shall on
the last day of the term or upon any earlier termination of this Lease, well
and truly surrender and deliver up the Demised Premises to the possession and
use of Landlord without fraud or delay and in good order, condition and
repair, except for reasonable wear and tear after the last necessary repair,
replacement, restoration or renewal made by Tenant, pursuant to its
obligations hereunder, free and clear of all lettings and occupancies other
than subleases then terminable at the option of the sublandlord thereof or
subleases to which Landlord shall have specifically consented, and free and
clear of all liens and encumbrances other than those, if any, presently
existing, or created or suffered by Landlord, without any payment or allowance
whatever by Landlord on account of any improvements which may be on the
Demised Premises.
Section 4.02. Where furnished by or at the expense of Tenant or any
subtenant, furniture, trade fixtures, business equipment, gaming and casino
equipment, slot machines and Tenant's personal property may be removed by
Tenant at or prior to the termination of this Lease or by such subtenant, as
the case may be, at or prior to the termination of its sublease, provided,
however, that the removal thereof will not injure the Demised Premises or
necessitate changes in or repairs to the same. Tenant shall pay or cause to
be paid to Landlord the cost of repairing any damage arising from such removal
and restoration of the Demised Premises to their condition prior to such
removal.
Section 4.03. Any personal property of Tenant or any subtenant which
shall remain in the Demised Premises after the termination of this Lease and
the removal of Tenant or such subtenant from the Demised Premises, may, at the
option of Landlord, be deemed to have been abandoned by Tenant or such
subtenant and either may be retained by Landlord as its property or be
disposed of, without accountability, in such manner as Landlord may see fit
or, if Landlord shall give written notice to Tenant to such effect, such
property shall be removed by Tenant at Tenant's sole cost and expense.
Section 4.04. If this Lease shall terminate pursuant to Article 15 or 16
hereof, then, notwithstanding Sections 4.02 and 4.03 hereof, Tenant or any
subtenant shall have a reasonable time thereafter to remove any property which
it shall be entitled to remove pursuant to Section 4.02 hereof.
Section 4.05. Landlord shall not be responsible for any loss or damage
occurring to any property owned by Tenant or any subtenant.
Section 4.06. The provisions of this Article shall survive any
termination of this Lease.
ARTICLE 5
Insurance
Section 5.01. Tenant, at its sole cost and expense, shall keep the
improvements on the Demised Premises insured, during the term of this Lease,
against loss or damage by fire, with such extended coverage as shall from time
to time be customary for premises similarly situated in Atlantic City, New
Jersey, with replacement cost endorsement, in amounts sufficient to prevent
Landlord or Tenant from being or becoming a co-insurer within the terms of the
policy or policies in question and in no event less than ninety percent (90%)
of the replacement value of the improvements on the Demised Premises exclusive
of the cost of foundations, excavations, and footings below the lowest
basement floor, without any deduction being made for depreciation. Such
replacement value shall be determined from time to time, but not more
frequently than once in any period of thirty-six (36) consecutive calendar
months, at the request of Landlord, by an appraiser, architect or contractor
who shall be mutually and reasonably acceptable to Landlord and Tenant. No
omission on the part of Landlord to request any such determination shall
relieve Tenant of its obligation hereunder.
Section 5.02. Tenant, at its sole cost and expense, shall maintain:
(a) for the mutual benefit of Landlord and Tenant, general public
liability insurance against claims for bodily injury, death or property
damage, occurring upon, in or about the Demised Premises, or the
elevators or any escalators, and on, in or about the adjoining sidewalks
and passageways (including, without limitation, personal injury, death
or property damage resulting directly or indirectly from any change,
alteration, improvement or repair thereof) for at least $5,000,000 for
any one accident and $1,000,000 for injury to any one individual and
$500,000 for damage to property and in such greater or lesser limits as
may be determined pursuant to Section 5.09 hereof;
(b) boiler and pressure vessel insurance, including pressure pipes,
if there be any such vessel or pipes in the Demised Premises, in an
amount not less than $250,000;
(c) insurance upon the improvements on the Demised Premises against
loss or damage due to war or nuclear action, as and when such insurance
shall be customary for premises similarly situated in Atlantic City, New
Jersey in an amount not less than the full insurable value thereof or
the maximum amount of such insurance obtainable;
(d) rental value insurance against loss of rental or other related
income derived by Tenant from any subleasing of the Demised Premises due
to the risks referred to in Section 5.01 hereof (including those
embraced by "extended coverage") in an amount sufficient to prevent
Tenant from becoming a co-insurer within the terms of the policy or
policies in questions, but in no event in an amount or amounts more than
the aggregate amount of the net rent and the real estate taxes hereunder
for a period of one year; and Tenant hereby assigns to Landlord or to a
trustee under Section 5.08 hereof if there be one, the proceeds of such
insurance so that in the event the improvements on the Demised Premises
shall be destroyed or seriously damaged such proceeds shall be held as
security for the payment of such net rent and real estate taxes
hereunder until the restoration of such improvements and, as Tenant
shall make payment of such net rent and real estate taxes, Landlord or
the trustee, as the case may be, shall, if Tenant shall not then be in
default, pay out to Tenant from said amount, the sums which shall have
been so paid by Tenant. Tenant may, at its election, carry such
insurance as a coverage contained in a business interruption insurance
policy; and
(e) such other insurance and in such amounts as may from time to
time be reasonably required by Landlord against other insurable hazards
which at the time are customarily insured against in the case of
premises similarly situated in Atlantic City, New Jersey, due regard
being given to the height and type of building, its construction, use
and occupancy.
Section 5.03.
(a) All insurance provided for in this Article shall be effected
under valid and enforceable policies, issued by insurers of recognized
responsibility. Upon the execution of this Lease, and thereafter not
less than fifteen (15) days prior to the expiration dates of the
expiring policies theretofore furnished pursuant to this Article,
originals of the policies (or, in the case of general public liability
insurance, certificates of the insurers) bearing notations evidencing
the payment of premiums or accompanied by other evidence satisfactory to
Landlord of such payment, shall be delivered by Tenant to Landlord,
except that, whenever this Lease or any renewal thereof shall be
mortgaged, such policies of insurance may be lodged with a First
Leasehold Mortgagee (as defined in Article 17 hereof) until the debt
secured by the First Leasehold Mortgage (as defined in Article 17
hereof) shall be paid or the term of this Lease and any renewals thereof
shall sooner end, and certificates of such policies shall meanwhile be
delivered to Landlord.
(b) Nothing in this Article 5 shall prevent Tenant from taking out
insurance of the kind and in the amounts provided for under this Article
under a blanket insurance policy or policies covering other properties
as well as the Demised Premises, provided, however, that any such policy
or policies of blanket insurance shall specify therein, or Tenant shall
furnish Landlord with a written statement from the insurers under such
policy or policies specifying, the amount of the total insurance
allocated to the Demised Premises, which amounts shall not be less than
the amounts required by Sections 5.01 and 5.02 hereof, and such amounts
so specified shall be sufficient to prevent any one of the assured from
becoming a co-insurer within the terms of the applicable policy or
policies, and provided further, however, that any such policy or
policies of blanket insurance shall, as to the Demised Premises,
otherwise comply as to endorsements and coverage with the provisions of
this Article.
(c) The insurance policies required under this Lease to be furnished
by Tenant to Landlord may, at the election of Tenant, be furnished
and/or paid for by any subtenant or other person having an insurable
interest in the Demised Premises, and Landlord shall accept such
policies as though they had been supplied and paid for by Tenant,
provided that such policies shall comply otherwise with the requirements
of this Lease.
Section 5.04. Except with respect to the insurance required by
subdivision (a) of Section 5.02 hereof, neither Landlord nor Tenant shall take
out separate insurance concurrent in form or contributing in the event of loss
with that insurance required in this Article to be furnished by, or which may
reasonably be required to be furnished by, Tenant unless Landlord and Tenant
are included therein as the insured, with loss payable as provided in this
Lease. Each party shall immediately notify the other of the placing of any
such separate insurance and shall cause the same to be delivered as in
Section 5.03 hereof required.
Section 5.05.
(a) All policies of insurance provided for in Sections 5.01 and 5.02
hereof shall name Landlord and Tenant as the insured as their respective
interests may appear, and, except as to paragraphs (a) and (d) of
Section 5.02 hereof, shall also name any fee and any leasehold
mortgagee, as the interest of any such mortgagee may appear, by standard
mortgagee clause. In case of damage to the buildings now on the Demised
Premises in an amount less than Twenty-five Thousand Dollars ($25,000)
the loss shall be adjusted by and the proceeds of such insurance paid to
Tenant. Any greater loss shall be adjusted and paid in the same manner
as is hereinafter provided in the case of a loss in excess of One
Hundred Thousand Dollars ($100,000) with respect to a new building on
the Demised Premises. During the construction of and after the
completion of a building on the Demised Premises, as referred to in
Article 9 hereof, the loss, if any, under such policies shall be
adjusted as follows: In case of any particular casualty resulting in
damage or destruction not exceeding $100,000 in the aggregate, the loss
under such policies shall be adjusted by Tenant and the insurance
companies and shall be payable to Tenant. In case of such damage or
destruction in excess of $100,000, the loss shall be adjusted with the
insurance companies by Landlord and Tenant and any fee and any leasehold
mortgagee, and the proceeds of any such insurance, as so adjusted, shall
be payable to the trustee acting hereunder pursuant to provisions of
Section 5.08 hereof or as provided in Section 23.02.
(b) All such policies shall provide that the loss, if any,
thereunder shall be adjusted and paid as hereinabove provided. Each
such policy shall, to the extent obtainable from insurance companies
licensed to do business in New Jersey, contain a provision that no act
or omission of Tenant or any subtenant shall affect or limit the
obligation of the insurance company so to pay the amount of any loss
sustained.
Section 5.06. Each such policy or certificate therefor issued by the
insurer shall, to the extent obtainable, contain an agreement by the insurer
that such policy shall not be cancelled without at least thirty (30) days'
prior written notice to Landlord and to any mortgagee named therein.
Section 5.07. Upon the expiration of this Lease, the unearned premiums
upon any such transferable insurance policies shall be apportioned if Tenant
shall not then be in default in the performance of any of Tenant's agreements,
terms, covenants and conditions in this Lease provided. At the commencement
of the term all transferable policies shall be transferred by Landlord to
Tenant who shall pay Landlord the unearned premiums thereon.
Section 5.08. The following provisions shall apply from and after the
time that Tenant shall begin the construction of a new building pursuant to
Article 9 hereof or at such sooner time as there shall be any insured damage
to the Demised Premises or a taking as mentioned in Article 16 hereof:
(a) Except as provided in Section 23.02 of this Lease, a bank or
trust company having an office in the State of New Jersey, designated by
Tenant, shall act as trustee hereunder and Landlord and Tenant shall
enter into an agreement with said bank or trust company appropriately
covering assumption of the duties of the trustee hereunder and
containing such provisions as may be reasonably required by said bank or
trust company, provided that Landlord shall not be required thereby to
assume any obligations or liabilities other than as provided in this
Lease.
(b) In the event of the refusal to act or the resignation of said
bank or trust company or of any successor or substituted bank or trust
company designated to act or acting as trustee hereunder, then, in lieu
of such bank or trust company, Tenant shall have the sole right to
designate any other bank or trust company having an office in the State
of New Jersey to act as trustee.
(c) Each such designation or substitution of any such bank or trust
company to act as trustee hereunder shall be effected by Tenant giving
to Landlord, and to the bank or trust company which shall have resigned
or to the bank or trust company then acting and for which another bank
or trust company is being substituted, written notice of such
designation or substitution, as the case may be, and as soon thereafter
as may be practicable after the giving of such notice (i) Landlord and
Tenant shall enter into an agreement with the bank or trust company so
designated or so being substituted appropriately covering the assumption
by it of the duties of the trustee hereunder and containing such
provisions as may reasonably be required by such bank or trust company,
provided that Landlord is not required thereby to assume any obligations
or liabilities other than as provided in this Lease, and (ii) the bank
or trust company which shall have resigned or for which another bank or
trust company shall have been so substituted shall turn over to the new
trustee all insurance proceeds remaining on hand with it.
(d) The fees and charges of every bank or trust company acting as
trustee hereunder shall be borne solely by Tenant and shall be paid
periodically and in such manner as may be required by such trustee.
(e) Anything contained in this Section to the contrary
notwithstanding, any agreement which, pursuant to the provisions of this
Section, Landlord and Tenant shall enter into with any bank or trust
company acting as trustee hereunder shall include as a party thereto the
holder of any mortgage affecting the fee of the Demised Premises and the
holder of any mortgage on this Lease.
Section 5.09. Either Landlord or Tenant may request a change in the
amounts or limits of the insurance to be maintained hereunder pursuant to
Section 5.02 hereof because of inflation or other relevant factors and any
dispute with respect thereto shall be resolved by arbitration pursuant to
Article 28 hereof. Landlord may request from Tenant such other insurance as
is referred to in Section 5.02(e) hereof, and any dispute with respect thereto
shall be resolved by arbitration pursuant to Article 28 hereof. Pending such
arbitration, Tenant shall supply Landlord with such further or increased
insurance as Landlord shall then demand and shall pay the premiums thereon.
If the determination of such arbitration shall be that Landlord was not
entitled to the insurance or increase so requested, then Landlord shall
reimburse Tenant for the amount of premiums so paid by Tenant, in which event
Tenant shall surrender such policies to Landlord and Landlord shall have the
option of continuing such further or increased insurance or canceling the
same, in which latter event the unearned premiums shall be property of
Landlord.
ARTICLE 6
Landlord's Right to Perform Tenant's Covenants
Section 6.01. If Tenant shall at any time fail to pay any Imposition in
accordance with the provisions of Article 3 hereof, or to take out, pay for,
maintain or deliver any of the insurance policies or certificates therefor as
provided for in Article 5 hereof, or shall fail to make any other payment or
perform any other act on its part to be made or performed, then Landlord,
after twenty (20) days' notice to Tenant (or without notice in case of an
emergency) and without waiving or releasing Tenant from any obligation of
Tenant contained in this Lease or from any default by Tenant and without
waiving Landlord's right to take such action as may be permissible under this
Lease as a result of such default, may (but shall be under no obligation to):
(a) pay any Imposition payable by Tenant pursuant to the provisions
of Article 3 hereof;
(b) take out, pay for and maintain any of the insurance policies
provided for in Article 5 hereof; or
(c) make any other payment or perform any other act on Tenant's part
to be made or performed as in this Lease provided.
Landlord may enter upon the Demised Premises for any such purpose, and take
all such action thereon, as may be necessary therefor.
Section 6.02. All sums so paid by Landlord and all costs and expenses
incurred by Landlord, including reasonable attorneys' fees, in connection with
the performance of any such act pursuant to Section 6.01, together with
interest thereon at the rate of twelve percent (12%) per annum from the date
of such payment or incurrence by Landlord of such cost and expense shall
constitute additional rent payable by Tenant under this Lease and shall be
paid by Tenant to Landlord on demand.
ARTICLE 7
Repairs and Maintenance of the Demised Premises
Section 7.01. Throughout the term of this Lease, Tenant, at its sole
cost and expense, shall take good care of the Demised Premises, all alleyways
and passageways and the sidewalks and curbs adjoining the same and shall keep
the same in good order and condition, except for reasonable wear and tear
after the last necessary repair, replacement, restoration or renewal made by
Tenant pursuant to its obligations hereunder, and make all necessary repairs
thereto, interior and exterior, structural and non-structural, ordinary and
extraordinary, and foreseen and unforeseen. All repairs made by Tenant shall
be at least equal in quality and class to the original work. Tenant shall do
or cause others to do all necessary shoring of foundations and walls of any
structures on the Demised Premises and every other act or thing for the safety
and preservation thereof which may be necessary by reason of any excavation or
other building operation upon any adjoining property or street, alleyway or
passageway.
Section 7.02. Tenant shall put, keep and maintain all portions of the
Demised Premises and the sidewalks, curbs, alleyways and passageways adjoining
the same in a clean and orderly condition, free of dirt, rubbish, snow, ice
and unlawful obstructions.
Section 7.03. Landlord shall not be required to furnish to Tenant any
facilities or services of any kind whatsoever during the term, such as, but
not limited to, water, steam, heat, gas, hot water, electricity, light and
power. Landlord shall in no event be required to make any alterations,
rebuildings, replacements, changes, additions, improvements or repairs during
the term of this Lease.
ARTICLE 8
Compliance with Laws, Ordinances, Etc.
Section 8.01. Throughout the term of this Lease, Tenant, at its sole
cost and expense, shall promptly comply with all present and future laws,
ordinances, orders, rules, regulations and requirements of all federal, state
and municipal governments, departments, commissions, boards and officers, and
all orders, rules and regulations of the national Board of Fire Underwriters
or any other body or bodies exercising similar functions, foreseen or
unforeseen, ordinary as well as extraordinary, that may be applicable to the
Demised Premises and the sidewalks, alleyways, passageways and curbs adjoining
the same or to the use or manner of use of the Demised Premises or the owners,
Tenants or occupants thereof, whether or not such law, ordinance, order, rule,
regulation or requirement shall affect the interior or exterior of the Demised
Premises, necessitate structural changes or improvements or interfere with the
use and enjoyment of the Demised Premises, and whether or not such compliance
is required by reason of any condition, event or circumstance existing prior
to or after the commencement of the term of this Lease.
Section 8.02. Tenant shall likewise observe and comply with the
requirements of all policies of public liability, fire and all other policies
of insurance required to be supplied by Tenant at any time in force with
respect to the Demised Premises, whether or not such observance or compliance
is required by reason of any condition, event or circumstance existing prior
to or after the commencement of the term of this Lease, and Tenant shall, in
the event of any violation or any attempted violation of the provisions of
this Section by any subtenant, take steps, immediately upon knowledge of such
violation or attempted violation, to remedy or prevent the same as the case
may be. In any case, Tenant shall have the right to substitute policies of
other insurance companies.
Section 8.03. Tenant shall have the right, after prior written notice to
Landlord, to contest by appropriate legal proceedings diligently conducted in
good faith, in the name of Tenant or Landlord or both, without cost or expense
to Landlord, the validity or application of any law, ordinance, order, rule,
regulation or requirement of the nature referred to in Section 8.01 hereof,
subject to the following:
(a) If by the terms of any such law, ordinance, order, rule,
regulation or requirement, compliance therewith pending the prosecution
of any such proceeding may legally be delayed without the incurrence of
any lien, charge or liability of any kind against the Demised Premises
or any part thereof and without subjecting Tenant or Landlord to any
liability, civil or criminal, for failure so to comply therewith, Tenant
may delay compliance therewith until the final determination of such
proceeding; or
(b) If any lien, charge or civil liability would be incurred by
reason of any such delay, Tenant nevertheless may contest as aforesaid
and delay as aforesaid, provided that such delay would not subject
Landlord to criminal liability or fine, and Tenant (i) furnishes to
Landlord security, reasonably satisfactory to Landlord, against any loss
or injury by reason of such contest or delay, and (ii) prosecutes the
contest with due diligence.
Landlord, without cost to it, shall, subject to the foregoing, execute and
deliver any appropriate papers which may be necessary or propter to permit
Tenant so to contest the validity or application of any such law, ordinance,
order, rule, regulation or requirement.
Section 8.04. If a "Long Term Renewal" (as defined in Article 17 hereof)
of this Lease has occurred and if, during any of the last three (3) years of
any of the Original Long Term, First Extended Term or Second Extended Term (as
the foregoing terms are defined in Article 17 hereof), respectively, as the
case may be, in order to comply with the foregoing provisions of this Article,
Tenant shall be required to make any addition or alteration to any
improvements now existing or hereafter constructed on the Demised Premises,
which shall cost more than $1,000,000, Tenant may elect to cancel this Lease
by giving notice to Landlord within thirty (30) days after the obligation to
make such addition or alteration shall become effective. This Lease shall
terminate thirty (30) days after the giving of such notice.
ARTICLE 9
New Building - Alterations
Section 9.01. Tenant may, at any time during the term of this Lease or
any renewal thereof, construct one or more buildings, parking lots, garages,
and/or any other improvements and may demolish any buildings or improvements,
or any part thereof, then existing on the Demised Premises, and thereafter
may, at Tenant's option, erect new buildings and/or other improvements
thereon, subject to the provisions of this Article. Before beginning any such
construction, Tenant shall submit to Landlord a copy of the plans and
specifications for such new building(s), and any amendments thereto, together
with an estimate which shall show in reasonable detail, allocated among the
various trades, the approximate net cost of such building(s). Such plans and
specifications shall comply with all relevant legal requirements. If Tenant
demolishes any buildings or improvements and elects not to replace same, then
Tenant shall remove all debris, fill all basements and leave the land upon
which such buildings or improvements were situated vacant and leave all
remaining buildings complete and usable as architecturally whole buildings,
compatible with the use and design of any buildings remaining on the Demised
Premises or attached thereto. Landlord's approval of such plans,
specifications and amendments thereto shall not be necessary.
Section 9.02. Before making any structural alterations to, or beginning
the demolition of, any buildings or improvements which may at any time be on
the Demised Premises, and before beginning the construction of a new building
on the Demised Premises, Tenant shall supply Landlord with such endorsements
to the existing insurance policies as shall be necessary to cover the
contemplated work.
Section 9.03. Any buildings and improvements erected by Tenant shall be
constructed and completed in compliance with all requirements of the law and
with all ordinances, regulations and/or orders of any State or other public
authority relating thereto. On completion of any building, or of any other
improvement requiring the same, Tenant will procure a final Certificate of
Occupancy and deliver to Landlord the original or a copy thereof.
Section 9.04. If Tenant shall erect any buildings and/or improvements on
the Demised Premises, Tenant may demolish and replace the same provided that
in so doing Tenant shall comply with all of the provisions of this Article
relating to demolition and construction on the Demised Premises.
Section 9.05. Any and all buildings, structures, alterations, additions
and improvements upon the Demised Premises at the expiration or sooner
termination of this Lease shall then become property of Landlord and shall be
surrendered at that time in accordance with the provisions of Section 4.01
hereof.
ARTICLE 10
Discharge of Liens
Section 10.01. Tenant shall not create or permit to be created or to
remain, and shall discharge, any construction, mechanic's, laborer's or
material-man's lien or any conditional sale, title retention agreement or
chattel mortgage, which might be or become a lien, encumbrance or charge upon
the Demised Premises or any part thereof having any priority or preference
over or ranking on a parity with the estate, rights and interest of Landlord
in the Demised Premises or any part thereof.
Section 10.02. If any construction, mechanic's, laborer's or
materialman's lien shall at any time be filed against the Demised Premises or
any part thereof, Tenant, within thirty (30) days after notice of the filing
thereof, shall cause the same to be discharged of record by payment, deposit,
bond, order of a court of competent jurisdiction, or otherwise. If Tenant
shall fail to cause such lien to be discharged within the period aforesaid,
then, in addition to any other right or remedy, Landlord may, after
twenty (20) days' notice to Tenant, but shall not be obligated to, discharge
the same either by paying the amount claimed to be due or by procuring the
discharge of such lien by deposit or by bonding proceedings, and in any such
event Landlord shall be entitled, if Landlord so elects, to compel the
prosecution of an action for the foreclosure of such lien by the lienor and to
pay the amount of the judgment in favor of the lienor with interest, costs and
allowances. Any amount so paid by Landlord and all costs and expenses
incurred by Landlord in connection therewith, together with interest thereon
at the rate of twelve percent (12%) per annum from the respective dates of
Landlord's making of the payment or incurring of the cost and expense shall
constitute additional rent payable by Tenant under this Lease and shall be
paid by Tenant to Landlord on demand.
Section 10.03. Nothing in this Lease contained shall be deemed or
construed in any way as constituting the consent or request of Landlord,
express or implied by inference or otherwise, to any contractor,
subcontractor, laborer or materialman for the performance of any labor or the
furnishing of any materials for any specific improvement, alteration to or
repair of the Demised Premises or any part thereof.
ARTICLE 11
No Waste
Section 11.01. Tenant shall not do or suffer any waste or damage,
disfigurement or injury to the Demised Premises or any part thereof, but this
shall not be deemed to prevent demolition or alterations pursuant to other
provisions of this Lease.
ARTICLE 12
Use of Property
Section 12.01.
(a) Tenant shall not use or allow the Demised Premises to be used
for any unlawful purpose or in violation of any Certificate of Occupancy
covering or affecting the use of the Demised Premises or any part
thereof or which may, in law, constitute a nuisance, public or private,
or which may make void or voidable any insurance then in force with
respect thereto.
(b) If a new building or buildings are constructed pursuant to the
provisions of Article 9 or of Section 15.04 hereof, the same shall be
used only for purposes which shall be legal.
(c) Any dispute with respect to the applicability or interpretation
of any provision of this Section, or as to compliance or non-compliance
by Tenant with the provisions of this Section, shall be determined by
arbitration under the provisions of Article 28 hereof.
Section 12.02. Tenant shall not suffer or permit the Demised Premises or
any portion thereof to be used by the public, as such, without restriction or
in such manner as might reasonably tend to impair Landlord's title to the
Demised Premises or any portion thereof, or in such manner as might reasonably
make possible a claim or claims of adverse usage, adverse possession or
prescription by the public, as such, or of implied dedication, of the Demised
Premises or any portion thereof. Tenant hereby acknowledges that Landlord
does not hereby consent, expressly or by implication, to the unrestricted use
or possession of the whole or any portion of the Demised Premises by the
public, as such.
ARTICLE 13
Entry on Demised Premises by Landlord
Section 13.01. Tenant shall permit Landlord and its authorized
representatives to enter the Demised Premises at all reasonable times (a) for
the purpose of inspecting the same, and (b) subject to the notice provisions
of Section 19.01(b) of this Lease, for the purpose of making any necessary
repairs thereto and performing any work therein that may be necessary by
reason of Tenant's failure to make any such repairs or perform any such work
or to commence the same with due diligence. Nothing herein shall imply any
duty upon the part of Landlord to do any such work; and performance thereof by
Landlord shall not constitute a waiver of Tenant's default in failing to
perform the same.
Section 13.02. During the progress of any work in the Demised Premises
performed by Landlord pursuant to the provisions of Section 13.01 hereof,
Landlord may keep and store therein all necessary materials, tools, supplies
and equipment. Landlord shall not be liable for inconvenience, annoyance,
disturbance, loss of business or other damage of Tenant or any subtenant by
reason of making such repairs or the performance of any such work, or on
account of bringing materials, tools, supplies and equipment into the Demised
Premises during the course thereof and the obligations of Tenant under this
Lease shall not be affected thereby.
Section 13.03. Landlord shall have the right to enter the Demised
Premises at all reasonable times during usual business hours for the purpose
of showing the same to prospective purchasers of the Demised Premises, and, at
any time within two years prior to the expiration of the term of this Lease
for the purpose of showing the same to prospective tenants. If any part of
the Demised Premises shall be used for "classified work" within the meaning of
governmental regulations, only persons permitted to do so under such
regulations may enter the Demised Premises.
ARTICLE 14
Indemnification
Section 14.01. Tenant shall hold Landlord harmless from any and all
damage to the adjoining or neighboring property by reason of the erection,
installation, construction or maintenance of improvements, and Tenant further
covenants and agrees to take all reasonable steps and measures to protect all
adjoining or neighboring land and improvements, including any adjoining or
neighboring real property owned and occupied by Landlord from any and all
damage by reason of the construction of the improvements or the installation
of the improvements upon the Demised Premises or by reason of any activity
upon the Demised Premises.
Section 14.02. Tenant shall indemnify the Landlord and assume all
liability for damage to property or injury to or death of any person or
persons caused by or in connection with or arising out of Tenant's or its
subtenants' negligence in their respective activities, use or occupancy of the
Demised Premises or any act or omission of Tenant, its subtenants, agents,
servants or employees upon the Demised Premises.
Section 14.03. Should Landlord be made a party to any litigation of any
nature whatever arising out of or in connection with Tenant's occupancy of the
Demised Premises or its activities thereon or from any of the causes mentioned
in Section 14.01 or 14.02, Tenant covenants and agrees to defend said
litigation on behalf of Landlord upon the demand of Landlord and to pay all
costs, including attorneys' fees, in connection therewith and to satisfy in
full the amount of any judgment rendered against Landlord in any such
litigation. Nothing herein shall require Tenant to defend or indemnify
Landlord with respect to Landlord's own acts or omissions.
Section 14.04. To the extent not otherwise covered by insurance, each
party to this Lease shall indemnify the other and hold the other harmless from
any liability, excluding attorneys' fees, costs and expenses, which may arise
out of the performance of their respective obligations and services under this
Lease. This indemnification shall be limited only to any award of damages
against either party arising from the sole negligence of, or the breach of
this Lease by, the other party hereto. Each party shall provide its own legal
representation, however, at its own cost and expense, during any litigation or
legal proceedings brought in connection with such claim, which shall not be
reimbursable by the other party pursuant to this provision.
ARTICLE 15
Damage or Destruction
Section 15.01. In case of damage to or destruction of any buildings or
improvements now existing or hereafter constructed on the Demised Premises,
Tenant shall have the right, at its option, to repair, restore or replace the
same, or to demolish the same and leave the land vacant. All proceeds of any
insurance payable by reason of such damage or destruction shall be paid to
Tenant in the manner provided in Section 15.03 hereof. Any construction of a
new building in replacement of a damaged or destroyed building, and any
demolition of any damaged or destroyed building, shall be subject to the
provisions of Article 9 hereof.
Section 15.02. In case of damage to or destruction of any buildings or
improvements on the Demised Premises or any part thereof by fire or otherwise,
Tenant shall promptly give written notice thereof to Landlord, and shall
advise Landlord whether Tenant elects to demolish the buildings and
improvements on the Demised Premises and leave the land vacant. If Tenant
does not elect to demolish the buildings and improvements, then Tenant shall,
at Tenant's sole cost and expense, and whether or not the insurance proceeds,
if any, shall be sufficient for such purpose, restore, repair, replace,
rebuild and/or alter the same, with such changes or alterations as may be made
at Tenant's election, all in conformity with and subject to the conditions of
Article 9 of this Lease. Such restorations, repairs, replacements, rebuilding
and/or alterations shall be commenced within ninety (90) days from the date of
occurrence of such damage or destruction, which time shall be extended by a
time commensurate with any delays due to adjustment of insurance, preparation
of plans and specifications, and applications for zoning variances and
rezoning, and shall thereafter be prosecuted with reasonable diligence,
unavoidable delays excepted.
Section 15.03.
(a) All insurance money paid on account of such damage or
destruction to the trustee acting hereunder pursuant to the provisions
of Section 5.08 hereof, less the reasonable cost, if any, incurred in
connection with adjustment of the loss and the collection thereof, shall
be applied by such trustee to the payment of the cost of the aforesaid
restoration, repairs, replacement, rebuilding or alterations, including
the cost of temporary repairs or for the protection of property pending
the completion of permanent restoration, repairs, replacements,
rebuilding or alterations (all of which temporary repairs, protection of
property and permanent restoration, repairs, replacement, rebuilding or
alterations are hereinafter collectively referred to as the
"restoration"), and shall be paid out to, or at the direction of, Tenant
from time to time as such restoration progresses, in installments equal
to ninety percent (90%) of the work completed and materials furnished,
and shall be received by Tenant for the purposes of paying the cost of
such restoration upon the written request of Tenant which shall be
accompanied by the following:
(1) a verified certificate signed by Tenant, or an executive
officer of Tenant, or a certificate signed by the architect or engineer
in charge of such construction, dated not more than thirty (30) days
prior to such request, setting forth the following:
(i) that the sum then requested either has been paid by
Tenant, or is justly due to contractors, subcontractors,
materialmen, engineers, architects or other persons who have
rendered services or furnished materials for the restoration
therein specified, and giving a brief description of such services
and materials and the several amounts so paid or due to each of
said persons in respect thereof, and stating that no part of such
expenditures has been or is being made the basis, in any previous
or then pending request, for the withdrawal of insurance money or
has been made out of the proceeds of insurance received by Tenant,
and that the sum then requested does not exceed the value of the
services and materials described in the certificate;
(ii) that except for the amount, if any, stated (pursuant to
the foregoing subclause (a)(1)) in such certificate to be due for
services or materials, there is no outstanding indebtedness shown
on Tenant's books or known to the persons signing such
certificate, after due inquiry, which is due on the date of such
certificate for labor, wages, materials, supplies or services in
connection with such restoration which, if unpaid, might become
the basis of a vendor's, mechanic's, laborer's or materialman's
statutory or similar lien upon such restoration or upon the
Demised Premises or any part thereof; and
(iii) that the cost, as estimated by the persons signing such
certificate, of the restoration required to be done subsequent to
the date of such certificate in order to complete the same, does
not exceed the aggregate of the insurance money remaining in the
hands of such trustee, after payment of the sum requested in such
certificate and the amount of the bond deposited pursuant to
Section 15.02 hereof.
(2) an official search of the public records or a search of a
title insurance company doing business in State of New Jersey showing
that there has not been filed with respect to the Demised Premises or
any part thereof any construction, vendor's, mechanic's, laborer's,
materialman's or like lien, which has not been discharged of record,
except such as will be discharged by payment of the amount then
requested.
Any balance of such funds shall be paid to Tenant upon completion of
such restoration in accordance with the requirements of this Article.
In the event that any such restoration involves expenditures in excess
of $100,000, the certificate required by subclause (a)(1) of this
Section shall be a certificate signed by the architect or engineer in
charge of the restoration, who shall be selected by Tenant and approved
in writing by Landlord, which approval Landlord shall not unreasonably
withhold. Upon compliance with the foregoing provisions of this
Section, such trustee shall, out of such insurance money, pay or cause
to be paid to Tenant or the persons named (pursuant to
subclause (a)(1)(i) of this Section) in such certificate the respective
amounts stated therein to have been paid by Tenant or to be due to them,
as the case may be.
(b) If the net insurance money as aforesaid at the time held by such
trustee shall be insufficient to pay the entire cost of such
restoration, Tenant shall pay the deficiency.
(c) Upon receipt by such trustee of satisfactory evidence, of the
character required by subclauses (a)(1) and (a)(2) of this Section, that
the restoration has been completed and paid for in full and that there
are no liens of the character referred to therein, any balance of the
insurance money at the time held by such trustee shall be paid to
Tenant.
(d) If Tenant elects not to restore the Demised Premises as
permitted by Section 15.01, then the insurance proceeds payable in
respect of such damage or destruction shall be distributed as follows:
(1) First, to the holder(s) of any leasehold mortgage(s) to the
extent of the then unpaid balances, with accrued interest.
(2) Next, to the cost of demolition.
(3) The remaining balance, if any, shall be distributed to
Tenant.
Section 15.04. No destruction of or damage to the improvements on the
Demised Premises or any part thereof by fire or any other casualty shall
permit Tenant to surrender this Lease or shall relieve Tenant from its
liability to pay the full net rent and additional rent and other charges
payable under this Lease or from any of its other obligations under this Lease
(except that the proceeds of rent insurance shall be held and applied as
provided in Section 5.02(d) hereof), and Tenant waives any rights now or
hereafter conferred upon it by statute or otherwise to quit or surrender this
Lease or the Demised Premises or any part thereof, or to any suspension,
diminution, abatement or reduction of rent on account of any such destruction
or damage.
Section 15.05. Anything herein to the contrary notwithstanding, if a
Long Term Renewal of this Lease has occurred and if, during any of the last
three (3) years of any of the Original Long Term, First Extended Term or
Second Extended Term, respectively, as the case may be, the buildings and
improvements on the Demised Premises shall be so damaged by fire or otherwise
that the cost of replacement or restoration thereof shall exceed 50% of the
then replacement value of the improvements so damaged (any dispute with
respect the extent of such damage to be arbitrated pursuant to Article 28
hereof), then:
(a) Unless Tenant then elects to extend the term of this Lease
pursuant to Sections 17.05 or 17.06, as applicable, Landlord may elect
to cancel this Lease on at least thirty (30) days' notice, given within
sixty (60) days after such damage, and this Lease and any and all
renewal rights thereunder shall come to an end on the date in such
notice specified.
(b) Tenant may elect to cancel this Lease on at least thirty (30)
days' notice, given within sixty (60) days after such damage, and this
Lease shall come to an end on the date specified in such notice;
provided, however, that prior to the specified date for cancellation of
this Lease, Tenant shall demolish all damaged buildings and improvements
on the Demised Premises in accordance with the provisions of Article 9
hereof, except and to the extent that Landlord requests in writing that
Tenant not demolish such damaged buildings and improvements.
(C) In the event of any such cancellation, Tenant shall not be
obligated to perform any restoration, this Lease and the term hereof and
any renewal rights shall terminate as of the effective date of such
cancellation as specified in the notice, all such insurance proceeds
shall be distributed in accordance with the terms of Section 15.03(d)
hereof. No such cancellation or termination shall release Tenant from
any obligation hereunder for rent, taxes and insurance premiums accrued
or payable for or during any period prior to the effective date of such
cancellation, and any prepaid rent, taxes and insurance premiums beyond
the effective date of such cancellation shall be adjusted. In case of
any arbitration of a dispute under this Section as to whether any cost
of replacement shall exceed fifty percent (50%) of the then replacement
value of the improvements so damaged, the time to give any notice under
this Section shall be extended to a date which shall be thirty (30) days
after the determination of such arbitration.
ARTICLE 16
Condemnation
Section 16.01. In the event that the Demised Premises, or any part
thereof, shall be taken in condemnation proceedings or by exercise of any
right of eminent domain or by agreement between Landlord, Tenant and those
authorized to exercise such right (any such matters being hereinafter referred
to as a "taking"), Landlord, Tenant and any person or entity having an
interest in the award or awards shall have the right to participate in any
such condemnation proceedings or agreement for the purpose of protecting their
interests hereunder. Each party so participating shall pay its own expenses
therein.
Section 16.02. If at any time during the term of this Lease there shall
be a taking of the whole or substantially all of the Demised Premises, this
Lease shall terminate and expire on the date of such taking and the rent and
additional rent hereunder shall be apportioned and paid to the date of such
taking. For the purposes of this Article, "substantially all of the Demised
Premises" shall be deemed to have been taken if the part of the Demised
Premises not taken shall be insufficient for the economic and feasible
operation thereof by Tenant.
16.
Section 16.03. If this Lease shall have terminated as a result of such
taking:
(a) If at the time of such taking Tenant shall have erected or be
engaged in the erection of a building, Tenant shall be entitled to the
building award as the term "building award" is hereinafter defined. The
building award shall be deemed to be that part of the award which shall
be specifically attributable by the condemnation court (or condemnation
commissioner or other body authorized to make the award) to any building
or buildings on the Demised Premises or, if not so attributed by the
court, as shall be determined by agreement between the parties or by
arbitration pursuant to Article 28 hereof, to be attributable to such
building or buildings.
(b) Landlord shall be entitled to the award for the land and for
consequential damages to and diminution of the assemblage or plottage
value of the land not so taken.
Section 16.04. If this Lease shall continue after any such taking, then
this Lease shall remain unaffected, except as follows:
(a) The rent shall be reduced by an amount which bears the same
proportion to the net annual rent immediately prior to the partial
taking as the rental value of the part of the Demised Premises
(excluding the rental value of any buildings thereon) so taken shall
bear to the rental value of the whole Demised Premises (excluding the
rental value of any buildings thereon) immediately prior to such taking.
If the parties are unable to agree on the amount of such new rent or the
factual basis thereof, the same shall be resolved by arbitration
pursuant to Article 28 hereof. Any award or awards paid with respect to
the building shall be distributed as follows:
(1) First to the holder(s) of any leasehold mortgage(s) to the
extent of the then unpaid balances, with accrued interest;
(2) Next, to the cost of demolition; and
(3) The remaining balance, if any, shall be distributed to
Tenant.
(b) (1) Tenant may demolish any buildings on the Demised
Premises and leave the land vacant.
(2) If Tenant does not demolish all the buildings on the
Demised Premises then Tenant shall, promptly after such taking and at
its expense restore such building or buildings to a complete
architectural unit, in which event Tenant shall be entitled to
reimbursement for the costs thereof from the building award, as defined
in subdivision (a) of Section 16.03 hereof.
(c) Landlord shall be entitled to the award for the land taken and
for consequential damages to and diminution of the assemblage or
plottage value of the land not so taken.
(d) Subject to Section 16.04(b), if at the time of such taking
Tenant shall have erected or be engaged in the erection of a building,
the entire building award, as defined in subdivision (a) of
Section 16.03 hereof, shall be the property of Tenant. In addition,
Tenant shall be entitled to any award for consequential damages to any
buildings or parts thereof that are not taken.
(e) The building award, or that part thereof which shall be
Tenant's, shall be paid to Tenant promptly; provided, however, that so
much thereof as shall be necessary to pay the cost of demolition
required by subdivision (b)(1) hereof (which sum is hereinafter
sometimes referred to as the "cost of demolition") shall be paid to
Tenant after completion of such demolition, and so much thereof as shall
be necessary to pay the cost of restoration required by subdivision
(b)(2) hereof (which sum is hereinafter sometimes referred to as the
"cost of restoration") shall be paid to Tenant after completion of such
restoration. If Tenant shall so elect, the monies payable to Tenant
under subdivision (b)(1) or (b)(2) hereof shall be paid in progress
payments as the work progresses in the same manner as provided in
Section 15.03 hereof with respect to the application of insurance
proceeds, but if Tenant shall deliver to Landlord a surety company bond
which shall be conditioned on restoration (if subdivision (b)(2) is
involved) or on completion of demolition (if subdivision (b)(1) is
involved), Tenant shall thereupon be entitled to the monies payable to
Tenant under subdivision (b)(1) or (b)(2) hereof, as the case may be,
subject to the rights of the holder of any leasehold mortgage. If
Tenant shall proceed under subdivision (b)(2) hereof and the building
award shall be insufficient to defray the cost of restoration, then
Tenant shall pay such deficiency.
Section 16.05. In the event of any taking mentioned in this Article 16,
Tenant shall not be entitled to any payment based upon the value of the
unexpired term of this Lease or any renewal thereof, or consequential damages
to the land not so taken, or the diminution of the assemblage or plottage
value of the land not so taken.
Section 16.06. In the event of the taking of an easement or any other
taking which shall be of an interest or estate in the land less than a fee
simple (other than a taking for temporary use mentioned in Section 16.07
hereof), as a result of which the Demised Premises shall be insufficient for
the economic and feasible operation thereof by Tenant, this Lease shall
terminate and expire with the same force and effect as in the case of a taking
pursuant to Section 16.02 hereof. Otherwise, such taking shall be deemed a
taking insufficient to terminate this Lease, and the division of the award
shall be governed by Section 16.04 in so far as that Section shall be
applicable; provided, however, that if there shall be any payment or award
predicated on a change in the grade of a street or avenue on which the Demised
Premises abuts, Tenant shall be entitled, after making such change or
restoration as may be necessary and appropriate by reason of such change of
grade, to reimbursement for the expense thereof to the extent of the net
amount of any payment or award, after deduction of costs of collection,
including attorneys' fees, which may be awarded for such change of grade. Any
part of any award for change of grade which shall remain unexpended after such
restoration shall be the property of Landlord. If any award shall include
change of grade and any other item or element of damage, that part thereof
shall be applied in accordance with this Section 16.06 which shall be
specifically attributed to change of grade by the condemnation court (or
condemnation commissioner or other body authorized to make the award) or, if
not so attributed, shall be determined by agreement between the parties or by
arbitration pursuant to Article 28 hereof.
Section 16.07. In the event of a taking of all or a part of the Demised
Premises for temporary use, this Lease shall continue without change, as
between Landlord and Tenant, and Tenant shall be entitled to the award made
for such use; provided that:
(a) such award shall be apportioned between Landlord and Tenant as
of the date of the expiration of the term of this Lease, and provided,
further, that if any such award shall be in a lump sum or in
installments covering a period of time greater than three months, Tenant
shall be entitled to a sum equal to a maximum of three months' rent and
the balance of such award shall be deposited with Landlord or with an
Authorized Institution refereed to in Section 31.01(e) hereof (if this
Lease shall have been mortgaged to such Authorized Institution) for
payment to Tenant in equal quarter-annual installments; and
(b) Tenant shall be entitled to file and prosecute any claim against
the condemnor for damages and to recover the same, for any negligent
use, waste or injury to the Demised Premises throughout the balance of
the then current term of this Lease. The amount of damages so recovered
shall be paid directly to the trustee referred to in Section 5.08 hereof
and shall be distributed in the same manner as is provided in
Section 15.02 hereof with respect to proceeds of insurance.
Section 16.08. In the event of any dispute between Landlord and Tenant
with respect to any issue of fact (other than one determined by the
condemnation court or condemnation commissioner or other body authorized to
make the award) arising out of a taking mentioned in this Article 16, such
dispute shall be resolved by arbitration pursuant to Article 28 hereof.
Section 16.09. In case of any taking mentioned in this Article 16, the
entire award shall be paid to a trustee to be appointed in the manner provided
in Section 5.08 hereof, unless this Lease shall have been mortgaged to an
Authorized Institution, as defined in Section 32.01(e) hereof, in which event
the entire award shall be payable to such Authorized Institution for
distribution to the parties entitled thereto pursuant to the provisions of
this Article 16.
ARTICLE 17
Long Term Renewal.
Section 17.01. For the purposes of this Article 17, each of the
following events shall be deemed a "Long Term Renewal Event":
(a) The holder of a first mortgage on Tenant's leasehold interest
under this Lease ("First Leasehold Mortgage") commences a foreclosure of
the First Leasehold Mortgage and such foreclosure is not dismissed
within ninety (90) days of the filing thereof. The term "First
Leasehold Mortgage" shall be deemed to include, without limitation, any
First Leasehold Mortgage or two or more First Leasehold Mortgages that
each have first priority and are pari passu with one another. The
holder of a First Leasehold Mortgage is hereinafter defined as a "First
Leasehold Mortgagee."
(b) Either Landlord or Tenant gives the Lease Termination Notice to
the other, as provided in Article 1 hereof, at any time while (i) any
indebtedness or obligation secured by a First Leasehold Mortgage remains
unsatisfied, or (ii) a First Leasehold Mortgagee is subject to an
unconditional obligation to make loans to Tenant, the repayment of which
would be secured by a First Leasehold Mortgage.
Section 17.02.
(a) Upon the occurrence of a Long Term Renewal Event, the then-
current term of this Lease shall be automatically renewed, at the end of
the then-current term, for a period of forty (40) calendar years (the
"Original Long Term") upon all of the same terms and conditions as
herein contained (except as hereinafter provided) without the necessity
of the execution of any further instrument or document. As used in this
Lease, the phrase "Long Term Renewal" of the term of this Lease shall
mean the renewal of the term of this Lease as set forth in this Section
17.02. Upon the occurrence of a Long-Term Renewal Event, (i) the Base
Annual Rent shall be adjusted as provided in this Article 17, (ii)
Landlord shall no longer have the right to further adjust the Base
Annual Rent as provided in Section 2.02 hereof, and (iii) there shall be
no further renewal of the term of the Lease, except as otherwise
specifically provided in Sections 17.05 and 17.06 hereof.
(b) Upon the occurrence of a Long Term Renewal Event, Tenant shall
promptly give written notice thereof to all First Leasehold Mortgagees,
if any.
Section 17.03. Upon the occurrence of a Long Term Renewal Event, the
Base Annual Rent for the balance of the term in effect at the time of such
occurrence shall automatically be adjusted to the fair market rent for the
Demised Premises, effective commencing on the first day of the first calendar
month following the occurrence of the Long Term Renewal Event. Such fair
market rent shall be determined in the manner set forth in Section 17.07
hereof.
Section 17.04. If the Long Term Renewal of the term of this Lease occurs
due to the commencement of a foreclosure on a First Leasehold Mortgage and,
thereafter, said foreclosure is dismissed and/or the mortgaged leasehold is
redeemed under applicable law, then the Long Term Renewal of this Lease
pursuant to Section 17.02 hereof shall be terminated and, upon such dismissal
or redemption, all terms, conditions and provisions of this Lease (including,
without limitation, those provisions with respect to Base Annual Rent and the
term of the Lease, and this Article 17), and the amount of the Base Annual
Rent, shall automatically be restored to those terms, conditions and
provisions and amount of Base Annual Rent that were in effect immediately
prior to the occurrence of the Long Term Renewal Event, effective on the first
day of the first calendar month following the date of such dismissal of the
foreclosure or such redemption of the mortgaged leasehold, without the
necessity of the execution of any further instrument or document.
Section 17.05. Provided that the term of this Lease has been irrevocably
renewed for the Original Long Term, then Tenant, at its option, may extend
this Lease for an additional period of thirty (30) years commencing upon the
expiration of the Original Long Term (the "First Extended Term") upon all of
the same terms and conditions as herein contained (except as hereinafter
provided) by serving notice thereof upon the Landlord at least one (1) year
before the expiration of the Original Long Term and, upon the service of said
notice, the Original Long Term shall be so extended for the First Extended
Term upon all of the terms and conditions of this Lease as are in effect
during the Original Long Term (except as to the amount of the Base Annual Rent
and except that the First Extended Term shall contain only one other
additional right to further extend the term of this Lease) without the
necessity of the execution of any further instrument or document.
Section 17.06. If Tenant has, pursuant to Section 17.05 hereof,
exercised its option to extend this Lease for the First Extended Term, then
Tenant, at its option, may extend this Lease for a second additional period of
thirty (30) years commencing upon the expiration of the First Extended Term
(the "Second Extended Term") upon all the same terms and conditions as herein
contained (except as hereinafter provided) by serving notice thereof upon the
Landlord at least one (1) year before the expiration of the First Extended
Term and, upon the service of said notice, the First Extended Term of this
Lease shall be so extended for the Second Extended Term upon all of the terms
and conditions of this Lease as are in effect during the First Extended Term
(except as to the amount of the Base Annual Rent and except that the Second
Extended Term shall contain no further option to extend the term of this
Lease) without the necessity of the execution of any further instrument or
document.
Section 17.07.
(a) The Base Annual Rent during the Original Long Term of this Lease
shall be the fair market rental of the Demised Premises, as mutually
agreed upon by Landlord, Tenant and the First Leasehold Mortgagee(s), if
any, within ninety (90) days after the occurrence of the Long Term
Renewal Event. In the event that within said ninety (90) day period,
Landlord, Tenant and the First Leasehold Mortgagee(s), if any, fail to
so agree to such rent for the Original Long Term, then the amount of the
Base Annual Rent for the Original Long Term shall be submitted to
arbitration to, and in accordance with the rules of, the American
Arbitration Association. In the event of such arbitration, Tenant shall
select one (1) arbitrator from a list of arbitrators to be submitted by
the American Arbitration Association, Landlord shall select one (1)
arbitrator from said list, and the two arbitrators so selected shall
select the third (3rd) arbitrator from such list as hereinafter
provided. The three (3) arbitrators shall then determine the fair
market rental of the Demised Premises and such determination shall be
binding upon Landlord and Tenant for the applicable Term. At any time
while a First Leasehold Mortgage is in effect, the arbitrator otherwise
to be selected by Tenant shall instead be selected by the First
Leasehold Mortgagee. If there is more than one First Leasehold
Mortgagee, then said arbitrator shall be selected by such First
Leasehold Mortgagees acting collectively or in such other manner as the
First Leasehold Mortgagees may otherwise agree.
(b) The Base Annual Rent during the First or Second Extended Term,
as the case may be, of this Lease shall be the fair market rental of the
Demised Premises, as mutually agreed upon by Landlord, Tenant and the
First Leasehold Mortgagee(s), if any, within ninety (90) days after
Tenant has exercised its option with respect to the First or Second
Extended Term, as the case may be. In the event that within said ninety
(90) day period, Landlord, Tenant and the First Leasehold Mortgagee(s),
if any, fail to so agree to such rent for the First or Second Extended
Term, as the case may be, then the amount of the Base Annual Rent for
the applicable Term shall be submitted to arbitration to, and in
accordance with the rules of, the American Arbitration Association. In
the event of such arbitration, Tenant shall select one (1) arbitrator
from a list or arbitrators to be submitted by the American Arbitration
Association, Landlord shall select one (1) arbitrator from said list,
and the two arbitrators so selected shall select the third (3rd)
arbitrator from such list as hereinafter provided. The three (3)
arbitrators shall then determine the fair market rental of the Demised
Premises and such determination shall be binding upon Landlord and
Tenant for the applicable Term. At any time while a First Leasehold
Mortgage is in effect, the arbitrator otherwise to be selected by Tenant
shall instead be selected by the First Leasehold Mortgagee. If there is
more than one First Leasehold Mortgagee, then said arbitrator shall be
selected by such First Leasehold Mortgagees acting collectively or in
such other manner as the First Leasehold Mortgagees may otherwise agree.
Section 17.08. The Base Annual Rent payable during the Original Long
Term, First Extended Term or Second Extended Term, as the case may be, shall
be adjusted every five (5) years during each such Term, to the then-current
fair market rental of the Demised Premises (such adjusted fair market rent is
hereinafter referred to as the "Adjusted Rent"). The Adjusted Rent shall be
as mutually agreed upon by Landlord and Tenant not later than six (6) months
prior to the beginning of the calendar year in which the Adjusted Rent is to
take effect. In the event that Landlord and Tenant fail to so agree to such
Adjusted Rent by said date, then the amount of the Adjusted Rent shall be
submitted to arbitration and the manner set forth Section 17.07(b) hereof.
Section 17.09. As used in this Lease, the phrases "fair market rent for
the Demised Premises", "fair market rental of the Demised Premises", and
variations of such phrases, shall mean the fair market rental of the Demised
Premises on a net basis as if the same were vacant and unimproved.
Section 17.10. The arbitration referred to in Section 17.07 hereof and,
to the extent applicable, in other provisions of this Lease, shall be
conducted as follows:
(a) The arbitration hearings shall be held in Atlantic City, New
Jersey.
(b) The arbitrators shall be persons who have had at least ten (10)
years of experience as a real estate broker, appraiser or the like in
Atlantic County, New Jersey. In the event that either Tenant or
Landlord fails to appoint an arbitrator within sixty (60) days after the
expiration of the ninety (90) day period provided for the Tenant and the
Landlord to reach agreement on the Base Annual Rent, then the arbitrator
of the Tenant or the Landlord, or both, as the case may be, shall be
appointed by the American Arbitration Association from its qualified
panel of arbitrators who meet the qualifications required of such
arbitrators provided in this Subsection 17.10(b).
(c) In the event that the two arbitrators selected by Tenant and
Landlord or by the American Arbitration Association in accordance with
the provisions hereof shall fail to appoint a third arbitrator within
twenty (20) days after their appointment, then such third arbitrator
shall be appointed by the American Arbitration Association from its
qualified panel of arbitrators who meet the requirements for
qualification provided under Subsection 17.10(b) hereof. The third
arbitrator shall act as chairman of the arbitration panel for purposes
of conducting the arbitration hearing.
(d) The hearing to be held by the arbitrators shall be held within
seventy (70) days after their appointment and their decision shall be
rendered within thirty (30) days after the conclusion of such hearings.
Such decision shall be in writing and in duplicate, one counterpart
thereof to be delivered to each of the parties hereto. The award of the
arbitrators shall be binding, final and conclusive on the parties and
judgment thereon may be entered in any court of competent jurisdiction
in the State of New Jersey.
(e) The fees of the arbitrators and the expenses incident to the
proceedings shall be borne equally by Landlord and Tenant. The fees of
respective counsel engaged by the parties and the fees of expert
witnesses and other witnesses called for by the parties shall be paid by
the respective party engaging such counsel or calling or engaging such
witnesses.
(f) In event that the amount of the Base Annual Rent for the
applicable Term (whether the Original Long Term or the First or Second
Extended Term) has not been determined by the date on which such Term is
to commence, such Term shall commence nevertheless and the monthly
rental to be payable by Tenant shall be the amount of the rental payable
per month during the last year of the preceding Term hereof; provided,
however, that when the rental for the Original Long Term or the First or
Second Extended Term, as the case may be, is finally determined,
Landlord and Tenant shall be charged or credited with the actual rental,
as so determined, commencing with the first day of the Original Long
Term or the First or Second Extended Term, as the case may be.
(g) In the event that the amount of Adjusted Rent has not been
determined by the date on which the Adjusted Rent first becomes due and
payable, then the monthly rental to be payable by Tenant shall be the
amount of the rental payable per month during the year immediately
preceding the date on which the Adjusted Rent first becomes due and
payable; provided, however, that when the amount of Adjusted Rent is
finally determined, Landlord and Tenant shall be charged or credited
with the actual rental, as so determined, commencing with the date that
the Adjusted Rent first became due and payable.
Section 17.11. The terms and provisions of this Article 17 shall not
operate, and shall not be binding on Landlord, unless and until Landlord
expressly consents thereto in writing prior to the granting by Tenant of a
First Leasehold Mortgage; provided, however, that Landlord hereby consents to
the operation of this Article 17 with respect to the following instruments,
each of which constitutes a First Leasehold Mortgage as defined in
Section 17.01 hereof, and are pari passu with one another: (i) that certain
Mortgage and Security Agreement with Assignment of Rents given by Tenant to
First Union National Bank and Midlantic Bank, National Association, of even
date herewith ("First Union Mortgage"), and (ii) that certain Mortgage and
Security Agreement with Assignment of Rents given by Tenant to Amalgamated
Bank of Chicago, Trustee ("Trustee"), of even date herewith.
ARTICLE 18
Assignments, Mortgages and Subleases of Tenant's Interest
Section 18.01. Tenant, and its successors and assigns, shall have the
unrestricted right to assign this Lease, subject, however, to the limitations
of this Section. No such assignment shall be effective unless and until
Landlord shall have received (i) written notice of such assignment identifying
the assignee and setting forth sufficient information with respect to the
assignee to permit Landlord to give any notices to such assignee as may be
required (or desirable) under this Lease, and (ii) an executed counterpart of
such assignment, in recordable form, under which the assignee shall have
assumed this Lease and agreed to perform and observe the covenants and
conditions in this Lease contained on Tenant's part to be performed and
observed. Upon compliance with this Section, each assignor shall be released
from all liability hereunder thereafter accruing.
Section 18.02. Tenant, and its successors and assigns, shall have the
unrestricted right to mortgage and pledge this Lease, subject, however, to the
limitations of this Section. Any such mortgage or pledge shall be subject and
subordinate to the rights of Landlord hereunder. Tenant shall give prompt
written notice to Landlord of any mortgage or pledge of this Lease. Said
notice shall set forth sufficient information with respect to the mortgagee
and/or pledgee to permit Landlord to give any notices to such mortgagee or
pledgee as may be required under this Lease.
Section 18.03. Tenant, and Tenant's successors and assigns, shall have
the unrestricted right to sublet the Demised Premises, in whole or in part
provided that each such sublease shall be subject and subordinate to the
rights of Landlord hereunder; provided, however, that no such subletting shall
be effective unless and until Landlord has received (i) written notice of such
subletting identifying the subtenant and setting forth sufficient information
with respect to the subtenant to permit Landlord to give any notices to such
subtenant as may be required (or desirable) under this Lease, and (ii) a true
and complete copy of the fully-executed sublease.
Section 18.04. Tenant shall deliver to Landlord, on request, in
duplicate, within ninety (90) days after the end of each fiscal year of
Tenant, a statement of income and expenses for such fiscal year, and a rent
schedule showing all subleases and the duration of the respective terms
thereof, with respect to the operation of the Demised Premises, which
statement shall be certified by Tenant or an executive officer of Tenant.
Section 18.05.
(a) Subject to the provisions of any First Leasehold Mortgage (as
defined in Section 17.01 hereof) or any assignment of rents and leases
executed in connection with a First Leasehold Mortgage, Tenant hereby
sells, assigns, transfers, sets over and delivers unto Landlord (as a
present and absolute assignment and transfer of title and not merely as
additional security) all leases, subleases and guarantees thereof, now
or hereafter existing, including all extensions, renewals and
modifications of any of the foregoing, affecting or otherwise
encumbering the Demised Premises (collectively, "Subleases"), together
with the immediate and continuing right to collect and receive all of
the rents, income, receipts, revenues, issues and profits now or
hereafter due or to which Tenant may now or shall hereafter (including
any period of redemption) become entitled or may demand or claim,
arising from or related to the Subleases or the Demised Premises,
including, but not limited to, minimum rents, additional rents,
percentage rents, deficiency rents, common area maintenance charges, tax
and insurance contributions, proceeds of sale of electricity, gas,
chilled and heated water and other utilities and services, liquidated
damages following default, the premium payable by any subtenant under
any Sublease or by any other occupant of the Demised Premises (in each
case, a "Subtenant") upon the exercise of any cancellation privilege
originally provided in any Sublease, and all proceeds payable under any
insurance policies covering loss of rents resulting from destruction of
or damage to the Demised Premises, together with any and all rights and
claims that Tenant may hereafter have against any Subtenant, excepting
therefrom any sums which by the express provisions of any Sublease are
payable directly to any governmental authority or to any other person,
firm or corporation other than the Subtenant (collectively, "Subrents");
subject, however, to a license ("License") hereby granted by Landlord to
Tenant, but limited as hereinafter provided, to collect and receive the
Subrents, to have and to hold the same unto Landlord, until such time
that all of Tenant's obligations and liabilities to Landlord under this
Lease are fully satisfied.
(b) Provided that no Event of Default (as defined in Section 19.01
hereof) has occurred, Tenant shall have the right under the License to
collect the Subrents. Tenant shall receive and hold the Subrents as a
trust fund to be applied, before using any part of the Subrents for any
other purpose, first to the payment of taxes and assessments upon the
Demised Premises before penalty or interest are due thereon in
accordance with the terms of this Lease, second to the cost of insurance
and of maintenance and repairs as required by the terms of this Lease,
third to the satisfaction of Tenant's obligations under the Subleases
and fourth to the payment of rent and other charges becoming due under
this Lease.
(c) Landlord shall apply any net amount collected by Landlord from
Subtenants to the net rent, additional rent and other charges due under
this Lease. No collection of rent by Landlord from an assignee of this
Lease or from a Subtenant shall constitute a waiver of any of the
provisions of this Article or an acceptance of the assignee or Subtenant
as a Tenant or a release of Tenant from performance by Tenant of its
obligations under this Lease. In the event of the failure of any
Subtenant to pay Subrent to Landlord pursuant to the foregoing
assignment after the happening of an Event of Default specified in
Section 19.01 hereof, any such Subrent thereafter collected by Tenant
shall be deemed to constitute a trust fund for the benefit of Landlord.
In the event, however, that Tenant shall have remedied such Event of
Default, the License shall be and deemed to be reinstated, and Tenant
shall again have the right to collect the Subrents subject to the terms
of the License.
(d) Tenant shall not directly or indirectly collect or accept any
payment of Subrent (other than additional rent) under any Sublease more
than three months in advance of the date when the same shall become due,
and such Subrent, in the case of any future Sublease, shall be payable
at least every three months, except that in case of a Sublease where the
sublandlord thereunder is required to make changes or alterations at
such sublandlord's expense, such sublandlord may collect advance rent
for an amount not in excess of one year's rent or the estimated cost of
such work, whichever is less.
Section 18.06. Subject to the further provisions of this Section,
Landlord agrees not unreasonably to refuse to execute an agreement,
hereinafter referred to as a "non-disturbance agreement," with such Subtenants
as shall qualify therefor under the following provisions of this Section and
who shall first have executed the non-disturbance agreement. Any such
Subtenant shall be what is commonly known as a "high credit" Tenant and,
except for prospective Tenants of ground floor space or space on the ground
floor in combination with other space, shall lease at least five percent (5%)
of the area of the Demised Premises. The term of any such Sublease shall not
extend beyond the term of this Lease. The rent reserved under any such
Sublease shall be no less than the then-prevailing rate for comparable space.
Any such Sublease shall include an escalation clause requiring the Subtenant
to pay, as additional rent, the Subtenant's proportionate share in any
increase, from and after the beginning of the term of the Sublease, in the
real estate taxes, and in the cost of insurance, labor and all operating
charges affecting the Demised Premises, unless the omission of such escalation
clause shall be reasonable. Landlord shall not unreasonably refuse to execute
a non-disturbance agreement. If Landlord and Tenant shall fail to agree on
the reasonableness of Landlord's refusal to execute such agreement or of the
omission of an escalation clause therefrom, such dispute shall be resolved by
arbitration pursuant to Section 28 hereof. If the result of such arbitration
shall be adverse to Landlord, Landlord shall not be liable for damages or
otherwise thereby but Landlord shall then execute the non-disturbance
agreement requested.
Section 18.07. Tenant shall not modify any Sublease, which shall have
been the subject of a non-disturbance agreement, as mentioned in Section 18.06
hereof, so as to reduce the rent, shorten the term, or adversely affect in any
other respect to any material extent the rights of the sublandlord thereunder,
or permit cancellation or accept the surrender of any such Sublease, without
the prior written consent of Landlord in each instance, which consent shall
not be required to the institution or prosecution of any action or proceedings
against such Subtenant by reason of a default on the part of such Subtenant
under the terms of such Sublease. Such consent of Landlord shall not be
required to (i) move any such Subtenant to another part of the Demised
Premises, provided that thereafter such Subtenant shall be obliged to pay a
rent which shall be no less than either the going rate of its new space or the
rent payable by the Subtenant for the vacated space; or (ii) to cancel any
such Sublease. In addition to being subject and subordinate to the rights of
Landlord hereunder, as required by the provisions of Section 18.03 hereof,
each such Sublease shall contain a specific provision to the effect that such
Sublease may not be modified or amended so as to reduce the rent, shorten the
term, or adversely affect in any other respect to any material extent the
rights of the sublandlord thereunder, or be cancelled or surrendered without
the prior written consent of Landlord in each instance.
ARTICLE 19
Default Provisions
Section 19.01. Any one or more of the following events shall constitute
"Events of Default" by Tenant:
(a) Tenant shall fail to pay any net rent or additional rent payable
under this Lease, when and as the same shall become due and payable, and
such default shall continue for a period of ten (10) days after notice
from Landlord to Tenant specifying the items in default, and shall
continue thereafter for a further period of ten (10) days after a second
notice from Landlord to Tenant which shall specify the items in default
and, in addition, shall state Landlord's intention to terminate this
Lease by reason of such default;
(b) Tenant defaults in the performance or compliance with any of the
agreements, terms, covenants or conditions in this Lease, other than
those referred to the foregoing paragraph (a) of this Section, for a
period of sixty (60) days after notice from Landlord to Tenant
specifying the items in default, and shall continue thereafter for a
further period of sixty (60) days after a second notice from Landlord to
Tenant which shall specify the items in default and, in addition, shall
state Landlord's intention to terminate this Lease by reason of such
default, or in the case of a default or a contingency that cannot with
due diligence be cured within said last mentioned sixty (60) day period,
Tenant fails to proceed within said last mentioned sixty (60) day period
to cure the same and thereafter to prosecute the curing of such default
with due diligence (it being intended in connection with a default not
susceptible of being cured with due diligence within said last mentioned
sixty (60) day period that the time of Tenant within which to cure the
same shall be extended for such period as may be necessary to complete
the same with all due diligence);
(c) If Tenant shall make a general assignment for the benefit of
creditors;
(d) If Tenant shall commence any case, proceeding or other action
seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or seeking
appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its property, and such
case, proceeding or other action results in the entry of an order for
relief against it which remains undismissed for a period of ninety (90)
days; or
(e) If any case, proceeding or other action against Tenant or any
guarantor of Tenant's obligations hereunder shall be commenced seeking
to have an order for relief entered against it as debtor, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking appointment
of a receiver, trustee, custodian or other similar official for it or
for all or any substantial part of its property, and such case,
proceeding or other action results in the entry of an order for relief
against it which remains undismissed for a period of one hundred
eighty (180) days.
Section 19.02. Upon the occurrence of an Event of Default by Tenant,
Landlord shall have the right, at its sole option, to terminate this Lease,
provided Landlord shall give Tenant, in addition to any notice requirements
provided in Section 19.01, thirty (30) business days' prior notice of Lease
termination. The termination notice may be cured within said thirty (30)
business day period, provided that Tenant cures the Event of Default
occasioning such termination notice or proceeds to cure such default with all
due diligence. If an Event of Default continues beyond any applicable grace
period (including the thirty (30) business day period set forth in this
Section), the balance of all rent and other charges to become due throughout
the term hereof shall, at the option of Landlord, be accelerated and shall be
immediately due and payable, and Landlord may in its own name, but as agent
for Tenant, assign, sublet or relet the Demised Premises for any period equal
to or greater or less than the remainder of the term hereof for any sum which
Landlord may deem reasonable to any tenant Landlord may select, and for any
use or purpose which Landlord may designate. With or without terminating this
Lease, Landlord may re-enter and take possession of the Demised Premises. If
necessary, Landlord may proceed to recover possession of the Demised Premises
under and by virtue of the laws of the State of New Jersey or by such other
proceedings, including re-entry and possession, as may be applicable. If
Landlord elects to terminate this Lease, everything contained in this Lease on
the part of Landlord to be done and performed shall cease without prejudice,
however, to the right of Landlord to recover from Tenant all Rent and other
sums accrued up to the time of termination or recovery of possession by
Landlord, whichever is later, all broker commissions and the cost of all
improvements to the Demised Premises incurred by Landlord in connection with
this Lease, and all rent remaining to be paid under this Lease. If the full
rental provided herein plus the costs, expenses and damages hereafter
described shall not be realized by Landlord, Tenant shall be liable for all
damages sustained by Landlord, including, without limitation, deficiency in
rent, reasonable attorneys' fees and brokerage fees.
Section 19.03. Pursuit of any of the foregoing remedies by Landlord
shall not preclude pursuit of any of the other remedies herein provided or any
other remedies provided by law or in equity, nor shall pursuit of any remedy
herein provided constitute a forfeiture or waiver of any rent due to Landlord
hereunder or of any damage accruing to Landlord by reason of the violation of
any of the terms, provisions and covenants herein contained. Forbearance by
Landlord to enforce one or more of the remedies herein provided upon the
occurrence of an Event of Default shall not be deemed or construed to
constitute a waiver of such default.
Section 19.04. If Landlord should fail to perform any of its obligations
under this Lease within sixty (60) days after Landlord's receipt of written
notice from Tenant specifying said failure, and said failure shall continue
thereafter for a further period of sixty (60) days after a second notice from
Tenant to Landlord which shall specify the items in default, or if it
reasonably would require more than sixty (60) days to cure such failure,
within a time reasonably necessary to cure such failure after Landlord's
receipt of such second written notice (provided Landlord must have undertaken
procedures to cure the failure within such second sixty (60) day period and
diligently pursued such efforts to cure to completion), then Tenant, in
addition to any other remedies available at law and in equity, shall have the
following remedies, which shall be cumulative and not exclusive, and which
Tenant may exercise serially or concurrently:
(a) Tenant shall have the right to perform any or all of such
obligations which Landlord has failed to perform, and Landlord shall
promptly reimburse Tenant for any and all reasonable costs and expenses
incurred by Tenant as a result of such performance, including interest
thereon at the rate of twelve percent (12%) per annum from the date such
costs and expenses were incurred until the date fully reimbursed. If
Landlord fails to reimburse Tenant within sixty (60) days, Tenant shall
have the right to deduct said amount from the next payment(s) of rent
due under this Lease.
(b) Tenant shall have the right to commence an action for damages or
such other remedies as may be available under this Lease or at law and
in equity.
(c) Tenant shall have the right, at its sole option, to terminate
this Lease, provided Tenant shall give Landlord, in addition to any
notice requirements provided above, thirty (30) business days' prior
notice of Lease termination. The termination notice may be cured within
the thirty (30) business day period as above provided Landlord cures the
Event of Default occasioning such termination notice or proceeds to cure
such default with all due diligence.
ARTICLE 20
Compliance With Environmental Laws
Section 20.01. Landlord shall indemnify, defend and hold harmless
Tenant, its officers, directors, principals, successors and assigns, from and
against any and all claims, obligations, liabilities, violations, penalties,
fines, governmental orders, suits, causes of action, judgments, damages
(civil, criminal or both) and all other costs and expenses of any nature
whatsoever, including, without limitation, reasonable consultants' fees and
attorneys' fees, which may result from any Hazardous Environmental Condition
(as defined in Section 20.02) caused by Landlord. Tenant shall indemnify,
defend and hold harmless Landlord, its officers, directors, principals,
successors and assigns, from and against any and all claims, obligations,
liabilities, violations, penalties, fines, governmental orders, suits, causes
of action, judgments, damages (civil, criminal or both) and all other costs
and expenses of any nature whatsoever, including, without limitation,
reasonable consultants' fees and attorneys' fees, which may result from any
Hazardous Environmental Condition not caused by Landlord. If any
environmental compliance activities must be undertaken because of a spill or
discharge of any hazardous materials in, on, under, at or about the Demised
Premises not caused by Landlord, then Tenant, at Tenant's expense, shall
promptly undertake all action required by applicable law. Landlord will
cooperate with Tenant in making any necessary submissions to governing
authorities.
Section 20.02. The term "Hazardous Environmental Condition" shall mean
any condition in, on or under the Demised Premises arising from or in
connection with any source or cause whatsoever, including, without limitation,
the spilling, leaking, leaching, migration, discharge, dispersal, release or
escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids
or gases, petroleum or petroleum products, waste materials or other irritants,
contaminants, pollutants or other substances of any nature into or upon land,
the atmosphere, or any water course or body of water, or ground water whether
sudden and accidental or over a course of time, which either (i) has caused or
has the potential of causing bodily injury or property damage to any person or
thing or (ii) is or may hereafter be designated as a "hazardous waste",
"hazardous substance", "regulated waste" or "regulated substance" or any other
term of similar import by any governmental jurisdiction with authority,
including, without limitation, the United States Atomic Energy Commission, the
United States Environmental Protection Agency and/or the New Jersey Department
of Environmental Protection, which requires or may hereafter require the
development and implementation of a remedial program, and/or result in the
imposition of fines and/or penalties; and/or impose on the owner of the
Demised Premises any obligation whatsoever.
Section 20.03. The foregoing indemnification shall survive the
termination of this Lease, and without limiting the generality of the
foregoing, Tenant shall indemnify and hold harmless Landlord from and against
(i) any and all liens for remedial expenses in favor of any federal, state
and/or local governmental authority or municipality caused by Tenant's
activities and (ii) any and all legal fees and disbursements in connection
with defending any suits or proceedings pertaining to a Hazardous
Environmental Condition caused by Tenant including suits to enforce this
Article 20.
ARTICLE 21
Invalidity of Particular Provisions
Section 21.01. If any term or provision of this Lease or the application
thereof to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforced to the fullest extent
permitted by law.
ARTICLE 22
Notices
Section 22.01. Any and all notices, demands, requests, submissions,
approvals, consents, disapprovals, objections, offers or other communications
or documents required to be given, delivered or served or which may be given,
delivered or served under or by the terms and provisions of this Lease or
pursuant to law or otherwise, shall be in writing and shall be deemed to have
been duly given, delivered or served if and when sent by registered mail
enclosed in a wrapper with the proper postage prepaid thereon and deposited
with the Registry Clerk of any United States Post Office, branch Post Office,
Post Office Station or Sub-Station regularly maintained, addressed if to
Tenant, at:
Boston Avenue and Pacific Avenue
Atlantic City, New Jersey 08401
Attention: President
or to such other address as Tenant may from time to time designate by written
notice to Landlord, or if to Landlord, addressed to Landlord at:
Park Place and The Boardwalk
Atlantic City, New Jersey 08401
Attention: President
or to such other address as Landlord may from time to time designate by
written notice to Tenant. The date of deposit with the said Registry Clerk
shall be deemed to be the date of such service.
ARTICLE 23
Rights of Leasehold Mortgagees
Section 23.01. If Tenant, or Tenant's successors or assigns, shall
mortgage this Lease in compliance with the provisions of Article 18 hereof,
then so long as any such mortgage shall remain unsatisfied of record, the
following provisions shall apply:
(a) Landlord or Tenant, as the case may be, upon serving the other
with any notice of default pursuant to the provisions of Article 19
hereof, or any other notice under the provisions of or with respect to
this Lease, shall also serve a copy of such notice upon the holder of
such mortgage, at the address provided for in paragraph (f) of this
Section, and no such notice to Landlord or Tenant hereunder shall be
deemed to have been duly given unless and until a copy thereof has been
so served.
(b) Any holder of such mortgage, in case Landlord or Tenant shall be
in default hereunder, shall, within the period and otherwise as herein
provided, have the right to remedy such default, or cause the same to be
remedied, and Landlord or Tenant, as the case may be, shall accept such
performance by or at the instance of such holder as if the same had been
made by the defaulting party.
(c) For the purposes of this Article, no Event of Default shall be
deemed to exist under Article 19 hereof in respect of the performance of
work required to be performed, or of acts to be done, or of conditions
to be remedied, if steps shall, in good faith, have been commenced
within the time permitted therefor to rectify the same and shall be
prosecuted to completion with diligence and continuity as in Article 19
hereof provided.
(d) Anything herein contained to the contrary notwithstanding, upon
the occurrence of an Event of Default, other than an Event of Default
due to a default in the payment of money, Landlord shall take no action
to effect a termination of this Lease without first giving to the holder
of such mortgage written notice thereof and a reasonable time thereafter
within which to accomplish one of the following: (i) to obtain
possession of the mortgaged property (including possession by a
receiver); (ii) to institute, prosecute and complete foreclosure
proceedings or otherwise acquire Tenant's interest under this Lease with
diligence; or (iii) in lieu of a foreclosure of such holder's leasehold
mortgage, give written notice to Tenant directing Tenant to assign
Tenant's leasehold interest under the Lease to the holder of such
mortgage, whereupon Tenant shall promptly assign to such holder, and
such holder shall fully accept and assume, all of Tenant's interest,
rights, obligations and liabilities under this Lease. Any default by
Tenant that is not reasonably susceptible of being cured by such holder
shall be deemed to have been waived by Landlord upon completion of such
foreclosure proceedings or upon such acquisition of Tenant's interest in
this Lease, except that any of such Events of Default that are
reasonably susceptible of being cured after such completion and
acquisition shall then be cured with reasonable diligence. It is
understood and agreed that such holder, or his designee, or any
purchaser in foreclosure proceedings (including, without limitation, a
corporation formed by such holder or by the holder or holders of the
bonds or obligations secured by the leasehold mortgage) may become the
legal owner and holder of this Lease through such foreclosure
proceedings or by assignment of this Lease in lieu of foreclosure.
(e) In the event of the termination of this Lease prior to the
expiration of the term, whether by summary proceedings to dispossess,
service of notice to terminate, or otherwise, due to default of Tenant
as referred to in Article 19 hereof, or any other default of Tenant, or
pursuant to Subparagraph (a) of Section 15.05 hereof, Landlord shall
serve upon the holder of such mortgage written notice that this Lease
has been terminated together with a statement of any and all sums which
would at that time be due under this Lease but for such termination, and
of all other defaults, if any, under this Lease then known to Landlord.
Such holder shall thereupon have the option to obtain a new lease, as
hereinafter provided. Upon the written request of the holder of such
mortgage, within thirty (30) days after service of such notice that this
Lease has been terminated, Landlord shall enter into a new lease of the
Demised Premises with such holder, or his designee, in accordance with
and upon the terms and conditions hereinafter described in this
paragraph (e). Such new lease shall be entered into at the reasonable
cost of the tenant thereunder, shall be effective as at the day of
termination of this Lease and shall be for the remainder of the term of
this Lease and at the rent and upon all the agreements, terms, covenants
and conditions hereof, including any applicable rights of renewal. Such
new lease shall require the tenant to perform any unfulfilled obligation
of Tenant under this Lease which is reasonably susceptible of being
performed by such tenant. Upon the execution of such new lease, the
tenant named therein shall pay any and all sums which would at the time
of the execution thereof be due under this Lease but for such
termination, and shall pay all expenses, including reasonable counsel
fees, court costs and disbursements incurred by Landlord in connection
with such defaults and termination, the recovery of possession of the
Demised Premises, and the preparation, execution and delivery of such
new lease. Upon the execution of such new lease, Landlord shall allow
to the tenant named therein and such tenant shall be entitled to an
adjustment in an amount equal to the net income derived by Landlord from
the Demised Premises during the period from the date of termination of
this Lease to the date of execution of such new lease.
(f) Any notice or other communication that Landlord or Tenant shall
desire or is required to give to or serve upon the holder of a mortgage
on this Lease shall be in writing and shall be served by registered
mail, addressed to such holder at his address as set forth in such
mortgage, or in the last assignment thereof, provided that such address
has been delivered to Landlord in accordance with Section 22.01 hereof,
or at such other address as shall be designated by such holder by
registered mail. Any notice or other communication which the holder of
a mortgage on this Lease shall desire or is required to give to or serve
upon Landlord shall be deemed to have been duly given or served if sent
by registered mail addressed to Landlord at Landlord's address set forth
in Section 22.01 of this Lease or at such other addresses as shall be
designated by Landlord by notice in writing given to such holder by
registered mail. Each such notice and communication shall be governed
by Section 22.01 hereof.
(g) Effective upon the commencement of the term of any new lease
executed pursuant to paragraph (e) of this Section, all subleases shall
be assigned and transferred without recourse by Landlord to the tenant
under such new lease, and all moneys on deposit with Landlord or the
trustee acting under Section 5.08 hereof which Tenant would have been
entitled to use but for the termination or expiration of this Lease may
be used by the tenant under such new lease for the purposes of and in
accordance with the provisions of such new lease.
(h) Anything herein contained to the contrary notwithstanding, the
provisions of this Article shall enure only to the benefit of the
holders of leasehold mortgages which shall be, respectively, a first,
second and third lien. If the holders of more than one such leasehold
mortgage shall make written requests upon Landlord for a new lease in
accordance with the provisions of paragraph (e) of this Section, the new
lease shall be entered into pursuant to the request of the holder whose
leasehold mortgage shall be prior in lien thereto and thereupon the
written requests for a new lease of each holder of a leasehold mortgage
junior in lien shall be and be deemed to be void and of no force or
effect.
(i) Nothing herein contained shall be deemed to obligate Landlord to
deliver possession of the Demised Premises to the tenant under any new
lease entered into pursuant to paragraph (e) of this Section.
(j) Landlord and Tenant shall not enter into any agreement canceling
or surrendering this Lease without the prior written consent of the
leasehold mortgagees.
(k) Until such time that all indebtedness and other obligations
secured by the First Union Mortgage (defined in Section 17.11 hereof)
are satisfied and the lenders secured by the First Union Mortgage no
longer have an unconditional obligation to make loans to Tenant, the
repayment of which would be secured by the First Union Mortgage,
Landlord and Tenant shall not enter into any agreement amending or
modifying this Lease without the consent of the lenders secured by the
First Union Mortgage and the consent of the Trustee (defined in Section
17.11 hereof). After such time that the foregoing consent is no longer
required for an amendment or modification of this Lease, then Landlord
and Tenant shall have the right to amend and/or modify this Lease at any
time and from time to time, without the consent of any leasehold
mortgagee, provided that any such amendment or modification does not
impair or diminish the lien of any then-existing leasehold mortgage.
Section 23.02. If the holder of a mortgage on this Lease shall be an
Authorized Institution, as defined in Section 31.01(e) hereof, then such
Authorized Institution may, in lieu of the trustee provided for in
Section 5.08 hereof, hold and disburse any funds which such trustee would have
been entitled to hold and disburse, but upon and subject nevertheless to all
the provisions hereof applicable thereto. Any reference in this Lease to
"trustee" shall where applicable be deemed to apply to an Authorized
Institution.
Section 23.03. If any leasehold mortgagee shall acquire title to
Tenant's interest in this Lease, by foreclosure of a mortgage thereon or by
assignment in lieu of foreclosure or by an assignment from a nominee or wholly
owned subsidiary corporation of such mortgagee, or under a new lease pursuant
to this Article, such mortgagee may assign such lease and shall thereupon be
released from all liability for the performance or observance of the covenants
and conditions in such lease contained on Tenant's part to be performed and
observed from and after the date of such assignment.
ARTICLE 24
Quiet Enjoyment
Section 24.01. Tenant, upon paying the net rent and all additional rent
and other charges herein provided for and observing and keeping all covenants,
agreements and conditions of this Lease on its part to be kept, shall quietly
have and enjoy the Demised Premises during the term of this Lease without
hindrance or molestation by anyone claiming by, through or under Landlord as
such, subject, however, to the exceptions, reservations and conditions of this
Lease.
ARTICLE 25
Excavation and Shoring
Section 25.01. If any excavation shall be made or contemplated to be
made for building or other purposes upon property or streets adjacent to or
nearby the Demised Premises, Tenant shall either:
(a) afford to the person or persons causing or authorized to cause
such excavation the right to enter upon the Demised Premises for the
purpose of doing such work as such person or persons shall consider to
be necessary to preserve any of the walls or structures of the
improvements on the Demised Premises from injury or damage and to
support the same by proper foundations, or
(b) at Tenants expense, do or cause to be done all such work as may
be necessary to preserve any of the walls or structures of the
improvements on the Demised Premises from injury or damages and to
support the same by proper foundations.
Tenant shall not, by reason of any such excavation or work, have any claim
against Landlord for damages or indemnity or for suspension, diminution,
abatement or reduction of rent under this Lease.
Section 25.02. Landlord hereby assigns to Tenant, without recourse, such
rights, if any, as Landlord may have against any parties causing damage to the
improvements on the Demised Premises to sue for and recover amounts expended
by Tenant as a result of such damage.
ARTICLE 26
No Rent Abatement
Section 26.01. Except as in this Lease otherwise expressly provided, no
abatement, diminution or reduction of rent or charges shall be claimed by or
allowed to Tenant, or any person claiming under it, under any circumstances,
whether for inconvenience, discomfort, interruption of business, or otherwise,
arising from the making of alterations, changes, additions, improvements or
repairs to any building or buildings now on or which may hereafter be erected
on the Demised Premises, by virtue or because of any present or future
governmental laws, ordinances, requirements, orders, directions, rules or
regulations or for any other cause or reason.
ARTICLE 27
Rights In The Event of Bankruptcy
Section 27.01. If the rights of the Tenant under this Lease are at any
time pledged, hypothecated or otherwise subject to any mortgage, deed of trust
or other security instrument, and if the Landlord or any trustee of the
Landlord shall reject this Lease pursuant to Section 365(a) of the Bankruptcy
Code, 11 U.S.C. Section 101, et seq. ("Bankruptcy Code"), Landlord and Tenant
agree, for the benefit of the holder of or beneficiary under any mortgage,
deed of trust or other security instrument (the "Leasehold Mortgagee"), that
the power to retain rights under the Lease pursuant to Section 365(h)(1)(A) of
the Bankruptcy Code shall be exercisable by the Leasehold Mortgagee and Tenant
does hereby grant to such Leasehold Mortgagee a limited power of attorney to
execute, deliver and file with any appropriate court any and all documents
necessary or appropriate to exercise such power and any one or more of the
extension options provided hereunder. Tenant agrees that under no
circumstances will it abandon any rights under Section 365(h)(1)(A) of the
Bankruptcy Code unless it has obtained the prior written authorization of
Leasehold Mortgagee. Any attempted abandonment by the Tenant of such rights
is a violation of this section and shall be null and void.
Section 27.02. If there shall have been filed by or against the Tenant
a petition under the Bankruptcy Code, the Tenant agrees, for the benefit of
the Leasehold Mortgagee, to give immediate written notice of said filing to
the Leasehold Mortgagee. If the Tenant or any trustee for the Tenant shall
determine to reject the Lease pursuant to Section 365(a) of the Bankruptcy
Code, the Tenant shall give the Leasehold Mortgagee not less than thirty (30)
days prior written notice of the date on which the Tenant shall apply to the
Bankruptcy Court for the authority to reject the Lease. The Leasehold
Mortgagee shall have the right but not the obligation to serve upon the Tenant
within such thirty-day period a notice stating that (a) the Leasehold
Mortgagee demands that the Tenant assume and assign the Lease to the Leasehold
Mortgagee pursuant to Section 365 of the Bankruptcy Code and (b) the Leasehold
Mortgagee covenants to cure or provide adequate assurance of prompt cure of
all defaults and provide adequate assurance of future performance under the
Lease. If the Leasehold Mortgagee serves upon the Tenant the notice described
in the preceding sentence, the Tenant shall not seek to reject the Lease and
shall comply with the demand provided for in clause (a) of the preceding
sentence within 30 days after the notice shall have been given, subject to
performance by the Leasehold Mortgagee of the covenant provided for in
clause (b) of the preceding sentence. If the Leasehold Mortgagee serves the
notice provided for in the preceding sentences, then, as between the Landlord
and such Leasehold Mortgagee (1) any rejection of the Lease by the Tenant
shall not constitute a termination of this Lease, (2) the Leasehold Mortgagee
may assume the obligations of the Tenant under this Lease without any
instrument of assignment or transfer from the Tenant, (3) the Leasehold
Mortgagee's rights under this Lease shall be free and clear of all rights,
claims and encumbrances of or in respect to the Tenant, and (4) the Leasehold
Mortgagee shall consummate the assumption of the Lease and the payment of the
amounts payable by it to the Landlord pursuant to this section at a closing to
be held in the offices of Landlord at the address set forth at the head of
this Lease or at such other address as may be designated by the Landlord on
the tenth business day after the assignment and assumption of the Lease to the
Leasehold Mortgagee has been approved by a final non-appealable court order.
Upon the assignment of this Lease by the Leasehold Mortgagee, the Leasehold
Mortgagee shall be released of all obligations or liabilities arising from and
after the date of such assignment. Notwithstanding anything in this section
to the contrary, Landlord agrees that if there shall have been filed by or
against the Tenant a petition under the Bankruptcy Code, and the Lease is
rejected pursuant to Section 365 of the Bankruptcy Code, the Landlord, at the
option of any Leasehold Mortgagee, shall enter into a new lease for the
Demised Premises with the Leasehold Mortgagee or its designee or assignee on
the same terms and conditions as contained herein.
Section 27.03. If the Leasehold Mortgagee or the Tenant with the prior
written authorization of the Leasehold Mortgagee shall elect to remain in
possession of the Demised Premises pursuant to Section 365(h)(1)(A) of the
Bankruptcy Code, any mortgage, deed of trust or other security instrument
encumbering the leasehold created by this Lease shall not be affected or
impaired by the rejection of this Lease and the Leasehold Mortgagee's lien
shall attach to all of Tenant's rights and remedies at any time arising
pursuant to Section 365(h) of the Bankruptcy Code including, without
limitation, all of Tenant's rights to remain in possession of the Demised
Premises. For the purposes of preserving such Leasehold Mortgagee's rights,
the Leasehold Mortgagee shall be deemed to be included within the term
"Tenant" for the purposes of granting possessory rights in the property
pursuant to the provisions of the Bankruptcy Code and shall have the right to
transfer such right of possession to any third party. For the purposes of
Section 365(h) of the Bankruptcy Code, the term "possession" shall mean the
right to possession of the Demised Premises granted to Tenant under the Lease
whether or not all or part of the Demised Premises has been subleased.
Section 27.04. If the Tenant shall reduce the amount of any installment
of fixed rental hereunder by the amount of any offset taken by the Tenant
pursuant to Section 365(h)(1)(B) of the Bankruptcy Code, then Tenant shall, on
the date on which such installment of fixed rental shall have become due
hereunder, deliver to the Landlord a notice setting forth the amount so
offset, the reason or reasons for such offset and an itemization in reasonable
detail of the damages suffered and costs incurred by Tenant arising from
nonperformance by the Landlord of the covenant in this Lease which gave rise
to such right of offset under Section 365(h)(1)(B) of the Bankruptcy Code.
The Landlord shall be deemed to have irrevocably accepted such offset unless,
within ten days after Tenant shall have given notice provided for in the
preceding sentence, the Landlord shall have given notice to the Tenant that it
disputes the amounts of the offset, setting forth the reasons for such dispute
and setting forth the amount, if any, which Landlord proposes to accept as a
proper offset. If Tenant fails to pay to Landlord within ten days after
Landlord shall have given notice as provided for in the preceding sentence an
amount equal to the difference between the amount of the offset by the Tenant
and the amount proposed by the Landlord as the proper offset, or if the
Landlord shall not have proposed such amount, the entire amount so offset, the
Landlord may commence a proceeding in the U.S. Bankruptcy Court in which
Landlord's case under the Bankruptcy Code is then pending, or if such case has
been closed, in any court of competent jurisdiction in the State of New Jersey
to determine the amount, if any, which the Tenant shall be entitled to offset
pursuant to Section 365(h)(1)(B) of the Bankruptcy Code. If within ten days
after the entry by such Court of a final and nonappealable order or judgment
declaring that the Tenant is required to pay the Landlord any amounts
theretofore offset, the Tenant shall have failed to pay such amounts to the
Landlord, the Landlord shall have all the rights and remedies available to it
under the Lease or otherwise at law in respect to a default in the payment of
fixed rental hereunder.
Section 27.05. As used in this Article 27, the term "Leasehold
Mortgagee" shall be deemed to include, without limitation, any Leasehold
Mortgagee, or two (2) or more holders of mortgages on Tenant's leasehold
interest under this Lease where such mortgages are pari passu with one
another.
ARTICLE 28
Arbitration and Appraisal
Section 28.01. In any case in which it is provided by the terms of this
Lease that any matter shall be determined by arbitration or appraisal, such
arbitration or appraisal shall be conducted in the manner specified in this
Article, except to the extent otherwise provided under Article 17 hereof.
Section 28.02. The party desiring such arbitration or appraisal shall
give written notice to that effect to the other party and shall in such notice
appoint a disinterested person of recognized competence in the field involved
as arbitrator or appraiser on its behalf. Within fifteen (15) days
thereafter, the other party shall by written notice to the original party
appoint a second disinterested person of recognized competence in such field
as arbitrator or appraiser on its behalf. The arbitrators thus appointed
shall appoint a third disinterested person of recognized competence in such
field, and such three arbitrators shall as promptly as possible determine such
matter, provided, however, that if the second arbitrator or appraiser shall
not have been appointed as aforesaid, the first arbitrator or appraiser shall
proceed to determine such matter. Landlord and Tenant shall each be entitled
to present evidence and argument to the arbitrators.
Section 28.03. The determination of the majority of the arbitrators or
appraisers, or of the sole arbitrator or appraiser, as the case may be, shall
be conclusive upon the parties and judgment thereof. The arbitrators or
appraisers or the sole arbitrator or appraiser, as the case may be, shall give
written notice to the parties stating their or his determination, and shall
furnish to each party a signed copy of such determination. If any such
dispute shall involve a determination of value or of a fixed amount of money
or rent and if there shall be no determination thereof by a majority of the
arbitrators, then, instead of such arbitration, either party shall be entitled
to seek a judicial determination of the matter in issue in a court of
competent jurisdiction.
Section 28.04. Each party shall pay the fees and expenses of the
arbitrator or appraiser appointed by such party and one-half of the fee and
expenses of the third arbitrator or appraiser, if any.
Section 28.05. Anything in this Lease contained to the contrary
notwithstanding, whenever under the provisions of this Lease, Tenant is
required to make any payment or to perform any act or thing at a specified
time or within a specified time limit, and any such payment or performance is
subject to arbitration under this Article, such time or time limit, as the
case may be, shall be and be deemed to be extended by the period consumed by
the institution, conduct and prosecution to final conclusion of any
arbitration or appraisal concerning or relating to such payment or
performance.
ARTICLE 29
Estoppel Certificate
Section 29.01. Tenant shall, without charge, at any time and from time
to time, within twenty (20) days after request by Landlord or the holder of
any mortgage on this Lease, certify by written instrument, duly executed,
acknowledged and delivered, to Landlord or such mortgagee, or any other
person, firm or corporation specified by Landlord or such mortgagee:
(a) that this Lease is unmodified and in full force and effect, or,
if there have been any modifications, that the same is in full force and
effect as modified and stating the modifications;
(b) whether or not there are then existing any set-offs or defenses
against the enforcement of any of the agreements, terms, covenants or
conditions hereof and any modifications hereof upon the part of Tenant
to be performed or complied with, and, if so, specifying the same;
(c) the dates, if any, to which the net rent and additional rent and
other charges hereunder have been paid in advance;
(d) the date of expiration of the current term; and
(e) the net rent then payable under this Lease.
Section 29.02. Landlord shall, without charge, at any time and from time
to time, within twenty (20) days after request by Tenant or the holder of any
mortgage on this Lease, certify by written instrument, duly executed,
acknowledged and delivered, to the effect that this Lease is unmodified and in
full force and effect (or if there shall have been modifications that the same
is in full force and effect as modified and stating the modifications) and the
dates to which the net rent and other charges have been paid, the date of
expiration of the current term, the net rent then payable under this Lease,
and stating whether or not, to the best knowledge of the officer executing
such certificate on behalf of Landlord, Tenant is in default in performance of
any covenant, agreement or condition contained in this Lease and, if so,
specifying each such default of which the person executing such certificate
may have knowledge.
ARTICLE 30
Recording
Section 30.01. This Lease, or a memorandum thereof, may be recorded by
Landlord or Tenant with the appropriate recording officer of Atlantic County
or the State of New Jersey.
ARTICLE 31
Waiver of Jury Trial And Counterclaims
Section 31.01. The parties hereto waive a trial by jury of any and all
issues arising in any action or proceeding between them or their successors
under or connected with this Lease or any of its provisions, any negotiations
in connection therewith, or Tenant's use or occupancy of the Demised Premises.
In case Landlord shall commence summary proceedings or an action for non-
payment of rent or additional rent hereunder against Tenant, Tenant shall not
interpose any counterclaim of any nature of description in any such proceeding
or action, but shall be relegated to an independent action at law.
ARTICLE 32
Definition of Certain Terms
Section 32.01. For purposes of this Lease, unless the context otherwise
requires:
(a) The term "Landlord" as used herein shall mean only the owner for
the time being of the Demised Premises, so that in the event of a sale,
transfer, conveyance or other termination of Landlord's interest in the
Demised Premises Landlord shall be and hereby is entirely freed and
relieved of all liability of Landlord hereunder, and in such event
Landlord shall remit to the trustee acting or to act pursuant to
Section 5.08 hereof any funds held by Landlord in which Tenant has an
interest, but if there shall then be no such trustee Landlord may remit
such funds to the successor owner of the Demised Premises. Landlord
shall remain liable for any such moneys not so remitted. It shall be
deemed and construed without further agreement between the parties or
their successors in interest, or between the parties and such successor
owner of the Demised Premises, that such successor owner has assumed and
agreed to carry out any and all agreements, covenants and obligations of
Landlord hereunder.
(b) Any reference herein to the termination of this Lease shall be
deemed to include any termination hereof by expiration, or pursuant to
Articles 15, 16 or 19 hereof, or otherwise.
(c) The term "unavoidable delays" shall mean delays due to strikes,
acts of God, inability to obtain labor or materials, governmental
restrictions, enemy action, civil commotion, fire, unavoidable casualty
or similar causes beyond the reasonable control of Tenant.
(d) The term "fee mortgage" shall mean a mortgage on Landlord's fee
or any part thereof and the term "fee mortgagee" shall mean any holder
of such fee mortgage.
(e) The term "Institution" shall mean a bank, savings bank, savings
and loan institution, trust or insurance company, an accredited college
or university, a pension, welfare or retirement fund, an eleemosynary
institution, or any combination of the foregoing. The term "Authorized
Institution" (that is, an Institution which shall qualify as a
depository hereunder for the purposes of holding funds such as
condemnation awards and insurance proceeds, in lieu of a trustee
appointed pursuant to Section 5.08 hereunder) shall be an Institution,
as so defined, but which shall be authorized to do business in the State
of New Jersey or which shall be or become amenable to the jurisdiction
of the courts of the State of New Jersey, at least with respect to any
matter connected with this Lease.
(f) The term "mortgage", whether or not used in combination with
other qualifying words, shall include a deed of trust to a trustee to
secure an issue of bonds, debentures, notes or other obligations, and
the term "mortgagee", and the term "holder", when used with reference to
a mortgage, shall include the trustee under a deed of trust and, when
appropriate, the holder or holders of the bonds, debentures, notes or
other obligations secured thereby.
(g) The term "completion of a building" and any similar term shall
be deemed to mean, and to have occurred, when a final Certificate of
Occupancy (or if such Certificate shall not then be issued, an official
certificate of proper completion) for the building in question shall
have been issued.
(h) The terms "leasehold mortgagee" or "holder of leasehold
mortgage" shall include the mortgagee named in a mortgage of Tenant's
interest hereunder or an assignee thereof.
ARTICLE 33
Brokers
Section 33.01. Landlord and Tenant each represent and warrant to the
other that they have not dealt with any broker, finder or similar agent in
connection with this Lease, and that they have not taken any action which
would result in any broker's, finder's or other fee or commission being due or
payable to any other party in connection with this Lease.
ARTICLE 34
Consent of Landlord
Section 34.01. Where any provision of this Lease requires the consent or
approval of Landlord, Landlord agrees that Landlord will not unreasonably
withhold or delay such consent or approval. Where any provision of this Lease
requires Tenant to do anything to the satisfaction of Landlord, Landlord
agrees that Landlord will not unreasonably refuse to state Landlord's
satisfaction of such action by Tenant.
Section 34.02. If Tenant shall request Landlord's consent, approval or
statement of satisfaction with respect to any matter hereunder, a failure of
Landlord to reply to such request within twenty (20) business days thereafter
shall be deemed a consent, approval or statement of satisfaction as the case
may be.
ARTICLE 35
Payments Under Protest
Section 35.01. In case of any dispute between Landlord and Tenant with
respect to the amount of money payable by Tenant to Landlord under the
provisions of this Lease, Tenant shall have the right to make payment under
protest and, in such event, shall have the right to assert and prosecute a
claim or claims for the recovery of the sum, or any part thereof, that shall
have been so paid by Tenant under protest.
ARTICLE 36
Waiver of Bond
Section 36.01. So long as any Tenant or any guarantor is liable for the
performance of the terms, covenants and conditions of this Lease, Landlord
waives any requirement of this Lease for delivery by Tenant to Landlord of a
bond, undertaking or security hereunder if Landlord shall receive reasonably
satisfactory evidence that the net worth of said Tenant or guarantor is at
least five times the estimated amount of the bond, undertaking or security.
The last financial statement of such Tenant or guarantor shall be deemed to be
reasonably satisfactory evidence of such net worth, provided such statement is
certified by a Certified Public Accountant.
ARTICLE 37
No Oral Modification
Section 37.01. All prior understandings and agreements between the
parties are merged with this agreement, which alone fully and completely sets
forth the understanding of the parties; and this Lease may not be changed or
terminated orally or in any manner other than by an agreement in writing and
signed by the party against whom enforcement of the change or termination is
sought.
ARTICLE 38
Net Lease
Section 38.01. This Lease shall be deemed and construed to be a "net
lease" and, except as herein otherwise expressly provided, Landlord shall
receive all rents and additional rent and all other payments hereunder to be
made by Tenant free from any charges, assessments, impositions, expenses or
deductions of any and every kind or nature whatsoever. Nothing herein
contained shall be construed to require Tenant to pay any inheritance,
franchise, corporation, income, or excess profits taxes, or surtax imposed
upon Landlord or upon the legal representatives, successors or assigns or any
of them, or any sums that may be necessary to avoid a default on any mortgage
which may at any time be placed upon the Demised Premises.
ARTICLE 39
Right of First Refusal
Section 39.01.
(a) Anything in this Lease contained to the contrary notwithstanding
and without in any manner affecting or limiting any of the rights,
privileges, options or estates granted to Tenant under this Lease, if
the Landlord, at any time during the Term of this Lease, receives one or
more bona fide offers from third parties to purchase the Demised
Premises or any part thereof, and if such offer is acceptable to the
Landlord, then Landlord shall notify Tenant in writing, and deliver to
Tenant a readable photostatic or other exact copy of such offer. Tenant
shall have sixty (60) days from and after receipt of such notice from
Landlord in which to elect purchase the Demised Premises for the
consideration and on the terms and conditions contained in the bona fide
offer; except that Tenant shall be credited with a sum equal to one-half
(1/2) of the amount of any brokerage commission which Landlord
shall save by a sale to Tenant. Such election shall be exercised by
written notice, together with payment of an amount equal to the down
payment provided for in such offer. If Tenant does not elect to
purchase the Demised Premises and Landlord thereafter proceeds to sell
the same, such sale may be completed if and only if the proposed
purchaser, if required to be licensed by the State of New Jersey or its
authorized agencies in order to hold an interest in the Demised
Premises, obtains such a license. In such event the purchaser shall
take title to the Demised Premises, subject to and burdened with all the
rights, provisions and conditions of this Lease, including this
Article 39 and the rights of the Tenant under this Lease as against the
new owner shall not be lessened or diminished by reason of the change of
ownership. Tenant's failure at any time to exercise its option under
this Article 39 shall not affect this Lease or the continuance of any of
Tenant's rights and options under this Article 39 or any other Article.
(b) If, at any time during the Term of this Lease, Landlord receives
one or more bona fide offers from third parties to purchase the Demised
Premises, and such offer includes other property of Landlord, then
Tenant's right of first refusal, as described in subparagraph (a) of
this Section shall be applicable to the Demised Premises alone at a
purchase price which shall be equal to that part of the price offered by
the third party which shall be the value of all property, including the
Demised Premises, included in such third party offer. In the event that
Landlord and Tenant are unable to agree as to the aforesaid allocation
of purchase price, the question of the allocation of the purchase price,
the question of the allocation of the purchase price to the Demised
Premises shall be submitted to binding arbitration by a panel of
three (3) arbitrators of the American Arbitration Association selected
and conducted as provided in Article 28 hereof. Except as to purchase
price, all terms and conditions set forth in subparagraph (a) above
shall also apply to this subparagraph (b).
(c) For purposes of this Article 39, an offer to purchase the
Demised Premises or any part thereof shall be deemed to mean and include
any offer to purchase an interest in any entity which is then the fee
owner of the Demised Premises, whether such entity be a joint venture, a
partnership, a corporation or any other entity or association.
(d) The provisions of this Article shall not apply to any transfer
or contemplated transfer of the Demised Premises by Landlord to its
parent, any subsidiary or any entity owned or controlled by Landlord or
its parent or any entity into which Landlord may merge.
ARTICLE 40
Dedication of Strip Along Sovereign Avenue
Section 40.01. Landlord and Tenant anticipate that, at some time after
the date of this Lease, Landlord may elect to dedicate, by a Deed of
Dedication to the City of Atlantic City, a triangular strip of land that is
presently a part of the Demised Premises abutting Sovereign Avenue, which
strip of land is described on Exhibit "C" attached hereto and made a part
hereof ("Dedication Strip"). Tenant hereby consents to the dedication, if
ever, of the Dedication Strip and agrees that upon such dedication the
Dedication Strip shall no longer be a part of the Demised Premises and shall
no longer be subject to this Lease. Landlord shall have the right to make
minor adjustments in or changes to the specific description or
dimensions of the Dedication Strip, provided that any such adjustment or
change does not materially and adversely affect the Demised Premises, and the
term "Dedication Strip," as used herein, shall mean and include the Dedication
Strip with such adjustments or changes, if any.
ARTICLE 41
Covenants To Bind And Benefit Respective Parties
Section 41.01. The covenants and agreements herein contained shall bind
and inure to the benefit of Landlord, its successors and assigns, and Tenant,
its successors and assigns.
ARTICLE 42
Captions And Table Of Contents
Section 42.01. The captions of this Lease are for convenience and
reference only and in no way define, limit or describe the scope or intent of
this Lease nor in any way affect this Lease.
Section 42.02. The table of contents preceding this Lease but under the
same cover is for the purpose of convenience and reference only and is not to
be deemed or construed in any way as part of this Lease, nor as supplemental
thereto or amendatory thereof.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed by their duly authorized officers as of the date first set forth
above.
LANDLORD:
BALLY'S PARK PLACE, INC.,
a New Jersey corporation
By:_______________________________________
Name:_____________________________________
Title:____________________________________
TENANT:
GNOC, CORP.,
a New Jersey corporation
By:_______________________________________
Name:_____________________________________
Title:____________________________________
<PAGE>
STATE OF NEW JERSEY )
) SS:
COUNTY OF ______________ )
On the _____ day of May, 1996, before me personally came
______________________, to me known, who, being by me duly sworn, did depose
and say that he/she is ____________________ of Bally's Park Place, Inc., a New
Jersey corporation, the corporation described in and which executed the
foregoing instrument by order of the board of directors of said corporation;
and that he/she signed his/her name thereto by like order.
____________________________________
Notary Public
My commission expires:______________
STATE OF NEW JERSEY )
) SS:
COUNTY OF _____________ )
On the _____ day of May, 1996, before me personally came Donna M. Graham,
to me known, who, being by me duly sworn, did depose and say that she is the
Chief Financial Officer and Treasurer of GNOC, Corp., a New Jersey
corporation, the corporation described in and which executed the foregoing
instrument by order of the board of directors of said corporation; and that
she signed her name thereto by like order.
____________________________________
Notary Public
My commission expires:______________
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 Demised Premises - Term of Lease. . . . . . . . . . . . . . 1
ARTICLE 2 Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 Payment of Taxes, Assessments, Etc. . . . . . . . . . . . . 5
Section 3.01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 4 Surrender . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 6 Landlord's Right to Perform Tenant's Covenants. . . . . . . 12
Section 6.01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 7 Repairs and Maintenance of the Demised Premises . . . . . . 13
Section 7.01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 7.03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 8 Compliance with Laws, Ordinances, Etc.. . . . . . . . . . . 14
Section 8.01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 9 New Building - Alterations. . . . . . . . . . . . . . . . . 15
Section 9.01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 9.02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 9.03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 9.04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9.05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 10 Discharge of Liens . . . . . . . . . . . . . . . . . . . . 16
Section 10.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 10.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 10.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 11 No Waste . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 11.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 12 Use of Property. . . . . . . . . . . . . . . . . . . . . . 17
Section 12.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 12.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 13 Entry on Demised Premises by Landlord. . . . . . . . . . . 18
Section 13.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 13.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 13.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 14 Indemnification. . . . . . . . . . . . . . . . . . . . . . 18
Section 14.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 14.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 14.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 14.04. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 15 Damage or Destruction. . . . . . . . . . . . . . . . . . . 19
Section 15.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 15.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 15.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 15.04. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 15.05. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 16 Condemnation . . . . . . . . . . . . . . . . . . . . . . . 23
Section 16.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 16.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 16.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 16.04. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 16.05. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 16.06. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 16.07. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 16.08. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 16.09. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 17 Long Term Renewal. . . . . . . . . . . . . . . . . . . . . 26
Section 17.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 17.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 17.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 17.04. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 17.05. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 17.06. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 17.07. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 17.08. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 17.09. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 17.10. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 17.11. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 18 Assignments, Mortgages and Subleases of Tenant's Interest. 30
Section 18.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 18.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 18.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 18.04. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 18.05. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 18.06. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 18.07. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 19 Default Provisions . . . . . . . . . . . . . . . . . . . . 33
Section 19.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 19.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 19.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 19.04. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 20 Compliance With Environmental Laws . . . . . . . . . . . . 36
Section 20.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 20.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 20.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 21 Invalidity of Particular Provisions. . . . . . . . . . . . 37
Section 21.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 22 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 22.01. . . . . . . . . . . . . . . . . . . . . . . . . . . .37,38
ARTICLE 23 Rights of Leasehold Mortgagees . . . . . . . . . . . . . . 38
Section 23.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 23.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 23.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 24 Quiet Enjoyment. . . . . . . . . . . . . . . . . . . . . . 41
Section 24.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 25 Excavation and Shoring . . . . . . . . . . . . . . . . . . 41
Section 25.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 25.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 26 No Rent Abatement. . . . . . . . . . . . . . . . . . . . . 42
Section 26.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 27 Rights In The Event of Bankruptcy. . . . . . . . . . . . . 42
Section 27.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 27.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 27.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 27.04. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 27.05. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 28 Arbitration and Appraisal. . . . . . . . . . . . . . . . . 44
Section 28.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 28.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 28.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 28.04. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 28.05. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 29 Estoppel Certificate . . . . . . . . . . . . . . . . . . . 45
Section 29.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 29.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 30 Recording. . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 30.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 31 Waiver of Jury Trial And Counterclaims . . . . . . . . . . 46
Section 31.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 32 Definition of Certain Terms. . . . . . . . . . . . . . . . 47
Section 32.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 33 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 33.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 34 Consent of Landlord. . . . . . . . . . . . . . . . . . . . 48
Section 34.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 34.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 35 Payments Under Protest . . . . . . . . . . . . . . . . . . 48
Section 35.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 36 Waiver of Bond . . . . . . . . . . . . . . . . . . . . . . 49
Section 36.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 37 No Oral Modification . . . . . . . . . . . . . . . . . . . 49
Section 37.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 38 Net Lease. . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 38.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 39 Right of First Refusal . . . . . . . . . . . . . . . . . . 50
Section 39.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 40 Dedication of Strip Along Sovereign Avenue . . . . . . . . 51
Section 40.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 41 Covenants To Bind And Benefit Respective Parties . . . . . 51
Section 41.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 42 Captions And Table Of Contents . . . . . . . . . . . . . . 51
Section 42.01. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 42.02. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
<PAGE>
EXHIBITS
Exhibit "A" -- Legal Description of the Demised Premises
Exhibit "B" -- Exceptions to the Grant of the Demised Premises
Exhibit "C" -- Legal Description of the Dedication Strip
<PAGE>
Amended and Restated
Ground Lease
between
Bally's Park Place, Inc.
(as Landlord)
and
GNOC, Corp.
(as Tenant)
Dated May ____, 1996<PAGE>
AMENDED AND RESTATED GROUND LEASE
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
THIS MORTGAGE AND SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS
(this "Mortgage"), dated as of the 2nd day of May 1996, given by GNOC,
CORP. (successor by merger to GNAC, Corp. ("GNAC")), a New Jersey
corporation ("Mortgagor"), having an office at Boston and Pacific Avenues,
P.O. Box 1737, Atlantic City, New Jersey 08404 to AMALGAMATED BANK OF
CHICAGO, as trustee under the Indenture (as hereinafter defined), having an
office at 1 West Monroe Street, Chicago, Illinois 60603 (the "Mortgagee").
ANY CAPITALIZED TERMS NOT DEFINED HEREIN SHALL HAVE THE MEANING SET FORTH
IN THE INDENTURE.
It is the intention of the Mortgagor that this instrument be a
"Pari Passu Mortgage" within the meaning of the indenture dated as of March
10, 1993 (the "Indenture"), among GNF Corp., a New Jersey Corporation
("GNF"), GNAC as guarantor, Mortgagor, and Mortgagee. Pursuant to the
Mortgage and Security Agreement with Assignment of Rents dated as of May 2,
1996 given by Mortgagor to First Union National Bank and Midlantic Bank,
National Association, as mortgagee, the lien created by this instrument
ranks pari passu with the lien created by said mortgage (the "First Union
Mortgage").
The rights of Mortgagee under this Mortgage are governed by an
intercreditor agreement dated April 16, 1993 (as the same may now or
hereafter be amended, the "Intercreditor Agreement") executed by the
Mortgagee, GNAC as guarantor, the Mortgagor, GNF as obligor and First Union
National Bank, for itself and as agent. To the extent any of the terms of
this Mortgage are inconsistent with the terms of the Intercreditor
Agreement, the terms of the Intercreditor Agreement shall control.
W I T N E S S E T H:
To secure the following obligations and liabilities: (a) the
payment to the holders of the 10-5/8% First Mortgage Notes due 2003 (Series
A) and 10-5/8% First Mortgage Notes due 2003 (Series B) (together, the
"Notes"), issued pursuant to the provisions of the Indenture of (i) the
principal amount of an indebtedness of TWO HUNDRED SEVENTY-FIVE MILLION
DOLLARS ($275,000,000), evidenced by the Notes issued pursuant to the
provisions of the Indenture, (ii) any and all interest due or to become due
on the Notes in accordance with the provisions of the Indenture and the
Notes, and (iii) any and all other sums due or to become due under the
Indenture, the Notes, this Mortgage and any further or subsequent advances
or expenditures made under any other Loan Document (hereinafter defined) by
Mortgagee pursuant to the provisions hereof (the items set forth in clauses
(i)-(iii) 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 Mortgagor (which,
together with the Indebtedness is referred to collectively as the
"Obligations") under (i) this Mortgage, (ii) the Indenture, (iii) the
Notes, and (iv) the Assignment of Leases and Rents dated as of the date
hereof given by Mortgagor to Mortgagee (the "Assignment"), (v) the Pledge
Agreement, (vi) all of the other Loan Documents, and (vii) any extensions,
renewals, replacements or modifications of any of the foregoing (this
Mortgage, the Indenture, the Assignment, the Notes, the Pledge Agreement
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").
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, 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 "Encumbered Property"):
The Mortgagor's interest in all those plots, pieces or parcels of
land more particularly described in Exhibit A-1 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 interest, right and title in and to
that certain Amended and Restated Ground Lease (the "Ground Lease") of even
date herewith between Bally's Park Place, Inc., as lessor, and Mortgagor,
as lessee, covering the land described in Exhibit A-2 annexed hereto and
made a part hereof (the "Leasehold Estate");
TOGETHER with Mortgagor's interest, right and title in and to the
buildings and other improvements now or hereafter erected on the Land
and/or the Leasehold Estate (such buildings and other improvements being
hereinafter collectively referred to as the "Buildings"), the Land, the
Leasehold Estate and the Buildings being hereinafter collectively referred
to as the "Real Property";
TOGETHER with all and singular the reversion or reversions,
remainder or remainders, rents and revenues produced in connection with the
Real Property 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 Real Property 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, casino and restaurant facilities located on the
Real Property 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 Real Property
including machinery, fixtures, systems, apparatus, fittings, materials and
equipment now or which may hereafter be used in the operation of the Real
Property, 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 personal property, fixtures, additions, substitutions
and proceeds being sometimes hereinafter collectively referred to as the
"Personal Property");
TOGETHER with Mortgagor's right, title and interest to and under
all leases, subleases, underletting, licenses and other occupancy
agreements which now or hereafter may affect the Real Property or any
portion thereof and under any and all guarantees, modifications, renewals
and extensions thereof (collectively, the "Leases") (including, without
limitation, the Ground Lease and any and all rights of Mortgagor to refunds
of rent, security deposits, real estate taxes and assessments and water,
sewer and other charges under the Ground Lease), 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
Property, together with all amendments and modifications thereof;
TOGETHER with (a) subject to the provisions of Article VI 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 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 Property or
in connection with the use or operation thereof (collectively, the
"Insurance Proceeds"), and (b) subject to the provisions of Article VII
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 VI and VII 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 acquittance 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 Real Property,
and in each such case, the foregoing shall be deemed a part of the Real
Property 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;
TOGETHER with all proceeds of any or all of the foregoing; and
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, further
represents, warrants, covenants and agrees with Mortgagee as follows:
I. Warranty of Title.
Mortgagor warrants to Mortgagee that (i) it has good and
marketable fee simple title to the Land described in Exhibit A-1, (ii)
Mortgagor is the owner of a valid and subsisting leasehold interest in the
Leasehold Estate and the Buildings described on Exhibit A-2 under the
Ground Lease, subject to no mortgage, lien, charge or encumbrance, except
the First Union Mortgage and an Assignment of Leases and Rents in favor of
First Union National Bank and Midlantic Bank, National Association, (iii)
it has good and marketable fee simple title to the Buildings located on the
Land and the Leasehold Estate and good and marketable title to the Personal
Property located on or used in connection with the Real Property, (iv) it
has the right to mortgage the Real Property and the Leases in accordance
with the provisions set forth in this Mortgage, (v) it has the right to
grant a security interest in the Personal Property and the Rents in
accordance with the provisions set forth in this Mortgage, and (vi) this
Mortgage is a valid and enforceable first lien on the Encumbered Property
(including the Leasehold Estate), subject, as of the date hereof, only to
the exceptions to title listed on Schedule B of Title Insurance Commitment
No. 963670009 issued by Chicago Title Insurance Company to First Union
National Bank and Midlantic Bank, National Association redated the date
hereof (collectively, the "Closing 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
Closing Encumbrances and the Additional Mortgages (as hereinafter defined)
(collectively, the Closing Encumbrances and the Additional Mortgages are
referred to as 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.
II. Payment of Indebtedness.
A. Mortgagor 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.
III. Requirements; Proper Care and Use.
A. Subject to the right of Mortgagor to contest a Legal
Requirement (hereinafter defined) as provided in Article X hereof,
Mortgagor 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
Mortgagor 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 of 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 Mortgagor 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 Mortgagor 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 a Material Adverse
Effect.
B. Mortgagor shall except as otherwise provided herein (i) not
abandon the Encumbered Property or any portion thereof that does not have a
material adverse effect on the Encumbered Property, (ii) maintain, in all
material respects, the Encumbered Property 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 Encumbered Property which,
in the reasonable judgment of Mortgagor, 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 Encumbered Property or
the priority or security of the lien of this Mortgage, (v) not remove or
demolish any of the Encumbered Property, if such removal or demolition
might materially impair the value of the Encumbered Property except in
accordance with Article 12 of the Indenture, except that Mortgagor 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 effect the value of the 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 except in accordance
with Article 12 of the Indenture, (vi) not make, install or permit to be
made or installed any alterations or additions to the Encumbered Property
if doing so would materially impair the value of the Encumbered Property
except in accordance with Article 12 of the Indenture, (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 Encumbered Property 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 Property for the purpose of inspecting
and appraising the Encumbered Property or any portion thereof.
C. Mortgagor 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 Property 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 Mortgagor
hereby assigns to Mortgagee any and all rights to give consent for all or
any portion of the Real Property or any interest therein to be so used.
Mortgagor shall not, by any act or omission, impair the integrity of the
Real Property, as it exists today, as a single or multiple zoning lot or
lots, as the case may be, separate and apart from all its premises. Any
act or omission by Mortgagor which would result in a violation of any of
the provisions of this Article III shall be null and void. Notwithstanding
the foregoing, Mortgagor shall have the right to grant easements, rights of
way and similar interests which are subordinate to the lien of this
Mortgage and which do not materially impair the value of the Encumbered
Property.
D. Mortgagor has 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 Property, and Mortgagor has full power and
authority to carry on its business at the Real Property as currently
conducted and has not received any notice of any violation of any Legal
Requirement that materially impairs the value of the Encumbered Property.
E. During the term of this Mortgage and 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 (ii) are herein collectively
referred to as the "Operational Requirements"):
a. As of the date hereof, 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.
b. Mortgagor will keep, maintain and preserve the Operational
Requirements in full force and effect and in good standing.
c. Mortgagor will not knowingly violate, nor will it
knowingly suffer any violation of, the Operational Requirements.
d. In the event Mortgagor knows of any fact, circumstances,
or occurrence which may result in a violation of the Operation
Requirements, Mortgagor shall promptly give Mortgagee written notice
thereof.
IV. 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 Encumbered Property is located or any agency, department, bureau,
board, commission, including the Casino Control Commission as defined in
the Indenture, 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 Indenture and any
franchise tax), Mortgagor 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 Mortgagor 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 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 of any such payment by Mortgagee to
the date of repayment to Mortgagee.
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, Mortgagor, 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 Mortgagor 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 Encumbered Property is located
which shall deduct from the value of the Encumbered Property, for purposes
of taxation, any lien thereon shall change in any way the laws for the
taxation of mortgages or debts secured by mortgages for state of 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 Mortgagor, Mortgagee, this Mortgage or the
Indenture is not exempt from payment of such tax and if Mortgagor shall be
permitted by law to pay the whole or such tax in addition to all other
payments required hereunder and under the other Loan Documents, Mortgagor
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.
V. Payment of Impositions.
A. Subject to the provisions of Article X 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, Mortgagor
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 maintain
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 against Mortgagor 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 Mortgagor 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
Mortgagor's option, be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), Mortgagor may exercise
the option to pay such Imposition in such installments, and, in such event,
Mortgagor 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, Mortgagor shall deliver to
Mortgagee evidence reasonably acceptable to Mortgagee showing the payment
of such Imposition. Mortgagor 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 Mortgagor 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,
Mortgagor 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,
Mortgagor 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, Mortgagor 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 Mortgagor.
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 V (provided, however, that Mortgagee shall
have no right to pay such Imposition which Mortgagor is contesting the
validity, enforceability or application of the same pursuant to the
provisions of Article X hereof or is 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.
VI. Insurance.
A. Mortgagor 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:
1. 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 Property 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 Mortgagor 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 or for a longer period, 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 the operations conducted at the
Real Property;
2. demolition and increased cost of construction coverage;
3. if a sprinkler system shall be located in the Buildings,
sprinkler leakage insurance;
4. commercial general liability insurance in respect to the
operation of the Encumbered Property 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 Mortgagor
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 for each Mortgagor (signed by (i) a Secretary or
Assistant Secretary of each Mortgagor and (ii) the Chairman, Vice Chairman,
President, Vice President or Treasurer of each Mortgagor; provided,
however, that such certificate may be signed by two of the officers listed
in clause (ii) above in lieu of being signed by one of such officers or
directors listed in such clause (ii) and one of the officers listed in
clause (i) above) stating that Mortgagor was unable to obtain commercial
general liability insurance coverage in excess of the amount actually
obtained or on other than a "claims made" basis; and
5. 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 Encumbered Property
or conducting operations similar to the operations conducted at the Real
Property.
All insurance provided hereunder shall be in such form as is
commonly obtained by owners of property 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 Property, shall
not contain a coinsurance provision whereby Mortgagor in the event of loss
becomes 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 Mortgagees, except
policies insuring against damage by fire or other casualty, which shall
provide for loss payable as more particularly set forth in Paragraph VI(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. Anything
contained herein to the contrary notwithstanding, in no event shall the
insurance provided under clause (t) of Paragraph VI(A)(1) 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 reasonably determined from time to time by Mortgagee.
Mortgagor 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
Mortgagor or by any lessee of the Real Property or any portion thereof, or
become void or questionable by reason of the failure or impairment of the
capital of any insurer, of if for any other reason whatsoever any such
insurance shall become unsatisfactory to Mortgagee, as determined in its
reasonable judgment, Mortgagor 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 Mortgagor shall, within thirty (30) days after
demand by Mortgagee, obtain such other types of insurance, in such amounts
as may be reasonable required by Mortgagee. Mortgagor 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. Mortgagor shall (i) pay as they become due all premiums for the
insurance required hereunder (it being understood that Mortgagor 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 Mortgagor shall be in default of its obligation to so insure
or deliver any such prepaid insurance or policies or certificate or
certificates of insurance to Mortgagee in accordance with the provisions
hereof, Mortgagee, at its option (but without any obligation do so) and
upon twenty-four (24) hours notice, unless Mortgagor provides satisfactory
evidence that all insurance requirements under this Mortgage and the
Indenture, have been complied with, 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. Mortgagor shall adjust the amount of insurance required to be
provided pursuant to the provisions of clause (t) of Paragraph VI(A)(1)
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. Mortgagor 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 Mortgagor 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 Mortgagor 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, Mortgagor 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, Mortgagor shall give immediate notice thereof to Mortgagee and
Mortgagor promptly shall commence and diligently shall continue and
complete the repair, restoration, replacement or rebuilding of the
Buildings in a good and workmanlike manner ("Restoration") and the Personal
Property so damage, 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 Eight Million Dollars
($8,000,000) (in either case, "Major Restoration"), then Mortgagor shall,
prior to the commencement of the Major Restoration, furnish or cause to be
furnished to Mortgagee: (1) 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 photo-static 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, Mortgagor
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. Mortgagor shall not commence any of the Major Restoration until
Mortgagor shall have complied with the applicable requirements referred to
in clause (F) above, and after commencing Major Restoration, Mortgagor
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 VI, 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:
1. If the Restoration to be done is Major Restoration, as
determined by Mortgagee, the Architect shall be in charge of the
Restoration.
2. 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 (1) 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 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).
3. Each request shall be accompanied by waivers or releases
of liens, reasonably 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.
4. There shall be no Event of Default or Potential Default
under this Mortgage, the Indenture or any other Loan Document.
5. 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 not then be continuing any Event of Default or
Potential Default under any Loan Document, any Insurance Proceeds (together
with any interest earned thereon) shall be paid to the Mortgagor. Upon
failure on the part of Mortgagor promptly to commence or diligently to
continue the Restoration, Mortgagee may, subject to the terms of the
Intercreditor Agreement, 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 Indenture 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 Plans in accordance
with paragraph (F) of this Article VI to Mortgagee 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, Mortgagor shall fail to commence
promptly such Major Restoration, or if thereafter Mortgagor fails
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
Mortgagor is, 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 Mortgagor 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 VI, then, in addition to all other
rights herein set forth, 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. 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 in accordance with the terms of
this Mortgage. Mortgagor hereby waives, for itself and all others holding
under it, 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 VI) 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 Ten Million
Dollars ($10,000,000), shall all be paid to Depositary and disbursed in
accordance with the provisions hereof; (ii) in the case of a loss in excess
of Eight Million Dollars ($8,000,000), but less than Ten Million Dollars
($10,000,000), the first Eight Million Dollars ($8,000,000) 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 Eight Million Dollars ($8,000,000) 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 Mortgagor 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 Eight Million Dollars ($8,000,000). Each insurer
is hereby authorized and directed to make payment of any Insurance Proceeds
or the portion thereof, as described in this Paragraph VI(J), under any
policies of insurance in connection with a loss in excess of Ten Million
Dollars ($10,000,000) directly to Depositary instead of to Mortgagor and
Depositary jointly, and Depositary is hereby authorized to endorse any
draft therefor as Mortgagor's attorney-in-fact if Mortgagor 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 Mortgagor or both,
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 Mortgagee's rights in accordance with the provisions hereof
shall transfer therewith all of Mortgagor's interest in all insurance
policies then covering the Buildings and the Personal Property or the
operations conducted at the Real Property.
M. Mortgagor hereby acknowledges 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 reasonable expense of Mortgagor, 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.
N. With respect to the Leasehold Estate, the insurance
requirements and the restoration obligations shall satisfy the requirements
of the Ground Lease.
VII. 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"), Mortgagor
shall continue to make all payments due under this Mortgage and under the
Indenture and the other Loan Documents in accordance with the provisions of
this Mortgage, the Indenture and the applicable provisions of the other
Loan Documents. Mortgagor shall notify Mortgagee immediately upon
obtaining knowledge of the institution of any proceedings for any Taking or
of any contemplated Taking of which Mortgagor is aware. No such proceeding
with respect to any Taking shall be settled without the prior express
written 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 Mortgagor collectively is less than Eight
Million Dollars ($8,000,000) shall not require such consent. Each
Governmental Authority is hereby authorized and directed to make payment of
any Award made in connection with any Taking directly to Mortgagor or
Depositary in accordance with the provisions of the next succeeding
sentence and Paragraph VII(B) hereof instead of to Mortgagor and Depositary
jointly, and Depositary is hereby authorized to endorse any draft therefor
as Mortgagor's attorney-in-fact if Mortgagor 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, 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 Mortgagor to continue
to conduct its business at such remaining Encumbered Property (a "Partial
Taking"), (i) in the event that the Award is less than Eight Million
Dollars ($8,000,000), the same shall be paid to Mortgagor, (ii) in the
event that the Award shall be equal to or be in excess of Eight Million
Dollars ($8,000,000), but shall be less than Ten Million Dollars
($10,000,000), the first Eight Million Dollars ($8,000,000) 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 Ten Million Dollars ($10,000,000), 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 VI 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. Mortgagor 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 VI hereof, as if such Partial Taking had resulted
in "damage or destruction to the Buildings or Personal Property" (within
the meaning of Paragraph VI(F) hereof), with Mortgagor, Mortgagee and
Depositary each having the same rights and obligations with respect to the
Award and Restoration as are set forth in Paragraphs VI(F) through VI(J)
hereof with respect to Insurance Proceeds, except that, notwithstanding the
provisions of Paragraph VI(F) hereof, Mortgagor 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
VI(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
subject to the terms of the Intercreditor Agreement, may 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 the Mortgagee. The
proceeds of such Award shall be distributed in accordance with the terms of
the Intercreditor Agreement.
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. Mortgagor hereby acknowledges 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 reasonable expense of Mortgagor, 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.
VIII. Sale of Encumbered Property; Additional Financing.
Mortgagor shall not, at any time, except as permitted pursuant to
the Loan Documents:
(a) assign, transfer or convey all or any part of the
Encumbered Property or any interest therein; or
(b) (i) pursuant to Section 1010 of the Indenture, directly
or indirectly, or permit any Subsidiary (as defined in the Indenture) to
directly or indirectly, create, incur, assume or otherwise suffer to exist
or cause or otherwise suffer to become effective any lien in or any right,
title or interest to this Mortgage or any assets or property of any kind or
nature whatsoever, real, personal or mixed (including fixtures), whether
tangible or intangible ("Property") that constitutes all or any portion of
the Collateral subject to the lien of this Mortgage (a "Restricted
Encumbrance," which term excludes the lien created by this Mortgage and the
other Loan Documents), unless (x) the Restricted Encumbrance is a Permitted
Encumbrance, or (y) such lien secures Indebtedness which ranks junior to or
is pari passu with the lien of this Mortgage and is granted to secure
Indebtedness (A) under any revolving credit facility with a bank or
financial institution permitted under clause (i) of the definition of
Permitted Indebtedness in the Indenture and (B) which, together with all
other indebtedness secured pursuant to this clause (B), is in an aggregate
principal amount not to exceed 80% of the cost of all Casino Hotel
Improvements reflected on the consolidated balance sheet of the Company.
If the Lien of a Restricted Encumbrance permitted under clause
(y) of the preceding paragraph is created, the Mortgagee shall, at the
request of the Mortgagor, enter into the Intercreditor Agreement with the
holder or holders of the Indebtedness secured by such Restricted
Encumbrance (collectively referred to as the "Additional Mortgages").
Notwithstanding the foregoing provisions of this subsection VIII(b), the
Mortgagor or any Subsidiary may create or incur or permit to exist purchase
money Restricted Encumbrances upon any Personal Property acquired by the
Mortgagor or any Subsidiary, provided that no such purchase money
Restricted Encumbrance upon any Personal Property acquired by the Mortgagor
or any Subsidiary after the date hereof shall extend to or cover any other
property or, at the time incurred, secure Indebtedness in excess of 80% of
the lesser of the cost or fair market value of the property subject to such
purchase money Restricted Encumbrance, and provided further that the
aggregate principal amount of all Indebtedness at any time outstanding and
secured by Restricted Encumbrances permitted by this clause plus the
aggregate amount of all leases on Personal Property comprising the
Collateral and secured by Restricted Encumbrances shall not, at any time,
exceed $5,000,000.
IX. Discharge of Liens.
Subject to the provisions of Article X hereof and except as
permitted by the Indenture or this Mortgage, Mortgagor 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, Mortgagor shall forthwith
deliver copies thereof to Mortgagee and Mortgagor shall within thirty (30)
days after request therefor by Mortgagee, cause the same to be discharged
of record by payment or bonding.
<PAGE>
X. Right of Contest.
Mortgagor, at its 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 Mortgagor 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, (b) adequate reserves with respect thereto are maintained on
Mortgagor's books in accordance with generally accepted accounting
principles and the applicable provisions of the Indenture, 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 Mortgagor, 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, Mortgagor 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 Mortgagor and its
subsidiaries taken as a whole or be disadvantageous in any material respect
to the Holders. If such action or proceeding is terminated or discontinued
adversely to Mortgagor and is not subject to appeal, Mortgagor shall,
within thirty (30) days of receiving request therefor, deliver to Mortgagee
evidence reasonably satisfactory to Mortgagee of Mortgagor's 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 sole
discretion.
XI. 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. Any lessee under any
Lease may encumber any of lessee's personalty, furniture, fixtures and
equipment originally installed by such lessee in such lessee's leased
space.
B. Mortgagor shall (i) perform all of the provisions of the Leases
on the part of the lessor thereunder to be performed within the time period
required under the Leases, (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 sole 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 XI 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 XI. 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, automatically
revocable by Mortgagee upon an Event of Default, 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 XI 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.
E. With respect to any Major Lease upon notice and demand,
Mortgagee shall, from time to time, execute, acknowledge and deliver to
Mortgagor or cause to be executed, acknowledged and delivered to Mortgagor,
and to any tenant, a subordination, attornment and non-disturbance
agreement in a form reasonably acceptable to the Mortgagee. With respect
to any Major Lease in which Mortgagor requests a subordination, attornment
and non-disturbance agreement such Major Lease shall be subject to the
reasonable approval of Mortgagee.
XII. Estoppel Certificates.
Mortgagor 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.
XIII. Loan Document Expenses.
Mortgagor 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 IV hereof.
<PAGE>
XIV. 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 Mortgagor 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 XIV shall
cure, or shall be deemed or construed to cure, any such Event of Default by
Mortgagor hereunder or waive any rights or remedies of Mortgagee hereunder
or at law or in equity by reason of any such Event of Default.
XV. Mortgagee's Costs and Expenses.
If (a) an Event of Default shall occur under this Mortgage,
beyond applicable grace periods, if any, or an Event of Default under any
other Loan Document, including the Indenture, beyond any applicable grace
period, or (b) Mortgagee shall exercise any of its rights or remedies to
which it is entitled 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 Mortgagor 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 XV 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 XV are not inconsistent
therewith or violative thereof.
XVI. Events of Defaults.
The occurrence of any one or more of the following events
(regardless of the reason therefor), shall constitute a "Default" hereunder
and, upon the Mortgagor giving 10 days written notice of a monetary Default
(except a Default for failure to pay principal and interest under the
Securities) and/or upon the Mortgagor giving 30 days written notice for a
non-monetary Default and the failure to cure within such periods (except as
otherwise provided in the last grammatical paragraph of this Article XVI)
shall become an "Event of Default" hereunder:
(i) if Mortgagor shall fail or neglect to comply with
or otherwise perform, keep or observe, any term, provision, condition,
covenant, warranty or representation contained in any Loan Document which
would constitute a default therein after applicable notice and grace
periods if any contained in such Loan Document (other than this Mortgage)
that is required to be complied with or otherwise performed, kept or
observed by Mortgagor or if for any reason whatsoever a default, including
an Event of Default (as such term is defined in the Indenture), shall occur
under any of the Loan Documents (other than this Mortgage) and be
continuing beyond any notice and applicable grace period, if any, contained
in such Loan Document; or
(ii) the failure to pay any Imposition or any
installment on account thereof (subject to Mortgagor's right to contest the
same in accordance with Article X hereof) or any insurance premiums for the
insurance required to be maintained hereunder when due and payable; or
(iii) the failure to furnish Mortgagee with proof of
payment of the Impositions required to be paid hereunder in accordance with
Paragraph 5(A) hereof or of any insurance premiums for the insurance
required to be provided hereunder by not later than thirty (30) days after
request therefor by Mortgagee; or
(iv) the failure (x) to keep in full force and effect
the insurance required by this Mortgage or (y) to assign and deliver to
Mortgagee the policy or policies or certificate or certificates of
insurance required to be provided hereunder in accordance with the
provisions hereof; or
(v) unless permitted hereunder or under the Loan
Documents, the actual or threatened material removal or material demolition
of, or material alteration to, the Encumbered Property or any portion
thereof; or
(vi) subject to Mortgagor's right to contest the same
pursuant to, and in accordance with, the provisions of Article X hereof,
the failure to (x) comply with any Legal Requirement or to cure any
violation or notice of violation of any Legal Requirement within the time
period specified in such Legal Requirement, or (y) comply with any
requirement of any insurance company issuing any policy of insurance
required to be provided hereunder; or
(vii) if any representation or warranty, statement, report,
financial statement or certificate made or delivered by Mortgagor or any of
its officers, employees or agents or any of its officers, employees or
agents to Mortgagee shall not be true and correct in any material respect
as of the date when made or when reaffirmed and shall materially adversely
affect the Encumbered Property or Mortgagee's interest therein; or
(viii) if the Encumbered Property or any portion thereof
shall be materially damaged, materially destroyed or materially injured by
fire or other casualty, or if there shall be a Partial Taking and, in
either of such cases, if Mortgagor shall fail to restore the Buildings and
the Personal Property in accordance with the provisions hereof; or
(ix) if, except pursuant to the provisions hereof or
of the Indenture, (x) Mortgagor shall make any new or additional mortgages
or deeds of trust on the Encumbered Property or any portion thereof, except
for the Additional Mortgages or (y) and except for the Permitted
Encumbrances, Mortgagor or otherwise shall encumber the Encumbered Property
or any portion thereof, or (z) and subject to the provisions otherwise set
forth herein, Mortgagor creates, permits or suffers any lien, claim, charge
or encumbrance of any kind or nature whatsoever to be recorded against the
Encumbered Property or any portion thereof; or
(x) if, except pursuant to the provisions hereof or of
the Indenture, Mortgagor shall (x) sell, transfer, assign or convey the
Encumbered Property or any portion thereof or any interest therein, by
operation of law or otherwise, except in connection with the Additional
Mortgages entered into by Mortgagor or in connection with Leases entered
into by Mortgagor and to the extent permitted by the Indenture, or (y)
assign or encumber the Rents or any portion thereof, except in connection
with the Additional Mortgages; or
(xi) if Mortgagor shall otherwise fail or neglect to
comply with or otherwise perform, keep or observe, in any material respect,
any other term, provision, condition, covenant, warranty or representation
contained in this Mortgage that is required to be complied with or
otherwise performed, kept or observed by Mortgagor, after notice of such
failure to comply from Mortgagee and the passage of the applicable grace
periods, if any (or if it shall be impractical to comply with such terms,
provisions, conditions or covenants within the applicable grace periods, if
any, to have failed to have commenced compliance and/or to have diligently
pursued such compliance; provided that Mortgagee shall not be subject to
any civil or criminal liability for such failure to comply), or if no grace
period shall be specified, then, for thirty (30) days after notice thereof
from Mortgagee.
If Mortgagor has been given notice of the occurrence of a Default
under the provisions of this Article XVI, and such Default shall also
constitute a default under any of the other Loan Documents, then notice of
such Default being given by Mortgagee hereunder shall be deemed to satisfy
any requirement that notice of such default must be given under the other
Loan Documents prior to constituting a Default hereunder, so that Mortgagor
is entitled to only one (1) notice of the same default under all of the
Loan Documents. If a Default shall be cured within the applicable grace
period, it shall cease being a "Default."
Notwithstanding anything contained herein if Mortgagor cannot
cure any non-monetary Default or any non-monetary breach of any provision,
covenant, condition, term or representation, it shall not constitute an
Event of Default if such breach or Default is susceptible of cure but
cannot reasonably be cured within any grace period and Mortgagor shall have
commenced to cure such breach or Default within the applicable grace period
and thereafter diligently and expeditiously prosecutes such cure to
completion, then such grace period shall be extended for such time as is
reasonably necessary for Mortgagor to cure such Default or breach in the
exercise of due diligence to cure such Default or breach.
If the Ground Lease is terminated, canceled or surrendered, or if any
default shall have occurred under the Ground Lease which is not remedied
within the time permitted thereunder, then an Event of Default shall be
deemed to have occurred under this Mortgage. In no event shall the time to
cure such Event of Default under this Mortgage, if any, exceed the time
permitted to cure such default under the Ground Lease.
XVII. 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 Mortgagor, take such action as
Mortgagee deems advisable, in its sole discretion, to protect and enforce
the rights of Mortgagee against the Mortgagor 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:
1. Mortgagee may elect to cause the Encumbered Property or
any portion thereof to be sold in accordance with the provisions hereof and
applicable law.
2. Mortgagee may, without releasing Mortgagor from any
Obligation under this Mortgage or any other obligation under the Guaranty
or any other Loan Document and without waiving any Event of Default,
exercise any of its rights and remedies under Article XIV hereof.
3. if the Indebtedness shall have been declared due and
payable in accordance with the provisions of the Indenture, 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.
4. Mortgagee, if it has not already revoked the license
granted pursuant to Article XI hereof, may revoke the license and may,
without releasing Mortgagor 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 Mortgagor and its 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
Encumbered Property, 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
Mortgagor with respect to the Encumbered Property, either in the name of
Mortgagor 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.
5. 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 XVII, 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 Property or, at Mortgagee's option, such other address
of the lessee as may be set forth in such Lease.
6. Mortgagee may declare the entire unpaid Indebtedness to be
immediately due and payable.
7. Mortgagee may institute proceedings for the complete
foreclosure of this Mortgage in which case the Encumbered Property or the
Mortgagor's interest therein may be sold for cash or upon credit in one or
more portions.
8. 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.
9. 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 the Mortgagor 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.
10. 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.
11. Mortgagee may recover judgment on the Notes either
before, during or after any proceedings for the enforcement of this
Mortgage.
12. 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, any guarantor or of any
person, firm or the entity liable for the payment of the Indebtedness.
13. Mortgagee may cure such Event of Default, without
relieving the Mortgagor of any liability in connection with such Event of
Default, and (1) the Mortgagor, on demand, shall reimburse the Mortgagee
for any and all costs and expenses incurred by the Mortgagee in connection
with the curing of any Event of Default, together with any defaulted
interest payable pursuant to the Indenture from the date such costs and
expenses are incurred until the same are paid to the Mortgagee, and (2) the
Mortgagee shall be entitled to apply any sums then held by the 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
14. Mortgagee may pursue such other remedies as the Mortgagee
may have under any applicable law.
B. Subject to the terms of the Intercreditor Agreement, the
purchase money proceeds or avails of any sale of the Encumbered Property
made under or by virtue of this Article XVII, together with any other sums
which then may be held by the Mortgagee under this Mortgage, whether under
the provisions of this Article XVII or otherwise, shall be applied as
follows:
First: To the payment of the costs and expenses of any such
sale, including reasonable compensation to the 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 the Mortgagee
under this Mortgage and together with interest as provided herein on all
advances made by the 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,
the Mortgagor. The 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, as defined in the
Indenture, 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 Property 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 there-to, as a condition to receiving the benefit of the
Real Property, the Personal Property or other collateral hereby encumbered
for the benefit of Mortgagee, Mortgagor does hereby give its 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. The 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, the
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 the Mortgagee
under or by virtue of this Article XVII, the 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. The
Mortgagee is hereby irrevocably appointed the true and lawful attorney of
Mortgagor, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Encumbered Property and rights
so sold and for that purpose the Mortgagee may execute all necessary
instruments of conveyance, assignment and transfer, and may substitute one
or more persons with like power, Mortgagor hereby ratifying and confirming
all that its 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 XVII, 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 in and to the properties and rights so sold, and shall be a
perpetual bar both at law and in equity against Mortgagor and against any
and all persons claiming or who may claim the same, or any part thereof
from, through or under the Mortgagor.
G. Anything contained in the Notes or in this Mortgage to the
contrary notwithstanding, in the event of any sale made under or by virtue
of this Article XVII (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 XVII
(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), the 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 the Mortgagee is authorized to deduct under this Mortgage.
I. No recovery of any judgment by the Mortgagee and no levy of an
execution under any judgment upon the Encumbered Property or upon any
property of Mortgagor 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 the Mortgagee hereunder, but such
liens, rights, powers and remedies of the 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 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, contained herein or in
the Notes.
K. Upon the occurrence of any Event of Default hereunder, it is
agreed that Mortgagor, if it is an occupant of the Real Property or any
part thereof, shall immediately surrender possession of the Real Property
so occupied to the Mortgagee, and if such occupant is permitted to remain
in possession, the possession shall be as tenant of the Mortgagee and, on
demand such occupant subject to applicable law (a) shall pay to the
Mortgagee monthly, in advance, a reasonable rental for the space so
occupied and in default thereof, and (b) 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 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 Mortgagor shall pay or shall cause to be paid interest thereon from and
after the date on which such payment first becomes due at the defaulted
interest pursuant to the Indenture and such interest shall be due and
payable, on demand, at such rate until the entire amount due is paid to the
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 the
Mortgagee to obtain judgment for the Indebtedness, or of any other nature
in aid of the enforcement of the Notes or of this Mortgage, Mortgagor 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 the
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 of any of its property, or of the Encumbered
Property or any part thereof, the Mortgagee shall be entitled to retain
possession and control of all property now and hereafter covered by this
Mortgage.
XVIII. Security Agreement under Uniform Commercial Code.
It is the intention of Mortgagor and Mortgagee that this Mortgage
shall constitute and this Mortgage does hereby constitute a Security
Agreement between Mortgagor 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 Real Property whether or not any such item is physically
attached to the Real Property 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 the Mortgagor 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 Mortgagor shall fail to execute any such financing or
continuation statements for twenty (20) days after request therefor is made
by Mortgagee, Mortgagor hereby authorizes Mortgagee, without the signature
of Mortgagor, 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.
XIX. Representations and Warranties.
Mortgagor represents and warrants that: (a) such Mortgagor has
the requisite power and lawful authority to execute and deliver this
Mortgage and to perform the Obligations it is required to perform under the
Loan Documents; (b) the execution and delivery of this Mortgage by
Mortgagor and performance of its obligations under this Mortgage will not
result in Mortgagor being in default under any provision of its Certificate
of Incorporation or By-Laws or of any deed of trust, mortgage, document,
instrument, credit or other agreement to which it is a party or by which
its assets are bound; (c) the Board of Directors of such Mortgagor has duly
authorized the execution and delivery of this Mortgage; (d) on the date
hereof, no portion of the Buildings or the Personal Property has been
materially damaged, destroyed or injured by fire or other casualty which is
not now fully restored or in the process of being restored; (e) Mortgagor
has all necessary licenses, authorizations, registrations and approvals to
own, use, occupy and operate the Encumbered Property and has full power and
authority to carry on its business at the Real Property as currently
conducted and has not received any notice of any violation of any Legal
Requirement that materially impairs the value of the Encumbered Property;
and (f) as of the date hereof, Mortgagor has not received any notice of any
Taking of the Encumbered Property as the case may be) or any portion
thereof and Mortgagor has no knowledge that any such Taking is
contemplated.
XX. No Waivers, Etc.
No failure by Mortgagee to insist upon the strict performance by
each Mortgagor 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
Mortgagor 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.
XXI. Brokerage.
Mortgagor hereby represents and warrants that it has dealt with
no broker, finder, or like agent in connection with this Mortgage.
XXII. Mortgage Subject to the Provisions of the Act.
Each provision of this Mortgage is subject to the provisions of
the Act, as defined in Article III, paragraph (E).
XXIII. Environmental Matters.
A. Mortgagor represents and warrants that:
1. To the best of Mortgagor's knowledge, none of the real
property owned and/ or occupied by Mortgagor and located in the State of
New Jersey, including, but not limited to, the Encumbered Property (the
"New Jersey Real Property"), has ever been used to treat, store, handle,
transfer, process or dispose of "Hazardous Wastes" as that term is defined
in applicable state or federal law. Mortgagor has not in the past, does
not at present, and shall not in the future, use, or allow the use of, in
any material respect its real property, including, but not limited to, the
Encumbered Property, for the purpose of refining, producing, storing,
handling, transferring, processing, treating, disposing of or transporting
"Hazardous Substances" as that term is defined in applicable state or
federal law. Mortgagor shall not, and shall not allow any other person to,
treat, store, dispose of or release any such Hazardous Waste on or in the
New Jersey Real Property, except for temporary storage of Hazardous Waste
generated on the property in strict compliance with all applicable laws.
2. To the best of Mortgagor's knowledge, none of the New
Jersey Real 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(1),
and said New Jersey Real Property is not now and will not be used in the
future as a "Major Facility."
3. No lien has been attached to any revenues or any New
Jersey Real Property or personal property owned by Mortgagor and located in
the State of New Jersey, including, but not limited to, the Encumbered
Property, and to the best of Mortgagor's knowledge there are no events,
conditions, facts or circumstances that could lead to the imposition of
such a lien, under any law relating to pollution or the discharge of
materials into the environment. Mortgagor shall not permit the imposition
of any such lien on any property which it owns.
4. Mortgagor has not received any summons, citation,
directive, or other written communication requiring, requesting, or
alleging the need for corrective action of Mortgagor from the New Jersey
Department of Environmental Protection and Energy or any other person or
entity relating to the releasing, spilling, leaking, pumping, pouring,
emitting, emptying, dumping or threatened release of "Hazardous
Substances," as such term is defined in applicable state or federal law.
To the best of Mortgagor's knowledge, there are no events, conditions,
facts or circumstances that could justify or give rise to any such
communication.
5. To the best of Mortgagor's knowledge, there are and have
been no underground storage tanks ("Underground Storage Tanks") on any New
Jersey Real Property as such term is defined in applicable state or federal
law and no New Jersey Real Property contains any asbestos or asbestos
containing materials other than in de minimis amounts.
B. Mortgagor covenants and agrees that:
1. If Mortgagor is presently an owner or operator of a "Major
Facility" in the State of New Jersey, as such term is defined in N.J.S.A.
58:10-23.11b(1), or if Mortgagor ever becomes such an owner or operator,
then Mortgagor shall furnish the New Jersey Department of Environmental
Protection and Energy with all the information required by N.J.S.A.
58:10-23.lld to the extent applicable.
2. Mortgagor shall not cause or permit to exist a releasing,
spilling, leaking, pumping, emitting, pouring, emptying or dumping of a
"Hazardous Substance," as such term is defined in applicable state or
federal law into waters of the State of New Jersey or onto lands from which
it might flow or drain into said waters, or into waters outside the
jurisdiction of the State of New Jersey, except in strict compliance with
the terms of applicable law, including any permit in force.
3. So long as Mortgagor shall own or operate any real
property located in the State of New Jersey, which is used as a "Major
Facility," as such term is defined in N.J.S.A. 58:10-23.11b(1), Mortgagor
shall duly file or cause to be duly filed with the Director of the Division
of Taxation in the New Jersey Department of the Treasury, a tax report or
return and shall pay or make provision for the payment of all taxes due
therewith, all in accordance with and pursuant to N.J.S.A. 58:10-23.11h to
the extent applicable.
4. In the event that there shall be filed a lien against the
Encumbered Property under any law relating to pollution or the discharge of
materials into the environment, then Mortgagor shall promptly but no later
than thirty (30) days from the date that Mortgagor is given notice that the
lien has been placed against the Encumbered Property, either (1) 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.
5. Should Mortgagor cause or permit any intentional or
unintentional action or omission resulting in the releasing, spilling,
leaking, pumping, pouring, emitting, emptying or dumping of materials into
the waters or onto lands of the State of New Jersey, or into the waters
outside the jurisdiction of the State of New Jersey, Mortgagor shall
promptly, diligently and expeditiously report and proceed to clean up such
release, spill, leak, pumping, pour, emission, emptying or dumping in
strict compliance with all applicable laws.
6. If Mortgagor shall fail to take any action required by
this Section, upon notice to Mortgagor (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 shall execute and deliver promptly after request, such
instruments as Mortgagee may deem useful or required to permit Mortgagee to
take any such action.
7. Without limiting the foregoing, Mortgagor shall comply in
all material respects with all applicable laws relating to pollution or the
discharge of materials into the environment or the indoor workplace.
8. Mortgagor 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 Mortgagor's
failure to comply with existing and future laws relating to pollution or
the discharge of materials into the environment, orders, ordinances, rules
and regulations, including those related to the presence of asbestos
affecting the Encumbered Property, 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
Indenture, or any other discharge of the Indebtedness by operation of law
or otherwise.
XXIV. Waivers by Mortgagor.
A. Mortgagor hereby waives all errors and imperfections, to the
extent permitted by law, in any proceedings instituted by Mortgagee under
this Mortgage, the Indenture 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 Mortgagor 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
Indenture or any other Loan Document, nor shall Mortgagor 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. Mortgagor hereby waives 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.
XXV. 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 Mortgagor or Mortgagee, or whenever Mortgagor 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:
Amalgamated Bank of Chicago
1 West Monroe Street
Chicago, Illinois 60603
Attn: Corporate Trust Department
B. If to Mortgagor:
GNOC, Corp.
Boston & Pacific Avenues
P.O. Box 1737
Atlantic City, New Jersey 08041
Attn: President
With a copy to:
Benesch, Friedlander, Coplan & Aronoff P.L.L.
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Attn: Chairman, Real Estate Department
C. or to such other address as Mortgagor 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.
XXVI. Conflict with Indenture.
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 Indenture,
then, unless this Mortgage expressly provides otherwise by specific
reference to the Loan Agreement, the terms, covenants, conditions and
provisions of the Indenture shall prevail.
XXVII. 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 Mortgagor
and Mortgagee. The covenants of this Mortgage shall run with the Real
Property and shall bind each Mortgagor and its 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.
XXVIII. 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 (e) "the Real
Property" shall mean "the Real Property or any portion thereof or interest
therein." Any act which Mortgagee is permitted to perform under this
Mortgage, the Indenture 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 Mortgagor under this Mortgage, the Indenture 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,
Mortgagor 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 Mortgagor's 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 Mortgagor or any successor corporation
shall have any liability for any obligations of Mortgagor hereunder or for
any claim based on, in respect of or by reason of such obligations or its
creation. Mortgagee, by accepting this Mortgage, waives and releases all
such liability.
XXIX. Enforceability.
This Mortgage 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 Mortgage shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Mortgage 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 Mortgage. Nothing contained in this Mortgage or in any other Loan
Documents shall require Mortgagor 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
Indenture or any other Loan Document would subject Mortgagee to penalty
under applicable law, then, ipso facto, the obligation of Mortgagor to make
such payment shall be reduced to the highest rate then permitted under
applicable law without penalty.
XXX. Satisfaction.
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 Mortgagor a satisfaction of this Mortgage in recordable form and
any other documents or instruments reasonably requested by Mortgagor to
release the lien of this Mortgage.
XXXI. Receipt of Copy.
Mortgagor acknowledges that it has received a true copy of this
Mortgage.
XXXII. Leasehold Mortgage Provisions.
A. Mortgagor represents and warrants that (i) the Mortgage is and
will remain a valid and enforceable first lien on the Leasehold Estate;
(ii) the Ground Lease is unmodified and in full force and effect; (iii)
Mortgagor will preserve such title and will forever warrant and defend the
same to Mortgagee and will forever warrant and defend the validity and
priority of the lien hereof against the claims of all persons and parties,
except the Trustee; (iv) all rents (including additional rents and other
charges) reserved in the Ground Lease have been paid to the extent they are
currently payable; (v) Mortgagor enjoys the quiet and peaceful possession
of the premises and improvements covered by the Ground Lease and Mortgagee
will enjoy the quiet and peaceful possession of such premises, subject to
the terms of the Ground Lease, if it succeeds to the rights of Mortgagor;
(vi) there is no default by any party under the terms of the Ground Lease
and no circumstances presently exist which, with notice and/or the passage
of time, would constitute such a default; and all conditions to the
effectiveness or continuing effectiveness thereof required to be satisfied
or performed by either party by the date hereof have been so satisfied or
performed; (vii) Mortgagor will at all times promptly and faithfully keep
and perform, or cause to be kept and performed, all the covenants and
conditions contained in the Ground Lease to be kept and performed; and
Mortgagor will not do or permit anything to be done or refrained or omitted
from being done, the doing or refraining from doing or the omission of
which will impair or tend to impair the security of the Mortgage or will be
grounds for declaring a breach under, or a forfeiture of, the Ground Lease;
(viii) the Ground Lease is prior to all liens, charges and encumbrances
whatsoever on the fee interest of the lessor thereunder, except for
Permitted Encumbrances; (ix) Mortgagor will not subordinate or consent to
the subordination of the Ground Lease to any mortgage on the fee interest
in the premises, except upon the prior written consent of Mortgagee; (x)
Mortgagor will not modify, extend or in any way alter the terms of the
Ground Lease or cancel or surrender the Ground Lease, or assign the Ground
Lease, or waive, excuse, condone or in any way release or discharge any of
the material obligations, covenants, conditions or agreements of the lessor
under the Ground Lease, without the consent of Mortgagee; and (xi)
Mortgagor will give immediate notice of any default given by the lessor
under the Ground Lease and promptly deliver to Mortgagee a copy of any
notice of default given to said lessor; Mortgagor will give Mortgagee
immediate notice of an assignment, conveyance, transfer or change of
ownership of the land demised thereunder; Mortgagor will immediately notify
Mortgagee of the receipt and substance of any notice, demand, request or
other material communication it receives from the lessor under the Ground
Lease, whether oral or written, and will promptly deliver a copy of the
same, if written, to Mortgagee; and it will promptly furnish all other
information which Mortgagee may request concerning the performance of the
lessee or the lessor under the Ground Lease.
B. So long as the obligations secured by the Mortgage remain
unpaid, the fee title and leasehold estate in the land demised under the
Ground Lease shall not, without the consent of Mortgagee or any purchaser
at foreclosure, merge but shall always be kept separate and distinct,
notwithstanding the union of said estates either in the lessee or in the
lessor under the Ground Lease, or in a third party, whether by purchase or
otherwise.
C. 1. The lien of this Mortgage attaches to all of
Mortgagor's rights and remedies at any time arising under or pursuant to
Section 365(h) of the Bankruptcy Code, 11 U.S.C. Section 365(h), (The
"Bankruptcy Code") including, without limitation, all of Mortgagor's rights
to retain its rights under the Ground Lease.
2. Mortgagor shall not without Mortgagee's prior written
consent elect to treat the Ground Lease as terminated under Section
365(h)(1) of the Bankruptcy Code. Any such election made without
Mortgagee's prior written consent shall be void.
3. Mortgagor hereby unconditionally assigns, transfers
and sets over to Mortgagee all of Mortgagor's claims and rights to the
payment of damages arising from any rejection by lessor of the Ground Lease
under the Bankruptcy Code. Mortgagee shall have the right to proceed in
its own name or in the name of Mortgagor in respect of any claim, suit,
action or proceeding relating to the rejection of the Ground Lease,
including, without limitation, the right to file and prosecute, to the
exclusion of Mortgagor, any proofs of claim, complaints, motions,
applications, notices and other documents, in any case in respect of lessor
under the Bankruptcy Code. This assignment constitutes a present,
irrevocable and unconditional assignment of the foregoing claims, rights
and remedies, and shall continue in effect until all of the indebtedness
and obligations secured by this Mortgage shall have been satisfied and
discharged in full. Any amounts received by Mortgagee as damages arising
out of the rejection of the Ground Lease as aforesaid shall be applied
first to all costs and expenses of Mortgagee (including, without
limitation, attorneys' fee) incurred in connection with the exercise of any
of this rights or remedies under this paragraph XXXII.
4. If pursuant to Section 365(h)(1) of the Bankruptcy
Code, Mortgagor seeks to offset against the rent reserved in the Ground
Lease the amount of any damages caused by the non-performance by the lessor
any of lessor's obligations under the Ground Lease after the rejection by
lessor of the Ground Lease under the Bankruptcy Code, Mortgagor shall,
prior to effecting such offset, notify the Mortgagee of its intent so to
do, setting forth the amounts proposed to be offset and the basis
therefore. Mortgagee shall have the right to object to all or any part of
such offset, and, in the event of such objection, Mortgagor shall not
effect any offset of the amounts so objected to by Mortgagee. If Mortgagee
has failed to object as aforesaid within ten (10) days after notice from
Mortgagor, Mortgagor may proceed to effect such offset in the amounts set
forth in Mortgagor's notice. Neither Mortgagee's failure to object as
aforesaid nor any objections or other communication between Mortgagee and
Mortgagor relating to such offset shall constitute an approval of any such
offset by Mortgagee. Mortgagor shall indemnify and save Mortgagee harmless
from and against any and all claims, demands, actions, suits, proceedings,
damages, losses, costs and expenses of every nature whatsoever (including,
without limitation, attorneys' fees) arising from or relating to any offset
by Mortgagor against the rent reserved in the Ground Lease.
5. If any action, proceeding, motion or notice shall be
commenced or filed in respect of the Mortgagor or the Encumbered Property
in connection with any case under the Bankruptcy Code, Mortgagee shall have
the option, to the exclusion of Mortgagor, exercisable upon notice from
Mortgagee to Mortgagor, to conduct and control any such litigation with
counsel of Mortgagee's choice. Mortgagee may proceed in its own name or in
the name of Mortgagor in connection with any such litigation, and Mortgagor
agrees to execute any and all powers, authorizations, consents and other
documents required by the Mortgagee in connection therewith. Mortgagor
shall, upon demand, pay to Mortgagee all costs and expenses (including
attorneys' fees) paid or incurred by Mortgagee in connection with the
prosecution or conduct of any such proceedings. Any such costs or expenses
not paid by Mortgagor as aforesaid shall be secured by the lien of this
Mortgage and shall be added to the principal amount of the indebtedness
secured hereby. Mortgagor shall not commence any action, suit, proceedings
or case, or file any application or make any motion, in respect of the
Ground Lease in any such case under the Bankruptcy Code without the prior
written consent of Mortgagee.
6. Mortgagor shall promptly after obtaining knowledge
thereof notify Mortgagee in writing of any filing by or against the lessor
under the Ground Lease of a petition under the Bankruptcy Code, Mortgagor
shall thereafter forthwith give written notice of such filing to Mortgagee,
setting forth any information available to Mortgagor as to the date of such
filing, the court in which such petition was filed, and the relief sought
therein. Mortgagor shall promptly deliver to Mortgagee following receipt
of any and all notices, summonses, pleadings, applications and other
documents received by Mortgagor in connection with any such petition and
any proceedings relating thereto.
7. If there shall be filed by or against the Mortgagor a
petition under the Bankruptcy Code, and the Mortgagor, as lessee under the
Ground Lease, shall determine to reject the Ground Lease pursuant to
Section 365(a) of the Bankruptcy Code, the Mortgagor shall give the
Mortgagee not less than ten (10) days prior notice of the date on which the
Mortgagor shall apply to the bankruptcy court for authority to reject the
Ground Lease. The Mortgagee shall have the right, but not the obligation,
to serve upon the Mortgagor within such ten (10) day period a notice
stating that (a) the Mortgagee demands that the Mortgagor assume and assign
the Ground Lease to the Mortgagee pursuant to Section 365 of the Bankruptcy
Code and (b) the Mortgagee covenants to cure or provide adequate assurance
of prompt cure of all defaults and provide adequate assurance of future
performance under the Ground Lease. If the Mortgagee serves upon the
Mortgagor the notice described in the preceeding sentence, the Mortgagor
shall not seek to reject the Ground Lease and shall comply with the demand
provided for in clause (a) of the preceding sentence within thirty (30)
days after the notice shall have been given, subject to the performance by
the Mortgagee of the covenant provided for in clause (b) of the preceding
sentence.
8. Effective upon the entry of an order for relief in
respect of the Mortgagor under the Bankruptcy Code, the Mortgagee hereby
assigns and transfers to the Mortgagee a non-exclusive right to apply to
the Bankruptcy Court under Section 365(d)(4) of the Bankruptcy Code for an
order extending the period during which the Ground Lease may be rejected or
assumed.
XXXIII. Release Provision.
The property described in Exhibit B annexed hereto and made a part
hereof (the "Sovereign Avenue Property") shall be released by Mortgagee
from the lien created by this Mortgage at such time that Mortgagee receives
a written request to release the Sovereign Avenue Property, provided,
however, that (i) there shall have been no Event of Default under the Loan
Documents which has not been cured, (ii) Mortgagee shall have received
evidence satisfactory to Mortgagee in its sole discretion that the
Sovereign Avenue Property shall be dedicated to and accepted and maintained
by the City of Atlantic City and (iii) Mortgagor shall have paid all
reasonable fees and expenses of Mortgagee's counsel in connection with the
release of the Sovereign Avenue Property.
<PAGE>
IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly
executed and acknowledged under seal as of the day and year first above
written.
MORTGAGOR:
GNOC, CORP.,
a New Jersey corporation
By:___________________________
Name: Donna M. Graham
Title: Chief Financial
Officer, Treasurer
<PAGE>
STATE OF NEW JERSEY )
) SS.
COUNTY OF ESSEX )
On the 2nd day of May, 1996, before me personally came Donna M.
Graham, to me known, who, being by me duly sworn, did depose and say that
she is a Chief Financial Officer and Treasurer of GNOC, Corp., a New Jersey
corporation, the corporation described in and which executed the foregoing
instrument by order of the board of directors of said corporation; and that
she signed her name thereto by like order.
_________________________
<PAGE>
EXHIBIT A-1
Fee Property Description <PAGE>
EXHIBIT A-2
Leasehold Property Description<PAGE>
EXHIBIT B
Release Property Description <PAGE>
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
given by
GNOC, CORP.,
Mortgagor
to
AMALGAMATED BANK OF CHICAGO, as Trustee,
Mortgagee
Dated as of May 2, 1996
Record and Return to:
McCarter & English
Four Gateway Center
100 Mulberry Street
P.O. Box 652
Newark, New Jersey 07101-0652
Attn: Curtis A. Johnson, Esq.
<PAGE>
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
TABLE OF CONTENTS
Article Page
I. Warranty of Title.............................................5
II. Payment of Indebtedness.......................................6
III. Requirements; Proper Care and Use.............................7
IV. Taxes on Mortgagee............................................9
V. Payment of Impositions.......................................11
VI. Insurance....................................................13
VII. Condemnation/Eminent Domain..................................23
VIII. Sale of Encumbered Property; Additional Financing............25
IX. Discharge of Liens...........................................25
X. Right of Contest.............................................25
XI. Leases.......................................................26
XII. Estoppel Certificates........................................29
XIII. Loan Document Expenses.......................................29
XIV. Mortgagee's Right to Perform.................................29
XV. Mortgagee's Costs and Expenses...............................30
XVI. Events of Defaults...........................................31
XVII. Remedies.....................................................31
XVIII. Security Agreement under Uniform Commercial Code.............38
XIX. Representations and Warranties...............................39
XX. No Waivers, Etc..............................................39
XXI. Brokerage....................................................40
XXII. Mortgage Subject to the Provisions of the Act................40
XXIII. Environmental Matters........................................40
XXIV. Waivers by Mortgagor.........................................43
XXV. Notices......................................................44
XXVI. Conflict with Indenture......................................45
XXVII. No Modification; Binding Obligations.........................45
XXVIII. Miscellaneous................................................46
XXIX. Enforceability...............................................47
XXX. Satisfaction.................................................47
XXXI. Receipt of Copy..............................................47
XXXII. Leasehold Mortgage Provisions................................47
XXXIII. Release Provisions...........................................51
EXHIBIT A-1
Fee Metes and Bounds Description
EXHIBIT A-2
Leasehold Metes and Bounds Description
EXHIBIT B
Release Metes and Bounds Description
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS (this "Assignment"), dated as
of the 2nd day of May 1996, given by GNOC, CORP. (successor by merger to
GNAC, Corp.), a New Jersey corporation ("Assignor"), having an office at
Boston and Pacific Avenues, P.O. Box 1737, Atlantic City, New Jersey 08404
to AMALGAMATED BANK OF CHICAGO, as trustee under the Indenture (as
hereinafter defined), having an address at 1 West Monroe Street, Chicago,
Illinois 60603 (the "Assignee").
W I T N E S S E T H :
Whereas, Assignor is the owner of certain real property situated
in Atlantic City, New Jersey, more particularly described on Exhibit A-1
annexed hereto and made a part hereof (the "Land"); and
Whereas, Assignor holds a leasehold interest under that certain
Amended and Restated Ground Lease (the "Ground Lease") of even date
herewith between Bally's Park Place, Inc., as lessor, and Assignor, as
lessee, covering the land described in Exhibit A-2 annexed hereto and made
a part hereof (the "Leasehold Estate"); and
Whereas, Assignor is the owner of the buildings and other
improvements now or hereafter erected on the Land and/or the Leasehold
Estate (such buildings and other improvements being hereinafter
collectively referred to as the "Buildings", the Land, the Leasehold Estate
and the Buildings being hereinafter collectively referred to as the
"Property"); and
Whereas, GNF, Corp. ("GNF") entered into an Indenture (the
"Indenture") dated as of March 10, 1993 between GNF as obligor, and
Assignee, as trustee, pursuant to which GNF executed and delivered its
10-5/8% First Mortgage Notes due 2003 (Series A) and 10-5/8% First Mortgage
Notes due 2003 (Series B) (together, the "Notes"), and Assignor executed
and delivered to
Assignee a Mortgage and Security Agreement with Assignment of Rents to
secure the Indenture and the Notes, covering the Property in the amount of
up to Two Hundred Seventy Five Million Dollars ($275,000,000); and
Whereas, to further secure the obligations of the Assignor under
the Indenture and the Notes, Assignor has executed and delivered to the
Assignee a Mortgage and Security Agreement with Assignment of Rents dated
as of May 2, 1996, covering the Property (the "Mortgage").
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
Assignor, 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 Indenture, the Notes, and the Mortgage, and (ii) all
monies which may be advanced by Assignee on behalf of Assignor under the
terms of the Mortgage, Assignor and hereby agrees as follows:
32. Assignor hereby grants, transfers, bargains, sells,
assigns, conveys, and set 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 the 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"). This is a present and absolute
assignment and transfer of title and not merely additional security.
33. Assignor further gives and grants unto Assignee the power
and authority, but not the obligation, to:
A. 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 or 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;
E. 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;
J. make any changes or improvements, structural or otherwise, on,
in or to the Leased Property or any part thereof which Assignee
may deem reasonable, 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 Leased 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 Leased 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), 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 the 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 Leased 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.
34. Assignee shall have the unqualified right, subject to the
provisions of applicable law, to receive, use and apply the 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 (b) for the
operation and maintenance of the Leased 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 Leased Property,
(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 attorney's 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 Paragraph 2 (xiii) hereof, shall apply all
remaining Rents and collected and received by it to the reduction of the
indebtedness secured by the Mortgage.
35. 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.
36. 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 gross 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.
37. Assignor hereby covenants and agrees:
A. 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 be 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
Indenture, the Notes, the Mortgage, and any other Loan Documents (as
such term is defined in the Mortgage).
38. Assignor hereby represents and warrants the following to
Assignee:
(i) to the best of the 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 lessees under such Leases;
(ii) Assignor has not executed or granted any
modifications or amendments of the Major Leases;
(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 Assignor 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 collected 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 sum 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.
39. It is understood and agreed that nothing contained in this
Agreement 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 prejudice any rights which
Assignee shall have by virtue of any default under the Indenture, the
Notes, or the Mortgage. Assignee, however, hereby agrees that it will use
reasonable efforts to promptly give notice (the "Informational Notice") to
Assignor and Assignor, 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.
40. Assignor agrees to indemnify and hold Assignee harmless
from and against any all liability, loss, damage, cost and expense,
including reasonable attorneys' fees and disbursements, other than those
which arise as a result of the gross negligence or wilful misconduct of
Assignee, which Assignee may or shall incur under any of the Leases, 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 gross 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. 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 each Assignee until the same is paid by
Assignor or Assignor to Assignee, shall be jointly and severally payable by
each Assignor to Assignee immediately upon demand, or, at the option of
Assignee, Assignee may reimburse itself therefor out of any 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 otherwise to impose any obligation upon Assignee
with respect to any of the Leases.
41. Upon request of Assignee, Assignor shall execute and
deliver to Assignee such further instruments as Assignee may deem
reasonably necessary to effect this Assignment and the covenants of
Assignor 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 sole discretion.
42. 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 collected by
Assignee.
43. 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 Indenture, the 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.
44. 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 hereof.
Assignor agrees to collect and receive said Rents and to use said Rents in
payment of principal and interest becoming due under the Indenture, the
Notes, the Mortgage and any Additional Mortgages (as defined in the
Mortgage). Subject to the provisions of Paragraph 2(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 Indenture, the 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 Indenture, the Notes, the Mortgage, this Assignment
and the Loan Documents are satisfied and the Commitments have been
permanently terminated. 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
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.
45. 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.
46. 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.
47. 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 Indenture, then,
unless this Assignment specifically provides otherwise by specific
reference to the Indenture, the terms, covenants, conditions and provisions
of the Indenture shall prevail.
48. 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: Amalgamated Bank of Chicago
1 West Monroe Street
Chicago, Illinois 60603
Attn: Corporate Trust Department
if to Assignor: GNOC Corp.
Boston & Pacific Avenues
P.O. Box 1737
Atlantic City, New Jersey 08041
Attn: President
With a copy to: Benesch, Friedlander, Coplan
& Aronoff P.L.L.
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Attn: Chairman, Real Estate Department
or at such different address as Assignor or Assignee shall hereafter
specify by written notice as provided herein.
49. 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.
50. 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.
51. No director, officer, employee, stockholder or
incorporator, as such, past, present or future, of Assignor or any
successor corporation, shall have any liability for any obligations of
Assignor 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.
52. 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.
53. 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.
IN WITNESS WHEREOF, the Assignor has executed this Assignment as
of the day and year first above written.
GNOC, CORP.,
a New Jersey corporation
By:______________________
Name: Donna M. Graham
Title: Chief Financial
Officer, Treasurer
<PAGE>
STATE OF NEW JERSEY )
) ss.:
COUNTY OF ESSEX )
On the 2nd day of May, 1996, before me personally came Donna M.
Graham, to me known, who, being by me duly sworn, did depose and say that
she is the Chief Financial Officer and Treasurer of GNOC, Corp., the
corporation described in and which executed the foregoing instrument, that
she 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 she signed her name
thereto by like order.
______________________________
Notary Public
<PAGE>
Exhibit A-1
Land
<PAGE>
Exhibit A-2
Leasehold Estate
<PAGE>
Exhibit D
SCHEDULE I
Intercreditor Agreement
INTERCREDITOR AGREEMENT, dated as of _________, 199_, among
Amalgamated Bank of Chicago, having an office at One West Monroe Street,
Chicago, Illinois 60603 ("Trustee"), [Lender], a ________________, having
an office at __________________ and [Lender] a _______________, having an
office at _______________ (collectively, the "Lender"), GNF, Corp. ("GNF"),
a Delaware corporation, having an office at Boston and Pacific Avenues,
Atlantic City, New Jersey 08401, GNOC, Corp. ("GNOC"), a New Jersey
corporation, having an office at Boston and Pacific Avenues, Atlantic City,
New Jersey 08401 and GNAC, Corp. ("GNAC"), a New Jersey corporation, having
an office at Boston and Pacific Avenues, Atlantic City, New Jersey 08401.
GNOC and GNAC are collectively referred to as the "Mortgagor".
WITNESSETH
WHEREAS, Trustee has entered into an Indenture, dated as of March 10,
1993 (the "Indenture"), between GNF, Corp., a Delaware corporation, as
obligor ("Obligor"), GNAC, as guarantor ("Guarantor"), and Trustee, as
trustee, pursuant to which Obligor's 10-5/8% Mortgage Notes due 2003 in the
aggregate principal amount of $275,000,000 (the "Notes"), were issued,
which Notes are secured by, among other things, a Mortgage and Security
Agreement with Assignment of Rents, dated as of March 10, 1993 (the
"Mortgage"), given by Mortgagor, as mortgagors, to Trustee, as mortgagee,
covering certain real property, known commonly on the date of the Indenture
as the Bally Grand Hotel and Casino, as well as all furniture, furnishings,
fixtures, machinery, equipment, supplies and certain other tangible
personal property contained thereon as more particularly described in the
Mortgage (the property encumbered by the Mortgage, the Assignment of Leases
and Rents (as hereinafter defined) (herein the "Secured Property"); and
WHEREAS, pursuant to the terms of the Indenture, GNOC is permitted to
enter into a loan agreement (the "Additional Loan Agreement"), providing
for the making of a loan to GNOC (the "Additional Loan") for the purpose
and on the terms of Section 1010 of the Indenture, which Additional Loan
will be evidenced by GNOC's promissory note (the "Additional Note") payable
to Lender and secured by a Mortgage and Security Agreement with Assignment
of Rents covering the Secured Property (the "Additional Mortgage"); and
WHEREAS, in accordance with the provisions of the Indenture, upon
request by GNAC, Trustee is required to enter into this Intercreditor
Agreement with Lender in order to set forth the understanding between
Trustee and Lender, among other things, with respect to (i) their rights
and priorities regarding the Secured Property; and (ii) the order of
priority that shall govern the allocation and application of proceeds from
the Secured Property for the redemption or repayment of the Notes and the
Additional Notes.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto agree as
follows:
1. Lender: (a) acknowledges receipt of the Indenture; and (b) agrees
that Trustee shall have and may exercise, with or without the knowledge or
consent of Lender, except as otherwise provided herein, such rights and
perform such duties as are provided for in the Indenture, the Notes, the
Mortgage, the Note Pledge Agreement, the Assignment of Leases and Rents
dated as of March 10, 1993 given by Mortgagor as assignors, to Trustee, as
assignee (the "Assignment of Leases and Rents"), and any and all other
documents executed in connection therewith (collectively, the "Loan
Documents", including, but not limited to, rights and duties affecting or
relating to the Loan Documents, the Secured Property and the indebtedness
evidenced by the Notes. Subject to the provisions of this Intercreditor
Agreement, Lender further agrees to take such action and to execute such
documents and agreements as Trustee shall reasonably request to permit
Trustee to exercise its rights and perform its duties hereunder and under
the Mortgage and the Assignment of Leases and Rents (collectively, the
"Mortgage Documents").
2. Trustee: (a) acknowledges receipt of the Additional Loan
Agreement; and (b) agrees that Lender shall have and may exercise, with or
without the knowledge or consent of Trustee, except as otherwise provided
herein, such rights and perform such duties as are provided for in the
Additional Loan Agreement, the Additional Note, the Additional Mortgage and
any and all other documents executed in connection therewith (collectively,
the "Additional Loan Documents"), including, but not limited to, rights and
duties affecting or relating to the Additional Loan Documents, the Secured
Property and the indebtedness evidenced by the Additional Note. Subject to
the provisions of this Intercreditor Agreement, Trustee further agrees to
take such action and execute such documents and agreements as Lender shall
reasonably request to permit Lender to exercise its right and perform its
duties hereunder and under the Additional Mortgage and any assignment of
leases and rents executed in connection therewith (collectively, the
"Additional Mortgage Documents").
3. With respect to the Secured Property and the lien created by the
Additional Mortgage (the "Additional Lien"), the Additional Lien shall be
and at all times remain on equal priority on a pari passu basis to the lien
created by the Mortgage Documents encumbering the Secured Property (the
"Mortgage Lien"), notwithstanding the order of execution, creation, filing
or recording of the Mortgage Documents and the Additional Mortgage
Documents (collectively, the "Security Documents"), the Additional Lien or
the Mortgage Lien or any Uniform Commercial Code financing statements or
other instruments or notices related thereto or the timing of any other
method of perfection of such lien. The Mortgage Lien and the Additional
Lien, as between Trustee and Lender, shall be of equal priority for
purposes of securing payment and performance of the obligations arising
under, or in connection with, the Mortgage Documents and the Additional
Mortgage Documents, notwithstanding the order of execution, creation,
filing or recording of the Security Documents, the Additional Lien, the
Mortgage Lien or any financing statements or other instruments or notices
related thereto or the timing of any other method of perfection of such
lien, which payment and performance shall be made in accordance with the
provisions hereunder, including, but not limited to, Paragraphs 13 and 14.
4. Except as otherwise provided herein, Trustee may amend or waive
any provision of the Loan Documents and Trustee may take such other action
as is authorized by the Loan Documents, so long as such action does not in
any way adversely affect the status of the Additional Lien or the rights of
Lender in connection with the Additional Loan Documents. Trustee shall
provide Lender with written notice of any such permitted written amendment
or waiver within twenty (20) business days after it becomes effective.
5. Except as otherwise provided herein, Lender may amend or waive any
provision of the Additional Loan Documents and Lender may take such other
action as is authorized by the Additional Loan Documents, so long as such
action does not in any way adversely affect the status of the Mortgage Lien
or the rights of Trustee in connection with the Loan Documents. Lender
shall provide Trustee with written notice of any such permitted written
amendment or waiver within twenty (20) business days after it becomes
effective.
6. Until such time as no Notes remain outstanding and all amounts due
thereunder and under the Indenture have been paid in full, Lender shall
promptly notify Trustee if an event of default or termination shall have
occurred and been declared by Lender in writing under the Additional Loan
Documents (whether as a result of Mortgagor's failure to make the required
payments of principal and interest thereunder or otherwise as a result of
any other action or inaction on the part of Mortgagor or any other party).
Trustee shall notify Lender promptly, but in any event within ten (10)
business days after its receipt of such notice and as promptly as
practicable in the event of an emergency, whether Trustee intends to (a)
declare an event of default under the Loan Documents and (b) exercise the
rights to enforce the Mortgage Documents and the Additional Mortgage
Documents. In the event Trustee elects to declare said event of default
and exercise the rights to enforce the Mortgage Documents and the
Additional Mortgage Documents as provided in Paragraphs 7 and 8 and so
notifies Lender of such election within such ten (10) business day period,
Lender agrees not to (a) enforce or exercise, by legal proceedings or
otherwise, without the written consent of Trustee, any right against
Mortgagor or its subsidiaries under the Additional Mortgage Documents.
Notwithstanding anything in this agreement to the contrary, in the event
the Trustee elects not to (i) declare said event of default and (ii)
exercise its rights hereunder to enforce the Mortgage Documents and the
Additional Mortgage Documents and so notifies Lender, or if Trustee fails
to notify Lender of its election within such ten (10) business day period,
Lender shall have the right to enforce any and all rights against Mortgagor
or its subsidiaries or any other party under the Additional Mortgage
Documents, provided that the enforcement of such rights and any action
taken in connection therewith does not adversely impair the validity,
priority or enforceability of the Mortgage Lien. The Lender expressly
retains the right to enforce its rights under the Additional Loan Documents
other than the Additional Mortgage Documents at any time pursuant to the
terms thereof. Furthermore, the Lender expressly retains the right to
enforce its rights under the Additional Mortgage Documents prior to an
election by the Trustee as provided in this Paragraph 6, provided that the
enforcement of such rights and any action taken in connection therewith
does not adversely impair the validity, priority or enforceability of the
Mortgage Lien. Notwithstanding anything to the contrary herein, the
Trustee may enforce the Mortgage Documents and enforce its rights and the
rights of the Mortgage Note Holders thereunder at any time pursuant to the
terms thereof.
7. (a) Upon the occurrence and during the continuance of an event of
default under the Loan Documents and under the Additional Loan Documents,
Lender hereby irrevocably appoints and authorizes Trustee to act as its
agent under the Additional Mortgage Documents with such powers as are
expressly delegated to Trustee by the terms of this Intercreditor
Agreement, together with such other powers as are reasonably incidental
thereto.
(b) In the event that, pursuant to Paragraph 6 hereof, Trustee
elects to exercise its rights hereunder to enforce the Mortgage Documents
and the Additional Mortgage Documents and so notifies Lender within the
required ten (10) business day period, Trustee shall have full and
exclusive control and authority, as trustee under the Indenture on behalf
of the holders of the Notes (the "Mortgage Note Holders") and as agent for
the Lender, over all Secured Property as and to the extent provided herein
and in the Security Documents. The control and authority shall include,
but shall not be limited to, the full and exclusive power and authority to:
(i) at any time after the occurrence and declaration of a default under the
Loan Documents, direct Lender to declare a default under the Additional
Loan Agreement, or declare a default under the Additional Loan Agreement as
agent for and on behalf of Lender, and exercise any and all rights, powers
and remedies under the Additional Mortgage Documents thereunder as agent
for and on behalf of Lender; (ii) declare an "event of default" under the
Indenture and exercise any and all rights, powers and remedies thereunder;
(iii) from time to time under the Indenture or the Additional Loan
Documents, acquire, foreclose, realize upon or otherwise take action with
respect to the Secured Property or proceeds thereof, possess and manage the
Secured Property or proceeds thereof as so acquired and, if Trustee
determines that disposition of the Secured Property or proceeds thereof as
so acquired is in the best interests of the Mortgage Note Holders, dispose
of the Secured Property; (iv) release, substitute or add Secured Property
from or to the Security Documents, provided that any such release,
substitution or addition shall be applicable equally to the Mortgage
Documents and the Additional Mortgage Documents in accordance with the
terms hereof; and (v) amend or subordinate the Security Documents in
connection with the exercise of rights as provided in Paragraphs 7(b)(i)
through 7(b)(iv), provided that the Mortgage Documents and the Additional
Mortgage Documents shall be treated equally with respect to such amendment.
8. Notwithstanding anything to the contrary contained herein, if an
event of default has occurred and been declared under the Loan Documents,
Trustee shall have full and exclusive control and authority, as trustee
under the Indenture on behalf of the Mortgage Note Holders and as agent for
the Lender, over all Secured Property as and to the extent provided herein
and in the Security Documents. The control and authority shall include,
but shall not be limited to, the full and exclusive power and authority to:
(i) direct Lender to declare and default under the Additional Loan
Agreement, or declare a default under the Additional Loan Agreement as
agent for and on behalf of Lender, and exercise any and all rights, powers
and remedies under the Additional Mortgage Documents thereunder as agent
for and on behalf of Lender; (ii) declare an "event of default" under the
Indenture and exercise any and all rights, powers and remedies thereunder;
(iii) from time to time under the Indenture or the Additional Loan
Documents, acquire, foreclose, realize upon or otherwise take action with
respect to the Secured Property or proceeds thereof, possess and manage the
Secured Property or proceeds thereof as so acquired and, if Trustee
determines that disposition of the Secured Property or proceeds thereof as
so acquired is in the best interests of the Mortgage Note Holders, dispose
of the Secured Property; (iv) release, substitute or add Secured Property
from or to the Security Documents, provided that any such release,
substitution or addition shall be applicable equally to the Mortgage
Documents and the Additional Mortgage Documents in accordance with the
terms hereof; and (v) amend or subordinate the Security Documents in
connection with the exercise of rights as provided in Paragraphs 8(b)(i)
through 8(b)(iv), provided that the Mortgage Documents and the Additional
Mortgage Documents shall be treated equally with respect to such amendment.
9. To further evidence the agreements referred to herein, Lender
agrees that, within ten (10) business days after request by Trustee, it
will do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances and instruments as Trustee may reasonably request for
the better assuring and evidencing of the foregoing agreements. In the
event Lender fails to act upon such request by Trustee within ten (10)
business days, Lender shall be deemed to have appointed Trustee, its
successors and assigns, as its true and lawful attorney-in-fact,
irrevocably, with power of substitution to do any or all of the foregoing
in the name, place and stead of Lender. This power of attorney, being
coupled with an interest, is irrevocable as long as this Intercreditor
Agreement shall remain in effect.
10. In exercising the control and authority as provided in Paragraphs
7 and 8:
(a) Trustee may exercise its own reasonable discretion and
judgment so long as any Notes remain outstanding or any amounts due
thereunder or under the Indenture have not been paid in full.
(b) Trustee agrees that it shall take enforcement action under
the Additional Mortgage Documents in the manner set forth in this Paragraph
10 to recover the balance due under the Additional Loan if:
(i) a default or termination shall have occurred under
the Additional Loan Documents (whether as a result of Mortgagor's failure
to make the required payments of principal and interest thereunder or
otherwise as a result of any other action or inaction on the part of
Mortgagor or any other party), and, as a result thereof, payment of all or
substantially all of the amounts outstanding thereunder has become due and
payable; and
(ii) Lender shall have given Trustee written notice of the
foregoing and a direction to enforce the Additional Mortgage Documents; and
(iii) Trustee notifies Lender, within ten (10) business
days of its receipt of the notice and direction to enforce described in
Paragraph 10(b)(ii) hereof, that it elects to exercise its right hereunder
to enforce the Mortgage Documents and the Additional Mortgage Documents.
(c) Trustee agrees that, in the event Trustee elects to enforce
the Mortgage Documents and the Additional Mortgage Documents as provided
herein, Trustee shall prosecute any foreclosure proceedings or any other
action instituted in connection therewith diligently and in good faith.
(d) In the event foreclosure proceedings are instituted by
Trustee in accordance with this Paragraph 10, Trustee shall have the full
and complete right, power and authority, but not the obligation, at all
times in connection with such foreclosure or other enforcement sale to do
any one or more of the following: (i) to bid on the Secured Property at
such sale an amount equal to the sum of the aggregate principal amount of
the Notes then outstanding and the then outstanding principal balance of
the Additional Loan, plus interest, unpaid fees (including, without
limitation, those of the Trustee), costs and attorneys' fees and other sums
secured by the Mortgage and the Additional Mortgage; (ii) to acquire title
in the foreclosure proceedings for the benefit of the Mortgage Note Holders
and/or Lender, but subject to the priorities set forth herein; (iii) to
manage, or to hire agents to manage, the foreclosed Secured Property and
sell or rent the same, upon such terms and conditions as Trustee shall in
good faith determine for the account of the Mortgage Note Holders and/or
Lenders, but subject to the priorities set forth herein; (iv) to sell the
foreclosed Secured Property upon such terms and conditions as Trustee shall
in good faith determine; and (v) to receive as part payment therefor a
purchase money mortgage, any such purchase money mortgage to be held by
Trustee for the benefit of the Mortgage Note Holders and/or Lender, but
subject to the priorities set forth herein. Trustee shall have, and may,
but is not obligated to, exercise, all of the rights, powers, options,
privileges and remedies provided to Trustee in this Paragraph 10 to the
exclusion of Lender, and Lender shall not have, and may not exercise, any
of such rights, powers, options, privileges and remedies, so long as
Trustee shall be diligently and in good faith exercising the same. Trustee
shall have no obligation to exercise any right or remedy under the
Indenture or the Notes in order to remedy any default in the payment of
interest or principal owing under the Additional Note.
11. In the event that Trustee elects to exercise its rights hereunder
to enforce the Mortgage Documents and the Additional Mortgage Documents in
accordance with Paragraph 6 hereof and is diligently and in good faith
exercising the same, the rights granted to Trustee in Paragraphs 7, 8, and
10 shall be exclusive and irrevocable and shall continue after: (a) an
event of default under any of the Security Documents or a default under any
present or future indebtedness of Mortgagor, GNF and/or any Subsidiary (as
defined in the Indenture) of Mortgagor to Trustee and/or Lender; and (b)
the filing or institution by or against Mortgagor, GNF and/or any
subsidiary of Mortgagor of any proceeding or proceedings under any chapter
or provision of Title 11 of the United States Code or of any proceeding or
proceedings for a reorganization, liquidation, composition, receivership or
similar relief under any other federal or state law. Trustee and Lender
shall cooperate from time to time in the exercise of such rights and
remedies, including, without limitation, the delivery and/or assignment to
Trustee of any of the Security Documents and any other instruments relating
to the indebtedness evidenced by the Notes or the Additional Note to the
extent that such delivery or assignment may be required by law in the
exercise of such rights and remedies.
12. (a) Trustee and its officers, directors, employees and agents
shall not be liable or responsible, directly or indirectly, to Lender for
any action taken or omitted to be taken, whether hereunder, under the
Security Documents or otherwise, nor shall it be liable or responsible for
any loss or expense suffered by any action or inaction, provided such loss
or expense was not caused by its gross negligence or wilful misconduct.
Lender and its officers, directors, employees and agents shall not be
liable or responsible, directly or indirectly, to Trustee for any action
taken or omitted to be taken, whether hereunder, under the Security
Documents or otherwise, nor shall it be liable or responsible for any loss
or expense suffered by any action or inaction, provided such loss or
expense was not caused by its gross negligence or wilful misconduct.
(b) Neither Lender nor Trustee shall, by any action or inaction,
be deemed to make any representation or warranty regarding the accuracy,
legality, validity, legal effect or sufficiency of (i) any act of Mortgagor
or any subsidiary of Mortgagor or any report, budget or financial
information submitted to Trustee or Lender in connection with or under any
of the provisions of this Intercreditor Agreement, the Indenture, the
Additional Loan Agreement or otherwise; or (ii) the Security Documents
and other agreements or documents creating or relating to the Mortgage
Lien, the indebtedness evidenced by the Notes, the Additional Lien and the
Additional Note, including any amendments thereto or any instrument or
document delivered pursuant hereto or thereto, or the validity, legality,
sufficiency, perfection, enforceability or collectibility thereof.
(c) Except as otherwise provided herein with respect to gross
negligence or wilful misconduct, Trustee and its officers, directors,
employees and agents shall have no liability or responsibility in
connection with the collection or payment of any sums owed to Lender by
Mortgagor or any subsidiary of Mortgagor, except as set forth in this
Intercreditor Agreement and the Security Documents. Trustee shall apply
any funds received by it as promptly as practicable but in all events
within three (3) business days of the date upon which such funds are
immediately available at Trustee's office, and any monies received by
Trustee need not be segregated from other funds except to the extent
required by law. Trustee shall be liable for interest on any funds
received by it and not applied as provided herein or as instructed by
Mortgagor, which interest shall be payable at the Federal funds rate
published in the "Money Rates Section" of The Wall Street Journal. Trustee
shall have no duty or obligation to perform any act hereunder or under the
Security Documents or any other instrument or document or to defend or
prosecute any action or proceeding unless it has been supplied with
adequate funds with which to take such action by Mortgagor or, with respect
to the Secured Property, by Lender in an amount equal to its Pro Rata Share
(as hereinafter defined) of such funds.
(d) Lender hereby indemnifies and agrees to hold harmless
Trustee and its respective officers, directors, employees and agents from
any claims, demands, actions, liabilities, causes of action, losses, costs
and expenses (including attorneys' fees) arising out of any action or
inaction by Lender in connection with this Intercreditor Agreement, the
Security Documents and the Additional Loan, or otherwise, except that this
indemnity shall not apply to claims, demands, action, liabilities, causes
of action, losses, costs and expenses of Trustee or its respective
officers, directors, employees and agents caused by the gross negligence or
wilful misconduct of Trustee. Lender and its officers, directors,
employees and agents shall not be liable or responsible for acting or
failing to act upon any advice, notice, request, demand, consent or writing
believed by such parties to be genuine, or in acting in reliance thereon or
upon the advice of its counsel. Lender hereby agrees to advance to
Trustee, upon demand, its pro rata share, as determined by a fraction, the
numerator of which is equal to the then outstanding amount due under the
Additional Loan and the denominator of which is equal to the aggregate
principal amount of the sum of the Notes and the Additional Note ("Pro Rata
Share"), of any sums paid or to be paid by Trustee, which sums shall be
reduced proportionately by any amounts received by Trustee from Mortgagor
in connection therewith pursuant to the Security Documents, in order to
preserve, protect or maintain the Security Property or to enforce the
Security Documents; provided, however, that Lender shall advance to
Trustee, upon demand, the full amount of any sums paid or to be paid by
Trustee at Lender's request or solely on Lender's behalf, which sums shall
be reduced proportionately by any amounts received by Trustee from
Mortgagor in connection therewith pursuant to the Security Documents, in
order to preserve, protect or maintain the Secured Property or to enforce
the Security Documents.
(e) Except as otherwise provided herein, no delay on the part of
Trustee or Lender in the exercise of any right or remedy shall operate as a
waiver thereof, and no single or partial exercise by Trustee or Lender of
any right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy, nor shall any modification, waiver
or discharge of any of the provisions of this Intercreditor Agreement be
binding upon Trustee, Lender or Mortgagor, except as expressly set forth in
writing, duly signed and delivered on behalf of Trustee, Lender or
Mortgagor, as the case may be.
13. Trustee and Lender hereby agree that any cash or other payment or
distribution that becomes available from the sources described in Paragraph
14 for the redemption or repayment of the Notes and the Additional Note
shall be applied in the following order of priority:
(a) First, to the payment in full of all unreimbursed reasonable
out-of-pocket costs, expenses and liabilities incurred by Trustee in the
performance of its duties hereunder and under the Security Documents with
respect to the Secured Property, provided that this payment shall not
include any recovery by Trustee as owner or pledgee of any of the Notes;
(b) Second, to the reimbursement of Trustee and Lender of all
amounts advanced to preserve, maintain and protect the Secured Property
and/or to enforce the Security Documents with respect to the Secured
Property;
(c) Third, to the payment in full of all unreimbursed reasonable
out-of-pocket costs, expenses and liabilities incurred by Lender in the
performance of its duties hereunder and under the Security Documents with
respect to the Secured Property;
(d) Fourth, to the payment of the aggregate principal amount of
the Notes then outstanding, plus accrued interest, and the aggregate
principal amount under the Additional Loan then outstanding, plus accrued
interest, on a pro rata basis based on such amounts;
(e) Fifth, the remainder shall be paid to Mortgagor or its
successors or assigns or to whomsoever may be lawfully entitled to receive
the same or as a court of competent jurisdiction may direct.
14. The payment priorities set forth in Paragraph 12 shall apply to
all cash or other payment or distribution that becomes available from (i)
the enforcement by the Trustee of the Security Documents, (ii) the sale or
other diposition of the Secured Property or proceeds thereof, including but
not limited to, any sale or disposition by the Trustee following
enforcement of the Security Documents, and (iii) the distribution of title
insurance proceeds, proceeds of other insurance (including casualty
insurance) and condemnation awards, made in connection with the Secured
Property.
15. Subject to the provisions of Paragraph 16, the priorities
established by Paragraph 13 shall be continuing priorities and shall apply
both before and after a default under the Indenture, the Additional Loan
and the Security Documents relative thereto, and before and after the
institution by or against Mortgagor or any subsidiary thereof of any
proceeding or proceedings under any chapter or provision of Title 11 of the
United States Code or any proceeding or proceedings for a reorganization,
liquidation, composition, receivership or similar relief under any other
federal or state law.
16. (a) Notwithstanding anything to the contrary contained in this
Intercreditor Agreement, if Lender shall voluntarily (except for the
pursuit of foreclosure proceedings permitted hereunder) take any action, or
cause any action to be taken, that results in the Additional Lien or any
Additional Mortgage Documents becoming ineffective or unenforceable as to
the Secured Property, Lender shall not share in the proceeds received from
the sale or disposition of the Secured Property until no Notes remain
outstanding and all amounts due thereunder and under the Indenture have
been paid in full, and all such proceeds shall be disbursed exclusively to
Trustee for redemption or repayment of the Notes other than amounts due in
connection therewith.
(b) In the event that any of the Notes are determined to be
invalid or unenforceable, in whole or in part, or the Mortgage Lien is
determined to be unenforceable or subordinate to the Additional Lien as a
result of any action taken by Lender, Lender agrees that, solely as between
Trustee and Lender, any and all such Notes and the Mortgage Lien shall be
deemed valid and enforceable, and the obligations of the parties hereunder
with respect thereto shall not be affected by any such determination but
shall continue in full force and effect.
(c) In the event that any mechanic's or materialman's lien shall
be placed upon the Secured Property which mechanic's or materialman's lien
takes priority over the Additional Lien or any part thereof, any and all
proceeds from the sale or other disposition of the Secured Property
otherwise payable to Lender shall first be applied toward the payment and
removal of such mechanic's or materialman's liens and shall be held by
Trustee during the pendency of any dispute contesting the validity or
enforceability of such mechanic's or materialman's liens.
17. Lender hereby waives: (a) as to the Trustee, notice of the
payments due under the Indenture or any non-payment thereof; and (b) except
as otherwise provided herein, all diligence in collection or protection of
or realization upon the payments due under the Indenture or the Notes or
any security therefor.
18. This Intercreditor Agreement shall be governed by and construed
and interpreted in accordance with the laws of the State of New York;
provided, however, that the provisions hereof which relate to realizing
upon the Secured Property shall be governed by the laws of the State of New
Jersey.
19. Whenever possible, each provision of this Intercreditor Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision herein shall be held to be prohibited
or invalid, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Intercreditor Agreement;
provided, however, that if any of the material provisions herein relating
to exculpations applicable to Trustee, including, but not limited to, the
provisions of Paragraph 11, shall be held to be prohibited or invalid, this
entire Intercreditor Agreement shall be of no further force and effect.
20. Trustee and Lender shall not challenge the legality, validity,
enforceability or perfection of any of the Security Documents.
21. This Intercreditor Agreement shall be binding upon and inure to
the benefit of the respective parties, their successors and assigns. Any
successor trustee under the Indenture shall be entitled to the benefits of
this Intercreditor Agreement to the same extent as if such successor
trustee were specifically named as Trustee in this Intercreditor Agreement,
and such successor trustee shall be deemed to have agreed to assume and be
bound by the terms of this Intercreditor Agreement with respect to the
Secured Property and any rights or interests relative thereto.
22. Notice, demand or request arising under this Intercreditor
Agreement or required by the provisions hereof shall be in writing and may
be served in person with receipt acknowledged or by mail by depositing the
same in any post office or letter box, postage prepaid, by registered or
certified mail, addressed to the parties at their addresses set forth
above. Such addresses may be changed by notice to the other parties given
in the same manner. Personally delivered notices shall be deemed received
when delivered if such delivery is acknowledged by receipt in writing.
Mailed notices shall be deemed received 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.
23. Nothing contained herein shall constitute a waiver, change,
modification or amendment in favor of Mortgagor or any subsidiary of any
term, provision, covenant or condition in the Security Documents or any
other contract, agreement or document. No rights, powers or remedies are
vested in any party other than Trustee, Lender and their respective
successors and assigns, including, by way of illustration and not
limitation, any rights as a third party beneficiary of this Intercreditor
Agreement.
24. This Intercreditor Agreement may be modified, altered, varied or
amended, and the authority of Trustee to act as such under this
Intercreditor Agreement may be terminated, only by written agreement
executed by the parties hereto.
25. This Intercreditor Agreement and any amendments, waivers or
supplements may be executed in any number of counterparts, each of which
shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument. This Intercreditor Agreement
shall become effective when the Additional Loan Agreement becomes effective
pursuant thereto.
26. Notwithstanding anything to the contrary contained herein, in the
event of a filing or institution by or against Mortgagor and/or any
subsidiary of Mortgagor of any proceeding or proceedings, under any chapter
or provision of Title 11 of the United States Code or of any proceeding or
proceedings for a reorganization, liquidation, composition, receivership or
similar relief under any other federal or state law, which proceeding or
proceedings result in the allowance by the bankruptcy trustee of the
enforcement of the Additional Lien or the Mortgage Lien, but not both, the
party that shall be prohibited from enforcing its lien shall have no right
to share in any proceeds collected by the party permitted to enforce its
lien in accordance with the bankruptcy proceedings.
27. Trustee, Lender, Mortgagor and GNF hereby agree that, in the
event that Mortgagor enters into more than one Additional Loan Agreement
pursuant to Section 1010 of the Indenture, Trustee, Lender (at any time
when indebtedness in respect of the Additional Loan remains outstanding or
the Lender remains obligated to make advances in respect of the Additional
Loan), Mortgagor, GNF and any such additional lender ("Additional Lender")
shall enter into an Amended and Restated Intercreditor Agreement which
shall (a) place such Additional Lender in the same position as Lender with
regard to (i) Trustee's, Lender's, and Additional Lender's rights and
priorities regarding the Secured Property and (ii) the order of priority
that shall govern the allocation and application of proceeds from the
Secured Property for the redemption or repayment of the Notes and the
Additional Loan, and any loan with any Additional Lender, and (b) otherwise
be substantially in the form of this Agreement with such changes thereto as
GNF many reasonably request, that would not affect the Trustee's, Lender's
or Additional Lender's pari passu priority with respect to the Secured
Property or otherwise impair such rights hereunder of the Trustee and the
Lender that are necessary for the practical realization of the substantive
benefits afforded them hereunder.
28. Each provision of this Intercreditor Agreement is subject to the
provisions of the New Jersey Casino Control Act and regulations promulgated
thereunder.
29. Before the Trustee acts or refrains from acting hereunder, it may
require at its own expense an opinion of counsel, and the Trustee shall not
be liable and shall be fully protected for any action it takes or omits to
take in reliance on such opinion.
30. Lender and Trustee agree that for so long as the Mortgage shall
be in full force and effect and subsequent to the Trustee's election to
proceed under Paragraph 6, in the event of any conflict between the
provisions of the Additional Mortgage Documents and the provisions of the
Mortgage Documents that are irreconcilable by their terms, unless waived in
writing by Trustee, the provisions of the Mortgage Documents shall govern
and Mortgagor shall be required to only perform the duties and obligations
of the Mortgage Documents. Mortgagor's full and satisfactory performance
of obligations under the Mortgage Documents shall relieve them of their
contradictory obligations under the Additional Mortgage Documents and shall
prevent Lender from asserting an event of default against Mortgagor arising
from such nonperformance under the Additional Mortgage Documents.<PAGE>
IN WITNESS WHEREOF, the parties have caused this Intercreditor
Agreement to be executed as of the date first set forth above.
AMALGAMATED BANK OF CHICAGO,
as Trustee
By:_________________________
Name:
Title:
[LENDER]
By:_________________________
Name:
Title:
[LENDER]
By:_________________________
Name:
Title:
GNF, CORP.
By:_________________________
Name:
Title:
GNOC, CORP.
By:_________________________
Name:
Title:
GNAC, CORP.
By:_________________________
Name:
Title:
<PAGE>
MODIFICATION TO INTERCREDITOR AGREEMENT
MODIFICATION TO INTERCREDITOR AGREEMENT (this "Modification"), dated
as of May 2, 1996, among First Union National Bank (formerly known as
Fidelity Bank, National Association) ("First Union"), Midlantic Bank,
National Association (formerly known as Midlantic National Bank)
("Midlantic" and together with First Union, the "Lender"), GNOC, Corp.
(successor by merger to GNAC, Corp.), a New Jersey corporation ("GNOC"),
and Amalgamated Bank of Chicago as Trustee ("Trustee") on behalf of itself
and the holders of the 10-5/8% Mortgage Notes due 2003 (the "Securities")
issued pursuant to a registration statement filed with the Securities and
Exchange Commission and under the Indenture dated as of March 10, 1993 (as
amended, modified or supplemented through the date hereof and as the same
may be amended, modified or supplemented from time to time, the
"Indenture"). Capitalized terms used herein and not otherwise defined
herein shall have the meaning ascribed thereto in the Indenture.
W I T N E S S E T H
WHEREAS, Trustee has entered into the Indenture, pursuant to which the
Securities were issued; and
WHEREAS, the Securities are secured by a Mortgage and Security
Agreement with Assignment of Rents, dated as of March 10, 1993 (as amended,
modified or supplemented through the date hereof and as the same may
hereafter be amended, modified or supplemented from time to time, the
"Trustee Mortgage") given by GNOC, as mortgagor, to Trustee, as mortgagee,
covering certain real property, as well as all furniture, furnishings,
fixtures, machinery, equipment, supplies and certain other tangible
personal property contained thereon as more particularly described in the
Trustee Mortgage (the "Secured Property") and an Assignment of Leases and
Rents, dated as of March 10, 1993 (as amended, modified or supplemented
through the date hereof and as the same may hereafter be amended, modified
or supplemented from time to time, the "Trustee Assignment") given by GNOC,
as assignor, to Trustee, as assignee; and
WHEREAS, as contemplated under the terms of the Indenture, First
Union, Midlantic, GNOC and Trustee are party to an Intercreditor Agreement
dated as of April 16, 1993 (the "Intercreditor Agreement"); and
WHEREAS, as contemplated under the terms of the Indenture, First
Union, Midlantic and GNOC entered into a loan agreement dated April 16,
1993 (as amended, modified or supplemented through the date hereof, the
"Original Loan Agreement") the obligations under which were secured by a
Mortgage, Security Agreement and Assignment of Rents, dated as of March 10,
1993 (as amended, modified or supplemented through the date hereof and as
the same may hereafter be amended, modified or supplemented from time to
time, the "Lender Mortgage") given by GNOC, as mortgagor, to Lender, as
mortgagee, covering the Secured Property and an Assignment of Leases and
Rents, dated as of March 10, 1993 (as amended, modified or supplemented
through the date hereof and as the same may hereafter be amended, modified
or supplemented from time to time, the "Lender Assignment") given by GNOC,
as assignor, to Lender, as assignee; and
WHEREAS, Lender and GNOC have entered into a Second Amended and
Restated Loan Agreement dated as of May 2, 1996 (the "New Loan Agreement"),
superseding the Original Loan Agreement and providing for the making of
loans to GNOC in the aggregate amount of up to $20,000,000 (the "New Loan")
for the purpose and on the terms of Section 1010 of the Indenture
(including, without limitation, the execution hereof), which New Loan will
be evidenced by GNOC's promissory notes (the "New Note") payable to Lender
and will be secured by (i) the Lender Mortgage, (ii) the Lender Assignment,
(iii) a Mortgage, Security Agreement and Assignment of Rents, dated as of
May 2, 1996 (as the same may hereafter be amended, modified or supplemented
from time to time, the "Lender Supplemental Mortgage") given by GNOC, as
mortgagor, to Lender, as mortgagee, covering the property described therein
(the "New Secured Property") and (iv) an Assignment of Leases and Rents,
dated as of May 2, 1996 (as the same may hereafter be amended, modified or
supplemented from time to time, the "Lender Supplemental Assignment") given
by GNOC, as assignor, to Lender, as assignee; and
WHEREAS, pursuant to the Indenture Trustee shall likewise receive a
Mortgage, Security Agreement and Assignment of Rents, dated as of May 2,
1996 (as the same may hereafter be amended, modified or supplemented from
time to time, the "Trustee Supplemental Mortgage") given by GNOC, as
mortgagor, to Trustee, as mortgagee, covering the New Secured Property and
an Assignment of Leases and Rents, dated as of May 2, 1996 (as the same may
hereafter be amended, modified or supplemented from time to time, the
"Trustee Supplemental Assignment") given by GNOC, as assignor, to Trustee,
as assignee; and
WHEREAS, the Trustee and the Lender enter into this modification to
the Intercreditor Agreement in order to set forth the understanding between
Trustee and Lender, among other things, with respect to (i) their rights
and priorities regarding the Secured Property and the New Secured Property;
and (ii) the order of priority that shall govern the allocation and
application of proceeds from the Secured Property and the New Secured
Property for the redemption of repayment of the Securities and the New
Note.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreement contained herein, the parties hereto agree as
follows:
i. The foregoing recitals are incorporated into this
Modification by reference.
ii. The Intercreditor Agreement is hereby modified as
follows:
a. All references in the Intercreditor Agreement to "Lender"
shall be deemed to refer to First Union and Midlantic.
b. All references in the Intercreditor Agreement to
"Mortgagor" shall be deemed to refer to GNOC.
c. All references in the Intercreditor Agreement to the
"Mortgage" shall be deemed to refer to the "Trustee Mortgage" and the
"Trustee Supplemental Mortgage" as defined in the recitals to this
Modification.
d. All references in the Intercreditor Agreement to the
"Assignment of Leases and Rents" shall be deemed to refer to the "Trustee
Assignment" and the "Trustee Supplemental Assignment" as defined in the
recitals to this Modification.
e. All references in the Intercreditor Agreement to the
"Additional Loan Agreement" shall be deemed to refer to the
"New Loan Agreement" as defined in the recitals to this Modification.
f. All references in the Intercreditor Agreement to the
"Additional Loan" shall be deemed to refer to the
"New Loan" as defined in the recitals to this Modification.
g. All references in the Intercreditor Agreement to the
"Additional Note" shall be deemed to refer to the
"New Note" as defined in the recitals to this Modification.
h. All references in the Intercreditor Agreement to the
"Additional Mortgage" shall be deemed to refer to the
"Lender Mortgage" and the "Lender Supplemental Mortgage" as defined in the
recitals to this Modification.
i. All references in the Intercreditor Agreement to the "Loan
Documents" and the "Mortgage Documents" shall be deemed to include the
"Trustee Supplemental Mortgage" and the "Trustee Supplemental Assignment"
as defined in the recitals to this Modification.
j. All references in the Intercreditor Agreement to the
"Additional Loan Documents" and the "Additional Mortgage Documents" shall
be deemed to include the "Lender Mortgage", the "Lender Assignment", the
"Lender Supplemental Mortgage" and the "Lender Supplemental Assignment" as
defined in the recitals to this Modification.
iii. Except as modified herein, all of the terms,
provisions and covenants of the Intercreditor Agreement
are in all other respects hereby ratified and confirmed
and shall remain in full force and effect.
iv. This Modification is to be construed according to
the laws of the State of New Jersey.
v. This Modification shall be binding upon the parties
hereto and their respective successors and assigns.
vi. This Modification 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 Modification by signing
any such counterpart.
IN WITNESS WHEREOF, the parties have caused this Modification to be
executed as of the date first set forth above.
FIRST UNION NATIONAL BANK
By:____________________________
Alan Lilienthal
Vice President
MIDLANTIC BANK, NATIONAL ASSOCIATION
By:_____________________________
Peter J. Cahill
Senior Vice President
AMALGAMATED BANK OF CHICAGO,
Trustee
By:___________________________
Name:
Title:
<PAGE>
STATE OF NEW JERSEY )
) SS:
COUNTY OF ESSEX )
On the 2nd day of May, 1996, before me personally came Alan
Lilienthal, to me known, who, being by me duly sworn, did depose and say
that he is a Vice President of First Union National Bank, the national
banking association 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.
__________________________
STATE OF NEW JERSEY )
) SS:
COUNTY OF ESSEX )
On the 2nd day of May, 1996, before me personally came Peter J.
Cahill, to me known, who, being by me duly sworn, did depose and say that
he is a Senior Vice President of Midlantic Bank, National Association, the
national banking association 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.
___________________________
STATE OF ILLINOIS )
) SS:
COUNTY OF COOK )
On the 1st day of May, 1996, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and
say that (s)he is a _____________________________ of Amalgamated Bank of
Chicago, the national banking association described in and which executed
the foregoing instrument; that she 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
she signed her name thereto by like order.
___________________________
<PAGE>
REVOLVING CREDIT NOTE
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF
ANY INTEREST IN THIS NOTE OR OF ANY PARTICIPATION IN THE LOANS THIS NOTE
EVIDENCES IS CONDITIONAL AND SHALL BE INEFFECTIVE IF THE NEW JERSEY CASINO
CONTROL COMMISSION DISAPPROVES.
$11,333,340.00 As of May 2, 1996
GNOC, Corp., a corporation organized under the laws of the State of
New Jersey (the "Borrower"), for value received, hereby promises to pay
to the order of First Union National Bank (the "Bank") on June 30, 1998,
in lawful money of the United States of America and in immediately
available funds, the principal sum of ELEVEN MILLION THREE HUNDRED THIRTY
THREE THOUSAND THREE HUNDRED FORTY DOLLARS or such lesser unpaid
principal amount as shall be outstanding hereunder, together with
interest from the date hereof on the unpaid principal balance of this
Revolving Credit Note, payable on the dates and at the rate provided for
in the Second Amended and Restated Loan Agreement dated as of May 2, 1996
by and among the undersigned, First Union National Bank and Midlantic
Bank, National Association (the "Agreement"). In no event shall the
interest rate payable hereon exceed the maximum rate of interest
permitted by law. Capitalized terms used herein which are defined in the
Agreement shall have the meanings therein defined.
The holder of this Revolving Credit Note is authorized to record in
its books and records (whether electronically or manually maintained),
pursuant to Section 2.03 of the Agreement, the date and principal amount
of each Revolving Credit Loan made by the Bank, the date and amount of
each payment or prepayment of principal thereof and the interest rate
with respect thereto. Such recordation shall constitute prima facie
evidence of the accuracy of the information endorsed, provided that the
failure of the Bank to make such recordation shall not affect the
obligations of the Borrower hereunder or under the Agreement. The
aggregate unpaid principal amount of all Revolving Credit Loans set forth
in such schedule shall be presumptive evidence of the principal amount
owing and unpaid on this Revolving Credit Note.
This Revolving Credit Note is one of the Revolving Credit Notes
referred to in the Agreement, and is entitled to the benefits and is
subject to the terms of the Agreement. The principal of this Revolving
Credit Note is repayable in the amounts and under the circumstances, and
its maturity is subject to acceleration upon the terms, set forth in the
Agreement.
Presentment for payment, demand, notice of dishonor, protest, notice
of protest and all other demands and notices in connection with the
delivery, performance and enforcement of this Revolving Credit Note are
hereby waived.
Upon the occurrence of any Event of Default specified in the
Agreement, all amounts then remaining unpaid on this Revolving Credit
Note may be declared to be immediately due and payable, all as provided
in the Agreement.
This Revolving Credit Note shall be construed and enforceable in
accordance with, and be governed by the internal laws of the State of New
Jersey.
This Revolving Credit Note may not be changed orally, but only by an
instrument in writing executed pursuant to the provisions of Section 9.01
of the Agreement.
GNOC, CORP.
By:
Donna M. Graham
Vice President and Chief
Financial Officer
<PAGE>
REVOLVING CREDIT NOTE
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF
ANY INTEREST IN THIS NOTE OR OF ANY PARTICIPATION IN THE LOANS THIS NOTE
EVIDENCES IS CONDITIONAL AND SHALL BE INEFFECTIVE IF THE NEW JERSEY
CASINO CONTROL COMMISSION DISAPPROVES.
$8,666,660.00 As of May 2, 1996
GNOC, Corp., a corporation organized under the laws of the State of
New Jersey (the "Borrower"), for value received, hereby promises to pay
to the order of Midlantic Bank, National Association(the "Bank") on June
30, 1998, in lawful money of the United States of America and in
immediately available funds, the principal sum of EIGHT MILLION SIX
HUNDRED SIXTY SIX THOUSAND SIX HUNDRED AND SIXTY DOLLARS or such lesser
unpaid principal amount as shall be outstanding hereunder, together with
interest from the date hereof on the unpaid principal balance of this
Revolving Credit Note, payable on the dates and at the rate provided for
in the Second Amended and Restated Loan Agreement dated as of May 2, 1996
by and among the undersigned, First Union National Bank and Midlantic
Bank, National Association (the "Agreement"). In no event shall the
interest rate payable hereon exceed the maximum rate of interest
permitted by law. Capitalized terms used herein which are defined in the
Agreement shall have the meanings therein defined.
The holder of this Revolving Credit Note is authorized to record in
its books and records (whether electronically or manually maintained),
pursuant to Section 2.03 of the Agreement, the date and principal amount
of each Revolving Credit Loan made by the Bank, the date and amount of
each payment or prepayment of principal thereof and the interest rate
with respect thereto. Such recordation shall constitute prima facie
evidence of the accuracy of the information endorsed, provided that the
failure of the Bank to make such recordation shall not affect the
obligations of the Borrower hereunder or under the Agreement. The
aggregate unpaid principal amount of all Revolving Credit Loans set forth
in such schedule shall be presumptive evidence of the principal amount
owing and unpaid on this Revolving Credit Note.
This Revolving Credit Note is one of the Revolving Credit Notes
referred to in the Agreement, and is entitled to the benefits and is
subject to the terms of the Agreement. The principal of this Revolving
Credit Note is repayable in the amounts and under the circumstances, and
its maturity is subject to acceleration upon the terms, set forth in the
Agreement.
Presentment for payment, demand, notice of dishonor, protest, notice
of protest and all other demands and notices in connection with the
delivery, performance and enforcement of this Revolving Credit Note are
hereby waived.
Upon the occurrence of any Event of Default specified in the
Agreement, all amounts then remaining unpaid on this Revolving Credit
Note may be declared to be immediately due and payable, all as provided
in the Agreement.
This Revolving Credit Note shall be construed and enforceable in
accordance with, and be governed by the internal laws of the State of New
Jersey.
This Revolving Credit Note may not be changed orally, but only by an
instrument in writing executed pursuant to the provisions of Section 9.01
of the Agreement.
GNOC, CORP.
By:
Donna M. Graham
Vice President and Chief
Financial Officer
<PAGE>
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.
SECOND AMENDED AND RESTATED LOAN AGREEMENT (the "Agreement") dated as
of May 2, 1996 among GNOC, Corp. (the "Borrower"), First Union National
Bank ("First Union") and Midlantic Bank, National Association ("Midlantic";
First Union and Midlantic are sometimes hereinafter referred to as the
"Banks") and First Union as agent.
RECITALS
A. The Borrower, GNAC, Corp. and GNF, Corp. as guarantors and the
Banks entered into a loan agreement dated April 16, 1993 in which the Banks
extended credit to the Borrower on a revolving basis in an amount up to
$20,000,000 which loan agreement was amended by the first amendment to loan
agreement dated as of December 31, 1993 (the "First Agreement").
B. The Borrower, GNAC, Corp. as guarantor and the Banks entered
into an amended and restated loan agreement dated as of September 30, 1994,
(the "Existing Agreement") among other things, releasing GNF, Corp. as
guarantor and extending the maturity of the obligations under the First
Agreement.
C. The Borrower and GNAC, Corp. merged on December 19, 1995 with
the Borrower being the surviving corporation.
D. The Borrower and the Banks wish to enter into a second amended
and restated loan agreement, among other things, extending the maturity of
the obligations under the Existing Agreement.
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):
"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).
"Agent" means First Union National Bank in its capacity as agent or
any Person that is appointed as a successor agent pursuant to the terms of
this Agreement.
"Agreement" means this second amended and restated 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.
"Assignment of Leases" means the Assignment of Leases and Rents dated
April 16, 1993 which was executed and delivered by the Borrower and GNAC as
collateral security for the obligations of the Borrower and GNAC under the
First Agreement as modified by the Mortgage Modification Agreement to
provide that such assignment acts as collateral security for the
obligations of the Borrower and GNAC under the Existing Agreement, and as
further modified by the Second Mortgage Modification Agreement to provide
that such assignment acts as collateral security for the obligations of the
Borrower under this Agreement.
"Bally Entertainment" means Bally Entertainment Corporation, a
Delaware corporation.
"Banks" means on the Closing Date, First Union and Midlantic, and
thereafter means First Union, Midlantic and their successors or permitted
assignees.
"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 corporate stock of any Person.
"Cash Equivalents" means securities issued or directly and fully
guaranteed by the United States Government having maturities of not more
than 30 days from the date of acquisition.
"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 Grand
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 May 2, 1996.
"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 hereunder.
"Compliance Certificate" means a certificate in the form of Exhibit
5.04(e) properly completed and signed by the CFO of the Borrower.
"Commitment" means $20,000,000 as such amount may be reduced from time
to time in accordance with the terms of this Agreement.
"Commitment Fees" means the fees payable under Section 2.04(b) hereof.
"Commitment Percentage" shall initially mean 56.6667% with respect to
First Union and 43.3333% with respect to Midlantic. Such Commitment
Percentages may be modified or assigned to other Persons from time to time
in accordance with the terms of this Agreement and shall be the percentages
as so modified and/or assigned.
"Confidential Information" has the meaning given to such term in
Section 9.14 hereof.
"Consolidated" refers to the consolidation of the accounts of the
Borrower and its Subsidiaries in accordance with GAAP, including principles
of consolidation.
"Consolidating" refers to the separation of the accounts of the
Borrower 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.
"EBITDA" means with respect to any Person for any period, the sum of
(a) Net Income, plus (b) any Extraordinary Losses reflected in such Net
Income amount, minus (c) any Extraordinary Gains reflected in such Net
Income amount, plus (d) Interest Expense for such period, plus (e) the
aggregate amount of Taxes on or measured by income of such Person for such
period (whether or not paid during that period), plus (f) Depreciation,
Amortization and all other non-cash expenses for such period, in each such
case determined in accordance with GAAP and, in the case of items (d) and
(e) only to the extent deducted in the determination of Net Income for such
period.
"Environmental Concern Materials" means (a) 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), (b) 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 (c)
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 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 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 7.01 of this Agreement.
"Extraordinary Gains" has the meaning given to such term under GAAP.
"Extraordinary Losses" has the meaning given to such term under GAAP.
"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.
"First Union" means First Union National Bank.
"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 may designate
and the Banks may approve.
"Funded Debt" means as of any date for any Person the sum of (a) the
aggregate amount of Indebtedness for Borrowed Money by such Person on that
date, plus (b) the aggregate amount of all Financing Lease obligations of
such Person on that date.
"Funded Debt Ratio" means, as of the last day of any Fiscal Quarter
(including the last day of a Fiscal Quarter which is also the last day of a
Fiscal Year), the ratio of (a) Funded Debt as of that date, to (b) EBITDA
for the fiscal period consisting of the Fiscal Quarter then ending and the
three immediately preceding Fiscal Quarters.
"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.
"GNAC" means GNAC, Corp., which on December 19, 1995 merged with the
Borrower.
"GNF" means GNF, Corp.
"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.
"Ground Lease" means the Amended and Restated Ground Lease dated May
2, 1996 by and between the Borrower and Bally's Park Place, Inc. under
which the Borrower has leased from Bally's Park Place, Inc. the property on
which the New Hotel Tower is to be built.
"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,
(a) any Financing Lease obligations, (b) obligations for borrowed money
secured by a Lien to which any property or asset owned by such Person is
subject, whether or not such obligations secured thereby shall have been
assumed, and (c) guaranties of items which would be included within this
definition (exclusive of whether such items would appear upon such balance
sheet).
"Indebtedness for Borrowed Money" of any Person means Indebtedness of
such Person excluding Contingent Liabilities of such Person but including
any obligations of such Person with respect to standby letters of credit.
"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 10, 1993 by and
among GNF, as obligor, GNAC as guarantor, the Borrower, and Amalgamated
Bank of Chicago as Trustee, pursuant to which was issued certain notes in
the principal amount of $275,000,000 due in the year 2003.
"Independent Certified Public Accountant" means Ernst & Young, LLP or
any other independent certified public accountants selected by the Borrower
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 the intercreditor agreement among the
Banks, the Borrower, GNAC, Corp., GNF and the Trustee dated April 16, 1993
as modified by the Modification to the Intercreditor Agreement dated as of
May 2, 1996.
"Interest Coverage Ratio" of any Person for any period, means the
ratio of (a) the sum of Net Income plus (i) any Extraordinary losses
reflected in such Net Income amount, minus (ii) any Extraordinary Gains
reflected in such Net Income amount, plus (iii) Taxes, plus (iv) Interest
Expense, plus (v) Depreciation, and plus (vi) 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 an
income statement of such Person excluding (a) amortization of debt issuance
costs and (b) amortization of original issue discount or premium.
"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.
"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 and other deposit accounts that constitute Permitted
Investments), 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, Supplemental Mortgage and Security Agreement with
Assignment of Rents, Supplemental Assignment of Leases, the Option to Lease
Agreement and the Revolving Credit Notes, as each may be further modified
or amended from time to time.
"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 (a) the
financial condition, business or operations of the Borrower, (b) the
ability of the Borrower to perform its obligations under this Agreement or
any of the other Loan Documents, (c) the validity of enforceability of this
Agreement, the notes or the other Loan Documents or (d) 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 June 30, 1998.
"Midlantic" means Midlantic Bank, National Association.
"Mortgage" means the mortgage, security agreement and assignment of
rents dated April 16, 1993 as modified by the Mortgage Modification
Agreement dated September 30, 1994 and the Second Mortgage Modification
Agreement, and securing the obligations of the Borrower under this
Agreement and under the Revolving Credit Notes.
"Mortgaged Property" means, collectively, the property described in
the Mortgage, including the Casino Hotel and the Supplemental Mortgage and
Security Agreement with Assignment of Rents, including the New Hotel Tower.
"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).
"New Hotel Tower" means the building addition to the Casino Hotel
which contain approximately 308 hotel rooms and related facilities to be
constructed by the Borrower on the Mortgaged Property.
"Option to Lease Agreement" means the option to lease agreement dated
May 2, 1996 among Bally's Park Place, Inc., Amalagamated Bank of Chicago
and the Agent.
"Participant Bank" means any bank to which a Bank has sold a
participation in the Revolving Credit Loans under Section 9.08.
"Permitted Indebtedness" means (a) borrowings funded under the
Indenture, (b) the Revolving Credit Loans, (c) Indebtedness reflected in
the financial statements mentioned in Section 4.04 or listed in Schedule
4.06, attached hereto, (d) obligations arising under the Tax Sharing
Agreement, (e) Indebtedness owed to Affiliates of the Borrower incurred in
connection with services rendered in a manner consistent with past
practices in an aggregate of not more than $5,000,000 at any one time, and
(f) other Indebtedness in an aggregate amount not more than $5,000,000,
"Permitted Investments" means (a) investments by Subsidiaries of the
Borrower in the Borrower; (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) loans to Bally's Park Place, Inc. that are
payable on demand in an amount not to exceed $10,000,000, provided that, at
the time any such loans are outstanding, there are no Revolving Credit
Loans outstanding hereunder; (n) deposits with, or bonds issued by, the
CRDA as may be required to comply with the New Jersey Casino Control Act;
and (o) 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 Revolving Credit
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 or any Subsidiary, or (ii)
greater than $500,000 entered against the Borrower, or any Subsidiary 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 or that are
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, (g) Liens described in
Schedule 1.01 attached hereto, (h) Liens described in Schedule B-2 of Title
Commitment No. 9636-70009 issued by Chicago Title Insurance Company dated
January 10, 1996 as continued through the date hereof, (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, and (k) leases or subleases granted to others not
interfering in any material respect with the business of the Borrower.
"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, 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, 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.
"Prime Rate" means the rate of interest announced by First Union 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.
"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 Section4043(b)
of ERISA or regulations issued thereunder, excluding events as to which the
thirty (30) day notice period is waived pursuant to the regulations issued
thereunder.
"Required Banks": at any time, Banks holding at least sixty-six and
two-thirds percent (66-2/3%) of the Commitment Percentages; and if no
Commitments remain outstanding it means Banks holding at least sixty-six
and two-thirds percent (66-2/3%) of the Revolving Credit Loans.
"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, Treasurer or
General Counsel of the Borrower, as the context requires.
"Restricted Payments" means (a) the declaration or payment by the
Borrower of any dividend on, or any distribution to holders of, any shares
of its Capital Stock, unless such dividend or distribution is solely in the
form of Capital Stock of the Borrower or warrants or other rights to
acquire such stock,
(b) the purchase, redemption, acquisition or retirement for value of the
Borrower's 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.
"Revolving Credit Loans" means the loan made pursuant to Section
2.01(a) hereof.
"Revolving Credit Notes" has the meaning given to such term in
Section 2.03 hereof.
"Second Mortgage Modification Agreement" means the mortgage
modification agreement executed simultaneous with this Agreement by the
Borrower and the Agent.
"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 fifty
percent (50%) of the voting Capital Stock or other voting ownership
interests of which is owned, directly or indirectly, by the Borrower (as
the context requires).
"Supplemental Mortgage and Security Agreement with Assignment of
Rents" means the supplemental mortgage and security agreement with
assignment of rents executed and delivered simultaneous with this Agreement
by the Borrower encumbering Borrower's leasehold interest in the Ground
Lease and securing its obligations under this Agreement and under the
Revolving Credit Notes.
"Supplemental Assignment of Leases" means the supplemental assignment
of leases executed and delivered simultaneous with this Agreement by the
Borrower to secure its obligations under this Agreement and under the
Revolving Credit Notes.
"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, GNAC, Corp., GNF and Bally Entertainment dated February 28, 1993.
"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 (a) the scope of the audit undertaken with
respect to such opinion, (b) such Person's status as a going concern, or
(c) 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 that term in Section 2.04(a).
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 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.<PAGE>
ARTICLE II
THE REVOLVING CREDIT LOANS
SECTION 2.01. The Revolving Credit Loans.
a. Subject to the terms and conditions hereof, each Bank severally
agrees to extend credit in the form of Revolving Credit Loans to the
Borrower from the date hereof until 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 at any one time outstanding shall not exceed such
Bank's Commitment Percentage of the Commitment.
b. Each disbursement of the Revolving Credit Loans shall be from
all of the Banks ratably according to their respective Commitment
Percentages. 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 Commitment, Borrower may borrow, repay and
reborrow Revolving Credit Loans under this Section.
SECTION 2.02. Notices. 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 telecopied or otherwise delivered to the
Banks within twenty-four hours of the telephonic notice in the form of
Exhibit 2.02) for each Revolving Credit Loan, specifying the date and
amount of the proposed Revolving Credit Loan, and the Agent in turn shall
notify each other Bank of the proposed Revolving Credit Loan by 3:00 p.m.
of the same day. 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 Article III, the Agent will immediately
make such funds available to Borrower.
SECTION 2.03. The 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 Percentage of the 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 such Note. Each Revolving Credit Note shall be
stated to mature on the Maturity Date.
SECTION 2.04. Fees
a. Upfront Fees.
Borrower shall pay on the date hereof a pro rata non-refundable
upfront fee (the "Upfront Fee") in the amount of $150,000 to the Agent for
the account of the Banks.
b. Commitment Fees.
. Borrower shall pay to the Agent for the account of the
Banks a non-refundable commitment fee (the "Commitment Fee") computed at
the rate of one half of one percent (1/2%) per annum on the average daily
undisbursed portion of the Commitment (to the extent that the Commitment
has not been reduced or terminated pursuant to Section 2.05 hereof).
2. The Commitment Fees shall be payable quarterly in arrears
on the last day of March, June, September and December in each year,
commencing on June 30, 1996, up to and including the Maturity Date.
c. Agent's Fees. 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. Termination or Reduction of the Commitment; Repayment
of Revolving Credit Loans.
a. Borrower has 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 Commitment in whole or ratably reduce
them in part, without penalty or premium. Any partial reduction of the
Commitment shall be in the minimum aggregate amount of $2,000,000 or an
integral multiple of $1,000,000 in excess thereof. Any termination or
reduction of the Commitment hereunder shall be permanent, and the
Commitment cannot thereafter be restored or increased without the written
consent of the Banks.
b. 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 Banks. All such payments shall be applied pro
rata between the Banks.
SECTION 2.06. Interest. Borrower shall pay interest on the unpaid
principal amount of each Revolving Credit Loan from the date on which such
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 Prime Rate plus one percent (1%), which
annual rate shall change simultaneously with each change in the Prime Rate.
The Commitment Fees and interest on the Revolving Credit 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.
SECTION 2.07. Payments.
a. Borrower will make all repayments and prepayments of principal
of the Revolving Credit Loans, all payments of interest on the Revolving
Credit Loans, and all payments of 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 (calculated on the basis of the aggregate amounts then
due each such Bank under the terms of this Agreement) 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 fees, as the case may
be.
SECTION 2.08. Reimbursement to Banks for Cost Increases Imposed By
Law.
a. If any Bank shall determine that the adoption of any applicable
law, rule, governmental 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: (1) 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 (2) subjects any Bank to any tax, duty or
other charge, or changes the basis of taxation of the Revolving Credit
Loans (other than income or franchise taxes payable by the Banks); then,
upon receiving notice as described in subsection 2.08(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 2.09. Mandatory Repayments. If at any time the aggregate
unpaid principal amount of the Revolving Credit Loans shall be in excess of
$20,000,000 (or such lesser amount which may be in effect after the
Borrower has reduced the Commitment pursuant to Section 2.05), the Borrower
shall immediately make a repayment of principal on the Revolving Credit
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 2.10 Taxes Related to Agreement.
(a) All payments made by the Borrower under this Agreement shall
be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on the Agent or any Bank as a
result of a present or former connection between the Agent or such Bank and
the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from the Agent or such Bank having
executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement). If any such non-excluded taxes,
levies, imposts, duties, charges, fees deductions or withholdings ("Non-
Excluded Taxes") are required to be withheld from any amounts payable to
the Agent or any Bank hereunder, the amounts so payable to the Agent or
such Bank shall be increased to the extent necessary to yield to the Agent
or such Bank (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in
this Agreement; provided, however, that the Borrower shall not be required
to increase any such amounts payable to any Bank that is not organized
under the laws of the United States of America or a state thereof if such
Bank fails to comply with the requirements of paragraph (b) of this
subsection. Whenever any Non-Excluded Taxes are payable by the Borrower,
as promptly as possible thereafter the Borrower shall send to the Agent for
its own account or for the account of such Bank, as the case may be, a
certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence, the
Borrower shall indemnify the Agent and the Banks for any incremental taxes,
interest or penalties that may become payable by the Agent or any Bank as a
result of any such failure. The agreements in this subsection shall
survive the termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder.
b. Each Bank that is not incorporated under the laws of the United
States of America or a state thereof shall:
I. deliver to the Borrower and the Agent (A) two (2) duly
completed copies of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be, and (B) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as the case
may be;
ii. deliver to the Borrower and the Agent two (2) further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and
iii. obtain such extensions of time for filing and complete
such forms or certifications as may reasonably be requested by the Borrower
or the Agent;
unless in any such case an event (including, without limitation, any change
in treaty, law or regulation) has occurred prior to the date on which any
such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Bank from duly completing and
delivering any such form with respect to it and such Bank so advises the
Borrower and the Agent. Such Bank shall certify (i) in the case of a Form
1001 or 4224, that it is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes
and (ii) in the case of a Form W-8 or W-9, that it is entitled to an
exemption from United States backup withholding tax. Each Person that
shall become a Bank or a Participant pursuant to Section 9.08 shall, upon
the effectiveness of the related transfer, be required to provide all of
the forms and statements required pursuant to this subsection, provided
that in the case of a Participant such Participant shall furnish all such
required forms and statements to the Bank from which the related
participation shall have been purchased.<PAGE>
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Effectiveness of this
Agreement. The obligations of each Bank under this Agreement are subject
to the following conditions precedent:
a. The execution and delivery of this Agreement by duly qualified
officers of the Borrower.
b. The execution and delivery by duly qualified officers of the
Borrower of (i) the Second Mortgage Modification Agreement, (ii) the
Supplemental Mortgage, Security Agreement with Assignment of Rents, (iii)
the Supplemental Assignment of Leases and Rents, and the (iv) Option to
Lease Agreement.
c. The execution and delivery of the Revolving Credit Notes,
payable to the order of each Bank, by a duly qualified officer of the
Borrower.
d. The Banks shall have received a certified copy of the Ground
Lease satisfactory in form and substance to the Banks.
e. The Banks shall have received a secretary's certificate for the
Borrower satisfactory in form and substance to the Banks.
f. The Banks shall have received a favorable opinion of counsel
for Borrower, in form and substance satisfactory to the Banks.
g. The Banks shall have received a reasonably current certificate,
issued by the Secretary of State of New Jersey for the Borrower stating
that the Borrower is a corporation duly incorporated and in good standing
under the laws of New Jersey.
h. The Agent shall have received an ALTA Standard Mortgagee Title
Insurance Policy in form and content satisfactory to the Banks insuring the
Mortgage as a first priority mortgage lien, pari passu with the mortgage
granted to the Trustee pursuant to the Indenture.
I. The Agent shall have received for the account of the Banks
payment of the Upfront Fee.
j. Pursuant to the terms of the Loan Documents, the Banks shall
have a perfected security interest and mortgage interest in the Collateral
pari passu in priority of lien and right of payment under the terms of the
Intercreditor Agreement to the security and mortgage granted to the Trustee
pursuant to the terms of the Indenture.
k. The Agent shall have received proof that the Borrower has
obtained and maintains all insurance required under the terms of the Loan
Documents.
l. The Banks shall have received a Phase I, and if requested a
Phase II, environmental audit for the Mortgaged Property satisfactory in
form and substance to each of the Banks.
m. The Banks shall have received an appraisal of the Mortgaged
Property satisfactory in form and substance to each of the Banks.
n. The Banks shall have received copies of the merger agreement
and certificate of merger for the merger between GNOC Corp. and GNAC Corp.
o. The Banks shall have received a construction budget for the New
Hotel Tower satisfactory in form and substance to each of the Banks.
p. The Banks shall have received a certificate from the CFO of the
Borrower certifying that the Interest Coverage Ratio for the four Fiscal
Quarters ending December 31, 1995 was greater than 1.80 to 1.
SECTION 3.02. Conditions Precedent to All Disbursements. The
obligation of each Bank to make any Revolving Credit Loan is subject to the
further conditions precedent that:
a. The representations and warranties contained in this Agreement
shall be accurate on and as of the date of such Revolving Credit Loan as
though made on and as of such date unless the inaccuracy of such
representation and warranty would not have a Material Adverse Effect, and,
except to the extent that (i) such statements expressly are made only as of
the date hereof and (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 IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement and to make
the Revolving Credit Loans, the Borrower hereby represents and warrants to
the Banks that the statements set forth in this Article IV are true,
correct and complete.
SECTION 4.01. Existence. Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of New
Jersey. The Borrower has all requisite corporate power and authority to
conduct its business and to own its properties and is duly qualified as a
foreign corporation in good standing in all jurisdictions, if any, in which
its failure so to qualify could have a Material Adverse Effect.
SECTION 4.02. Authorization; No Legal Bar; No Default.
The execution, delivery and performance by the Borrower 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 result in a breach of or constitute a default under any
indenture (including the Indenture), or other material instrument or
agreement to which a Borrower is a party or by which it or its properties
may be bound or affected.
SECTION 4.03. Validity of the Loan Documents. The Loan Documents
when duly executed and delivered will constitute, valid and legally binding
obligations of Borrower 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 4.04. Financial Information. The Borrower has previously
furnished to the Banks true and complete copies of the following financial
statements: (a) the Consolidated balance sheet and statements of income,
Stockholders' Equity and cash flows of the Borrower and its Subsidiaries as
of December 31, 1995 audited by Ernst & Young, with additional
Consolidating information, and (b) the Consolidated balance sheet and
statements of income, Stockholders' Equity and cash flows of Bally
Entertainment and its Subsidiaries as of December 31, 1995, audited by
Ernst & Young. 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. Since December 31, 1995, there has been no material adverse
change in the business, financial condition, operations or prospects of the
Borrower.
SECTION 4.05. Litigation. Except as disclosed in Schedule 4.05
attached hereto, there are no actions, suits or proceedings pending or
threatened against Borrower or any of its 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, would produce a Material Adverse
Effect.
SECTION 4.06. 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 the Borrower and its Subsidiaries
that are not disclosed on the financial statements mentioned in Section
4.04 or by Schedule 4.06 attached hereto.
SECTION 4.07. Taxes. Except as disclosed on Schedule 1.01, the
Borrower and each of its Subsidiaries 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. The Borrower and each of its
Subsidiaries 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 the Borrower or any of its Subsidiaries, which
additional Taxes, assessments or charges exceed those amounts previously
paid by the Borrower or its Subsidiaries, adequate reserves for such
amounts have been accrued in accordance with GAAP in the financial
statements of the Borrower and its Subsidiaries.
SECTION 4.08. Liens. The property and assets of Borrower are not
subject to any Lien other than Permitted Liens.
SECTION 4.09. 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 of the Loan
Documents (except as may have been obtained prior to the execution of this
Agreement).
SECTION 4.10. ERISA. Each Plan maintained for employees of Borrower
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 4.11. Ownership of the Borrower. On the Closing Date Bally
Entertainment owned 100% of the voting securities of the Borrower.
SECTION 4.12. Gaming Licenses. As of the date hereof, all Gaming
Licenses of the Borrower have been obtained and are in full force and
effect. The next date for renewal of the Borrower's Gaming Licenses is
July 31, 1996, and such renewal will be for four (4) years.
SECTION 4.13. 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 Revolving Credit Loans will be used to purchase or carry Margin
Stock.
SECTION 4.14. Stock as Collateral. The Collateral does not include
any stock in any corporation.
SECTION 4.15. Environmental Matters. Except as set forth in Schedule
4.15 attached hereto, the Borrower and each of its Subsidiaries have, to
the knowledge of the Borrower, obtained all permits, licenses and other
authorizations which are required with respect to their businesses under
all applicable Environmental Laws. The Borrower 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 the Borrower
nor any of its Subsidiaries have 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, or which may give rise to
any liability, or otherwise form the basis of any claim, action, suit,
proceeding, hearing or investigation, 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. Except as set forth on Schedule 4.15, neither
the Borrower 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, or which may give rise to any liability, or otherwise form the
basis of any claim, action, suit, proceeding, hearing or investigation,
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 4.16. Burdensome Restrictions. Neither the Borrower nor its
Subsidiaries are subject to any Burdensome Restriction other than those
contained in the Indenture and documents related thereto. Neither the
Borrower nor its Subsidiaries are in default of under any material contract
to which any of them are a party.
SECTION 4.17. Projections; Budgets. All of the projections and
budgets submitted in writing to the Banks by the Borrower were prepared and
submitted in good faith.
SECTION 4.18. Compliance with Laws. Each of the Borrower and its
Subsidiaries is in compliance with all laws 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 4.19. Intellectual Property. Each of the Borrower and its
Subsidiaries 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 4.20. Labor Matters. Except as set forth on Schedule 4.20
attached hereto, the Borrower is not a party to any labor union or
collective bargaining agreements. The Borrower is 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. Except as disclosed on Schedule 4.20, hereto,
there are no (a) unfair labor practice complaints pending or, to the best
knowledge of the Borrower, threatened against the Borrower before the
National Labor Relations Board or any court nor any pending or, to the best
knowledge of the Borrower, 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, threatened against the Borrower which
could result in a cessation of the operations of the Borrower, or (c)
representation or petition, respecting the employees of the Borrower filed
with the National Labor Relations Board.
SECTION 4.21. Brokerage Commissions. Except for fees paid to the
Banks hereunder, no Person is entitled to receive from the Borrower 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 with
respect to the transactions contemplated hereby.
SECTION 4.22. Investment Company Act. Neither the Borrower 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>
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any amount due any Bank hereunder remains unpaid, or any
Bank shall have any Commitment hereunder, the Borrower and its Subsidiaries
on a Consolidated basis or the Borrower, as applicable, shall comply with
the following affirmative covenants:
SECTION 5.01. Consolidated Net Worth. The Borrower and its
Subsidiaries, on a Consolidated basis, shall maintain at all times a Net
Worth of not less than (a) $60,000,000.00 during the period from the
Closing Date through December 31, 1996, (b) $65,000,000.00 from January 1,
1997 through December 31, 1997, and (c) $70,000,000.00 thereafter.
SECTION 5.02. Consolidated Interest Coverage Ratio. The Borrower
and its Subsidiaries, on a Consolidated basis, shall have an Interest
Coverage Ratio as of the end of each Fiscal Quarter calculated for the four
(4) Fiscal Quarters then ending, of not less than the ratio shown in the
chart below.
Interest
Coverage Ratio Fiscal Quarter Ending
1.80 to 1 March 31, 1996
1.80 to 1 June 30, 1996
1.90 to 1 September 30, 1996
1.90 to 1 December 31, 1996
1.90 to 1 March 31, 1997
1.90 to 1 June 30, 1997
2.00 to 1 September 30, 1997 and thereafter
SECTION 5.03. Consolidated Funded Debt Ratio. The Borrower and
its Subsidiaries, on a Consolidated basis, shall have at the end of each
Fiscal Quarter a Funded Debt Ratio of not more than the ratio shown in the
chart below.
Funded Debt Ratio Fiscal Quarter Ending
5.00 to 1 March 31, 1996
5.00 to 1 June 30, 1996
5.00 to 1 September 30, 1996
4.85 to 1 December 31, 1996
4.85 to 1 March 31, 1997
4.85 to 1 June 30, 1997
4.65 to 1 September 30, 1997
4.50 to 1 December 31, 1997 and thereafter
SECTION 5.04. Financial Information. The Borrower will furnish to
the Banks the following financial information and notices:
a. as soon as available, but in any event within sixty (60) days
after the end of the first three Fiscal Quarters of each Fiscal Year,
unaudited quarterly Consolidated and Consolidating financial statements of
the Borrower and its Subsidiaries certified by the CFO of the Borrower;
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 the Borrower and its Subsidiaries accompanied by an
Unqualified Opinion, and (ii) unaudited Consolidating financial statements
of the Borrower and its Subsidiaries certified by the CFO of the Borrower;
c. with the annual audited Consolidated financial statements,
commencing with respect to the period ending December 31, 1995, a
certificate, substantially in the form attached as Exhibit 5.05C-1 and a
letter of reliance in the form of Exhibit 5.05C-2, 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 thirty (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 from the CFO of the
Borrower 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 the Borrower
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 its filing, copies of all
documents filed with the Securities and Exchange Commission by the
Borrower; and
g. concurrently with the delivery of the quarterly financial
statements referred to above, the then current projections and forecasts
with assumptions prepared by the Borrower; provided, however, that in the
event that the Borrower has breached its obligations under this Section
5.04, such party shall have thirty (30) days after written notice from
either of the Banks to cure such breach. All Consolidated financial
statements provided under this Section 5.04 must include a Consolidated
statement of cash flows.
SECTION 5.05. Reports. The Borrower will furnish to the Banks:
a. as soon as practical and in any event within five (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 setting forth details of such default, stating whether
or not the same is continuing and, if so, the action that the Borrower
proposes to take with respect thereto;
b. as soon as practical and in any event within five (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 that could have a Material Adverse Effect on such
party;
c. as soon as practical and in any event within five (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 proposes 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 five (5) Business
Days after a Responsible Officer becomes aware of the occurrence of a
change or event concerning the Borrower that has or could 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 one (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 five (5) Business
Days after a Responsible Officer learns of any labor dispute materially
affecting the Borrower or its Subsidiaries or the termination, prior to
scheduled expiration, of any collective bargaining agreement or labor
contract to which the Borrower 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; provided, however, that in the event that the
Borrower has breached its obligations under this Section 5.05(g), such
party shall have thirty (30) days after written notice from either of the
Banks to cure such breach.
h. within 30 days following the end of each month a report on the
progress of the construction of the New Hotel Tower including (i) the cost
of all completed improvements; (ii) the amount paid to contractors and
suppliers in connection with such completed improvements or otherwise;
(iii) an estimate of the cost of completing the New Hotel Tower, and (iv)
any material adverse events that have occurred with respect to the
construction of the New Hotel Tower. The obligation to provide the report
described in this subsection shall expire upon the completion of the New
Hotel Tower.
SECTION 5.06. Insurance. Borrower will maintain the following
insurance:
a. at all times, "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 Banks as loss payees
as their interests may appear under a standard mortgagee endorsement
clause;
b. at all times, 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. at all times, flood insurance in an amount equal to the maximum
available amount under the Federal Flood Insurance Program; and
d. during the period of any construction on the New Hotel Tower,
full extended coverage casualty insurance written on the standard
"Builder's Risk Completed Value" form (non-reporting full coverage in an
amount satisfactory to the Banks); and
e. at all times, such other insurance as may be from time to time
customary in the casino industry; provided, however, that in the event that
the Borrower has breached its obligations under this Section 5.06, such
party shall have thirty (30) days after written notice from either of the
Banks in which to cure such breach.
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 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 5.07. Taxes. Borrower will pay when due all Taxes,
assessments and charges imposed upon it or its 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; provided, however, that
in the event that the Borrower has breached its obligations under this
Section 5.07, such party shall have thirty (30) days after written notice
from either of the Banks in which to cure such breach.
SECTION 5.08. Compliance with Laws. Borrower 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; provided, however, that in the
event that the Borrower has breached its obligations under this Section
5.08, such party shall have thirty (30) days after written notice from
either of the Banks in which to cure such breach.
SECTION 5.09. Inspection of Property; Books and Records;
Discussions. Borrower 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 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 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 of any obligation to
provide any notices required under the terms of this Agreement or any of
the Loan Documents.
SECTION 5.10. ERISA. The Borrower 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; provided, however,
that in the event that the Borrower shall have breached its obligations
under this Section 5.10, such party shall have thirty (30) days after
written notice from either of the Banks in which to cure such breach.
SECTION 5.11. Preservation of Corporate Existence, Etc. The Borrower
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.
SECTION 5.12. Maintaining Ownership of Properties. The Borrower will
maintain or cause to be maintained 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 all appropriate repairs, renewals
and replacements thereof, consistent with past practice.
SECTION 5.13. Maintenance of Licenses, Permits, etc. The Borrower
(a) 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, and
(b) shall notify the Banks in writing, as soon as practical and in any
event within five (5) Business Days after a Responsible Officer learns of
the suspension, cancellation, revocation or discontinuance of or of any
pending or threatened action or proceeding seeking to suspend, cancel
revoke or discontinue any such license, permit, governmental approval,
franchise authorization or right.
SECTION 5.14. 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 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 required by a Bank for
the purpose of carrying out the provisions and intent of the Loan
Documents.
SECTION 5.15. Use of Proceeds. The Borrower shall use the
proceeds of the Revolving Credit Loans for general corporate purposes
including construction of the New Hotel Tower.
SECTION 5.16 Completion of New Hotel Tower; Assignment of
Construction Contracts. Prior to commencing any construction work on the
New Hotel Tower that would materially change the appearance or operation of
the existing Casino Hotel, the Borrower shall:
a. enter into contracts with a contractor and an architect each of
which have the resources and ability to complete the New Hotel Tower within
20 months after the commencement of such work and both of which agree to do
so in such contracts and is otherwise reasonably acceptable to the Banks,
and
b. provide to the Agent (i) true copies of such contracts, (ii) an
assignment of such contracts substantially in the form of Exhibit
5.16(b)(ii), (ii) letters from such contractor and from such architect,
each substantially in the form of Exhibit 5.16(b)(iii), and (iii) a surety
bond issued by a surety satisfactory to the Banks and in form and substance
satisfactory to the Banks naming the Agent and the Borrower as dual
obligees insuring the obligation of the contractor to complete the New
Hotel Tower under its contract with the Borrower as assigned to the Agent.
<PAGE>
ARTICLE VI NEGATIVE COVENANTS
So long as any amount due any Bank hereunder remains unpaid, or any
Bank shall have any Commitment hereunder, the Borrower shall, and shall
cause its Subsidiaries to comply with the following negative covenants:
SECTION 6.01. Limitation on Restricted Payments. Restricted Payments
made after the date hereof shall be limited to 50% of cumulative
Consolidated Net Income of the Borrower after June 30, 1995; provided,
however, that, until the Funded Debt Ratio calculated on a Consolidated
basis shall be less than 4.0 to 1, in no event shall the aggregate of
dividends or Restricted Payments paid after March 31, 1993 exceed
$15,000,000.
SECTION 6.02. Limitation on Capital Expenditures. Except for Capital
Expenditures related to the construction of the New Hotel Tower, the
Borrower and its Subsidiaries shall not create, assume, incur or otherwise
become or remain obligated in respect of any liability to make any Capital
Expenditure, if after giving effect thereto the amount of all Capital
Expenditures incurred by the Borrower and its Subsidiaries would exceed an
amount equal to an aggregate of $30,000,000 for the period from January 1,
1996 through June 30, 1998; provided, further, that (a) except for Capital
Expenditures related to the construction of the New Hotel Tower, the
aggregate amount of all Capital Expenditures incurred by the Borrower and
its Subsidiaries for the period from January 1, 1996 through December 31,
1996 shall not exceed $10,000,000, and (b) except for Capital Expenditures
related to the construction of the New Hotel Tower, the aggregate amount of
all Capital Expenditures incurred by the Borrower and its Subsidiaries for
the period from January 1, 1996 through December 31, 1997 shall not exceed
$20,000,000.
SECTION 6.03. Limitation on Liens. The Borrower and its Subsidiaries
will not incur, create, assume or permit to exist any Liens except
Permitted Liens; provided, however, that in the event that a Lien other
than a Permitted Lien should come to exist other than as a result of the
intentional acts of the Borrower, such party shall have thirty (30) days
after written notice from either of the Banks to cure such breach.
SECTION 6.04. Limitation on Indebtedness. The Borrower and its
Subsidiaries will not create, incur, assume or permit to exist any
Indebtedness except Permitted Indebtedness.
SECTION 6.05. Limitation on Investments. The Borrower and its
Subsidiaries will not make any Investments other than Permitted
Investments.
SECTION 6.06. Limitation on Contingent Liabilities. The Borrower and
its Subsidiaries will not undertake or otherwise become responsible for any
Contingent Liabilities except for obligations of the Borrower and its
Subsidiaries under the Indenture and hereunder.
SECTION 6.07. Limitation on Mergers; Sale of Assets. The Borrower,
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 6.07, or (e)
sell, lease or otherwise dispose of all or any substantial part of its
assets.
SECTION 6.08. Limitation on Change of Nature of Business. The
Borrower and its Subsidiaries taken as a whole will not make any material
change in the nature of their businesses as conducted on the date of this
Agreement.
SECTION 6.09. Regulation U.
a. Borrower will not use the proceeds of the Revolving Credit
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 twenty-five percent (25%) of the Borrower's assets
will consist of Margin Stock.
SECTION 6.10. Transactions with Affiliates. Except for Permitted
Investments and the Ground Lease, the Borrower 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 6.11. Limitation on Long-Term Leases; Sale and Lease-Back
Transactions. Except for the Ground Lease and leases of retail shops, the
Borrower and its Subsidiaries will not (a) become obligated as lessor 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 6.12. Amendment of Articles of Incorporation or By-Laws. The
Borrower shall not amend, modify or supplement its Articles of
Incorporation or By-Laws, except upon at least ten (10) days prior express
written notice to the Banks.
SECTION 6.13. ERISA. The Borrower 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 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, 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 6.14. Amendment to Indenture. The Borrower and its
Subsidiaries will not amend the Indenture.
SECTION 6.15. Maintenance of Property. Except for construction of
the New Hotel Tower and except for the temporary metal theater building
commonly known as the temporary theater and related improvements, the
Borrower and its Subsidiaries will not demolish, destroy, replace or build
any major structures without the prior written consent of the Banks.<PAGE>
ARTICLE VII DEFAULT AND REMEDIES
SECTION 7.01. 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 two (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 contemplated hereby or made or delivered pursuant hereto or
in connection herewith, shall prove to have been untrue or misleading when
made; provided, however, it shall not be an Event of Default if (i) any
representation or warranty which is untrue or misleading was not made in
bad faith, and (ii) the facts or conditions with respect to which such
representation or warranty is false or misleading do not have a Material
Adverse Effect.
d. Subject to the terms of Article XVI of the Mortgage, Borrower
shall fail to perform or observe any other term, covenant or agreement
contained in the Loan Documents and any applicable grace or cure periods
contained therein (including, without limitation, those set forth in
Article XVI of the Mortgage) shall have expired.
e. Borrower 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; provided, however, that if the
Borrower shall have in good faith disputed such obligation and provided
suitable financial assurance demonstrating its ability to meet such
obligation, then there shall be no Event of Default hereunder.
f. There has been an "Event of Default" and the Trustee has made a
declaration of acceleration under the terms of the Indenture.
g. Bally Entertainment ceases to own or control, directly or
indirectly, a majority of the voting securities of the Borrower.
h. (i) the Borrower 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 the Borrower or its Subsidiaries shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against
the Borrower 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 sixty (60) days from the commencement
thereof; or (iii) there shall be commenced against the Borrower 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 the Borrower 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) the Borrower 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.
i. (i) the Borrower 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) the
Borrower, 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 (v)
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.
j. Except for judgments constituting Permitted Liens, one or more
judgments or decrees shall be entered against the Borrower and any of its
Subsidiaries involving in the aggregate a liability (not paid when due) in
excess of $500,000, 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.
k. The casino license held by Borrower is suspended, revoked or
not renewed, unless the Borrower regains its license within seven (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.
l. The Borrower or any of its Subsidiaries contest the validity of
any of the Loan Documents or the extent and priority of the Liens granted
in favor of the Banks.
SECTION 7.02. 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 a time period
herein, which is applicable to such Potential Default.
SECTION 7.03. Termination of Commitment; Acceleration. If an Event
of Default shall occur and be continuing, the Agent may, by notice to
Borrower:
a. declare the Commitment to be terminated, whereupon the
Commitment and the obligations of Banks to make disbursements of Revolving
Credit 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 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, provided
however, even if there is no notice to the Borrower, the occurrence of the
events described in Subsection 7.01(h) shall result in an immediate
termination of the Commitment and an immediate acceleration of all amounts
due by the Borrower under the Revolving Credit Notes.
SECTION 7.04. 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 (a) the Prime
Rate plus 3.0%, or (b) ten and five-eighths percent (10-5/8%).
SECTION 7.05. Remedies Not Exclusive. The remedies provided
herein in this Article VII 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 7.06. Set-Off. Each Bank shall have a right of setoff
against, a Lien upon and a security interest in all property of Borrower
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 to the Bank.
SECTION 7.07. 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 to collect the payments then due and
thereafter to become due under the Loan Documents.<PAGE>
ARTICLE VII
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 Revolving Credit 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 portion of the
Commitment and its portion of the Revolving Credit 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. Notwithstanding any other
provision of this Agreement, an Agent while it serves as Agent, may not
assign its rights and obligations as a Bank if as a result of that
assignment its Commitment Percentage or the aggregate amount of its
Revolving Credit Loans would be less than the Commitment Percentage or the
aggregate amount of the Revolving Credit Loans of any other Bank.
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 Potential Default or 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 a Potential
Default or an Event of Default 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 Potential
Default or 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 the 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 Commitment Percentages, 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 to be taken 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 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 Borrower and made its own decision to
make its Revolving Credit 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 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 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. Any Bank, or combination of Banks, with Commitment Percentages
which total 66.6667% may, by written notice, instruct the Agent to send a
notice to the Borrower under Section 7.03 terminating the Commitment 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 43.3333% 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 7.03 terminating the Commitment and accelerating
the obligations of the Borrower hereunder. The Agent shall, five (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
66.6667%.
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 66.6667% 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 43.3333% 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 five (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 66.6667%.
SECTION 8.12. Successor Agent.
a. The Agent may resign as Agent upon thirty (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 8.02 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 66 2/3% of the Commitment arising
under this Agreement, or (ii) hold more than 66 2/3% 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 8.02 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, or any third Person.<PAGE>
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendment or Waiver. Neither this Agreement nor any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
subsection. With the prior written consent of the Required Banks, the
Agent and the Borrower may, from time to time, enter into written
amendments, supplements or modifications to the Loan Documents for the
purpose of adding any provisions or changing in any manner the rights of
the Banks, the Borrower hereunder or thereunder or waiving, on such terms
and conditions as the Agent may specify in such instrument, any of the
requirements of the Loan Documents or any Potential Default or Event of
Default and its consequences; provided, however, that no such waiver and no
such amendment, supplement or modification shall (a) (i) increase or
decrease the Commitment of any Bank (except for a ratable decrease in the
Commitment) or subject any Bank to any additional obligation for
reimbursement or indemnification, or (ii) reduce the principal of or rate
of interest on any Revolving Credit Loan or any fees hereunder, or (iii)
change any payment date, or (b) amend, modify or waive any provision of
this subsection or reduce the percentage specified in the definition of
Required Banks, or consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement or the other Loan
Documents or consent to the release of all or substantially all of the
Collateral upon which Liens have been created pursuant to the Loan
Documents or consent to the release of any guaranty, in each case without
the prior written consent of all the Banks, or (c) amend, modify or waive
any provision of Article IX without the prior written consent of the Agent.
Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Banks and shall be binding upon the Borrower,
the Banks, the Agent and all future holders of the Revolving Credit Notes.
In the case of any waiver, the Borrower, the Banks and the Agent shall be
restored to their former position and rights hereunder and under the
outstanding Revolving Credit Notes and any other Loan Documents, and any
Potential Default or Event of Default waived shall be deemed to be cured
and not continuing; but no such waiver shall extend to any subsequent or
other Potential Default or Event of Default, or impair any right consequent
thereon. 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 Bank 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 portion
of the Commitment and Revolving Credit Loans.
SECTION 9.02. Indemnification. The Borrower agrees 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 Requirement of
Law 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 Revolving Credit Loans hereunder excluding therefrom
the costs and expenses relating to the routine administration of the
Revolving Credit Loans and any matters relating to the participation or
assignment of the Revolving Credit Loans by the Banks (collectively, the
"Indemnified Matters"): provided, however, that the Borrower 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,
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, 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 shall not have the right to assign its rights
hereunder, any portion thereof, or any interest therein.
b. Any Bank may at any time, without the approval of the Borrower,
assign all or a portion of its portion of the Commitment and outstanding
Revolving Credit 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 under the Loan Documents to the
extent of such assignment.
c. Any Bank may at any time, with the prior written approval of
the Borrower and all the other Banks (which approval shall not be
unreasonably withheld), assign all or a portion of its portion of the
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 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 Revolving Credit 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 portion of the Commitment and/or outstanding Revolving Credit 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 any Bank
receives a payment on account of its portion of the Revolving Credit Loans
in a proportion greater than similar payments on account of the portions of
the Revolving Credit Loans held by the other Banks, the Bank so receiving
such greater proportionate payment will purchase a participation in the
portions of the Revolving Credit 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 Revolving Credit Loans
equal to its respective proportionate shares in the outstanding principal
balance of Revolving Credit Loans before the disproportionate payment. If,
however, any payment on account of the Revolving Credit 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 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 found or
declared to be 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 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; 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. THE BORROWER, EACH BANK AND
THE AGENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE 22TRIAL 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.
GNOC, Corp. Boston and Pacific Avenues
Atlantic City, N.J. 08401
Telecopier: 609-340-4861
By_______________________ Attention: Donna M. Graham
Donna M. Graham
Vice President and
Chief Financial Officer
FIRST UNION NATIONAL BANK 550 Broad Street
Newark, N.J. 07102
Telecopier: 201-565-6681
Attention: Robert K. Strunk, II
By_______________________
Alan Lilienthal
Vice President
MIDLANTIC BANK, 6000 Midlantic Drive
NATIONAL ASSOCIATION Box 6000
Mt. Laurel, NJ 08504-6000
By_______________________ Telecopier: 609-778-2683
Peter J. Cahill Attention: Denise D. Killen
Senior Vice President
<PAGE>
Schedules and Exhibits
Schedule 1.01 Certain Permitted Liens
1. Lien for Franchise Taxes of GNAC Corp. for 1989, 1990, 1991 and
1992.
2. Judgement against Golden Nugget of Atlantic City Corporation in
favor of Steven M. Kramer, Esq. and Joel W. Garber, Esq.
3. Judgement against GNOC in favor of the State of New Jersey
dated 6/8/92
4. Federal Tax Lien against Golden Nugget, Marketing Corp.,
(Book 145, Page 181)
5. Mechanic's Lien against Golden Nugget Gambling Hall, Inc.,
a/k/a GNAC Corp., in favor of Heritage Aluminum and Glass,
Inc. (Book 10, Page 325)
Schedule 4.05 Pending or Threatened Litigation against the Borrower
None
Schedule 4.06 Certain Permitted Indebtedness
None
Schedule 4.15 Environmental Matters
The matters set forth in that certain Phase I Environmental Assessment
dated December 7, 1995 prepared by Property Solutions Incorporated.
Schedule 4.20 Labor Matters involving the Borrower
COLLECTIVE BARGAINING AGREEMENTS
UNION EXPIRATION DATE
LOCAL 54 SEPTEMBER 15, 1999
LOCAL 68 JUNE 30, 1996
LOCAL 623 APRIL 30, 1996
LOCAL 711 APRIL 30, 1996
Schedule 6.07 Subsidiaries of the Borrower or its Subsidiaries
GNF <PAGE>
Exhibit 2.02
Form of Borrowing Notification
BORROWING NOTIFICATION
With respect to the Amended and Restated Credit Agreement dated May 2,
1996 (the "Credit Agreement"), among GNOC Corp., a New Jersey corporation,
as borrower, First Union National Bank as lender and agent and Midlantic
Bank, N.A. as lender, the undersigned hereby requests that the Bank advance
funds as follows:
1. Aggregate amount of loans
presently outstanding $____________
2. Amount of requested loan: $_____________
3. Date of loan: ____________________
4. Deposit to Account #____________
GNOC Corp.
<PAGE>
Exhibit 2.03
FORM OF REVOLVING CREDIT NOTE
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE OR OTHER DISPOSITION OF
ANY INTEREST IN THIS NOTE OR OF ANY PARTICIPATION IN THE LOANS THIS NOTE
EVIDENCES IS CONDITIONAL AND SHALL BE INEFFECTIVE IF THE NEW JERSEY CASINO
CONTROL COMMISSION DISAPPROVES.
$[amount] As of May 2, 1996
GNOC, Corp., a corporation organized under the laws of the State of
New Jersey (the "Borrower"), for value received, hereby promises to pay
to the order of [insert] (the "Bank") on June 30, 1998, in lawful money
of the United States of America and in immediately available funds, the
principal sum of [amount] DOLLARS or such lesser unpaid principal amount
as shall be outstanding hereunder, together with interest from the date
hereof on the unpaid principal balance of this Revolving Credit Note,
payable on the dates and at the rate provided for in the Second Amended
and Restated Loan Agreement dated as of May 2, 1996 by and among the
undersigned, First Union National Bank and Midlantic Bank, National
Association (the "Agreement"). In no event shall the interest rate
payable hereon exceed the maximum rate of interest permitted by law.
Capitalized terms used herein which are defined in the Agreement shall
have the meanings therein defined.
The holder of this Revolving Credit Note is authorized to record in
its books and records (whether electronically or manually maintained),
pursuant to Section 2.03 of the Agreement, the date and principal amount
of each Revolving Credit Loan made by the Bank, the date and amount of
each payment or prepayment of principal thereof and the interest rate
with respect thereto. Such recordation shall constitute prima facie
evidence of the accuracy of the information endorsed, provided that the
failure of the Bank to make such recordation shall not affect the
obligations of the Borrower hereunder or under the Agreement. The
aggregate unpaid principal amount of all Revolving Credit Loans set forth
in such schedule shall be presumptive evidence of the principal amount
owing and unpaid on this Revolving Credit Note.
This Revolving Credit Note is one of the Revolving Credit Notes
referred to in the Agreement, and is entitled to the benefits and is
subject to the terms of the Agreement. The principal of this Revolving
Credit Note is repayable in the amounts and under the circumstances, and
its maturity is subject to acceleration upon the terms, set forth in the
Agreement.
Presentment for payment, demand, notice of dishonor, protest, notice
of protest and all other demands and notices in connection with the
delivery, performance and enforcement of this Revolving Credit Note are
hereby waived.
Upon the occurrence of any Event of Default specified in the
Agreement, all amounts then remaining unpaid on this Revolving Credit
Note may be declared to be immediately due and payable, all as provided
in the Agreement.
This Revolving Credit Note shall be construed and enforceable in
accordance with, and be governed by the internal laws of, the State of
New Jersey.
This Revolving Credit Note may not be changed orally, but only by an
instrument in writing executed pursuant to the provisions of Section 9.01
of the Agreement.
GNOC, CORP.
By: exhibit - do not sign
Donna M. Graham
Vice President and Chief
Financial Officer<PAGE>
Exhibit 5.05C-1
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
Board of Directors
GNOC, CORP.
We have audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of GNOC, Corp. (a wholly owned
subsidiary of Bally Entertainment Corporation) as of _____________,
199___ and the related consolidated statements of operations,
stockholder's equity, and cash flows for the year then ended, and have
issued our report thereon dated _________________, 199__.
In connection with our audit, nothing came to our attention that caused
us to believe that the Company failed to comply with the terms,
covenants, provisions or conditions of Sections 5.01, 5.02, 5.03, 6.01
and 6.02 of the Second Amended and Restated Loan Agreement dated as of
May 2, 1996 to which First Union National Bank, Midlantic Bank, National
Association <insert names of other banks that are party to agreement by
reason of permitted assignment at the time report is issued> (the
"Banks") and GNOC, Corp. are parties insofar as they relate to accounting
matters. However, our audit was not directed primarily toward obtaining
knowledge of such noncompliance.
This report is intended solely for the use of the Company and the Banks
and should not be used for any other purpose.<PAGE>
Exhibit 5.05C-2
Form of Accountant's reliance letter
[date]
Dear
<name of accountant> has been engaged to conduct an audit, in accordance
with generally accepted auditing standards, of the consolidated financial
statements for the year ended <insert date> of GNOC, Corp. (the
"Company") for the primary purpose of expressing an opinion on whether
the consolidated financial statements present fairly its financial
position at <insert date> and the results of its operations and cash
flows for the year then ended in conformity with generally accepted
accounting principles. Our audit of the Company's [insert] financial
statements was being made for the purpose stated above, and has not been
planned or conducted for the benefit of First Union National Bank,
Midlantic Bank, National Association (the "Banks") or in contemplation of
the Banks' ongoing credit decisions related to the Second Amended and
Restated Loan Agreement dated May 2, 1996 between the Company and the
Banks (the "Agreement"). Therefore, items of possible interest to the
Banks may not be specifically addressed.
We acknowledge, however, that the Company plans to provide the Banks with
a copy of the consolidated financial statements referred to above and of
our report thereon dated [insert], and that the Banks intend to use the
audited consolidated financial statements as part of their ongoing credit
decisions related to the Agreement, and that the Company has knowledge of
such intended reliance.
In providing this letter, we advise both you and the Banks of the
following. The financial statements are the representations of
management of the Company, and management has the responsibility for
adopting sound accounting policies, for maintaining an adequate and
effective system of accounts, for safeguarding the assets, and for
devising adequate internal control structure. Because there are inherent
limitations involved in any audit that is intended to express an opinion
on the fairness of the presentation of the financial statements being
reported on, an auditor's report is never intended to be a warranty or
guaranty of any sort, but rather is an opinion, arrived at in accordance
with recognized professional standards, whether the financial statements
as a whole present fairly, in all material respects, in conformity with
generally accepted accounting principles, the Company's financial
position as of the balance sheet date and the results of its operations
and its cash flows for the period then ended. Our use of professional
judgment and our assessment of materiality for the purpose of our work
mean that matters may have existed that would have been assessed
differently by others, including the Banks, in connection with the
ongoing credit decisions related to the Agreement. Our audit should not
be taken to supplant the inquiries and procedures that the Banks should
undertake for the purpose of satisfying itself of the Company's credit
worthiness or compliance with the provisions of the Agreement referred to
above. In addition, we will perform no procedures subsequent to the date
of our report to update our report or the financial statements.
Our opinion should never be mistaken as authorization or approval for a
credit decision. A lender's credit decision should be based not only on
the borrower's financial statements, but also on the lender's exercise of
reasonable due diligence with respect to many other factors, some of
which are internal and some of which are external to the borrower.
Moreover, a lender needs to monitor those factors on a on-going basis and
not rely solely on a once-a-year report by an auditor on the historical
financial statements of the borrower. We wish to emphasize, therefore,
that any lender would be remiss in placing its reliance solely upon our
report in making its ongoing credit decisions with respect to the
Agreement and that it is our understanding that the Banks are not relying
solely on the financial statements audited by <insert name of accountant>
in connection with the ongoing credit decisions related to the Agreement.
Very truly yours,
<PAGE>
Exhibit 5.05e
Form of Quarterly Compliance Certificate
OFFICER'S CERTIFICATE
I, [insert], being the Vice President-Finance of GNOC, Inc., a New
Jersey corporation (the "Company"), hereby certify, pursuant to Section
5.05e of the Second Amended and Restated Loan Agreement (the "Agreement")
dated as of May 2, 1996 among the Company, First Union National Bank and
Midlantic Bank. N.A. as follows:
1. The accompanying schedules accurately reflect the
calculations of the financial tests contained in Section 5.01, 5.02,
5.03, and 6.01 of the Agreement.
2. I have no knowledge that an Event of Default (as such term
is defined in the Agreement) has occurred or that any event has occurred
that with the passage of time or giving of notice or both would, if
unremedied, be an Event of Default.
The statements set forth herein above are true, correct and
complete to the best of my knowledge and belief.
Dated:
___________________________________
[insert]
<PAGE>
GNOC, Inc.
Affirmative Covenants - Line of Credit
Period ended:
SECTION 5.01 CONSOLIDATED NET WORTH
[show calculations]
SECTION 5.02 CONSOLIDATED INTEREST COVERAGE RATIO
[show calculations]
SECTION 5.03 CONSOLIDATED FUNDED DEBT RATIO
[show calculations]
SECTION 6.01 RESTRICTED PAYMENTS
[show calculations]
<PAGE>
Exhibit 5.16(b)(ii)
COLLATERAL ASSIGNMENT OF CONSTRUCTION
AND ARCHITECT CONTRACTS
KNOW ALL MEN BY THESE PRESENTS THAT GNOC, Corp., having a mailing
address at [insert address of borrower] (the "Assignor"), in
consideration ONE DOLLAR ($1) paid by First Union National Bank, having
an office at [insert address of lender] (the "Assignee"), hereby assigns,
transfers and conveys unto Assignee, its successor and assigns, all the
rights, interest and privileges of Assignor in and to any construction
and architect contracts between Assignor and others for the construction
of the project located at [insert] including, but not limited to those
certain agreements by and between Assignor and [insert] (together
hereinafter called the "Contracts"), together with all rights and
privileges of any nature thereunder accruing to Assignor.
This Assignment is made as additional security for the payment and
performance of Assignor's obligations under [insert].
Assignor covenants, represents and warrants that:
1. Assignor has not executed or made any prior assignment of any of
its rights under the Contracts, and will not do so in the future;
2. Assignor has not done anything which might prevent Assignee from
complying with, or limit Assignee in operating under, any of the
provisions of the contents; and
3. Except insofar as Assignee may request performance under any of
the Contracts: Assignee will not be obligated to perform or discharge
any obligation under the Contracts or under or by reason of this
Assignment, and Assignor hereby agrees to indemnify Assignee against and
hold Assignee harmless from any and all liability, loss or damage which
Assignee may or might incur under the Contracts or under or by reason of
this Assignment and from any and all claims and demands whatsoever which
may be asserted against Assignee by reason of any alleged obligation or
undertaking on Assignee's part to perform or discharge any of the
covenants, obligations and conditions of the Contracts, and if Assignee
should incur any such liability, loss or damage under the Contracts or
under or by reason of this Assignment, or in defense against any such
claims or demands, the amount thereof, including costs, expenses and
reasonable attorney's fees, together with interest thereon at the rate
applicable to such charges in accordance with the terms of the loan
documents executed in connection herewith ("Loan Documents"), shall be
payable by Assignor to Assignee immediately upon Assignee's demand,
subject to the terms of the Loan Documents.
This Assignment shall inure to the benefit of and shall be binding
upon the parties hereof and their respective successors and assigns.
This Assignment shall be governed by and construed accordingto the
laws of the State of New Jersey.
IN WITNESS WHEREOF, Assignor has caused these presents to be
executed and to be made effective as of [insert date].
<PAGE>
Exhibit 5.16(b)(iii)
[date]
First Union National Bank
550 Broad Street
Newark, New Jersey 07102
GNOC, Corp. ("Borrower")
Premises: [description]
Gentlemen:
The undersigned is a contractor [architect] on the above project.
In consideration of your making a loan to Borrower to finance said
construction, we agree that in the event of default by Borrower under any
of the loan documents, we shall, at your request, continue performance on
your behalf under our agreement with the Borrower (a copy of which is
attached as Exhibit A) in accordance with the terms thereof, provided we
shall be reimbursed in accordance with said agreement for all work, labor
and materials rendered on your behalf. No material modification of our
agreement shall be binding upon you without your consent.
We acknowledge that (i) the agreement is in full force and effect;
and (ii) there are no arbitration proceedings pending under the
agreement.
[signed]
<PAGE>
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
THIS MORTGAGE AND SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS
(this "Mortgage"), dated as of the 16th day of April 1993, given by GNOC,
Corp. ("GNOC"), a New Jersey corporation, having an office at Boston and
Pacific Avenues, P.O. Box 1737, Atlantic City, New Jersey 08404, and GNAC,
Corp. ("GNAC"), a New Jersey corporation, having an office at Boston and
Pacific Avenues, P.O. Box 1737, Atlantic City, New Jersey, 08404, (GNOC and
GNAC are referred to individually as a Mortgagor and collectively, as
"Mortgagor") to FIRST FIDELITY BANK, NATIONAL ASSOCIATION, NEW JERSEY
("First Fidelity"), a national banking association, having an address at
550 Broad Street, Newark, New Jersey 07101 and MIDLANTIC NATIONAL BANK
("Midlantic"), a national banking association, having an address at 499
Thornall Street, Metropark, Edison, New Jersey 08137 (First Fidelity and
Midlantic are referred to collectively as the "Mortgagee").
It is the intention of the Mortgagor that this instrument be a
"Pari Passu Mortgage" within the meaning of the indenture dated as of March
10, 1993 (the "Indenture"), among GNF Corp., a New Jersey Corporation
("GNF"), GNAC as guarantor, GNOC, and Amalgamated Bank of Chicago as
Trustee (the "Trustee"). Pursuant to the Mortgage and Security Agreement
with Assignment of Rents dated as of March 10, 1993 given by GNAC and GNOC,
as mortgagor, to Amalgamated Bank of Chicago, as mortgagee, the lien
created by this instrument ranks pari passu with the lien created by said
Mortgage recorded on March 11, 1993 in Mortgage Book 4980 at page 92 in
the Atlantic County, New Jersey Clerk's Office (the "Trustee's Mortgage").
The rights of Mortgagee under this Mortgage are governed by an
intercreditor agreement of even date (the "Intercreditor Agreement")
executed by the Mortgagee, the Mortgagors, GNF and the Trustee. To the
extent any of the terms of this Mortgage are inconsistent with the terms of
the Intercreditor Agreement, the terms of the Intercreditor Agreement shall
control. Any capitalized terms not defined herein or not refered to as
part of the Indenture shall have the meaning set forth in the Loan
Agreement (as hereinafter defined).
WITNESSETH:
To secure the following obligations and liabilities: (a) the
payment to Mortgagee under that certain loan agreement dated as of April
16, 1993 (the "Loan Agreement") by GNOC, Corp. as the borrower, GNAC and
GNF, Corp, as guarantors, of (i) the indebtedness in the maximum principal
amount of TWENTY MILLION DOLLARS, evidenced by Revolving Credit Notes
issued pursuant to the provisions of the Loan Agreement, (ii) any and all
interest due or to become due on the Revolving Credit Notes in accordance
with the provisions of the Loan Agreement and the Revolving Credit Notes,
and (iii) any and all other sums due or to become due under the Loan
Agreement, the Revolving Credit Notes, this Mortgage and any further or
subsequent advances or expenditures made under any other Loan Document
(hereinafter defined) by Mortgagee pursuant to the provisions hereof (the
items set forth in clauses (i)-(iii) 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
Mortgagor (which, together with the Indebtedness is referred to
collectively as the "Obligations") under (i) this Mortgage, (ii) the Loan
Agreement, (iii) the Revolving Credit Notes, and (iv) the Assignment of
Leases and Rents dated as of the date hereof given by Mortgagor to
Mortgagee (the "Assignment"), (v) and other documents executed by the
Mortgagor in connection with the foregoing, and (vi) any extensions,
renewals, replacements or modifications of any of the foregoing (this
Mortgage, the Loan Agreement, the Assignment, the Revolving Credit 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").
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, 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 "Encumbered Property"):
The Mortgagor's 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 interest, right and title in and to the
buildings and other improvements now or hereafter erected on the Land, as
hereinafter defined (such buildings and other improvements being
hereinafter collectively referred to as the "Buildings"), the Land, and the
Buildings being hereinafter collectively referred to as the "Real
Property";
TOGETHER with all and singular the reversion or reversions,
remainder or remainders, rents and revenues produced in connection with the
Real Property and all of the estate, right, title, interest, property,
possession, claim and demand whatsoever, both in law and at equity, or
Mortgagor of, in and to the Real Property 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, casino and restaurant facilities located on the
Real Property 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 Real Property
including machinery, fixtures, systems, apparatus, fittings, materials and
equipment now or which may hereafter be used in the operation of the Real
Property, 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 personal property, fixtures, additions, substitutions
and proceeds being sometimes hereinafter collectively referred to as the
"Personal Property");
TOGETHER with Mortgagor's right, title and interest to and under
all leases, subleases, underletting, licenses and other occupancy
agreements which now or hereafter may affect the Real Property 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
Property, together with all amendments and modifications thereof;
TOGETHER with (a) subject to the provisions of Article VI 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 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 Property or
in connection with the use or operation thereof (collectively, the
"Insurance Proceeds"), and (b) subject to the provisions of Article VII
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 VI and VII 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 Real Property,
and in each such case, the foregoing shall be deemed a part of the Real
Property 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;
TOGETHER with all proceeds of any or all of the foregoing; and
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, further
represents, warrants, covenants and agrees with Mortgagee as follows:
<PAGE>
I. Warranty of Title.
Mortgagor warrants to Mortgagee that (i) it has good and
marketable fee simple title to the Land, (ii) it has good and marketable
fee simple title to the Buildings located on the Land and good and
marketable title to the Personal Property located on or used in connection
with the Real Property, (iii) it has the right to mortgage the Real
Property and the Leases in accordance with the provisions set forth in this
Mortgage, (iv) it has the right to grant a security interest in the
Personal Property and the Rents in accordance with the provisions set forth
in this Mortgage, and (v) this Mortgage is a valid and enforceable first
lien on the Encumbered Property, subject, as of the date hereof, only to
the exceptions to title listed on Schedule B, Section 1 and Section 2 of
Title Insurance Commitment No. F2366251L issued by the Commonwealth Land
Title Insurance Co. dated March 11, 1993 as continued through the date
hereof (collectively, the "Closing 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
Closing Encumbrances and the Permitted Liens (as that term is defined in
the Loan Agreement) (collectively, the Closing Encumbrances and the
Permitted Liens are referred to as 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.
II. Payment of Indebtedness.
A. Mortgagor 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.
III. Requirements; Proper Care and Use.
A. Subject to the right of Mortgagor to contest a Legal
Requirement (hereinafter defined) as provided in Article X hereof,
Mortgagor 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
Mortgagor 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 of 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 Mortgagor 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 Mortgagor 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 a Material Adverse
Effect.
B. Mortgagor shall except as otherwise provided herein (i) not
abandon the Encumbered Property or any portion thereof that does not have a
material adverse effect on the Encumbered Property, (ii) maintain, in all
material respects, the Encumbered Property 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 Encumbered Property which,
in the reasonable judgment of Mortgagor, 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 Encumbered Property or
the priority or security of the lien of this Mortgage, (v) not remove or
demolish any of the Encumbered Property, if such removal or demolition
might materially impair the value of the Encumbered Property except in
accordance with Article 12 of the Indenture, except that Mortgagor 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 effect the value of the 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 except in accordance
with Article 12 of the Indenture, (vi) not make, install or permit to be
made or installed any alterations or additions to the Encumbered Property
if doing so would materially impair the value of the Encumbered Property
except in accordance with Article 12 of the Indenture, (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 Encumbered Property 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 Property for the purpose of inspecting
and appraising the Encumbered Property or any portion thereof.
C. Mortgagor 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 Property 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 Mortgagor
hereby assigns to Mortgagee any and all rights to give consent for all or
any portion of the Real Property or any interest therein to be so used.
Mortgagor shall not, by any act or omission, impair the integrity of the
Real Property, as it exists today, as a single or multiple zoning lot or
lots, as the case may be, separate and apart from all its premises. Any
act or omission by Mortgagor which would result in a violation of any of
the provisions of this Article III shall be null and void. Notwithstanding
the foregoing, Mortgagor shall have the right to grant easements, rights of
way and similar interests which are subordinate to the lien of this
Mortgage and which do not materially impair the value of the Encumbered
Property.
D. Mortgagor has 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 Property, and Mortgagor has full power and
authority to carry on its business at the Real Property as currently
conducted and has not received any notice of any violation of any Legal
Requirement that materially impairs the value of the Encumbered Property.
E. During the term of this Mortgage and 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 (ii) are herein collectively
referred to as the "Operational Requirements"):
a. As of the date hereof, 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.
b. Mortgagor will keep, maintain and preserve the Operational
Requirements in full force and effect and in good standing.
c. Mortgagor will not knowingly violate, nor will it
knowingly suffer any violation of, the Operational Requirements.
d. In the event Mortgagor knows of any fact, circumstances,
or occurrence which may result in a violation of the Operation
Requirements, Mortgagor shall promptly give Mortgagee written notice
thereof.
IV. 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 Encumbered Property is located or any agency, department, bureau,
board, commission, including the Casino Control Commission as defined in
the Loan Agreement, 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 Loan Agreement and any
franchise tax), Mortgagor 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 Mortgagor 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 Loan Agreement, including, in calculating such rate of interest, any
additional interest which may be imposed under the Loan 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.
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, Mortgagor, 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 Mortgagor 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 Encumbered Property is located
which shall deduct from the value of the Encumbered Property, for purposes
of taxation, any lien thereon shall change in any way the laws for the
taxation of mortgages or debts secured by mortgages for state of 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 Mortgagor, Mortgagee, this Mortgage or the Loan
Agreement is not exempt from payment of such tax and if Mortgagor shall be
permitted by law to pay the whole or such tax in addition to all other
payments required hereunder and under the other Loan Documents, Mortgagor
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.
V. Payment of Impositions.
A. Subject to the provisions of Article X 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, Mortgagor
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 maintain
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 against Mortgagor 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 Mortgagor 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
Mortgagor's option, be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), Mortgagor may exercise
the option to pay such Imposition in such installments, and, in such event,
Mortgagor 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, Mortgagor shall deliver to
Mortgagee evidence reasonably acceptable to Mortgagee showing the payment
of such Imposition. Mortgagor 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 Mortgagor 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,
Mortgagor 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,
Mortgagor 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, Mortgagor 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 Mortgagor.
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 V (provided, however, that Mortgagee shall
have no right to pay such Imposition which Mortgagor is contesting the
validity, enforceability or application of the same pursuant to the
provisions of Article X hereof or is 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.
VI. Insurance.
A. Mortgagor 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:
1. 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. ENCUMBRANCES. 4001, if the Real Property 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
Mortgagor 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 or for a longer period, 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 the operations
conducted at the Real Property;
2. demolition and increased cost of construction coverage;
3. if a sprinkler system shall be located in the Buildings,
sprinkler leakage insurance;
4. commercial general liability insurance in respect to the
operation of the Encumbered Property 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 Mortgagor
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 for each Mortgagor (signed by (i) a Secretary or
Assistant Secretary of each Mortgagor and (ii) the Chairman, Vice Chairman,
President, Vice President or Treasurer of each Mortgagor; provided,
however, that such certificate may be signed by two of the officers listed
in clause (ii) above in lieu of being signed by one of such officers or
directors listed in such clause (ii) and one of the officers listed in
clause (i) above) stating that Mortgagor was unable to obtain commercial
general liability insurance coverage in excess of the amount actually
obtained or on other than a "claims made" basis; and
5. 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 Encumbered Property
or conducting operations similar to the operations conducted at the Real
Property.
All insurance provided hereunder shall be in such form as is
commonly obtained by owners of property 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 Property, shall
not contain a coinsurance provision whereby Mortgagor in the event of loss
becomes 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 Mortgagees, except
policies insuring against damage by fire or other casualty, which shall
provide for loss payable as more particularly set forth in Paragraph VI(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. Anything
contained herein to the contrary notwithstanding, in no event shall the
insurance provided under clause (t) of Paragraph VI(A)(1) 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 reasonably determined from time to time by Mortgagee.
Mortgagor 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
Mortgagor or by any lessee of the Real Property or any portion thereof, or
become void or questionable by reason of the failure or impairment of the
capital of any insurer, of if for any other reason whatsoever any such
insurance shall become unsatisfactory to Mortgagee, as determined in its
reasonable judgment, Mortgagor 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 Mortgagor shall, within thirty (30) days after
demand by Mortgagee, obtain such other types of insurance, in such amounts
as may be reasonable required by Mortgagee. Mortgagor 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. Mortgagor shall (i) pay as they become due all premiums for the
insurance required hereunder (it being understood that Mortgagor 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 Mortgagor shall be in default of its obligation to so insure
or deliver any such prepaid insurance or policies or certificate or
certificates of insurance to Mortgagee in accordance with the provisions
hereof, Mortgagee, at its option (but without any obligation do so) and
upon twenty-four (24) hours notice, unless Mortgagor provides satisfactory
evidence that all insurance requirements under this Mortgage and the Loan
Agreement, have been complied with, 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. Mortgagor shall adjust the amount of insurance required to be
provided pursuant to the provisions of clause (t) of Paragraph VI(A)(1)
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. Mortgagor 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 Mortgagor 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 Mortgagor 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, Mortgagor 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, Mortgagor shall give immediate notice thereof to Mortgagee and
Mortgagor promptly shall commence and diligently shall continue and
complete the repair, restoration, replacement or rebuilding of the
Buildings in a good and workmanlike manner ("Restoration") and the Personal
Property so damage, 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 Eight Million Dollars
($8,000,000) (in either case, "Major Restoration"), then Mortgagor shall,
prior to the commencement of the Major Restoration, furnish or cause to be
furnished to Mortgagee: (1) 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 photo-static 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, Mortgagor
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. Mortgagor shall not commence any of the Major Restoration until
Mortgagor shall have complied with the applicable requirements referred to
in clause (F) above, and after commencing Major Restoration, Mortgagor
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 VI, 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:
1. If the Restoration to be done is Major Restoration, as
determined by Mortgagee, the Architect shall be in charge of the
Restoration.
2. 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 (1) 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 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).
3. Each request shall be accompanied by waivers or releases
of liens, reasonably 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.
4. There shall be no Event of Default or Potential Default
under this Mortgage, the Loan Agreement or any other Loan Document.
5. 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 not then be continuing any Event of Default or
Potential Default under any Loan Document, any Insurance Proceeds (together
with any interest earned thereon) shall be paid to the Mortgagor. Upon
failure on the part of Mortgagor promptly to commence or diligently to
continue the Restoration, Mortgagee may, subject to the terms of the
Intercreditor Agreement, 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 Loan 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 Plans in accordance
with paragraph (F) of this Article VI to Mortgagee 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, Mortgagor shall fail to commence
promptly such Major Restoration, or if thereafter Mortgagor fails
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
Mortgagor is, 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 Mortgagor 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 VI, then, in addition to all other
rights herein set forth, 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. 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 in accordance with the terms of
this Mortgage. Mortgagor hereby waives, for itself and all others holding
under it, 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 VI) 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 Ten Million
Dollars ($10,000,000), shall all be paid to Depositary and disbursed in
accordance with the provisions hereof; (ii) in the case of a loss in excess
of Eight Million Dollars ($8,000,000), but less than Ten Million Dollars
($10,000,000), the first Eight Million Dollars ($8,000,000) 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 Eight Million Dollars ($8,000,000) 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 Mortgagor 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 Eight Million Dollars ($8,000,000). Each insurer
is hereby authorized and directed to make payment of any Insurance Proceeds
or the portion thereof, as described in this Paragraph VI(J), under any
policies of insurance in connection with a loss in excess of Ten Million
Dollars ($10,000,000) directly to Depositary instead of to Mortgagor and
Depositary jointly, and Depositary is hereby authorized to endorse any
draft therefor as Mortgagor's attorney-in-fact if Mortgagor 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 Mortgagor or both,
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 Mortgagee's rights in accordance with the provisions hereof
shall transfer therewith all of Mortgagor's interest in all insurance
policies then covering the Buildings and the Personal Property or the
operations conducted at the Real Property.
M. Mortgagor hereby acknowledges 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 reasonable expense of Mortgagor, 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.
<PAGE>
VII. 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"), Mortgagor
shall continue to make all payments due under this Mortgage and under the
Loan Agreement and the other Loan Documents in accordance with the
provisions of this Mortgage, the Loan Agreement and the applicable
provisions of the other Loan Documents. Mortgagor shall notify Mortgagee
immediately upon obtaining knowledge of the institution of any proceedings
for any Taking or of any contemplated Taking of which Mortgagor is aware.
No such proceeding with respect to any Taking shall be settled without the
prior express written 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 Mortgagor collectively is less
than Eight Million Dollars ($8,000,000) shall not require such consent.
Each Governmental Authority is hereby authorized and directed to make
payment of any Award made in connection with any Taking directly to
Mortgagor or Depositary in accordance with the provisions of the next
succeeding sentence and Paragraph VII(B) hereof instead of to Mortgagor and
Depositary jointly, and Depositary is hereby authorized to endorse any
draft therefor as Mortgagor's attorney-in-fact if Mortgagor 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, 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 Mortgagor to continue to conduct its business at such remaining
Encumbered Property (a "Partial Taking"), (i) in the event that the Award
is less than Eight Million Dollars ($8,000,000), the same shall be paid to
Mortgagor, (ii) in the event that the Award shall be equal to or be in
excess of Eight Million Dollars ($8,000,000), but shall be less than Ten
Million Dollars ($10,000,000), the first Eight Million Dollars ($8,000,000)
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 Ten Million Dollars ($10,000,000), 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 VI 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. Mortgagor 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 VI hereof, as if such
Partial Taking had resulted in "damage or destruction to the Buildings or
Personal Property" (within the meaning of Paragraph VI(F) hereof), with
Mortgagor, Mortgagee and Depositary each having the same rights and
obligations with respect to the Award and Restoration as are set forth in
Paragraphs VI(F) through VI(J) hereof with respect to Insurance Proceeds,
except that, notwithstanding the provisions of Paragraph VI(F) hereof,
Mortgagor 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 VI(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 subject to the terms of the
Intercreditor Agreement, may 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 the Mortgagee. The
proceeds of such Award shall be distributed in accordance with the terms of
the Intercreditor Agreement.
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. Mortgagor hereby acknowledges 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 reasonable expense of Mortgagor, 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.
VIII. Sale of Encumbered Property; Additional Financing.
Except as permitted under the terms of the Loan Agreement,
Mortgagor shall not, at any time assign, transfer or convey all or any part
of the Encumbered Property or any interest therein.
IX. Discharge of Liens.
Subject to the provisions of Article X hereof and except as
permitted by the Loan Agreement or this Mortgage, Mortgagor 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, Mortgagor shall forthwith
deliver copies thereof to Mortgagee and Mortgagor shall within thirty (30)
days after request therefor by Mortgagee, cause the same to be discharged
of record by payment or bonding.
X. Right of Contest.
Mortgagor, at its 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 Mortgagor 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, (b) adequate reserves with respect thereto are maintained on
Mortgagor's books in accordance with generally accepted accounting
principles and the applicable provisions of the Loan 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 Mortgagor, 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, Mortgagor 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 Mortgagor and its
subsidiaries taken as a whole or be disadvantageous in any material respect
to the Holders. If such action or proceeding is terminated or discontinued
adversely to Mortgagor and is not subject to appeal, Mortgagor shall,
within thirty (30) days of receiving request therefor, deliver to Mortgagee
evidence reasonably satisfactory to Mortgagee of Mortgagor's 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 sole
discretion.
XI. 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. Any lessee under any
Lease may encumber any of lessee's personalty, furniture, fixtures and
equipment originally installed by such lessee in such lessee's leased
space.
B. Mortgagor shall (i) perform all of the provisions of the Leases
on the part of the lessor thereunder to be performed within the time period
required under the Leases, (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 sole 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 XI 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 XI. 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, automatically
revocable by Mortgagee upon an Event of Default, 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 XI 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.
E. With respect to any Major Lease upon notice and demand,
Mortgagee shall, from time to time, execute, acknowledge and deliver to
Mortgagor or cause to be executed, acknowledged and delivered to Mortgagor,
and to any tenant, a subordination, attornment and non-disturbance
agreement in a form reasonably acceptable to the Mortgagee. With respect
to any Major Lease in which Mortgagor requests a subordination, attornment
and non-disturbance agreement such Major Lease shall be subject to the
reasonable approval of Mortgagee.
XII. Estoppel Certificates.
Mortgagor 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.
XIII. Loan Document Expenses.
Mortgagor 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 IV hereof.
XIV. 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 Mortgagor 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 XIV shall
cure, or shall be deemed or construed to cure, any such Event of Default by
Mortgagor hereunder or waive any rights or remedies of Mortgagee hereunder
or at law or in equity by reason of any such Event of Default.
XV. Mortgagee's Costs and Expenses.
If (a) an Event of Default shall occur under this Mortgage,
beyond applicable grace periods, if any, or an Event of Default under any
other Loan Document, including the Loan Agreement, beyond any applicable
grace period, or (b) Mortgagee shall exercise any of its rights or remedies
to which it is entitled 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 Mortgagor 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 XV 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 XV are not inconsistent
therewith or violative thereof.
XVI. Events of Defaults.
The occurrence of an "Event of Default" under the terms of the
Loan Agreement shall be an Event of Default hereunder; provided, however,
if Mortgagor shall fail or neglect to comply with or otherwise perform,
keep or observe, any non-monetary term, provision, condition or covenant
contained in this Mortgage, such failure or neglect shall not constitute an
Event of Default under the Loan Agreement, this Mortgage or any other Loan
Document unless the Mortgagee shall have given written notice of such
failure or neglect to the Mortgagor, and the Mortgagor shall have failed to
cure within 30 days following such notice; provided, further, if Mortgagor
cannot cure any non-monetary breach of any provision, covenant or
condition, it shall not constitute an Event of Default if such breach
cannot reasonably be cured within such 30 day grace period because of any
strikes, lockouts, unavailability of materials, failure of power, delays in
settling insurance or condemnation claims, governmental or quasi-
governmental laws or regulations, riots, insurrections, adverse weather
conditions, war or any other reason beyond Mortgagee's reasonable control
("Force Majeure"), so long as upon the termination of the event or events
constituting the Force Majeure, the Mortgagor diligently acts to cure the
breached provision, condition or covenant within a reasonable period of
time.
XVII. 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 Mortgagor, take such action as
Mortgagee deems advisable, in its sole discretion, to protect and enforce
the rights of Mortgagee against the Mortgagor 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:
1. Mortgagee may elect to cause the Encumbered Property or
any portion thereof to be sold in accordance with the provisions hereof and
applicable law.
2. Mortgagee may, without releasing Mortgagor from any
Obligation under this Mortgage or any other obligation under the Guaranty
or any other Loan Document and without waiving any Event of Default,
exercise any of its rights and remedies under Article XIV hereof.
3. if the Indebtedness shall have been declared due and
payable in accordance with the provisions of the Loan 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.
4. Mortgagee, if it has not already revoked the license
granted pursuant to Article XI hereof, may revoke the license and may,
without releasing Mortgagor 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 Mortgagor and its 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
Encumbered Property, 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
Mortgagor with respect to the Encumbered Property, either in the name of
Mortgagor 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.
5. 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 XVII, 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 Property or, at Mortgagee's option, such other address
of the lessee as may be set forth in such Lease.
6. Mortgagee may declare the entire unpaid Indebtedness to be
immediately due and payable.
7. Mortgagee may institute proceedings for the complete
foreclosure of this Mortgage in which case the Encumbered Property or the
Mortgagor's interest therein may be sold for cash or upon credit in one or
more portions.
8. 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.
9. 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 the Mortgagor 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.
10. 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.
11. Mortgagee may recover judgment on the Revolving Credit
Notes either before, during or after any proceedings for the enforcement of
this Mortgage.
12. 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, any guarantor or of any
person, firm or the entity liable for the payment of the Indebtedness.
13. Mortgagee may cure such Event of Default, without
relieving the Mortgagor of any liability in connection with such Event of
Default, and (1) the Mortgagor, on demand, shall reimburse the Mortgagee
for any and all costs and expenses incurred by the Mortgagee in connection
with the curing of any Event of Default, together with any defaulted
interest payable pursuant to the Loan Agreement from the date such costs
and expenses are incurred until the same are paid to the Mortgagee, and (2)
the Mortgagee shall be entitled to apply any sums then held by the
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
14. Mortgagee may pursue such other remedies as the Mortgagee
may have under any applicable law.
B. Subject to the terms of the Intercreditor Agreement, the
purchase money proceeds or avails of any sale of the Encumbered Property
made under or by virtue of this Article XVII, together with any other sums
which then may be held by the Mortgagee under this Mortgage, whether under
the provisions of this Article XVII or otherwise, shall be applied as
follows:
First: To the payment of the costs and expenses of any such
sale, including reasonable compensation to the 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 the Mortgagee
under this Mortgage and together with interest as provided herein on all
advances made by the 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 Revolving Credit 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,
the Mortgagor. The 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, as defined in the Loan
Agreement, 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 Property 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 there-to, as a condition to receiving the benefit of the
Real Property, the Personal Property or other collateral hereby encumbered
for the benefit of Mortgagee, Mortgagor does hereby give its 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. The 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, the
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 the Mortgagee
under or by virtue of this Article XVII, the 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. The
Mortgagee is hereby irrevocably appointed the true and lawful attorney of
Mortgagor, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Encumbered Property and rights
so sold and for that purpose the Mortgagee may execute all necessary
instruments of conveyance, assignment and transfer, and may substitute one
or more persons with like power, Mortgagor hereby ratifying and confirming
all that its 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 XVII, 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 in and to the properties and rights so sold, and shall be a
perpetual bar both at law and in equity against Mortgagor and against any
and all persons claiming or who may claim the same, or any part thereof
from, through or under the Mortgagor.
G. Anything contained in the Loan Agreement or in this Mortgage to
the contrary notwithstanding, in the event of any sale made under or by
virtue of this Article XVII (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 XVII
(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), the 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 the Mortgagee is authorized to deduct under this Mortgage.
I. No recovery of any judgment by the Mortgagee and no levy of an
execution under any judgment upon the Encumbered Property or upon any
property of Mortgagor 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 the Mortgagee hereunder, but such
liens, rights, powers and remedies of the 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 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, contained herein or in
the Loan Agreement or the Revolving Credit Notes.
K. Upon the occurrence of any Event of Default hereunder, it is
agreed that Mortgagor, if it is an occupant of the Real Property or any
part thereof, shall immediately surrender possession of the Real Property
so occupied to the Mortgagee, and if such occupant is permitted to remain
in possession, the possession shall be as tenant of the Mortgagee and, on
demand such occupant subject to applicable law (a) shall pay to the
Mortgagee monthly, in advance, a reasonable rental for the space so
occupied and in default thereof, and (b) 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 Loan Agreement or the
Revolving Credit 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 Mortgagor shall pay or shall
cause to be paid interest thereon from and after the date on which such
payment first becomes due at the defaulted interest pursuant to the Loan
Agreement and such interest shall be due and payable, on demand, at such
rate until the entire amount due is paid to the 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 the
Mortgagee to obtain judgment for the Indebtedness, or of any other nature
in aid of the enforcement of the Loan Agreement, the Revolving Credit Notes
or of this Mortgage, Mortgagor 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 the 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 of any of its property, or of the Encumbered
Property or any part thereof, the Mortgagee shall be entitled to retain
possession and control of all property now and hereafter covered by this
Mortgage.
XVIII. Security Agreement under Uniform Commercial Code.
It is the intention of Mortgagor and Mortgagee that this Mortgage
shall constitute and this Mortgage does hereby constitute a Security
Agreement between Mortgagor 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 Real Property whether or not any such item is physically
attached to the Real Property 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 the Mortgagor 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 Mortgagor shall fail to execute any such financing or
continuation statements for twenty (20) days after request therefor is made
by Mortgagee, Mortgagor hereby authorizes Mortgagee, without the signature
of Mortgagor, 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.
XIX. Representations and Warranties.
Each Mortgagor represents and warrants for itself that: (a) such
Mortgagor has the requisite power and lawful authority to execute and
deliver this Mortgage and to perform the Obligations it is required to
perform under the Loan Documents; (b) the execution and delivery of this
Mortgage by such Mortgagor and performance of its obligations under this
Mortgage will not result in such Mortgagor being in default under any
provision of its Certificate of Incorporation or By-Laws or of any deed of
trust, mortgage, document, instrument, credit or other agreement to which
it is a party or by which its assets are bound; (c) the Board of Directors
of such Mortgagor has duly authorized the execution and delivery of this
Mortgage; (d) on the date hereof, no portion of the Buildings or the
Personal Property has been materially damaged, destroyed or injured by fire
or other casualty which is not now fully restored or in the process of
being restored; (e) such Mortgagor has all necessary licenses,
authorizations, registrations and approvals to own, use, occupy and operate
the Encumbered Property and has full power and authority to carry on its
business at the Real Property as currently conducted and has not received
any notice of any violation of any Legal Requirement that materially
impairs the value of the Encumbered Property; and (f) as of the date
hereof, such Mortgagor has not received any notice of any Taking of the
Encumbered Property as the case may be) or any portion thereof and such
Mortgagor has no knowledge that any such Taking is contemplated.
XX. No Waivers, Etc.
No failure by Mortgagee to insist upon the strict performance by
each Mortgagor 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
Mortgagor 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.
XXI. Brokerage.
Mortgagor hereby represents and warrants that it has dealt with
no broker, finder, or like agent in connection with the Loan Agreement, the
Revolving Credit Notes or this Mortgage.
XXII. Mortgage Subject to the Provisions of the Act.
Each provision of this Mortgage is subject to the provisions of
the Act, as defined in Article III, paragraph (E).
XXIII. Environmental Matters.
A. Each Mortgagor represents and warrants that:
1. To the best of Mortgagor's knowledge, none of the real
property owned and/ or occupied by Mortgagor and located in the State of
New Jersey, including, but not limited to, the Encumbered Property (the
"New Jersey Real Property"), has ever been used to treat, store, handle,
transfer, process or dispose of "Hazardous Wastes" as that term is defined
in applicable state or federal law. Mortgagor has not in the past, does
not at present, and shall not in the future, use, or allow the use of, in
any material respect its real property, including, but not limited to, the
Encumbered Property, for the purpose of refining, producing, storing,
handling, transferring, processing, treating, disposing of or transporting
"Hazardous Substances" as that term is defined in applicable state or
federal law. Mortgagor shall not, and shall not allow any other person to,
treat, store, dispose of or release any such Hazardous Waste on or in the
New Jersey Real Property, except for temporary storage of Hazardous Waste
generated on the property in strict compliance with all applicable laws.
2. To the best of Mortgagor's knowledge, none of the New
Jersey Real 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(1),
and said New Jersey Real Property is not now and will not be used in the
future as a "Major Facility."
3. No lien has been attached to any revenues or any New
Jersey Real Property or personal property owned by Mortgagor and located in
the State of New Jersey, including, but not limited to, the Encumbered
Property, and to the best of Mortgagor's knowledge there are no events,
conditions, facts or circumstances that could lead to the imposition of
such a lien, under any law relating to pollution or the discharge of
materials into the environment. Mortgagor shall not permit the imposition
of any such lien on any property which it owns.
4. Mortgagor has not received any summons, citation,
directive, or other written communication requiring, requesting, or
alleging the need for corrective action of Mortgagor from the New Jersey
Department of Environmental Protection and Energy or any other person or
entity relating to the releasing, spilling, leaking, pumping, pouring,
emitting, emptying, dumping or threatened release of "Hazardous
Substances," as such term is defined in applicable state or federal law.
To the best of Mortgagor's knowledge, there are no events, conditions,
facts or circumstances that could justify or give rise to any such
communication.
5. To the best of Mortgagor's knowledge, there are and have
been no underground storage tanks ("Underground Storage Tanks") on any New
Jersey Real Property as such term is defined in applicable state or federal
law and no New Jersey Real Property contains any asbestos or asbestos
containing materials other than in de minimis amounts.
B. Each Mortgagor covenants and agrees that:
1. If Mortgagor is presently an owner or operator of a "Major
Facility" in the State of New Jersey, as such term is defined in N.J.S.A.
58:10-23.11b(1), or if Mortgagor ever becomes such an owner or operator,
then Mortgagor shall furnish the New Jersey Department of Environmental
Protection and Energy with all the information required by N.J.S.A.
58:10-23.lld to the extent applicable.
2. Mortgagor shall not cause or permit to exist a releasing,
spilling, leaking, pumping, emitting, pouring, emptying or dumping of a
"Hazardous Substance," as such term is defined in applicable state or
federal law into waters of the State of New Jersey or onto lands from which
it might flow or drain into said waters, or into waters outside the
jurisdiction of the State of New Jersey, except in strict compliance with
the terms of applicable law, including any permit in force.
3. So long as Mortgagor shall own or operate any real
property located in the State of New Jersey, which is used as a "Major
Facility," as such term is defined in N.J.S.A. 58:10-23.11b(1), Mortgagor
shall duly file or cause to be duly filed with the Director of the Division
of Taxation in the New Jersey Department of the Treasury, a tax report or
return and shall pay or make provision for the payment of all taxes due
therewith, all in accordance with and pursuant to N.J.S.A. 58:10-23.11h to
the extent applicable.
4. In the event that there shall be filed a lien against the
Encumbered Property under any law relating to pollution or the discharge of
materials into the environment, then Mortgagor shall promptly but no later
than thirty (30) days from the date that Mortgagor is given notice that the
lien has been placed against the Encumbered Property, either (1) 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.
5. Should Mortgagor cause or permit any intentional or
unintentional action or omission resulting in the releasing, spilling,
leaking, pumping, pouring, emitting, emptying or dumping of materials into
the waters or onto lands of the State of New Jersey, or into the waters
outside the jurisdiction of the State of New Jersey, Mortgagor shall
promptly, diligently and expeditiously report and proceed to clean up such
release, spill, leak, pumping, pour, emission, emptying or dumping in
strict compliance with all applicable laws.
6. If Mortgagor shall fail to take any action required by
this Section, upon notice to Mortgagor (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 shall execute and deliver promptly after request, such
instruments as Mortgagee may deem useful or required to permit Mortgagee to
take any such action.
7. Without limiting the foregoing, Mortgagor shall comply in
all material respects with all applicable laws relating to pollution or the
discharge of materials into the environment or the indoor workplace.
8. Mortgagor 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 Mortgagor's
failure to comply with existing and future laws relating to pollution or
the discharge of materials into the environment, orders, ordinances, rules
and regulations, including those related to the presence of asbestos
affecting the Encumbered Property, 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 Revolving
Credit Notes, the Loan Agreement, or any other discharge of the
Indebtedness by operation of law or otherwise.
XXIV. Waivers by Mortgagor.
A. Mortgagor hereby waives all errors and imperfections, to the
extent permitted by law, in any proceedings instituted by Mortgagee under
this Mortgage, the Loan 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 Mortgagor 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 Loan Agreement or any other Loan
Document, nor shall Mortgagor 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. Mortgagor hereby waives 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.
XXV. 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 Mortgagor or Mortgagee, or whenever Mortgagor 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, New Jersey
550 Broad Street
Newark, New Jersey 07101
Attn: Robert K. Strunk
and Midlantic National Bank
499 Thornall Street
Metro Park Plaza
Edison, N.J. 08837
Attn: Edward M. Tessalone
B. If to Mortgagor:
GNAC, Corp. & GNOC, Corp.
Boston & Pacific Avenues
P.O. Box 1737
Atlantic City, New Jersey 08041
Attn: President
and Sills, Cummis, Zuckerman, Radin
Tischman, Epstein & Gross
One Riverfront Plaza
Newark, New Jersey 07102
Attn: Wayne Heicklen, Esq.
C. or to such other address as Mortgagor 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.
XXVI. Conflict with Loan 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 Loan
Agreement, then, unless this Mortgage expressly provides otherwise by
specific reference to the Loan Agreement, the terms, covenants, conditions
and provisions of the Loan Agreement shall prevail.
XXVII. 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 Mortgagor
and Mortgagee. The covenants of this Mortgage shall run with the Real
Property and shall bind each Mortgagor and its 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.
XXVIII. 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 (e) "the Real
Property" shall mean "the Real Property or any portion thereof or interest
therein." Any act which Mortgagee is permitted to perform under this
Mortgage, the Loan 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 Mortgagor under this Mortgage, the Loan 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, Mortgagor 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 Mortgagor's 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 Mortgagor or any successor corporation
shall have any liability for any obligations of Mortgagor hereunder or for
any claim based on, in respect of or by reason of such obligations or its
creation. Mortgagee, by accepting this Mortgage, waives and releases all
such liability.
XXIX. Enforceability.
This Mortgage 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 Mortgage shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Mortgage 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 Mortgage. Nothing contained in this Mortgage or in any other Loan
Documents shall require Mortgagor 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
Loan Agreement or any other Loan Document would subject Mortgagee to
penalty under applicable law, then, ipso facto, the obligation of Mortgagor
to make such payment shall be reduced to the highest rate then permitted
under applicable law without penalty.
<PAGE>
XXX. Satisfaction.
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 Mortgagor a satisfaction of this Mortgage in recordable form and
any other documents or instruments reasonably requested by Mortgagor to
release the lien of this Mortgage.
XXXI. Receipt of Copy.
Each Mortgagor acknowledges that it has received a true copy of
this Mortgage.
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:
GNOC, Corp., a New
Jersey Corporation
By:___________________________
Name: Donna M. Graham
Title: Chief Financial
Officer, Treasurer
GNAC, Corp., a New
Jersey Corporation
By:___________________________
Name: Donna M. Graham
Title: Chief Financial
Officer, Treasurer
<PAGE>
STATE OF NEW JERSEY )
)
COUNTY OF ESSEX )
On the 16th day of April, 1993, before me personally came Donna
M. Graham, to me known, who, being by me duly sworn, did depose and say
that she resides at 26 Beacon Lane, Brigantine, New Jersey 08203; that she
is a Chief Financial Officer and Treasurer of GNOC, Corp., a New Jersey
corporation, the corporation described in and which executed the foregoing
instrument by order of the board of directors of said corporation; and that
she signed her name thereto by like order.
_________________________
Notary Public
STATE OF NEW JERSEY)
)
COUNTY OF ESSEX )
On the 16th day of April, 1993, before me personally came Donna M. Graham,
to me known, who, being by me duly sworn, did depose and say that she
resides at 26 Beacon Lane, Brigantine, New Jersey 08203; that she is a
Chief Financial Officer and Treasurer of GNAC, Corp., a New Jersey
corporation, the corporation described in and which executed the foregoing
instrument by order of the board of directors of said corporation; and that
she signed her name thereto by like order.
_________________________
Notary Public
<PAGE>
EXHIBIT A
Property Description<PAGE>
EXHIBIT B
Leases
Lease dated July 1, 1992 by and between GNAC, Corp. (as lessor) and GNOC,
Corp.(as lessee).
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
given by
GNOC, CORP., a New Jersey corporation,
and
GNAC, CORP., a New Jersey corporation,
Mortgagor
to
FIRST FIDELITY BANK, NATIONAL ASSOCIATION, NEW JERSEY,
and
MIDLANTIC NATIONAL BANK
Mortgagee
Dated as of April 16, 1993
Record and Return to:
McCarter & English
Four Gateway Center
100 Mulberry Street
P.O. Box 652
Newark, New Jersey 07101-0652
Attn: Curtis A. Johnson, Esq.
<PAGE>
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
TABLE OF CONTENTS
Article Page
I. Warranty of Title 6
II. Payment of Indebtedness 6
III. Requirements; Proper Care and Use 7
IV. Taxes on Mortgagee 9
V. Payment of Impositions 11
VI. Insurance 13
VII. Condemnation/Eminent Domain 23
VIII. Sale of Encumbered Property; Additional Financing 25
IX. Discharge of Liens 25
X. Right of Contest 25
XI. Leases 26
XII. Estoppel Certificates 29
XIII. Loan Document Expenses 29
XIV. Mortgagee's Right to Perform 29
XV. Mortgagee's Costs and Expenses 30
XVI. Events of Defaults 31
XVII. Remedies 31
XVIII. Security Agreement under Uniform Commercial Code 38
XIX. Representations and Warranties 39
XX. No Waivers, Etc. 39
XXI. Brokerage. 40
XXII. Mortgage Subject to the Provisions of the Act 40
XXIII. Environmental Matters 40
XXIV. Waivers by Mortgagor 43
XXV. Notices 44
XXVI. Conflict with Loan Agreement 45
XXVII. No Modification; Binding Obligations 45
XXVIII. Miscellaneous 45
XXIX. Enforceability 46
XXX. Satisfaction 47
XXXI. Receipt of Copy 47
EXHIBIT A
Metes and Bounds Description
EXHIBIT B
Leases
<PAGE>
Record and Return to:
Curtis A. Johnson
McCarter & English
Four Gateway Center
100 Mulberry Street
Newark, NJ 07102
AGREEMENT FOR MODIFICATION OF MORTGAGE
AND ASSIGNMENT OF LEASES
THIS AGREEMENT FOR MODIFICATION OF MORTGAGE AND ASSIGNMENT OF LEASES
("this Agreement") made November 1, 1994, by and between GNOC, Corp., having
an address at Boston and Pacific Avenues, P.O. Box 1737, Atlantic City, New
Jersey, GNAC, Corp., having an address at Boston and Pacific Avenues, P.O.
Box 1737, Atlantic City, New Jersey, (GNOC and GNAC are referred to
individually as a "Mortgagor" and collectively as "Mortgagor"), First
Fidelity Bank, National Association (successor by consolidation to First
Fidelity Bank, National Association, New Jersey) having an office at 550
Broad Street, Newark, New Jersey 07102 and Midlantic Bank, National
Association (successor by consolidation to Midlantic National Bank) having
an address at 499 Thornall Street, Metropark, Edison, New Jersey 08837
(First Fidelity and Midlantic are referred to collectively as the
"Mortgagee").
W I T N E S S E T H :
WHEREAS, Mortgagee is the holder of that certain Mortgage and Security
Agreement with Assignment of Rents (the "Mortgage") dated as of April 16,
1993, which Mortgage was recorded on April 20, 1993 in the Office of the
Clerk of Atlantic County, New Jersey in Mortgage Book 5004 at page 35 et
seq. to secure the obligations described therein, and which Mortgage is a
lien on the property described therein (the "Encumbered Property"); and
WHEREAS, the Mortgage was given as security for certain financial
accommodations made by Mortgagee to Mortgagor, as evidenced by that certain
Loan Agreement (the "Loan Agreement") dated April 16, 1993, by and between
Mortgagor as borrower and Mortgagee; and
WHEREAS, Mortgagor gave to Mortgagee as additional security for the
loan an Assignment of Leases and Rents (the "Assignment") dated April 16,
1993 which Assignment was recorded on April 20, 1993 in the Office of the
Clerk of Atlantic County in Mortgage Book 5004, at page 92 et. seq.; and
WHEREAS, Mortgagor and Mortgagee have entered into a First Amendment
to the Loan Agreement, dated as of December 31, 1993, which among other
things, amended certain financial and other covenants in the Loan Agreement;
and
WHEREAS, Mortgagor and Mortgagee have entered into an Amended and
Restated Loan Agreement dated as of September 30, 1994 (the "Amended and
Restated Loan Agreement"), which among other things, amended and restated
certain covenants and extended the maturity date of the Loan Agreement to
December 31, 1996; and
WHEREAS, Mortgagor has this day executed a Revolving Credit Note (each,
a "New Revolving Credit Note") in favor of each of the Mortgagees evidencing
the Mortgagor's obligations to such Mortgagee under the Amended and Restated
Loan Agreement; and
WHEREAS, the parties hereto have agreed to modify the Mortgage and the
Assignment to, inter alia, reflect the fact that they continue to secure the
obligations of the Mortgagors to the Mortgagees as those obligations have
been modified by the Amended and Restated Loan Agreement and the New
Revolving Credit Notes.
NOW, THEREFORE, incorporating the foregoing herein by reference and in
consideration of the mutual covenants herein contained, the parties hereto
do mutually covenant and agree, as follows:
1. The foregoing recitals are incorporated into this Agreement by
this reference.
2. The term "Loan Agreement" as it is used in the Mortgage, as
modified hereby, shall be deemed to refer to the Amended and Restated Loan
Agreement.
3. The term "Loan Agreement" as it is used in the Assignment, as
modified hereby, shall be deemed to refer to the Amended and Restated Loan
Agreement.
4. The term "Revolving Credit Notes" as used in the Mortgage, as
modified hereby, shall be deemed to refer to the New Revolving Credit Notes.
5. The term "Revolving Credit Notes" as used in the Assignment, as
modified hereby, shall be deemed to refer to the New Revolving Credit Notes.
6. The term "Mortgage" as used in the Assignment, as modified
hereby, shall be deemed to refer to the Mortgage, as modified hereby.
7. The Encumbered Property described in the Mortgage, as modified
hereby, shall remain in all respects subject to the lien, charge, or
encumbrance of the Mortgage as modified hereby, and nothing herein contained
and nothing done pursuant hereto, shall affect the lien, charge or
encumbrance of or warranty of title in, or conveyance effected by the
Mortgage, or the priority thereof over other liens, charges, encumbrances
or conveyances; nor shall anything herein contained or done in pursuance
hereof affect or be construed to affect any other security or instrument,
if any, held by Mortgagee as security for or evidence of the aforesaid
indebtedness.
8. Pursuant to N.J.S.A. 46:9-8.1, the Mortgage, as modified hereby,
and the obligations secured hereunder and all other obligations of the
Mortgagor are subject to modification. To the extent permitted by law, the
Mortgage, as modified hereby, secures all modifications from the date upon
which the Mortgage was originally recorded, including future loans and
extensions of credit and changes in the interest rate, due date, amount or
other terms and conditions of any obligations. The Mortgage, as modified
hereby, may be modified from time to time without affecting the priority of
the lien created thereby.
9. Except as modified herein, all of the terms, provisions and
covenants of the Mortgage and Assignment are in all other respects hereby
ratified and confirmed and shall remain in full force and effect.
10. This Agreement is to be construed according to the laws of the
State of New Jersey.
11. This Agreement shall be binding upon the parties hereto and
their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
GNOC, Corp.
By_______________________
Donna M. Graham
Treasurer
GNAC, Corp.
By_______________________
Donna M. Graham
Treasurer
FIRST FIDELITY BANK,
NATIONAL ASSOCIATION
By_______________________
Robert K. Strunk, II
Vice President
MIDLANTIC BANK, NATIONAL ASSOCIATION
By_______________________
Edward M. Tessalone
Vice President
State of New Jersey :
: SS
County of Essex :
BE IT REMEMBERED, that on this 1st day of November, 1994, before me,
the subscriber, personally appeared Donna M. Graham as the Treasurer of
GNOC, Corp., a New Jersey corporation, who I am satisfied is the person
who has signed this mortgage modification, and she acknowledged that she
signed, sealed and delivered this mortgage modification as an officer of
the corporation, and that her mortgage modification is the voluntary act
and deed of the corporation made by virtue of authority from its Board of
Directors.
___________________________
A Notary Public
State of New Jersey :
: SS
County of Essex :
BE IT REMEMBERED, that on this 1st day of November, 1994, before me,
the subscriber, personally appeared Donna M. Graham as the Treasurer of
GNAC, Corp., a New Jersey corporation, who I am satisfied is the person
who has signed this mortgage modification, and she acknowledged that she
signed, sealed and delivered this mortgage modification as an officer of
the corporation, and that her mortgage modification is the voluntary act
and deed of the corporation made by virtue of authority from its Board of
Directors.
___________________________
A Notary Public
State of New Jersey :
: SS
County of Essex :
BE IT REMEMBERED, that on this 1st day of November, 1994, before me,
the subscriber, personally appeared Robert K. Strunk, II as the Vice
President of First Fidelity Bank, National Association, who I am
satisfied is the person who has signed this mortgage modification, and he
acknowledged that he signed, sealed and delivered this mortgage
modification as an officer of the corporation, and that his mortgage
modification is the voluntary act and deed of the corporation made by
virtue of authority from its Board of Directors.
___________________________
A Notary Public
State of New Jersey :
: SS
County of Essex :
BE IT REMEMBERED, that on this 1st day of November, 1994, before me,
the subscriber, personally appeared Edward M. Tessalone as the Vice
President of Midlantic Bank, National Association who I am satisfied is
the person who has signed this mortgage modification, and he acknowledged
that he signed, sealed and delivered this mortgage modification as an
officer of the corporation, and that his mortgage modification is the
voluntary act and deed of the corporation made by virtue of authority
from its Board of Directors.
___________________________
A Notary Public
<PAGE>
<PAGE>
Record and Return to:
Curtis A. Johnson, Esq.
McCarter & English
Four Gateway Center
100 Mulberry Street
Newark, NJ 07102
SECOND MORTGAGE MODIFICATION AGREEMENT
THIS SECOND MORTGAGE MODIFICATION AGREEMENT ("this Agreement") made as
of May 2nd, 1996, by and among GNOC, CORP. (successor by merger to GNAC,
Corp.), having an address at Boston and Pacific Avenues, P.O. Box 1737,
Atlantic City, New Jersey (the "Mortgagor"), FIRST UNION NATIONAL BANK
(formerly known as First Fidelity Bank, National Association), having an
office at 550 Broad Street, Newark, New Jersey 07102 and MIDLANTIC BANK,
NATIONAL ASSOCIATION (formerly known as Midlantic National Bank), having an
address at 2 Tower Center, East Brunswick, New Jersey (First Union and
Midlantic are together referred to as the "Mortgagee").
W I T N E S S E T H :
WHEREAS, Mortgagee is the holder of that certain Mortgage and Security
Agreement with Assignment of Rents (the "Original Mortgage") dated as of
April 16, 1993, which Original Mortgage was recorded on April 20, 1993 in
the Office of the Clerk of Atlantic County in Mortgage Book 5004, at page
35 et seq. to secure the obligations described therein, and which Original
Mortgage is a lien on the property described therein as the Real Property;
and
WHEREAS, the Original Mortgage was given as security for certain
financial accommodations made by Mortgagee to Mortgagor, as evidenced by
that certain Loan Agreement (the "Loan Agreement") dated April 16, 1993, by
and between Mortgagor and Mortgagee; and
WHEREAS, Mortgagor gave to Mortgagee as additional security for the
loan an Assignment of Leases and Rents (the "Original Assignment") dated
April 16, 1993, which Original Assignment was recorded on April 20, 1993 in
the Office of the Clerk of Atlantic County in Mortgage Book 5004, at page
92 et. seq.; and
WHEREAS, Mortgagor and Mortgagee entered into a First Amendment to the
Loan Agreement dated as of December 31, 1993, which among other things,
amended certain financial and other covenants in the Loan Agreement; and
WHEREAS, Mortgagor and Mortgagee entered into an Amended and Restated
Loan Agreement (the "Amended and Restated Loan Agreement") dated as of
September 30, 1994, which among other things, amended and restated certain
covenants and extended the maturity date of the Loan Agreement to December
31, 1996; and
WHEREAS, Mortgagor executed a Revolving Credit Note dated as of
September 30, 1994 in favor of each Mortgagee (each, a "Revolving Credit
Note") evidencing the Mortgagor's obligations to such Mortgagee under the
Amended and Restated Loan Agreement; and
WHEREAS, Mortgagor and Mortgagee modified the Original Mortgage and
the Original Assignment pursuant to that certain Agreement for Modification
of Mortgage and Assignment of Leases (the "Modification") dated November 1,
1994, which Modification was recorded on November 7, 1994 in the Office of
the Clerk of Atlantic County in Mortgage Book 5490, at page 26 et. seq.,
which among other things, reflected the fact that the Original Mortgage and
the Original Assignment continued to secure the obligations of the
Mortgagor to the Mortgagee as those obligations have been modified by the
Amended and Restated Loan Agreement and the Revolving Credit Notes (the
Original Mortgage and the Original Assignment as modified by the
Modification shall hereafter be referred to as the "Mortgage" and the
"Assignment", respectively); and
WHEREAS, Mortgagor and Mortgagee have this day executed a Second
Amended and Restated Loan Agreement ("Second Amended and Restated Loan
Agreement"), which among other things, amends and restates certain
covenants and extends the maturity date of the Loan Agreement to June 30,
1998; and
WHEREAS, pursuant to the Second Amended and Restated Loan Agreement
Mortgagor has this day executed new revolving credit notes in favor of each
Mortgagee in the maximum aggregate principal amount of $20,000,000 (each,
a "New Revolving Credit Note") evidencing the Mortgagor's obligations to
such Mortgagee under the Second Amended and Restated Loan Agreement; and
WHEREAS, the parties hereto have agreed to further modify the Mortgage
and the Assignment to, inter alia, reflect the fact that Mortgage and the
Assignment continue to secure the obligations of the Mortgagor to the
Mortgagee as those obligations have been modified by the Second Amended and
Restated Loan Agreement and the New Revolving Credit Notes.
NOW, THEREFORE, incorporating the foregoing herein by reference and in
consideration of the mutual covenants herein contained, the parties hereto
do mutually covenant and agree, as follows:
12. The foregoing recitals are incorporated into this Agreement by
this reference.
13. The term "Loan Agreement" as it is used in the Mortgage, as
modified hereby, shall be deemed to refer to the Second Amended and
Restated Loan Agreement.
14. The term "Loan Agreement" as it is used in the Assignment, as
modified hereby, shall be deemed to refer to the Second Amended and
Restated Loan Agreement.
15. The term "Revolving Credit Notes" as used in the Mortgage, as
modified hereby, shall be deemed to refer to the New Revolving Credit
Notes.
16. The term "Revolving Credit Notes" as used in the Assignment,
as modified hereby, shall be deemed to refer to the New Revolving Credit
Notes.
17. The term "Mortgage" as used in the Mortgage, as modified
hereby, shall be deemed to refer to the Mortgage, as modified hereby.
18. The term "Mortgage" as used in the Assignment, as modified
hereby, shall be deemed to refer to the Mortgage, as modified hereby.
19. The term "Assignment" as used in the Mortgage, as modified
hereby, shall be deemed to refer to the Assignment, as modified hereby.
20. The term "Assignment" as used in the Assignment, as modified
hereby, shall be deemed to refer to the Assignment, as modified hereby.
21. The Encumbered Property shall remain in all respects subject
to the lien, charge, or encumbrance of the Mortgage, as modified by this
Agreement, and nothing herein contained and nothing done pursuant hereto
shall affect the lien, charge or encumbrance of or warranty of title in, or
conveyance effected by the Mortgage, or the priority thereof over other
liens, charges, encumbrances or conveyances; nor shall anything herein
contained or done pursuant hereto affect or be construed to affect any
other security or instrument, if any, held by Mortgagee as security for or
evidence of the aforesaid indebtedness.
22. Pursuant to N.J.S.A. 46:9-8.1, the Mortgage, as modified
hereby, and the obligations secured hereunder and all other obligations of
the Mortgagor are subject to modification. To the extent permitted by law,
the Mortgage, as modified hereby, secures all modifications from the date
upon which the Mortgage was originally recorded, including future loans and
extensions of credit and changes in the interest rate, due date, amount or
other terms and conditions of any obligations. The Mortgage, as modified
hereby, may be modified from time to time without affecting the priority of
the lien created thereby.
23. Mortgagor hereby confirms as presently true all
representations and warranties made by Mortgagor in the Mortgage and the
Assignment.
24. This Agreement may be executed in one or more counterparts,
each of which shall constitute an original and all of which taken together
shall constitute one agreement.
25. Except as modified herein, all of the terms, provisions and
covenants of the Mortgage and the Assignment are in all other respects
hereby ratified and confirmed and shall remain in full force and effect.
26. This Agreement is to be construed according to the laws of the
State of New Jersey.
27. This Agreement shall be binding upon the parties hereto and
their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
GNOC, CORP.
By: _______________________
Donna M. Graham
Chief Financial Officer and
Treasurer
FIRST UNION NATIONAL BANK
By: _______________________
Alan Lilienthal
Vice President
MIDLANTIC BANK, NATIONAL ASSOCIATION
By: _______________________
Denise D. Killen
Vice President
<PAGE>
State of New Jersey :
: SS
County of Essex :
BE IT REMEMBERED, that on this 2nd day of May, 1996, before me, the
subscriber, personally appeared Donna M. Graham as the Chief Financial
Officer and Treasurer of GNOC, Corp., a New Jersey corporation, who I am
satisfied is the person who has signed this agreement, and (s)he
acknowledged that (s)he signed, sealed and delivered this agreement as an
officer of the corporation, and that her/his agreement is the voluntary act
and deed of the corporation made by virtue of authority from its Board of
Directors.
_________________________
State of New Jersey :
: SS
County of Essex :
BE IT REMEMBERED, that on this 2nd day of May, 1996, before me, the
subscriber, personally appeared Alan Lilienthal as Vice President of First
Union National Bank, who I am satisfied is the person who has signed this
mortgage modification, and (s)he acknowledged that (s)he signed, sealed and
delivered this agreement as an officer of the corporation, and that her/his
agreement is the voluntary act and deed of the corporation made by virtue
of authority from its Board of Directors.
___________________________
State of New Jersey :
: SS
County of :
BE IT REMEMBERED, that on this 2nd day of May, 1996, before me, the
subscriber, personally appeared Denise D. Killen as Vice President of
Midlantic Bank, National Association who I am satisfied is the person who
has signed this agreement, and (s)he acknowledged that (s)he signed, sealed
and delivered this agreement as an officer of the corporation, and that
her/his agreement is the voluntary act and deed of the corporation made by
virtue of authority from its Board of Directors.
___________________________
<PAGE>
<PAGE>
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
THIS MORTGAGE AND SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS
(this "Mortgage"), dated as of the 2nd day of May 1996, given by GNOC,
CORP. (successor by merger to GNAC, Corp. ("GNAC")), a New Jersey
corporation ("Mortgagor"), having an office at Boston and Pacific Avenues,
P.O. Box 1737, Atlantic City, New Jersey 08404 to FIRST UNION NATIONAL BANK
(formerly known as First Fidelity Bank, National Association), a national
banking association ("First Union"), having an office at 550 Broad Street,
Newark, New Jersey 07102 and MIDLANTIC BANK, NATIONAL ASSOCIATION (formerly
known as Midlantic National Bank), a national banking association
("Midlantic"), having an address at 2 Tower Center, East Brunswick, New
Jersey 08816 (First Union and Midlantic are together referred to as the
"Mortgagee").
It is the intention of the Mortgagor that this instrument be a
"Pari Passu Mortgage" within the meaning of the indenture dated as of March
10, 1993 (the "Indenture"), among GNF Corp., a New Jersey Corporation
("GNF"), GNAC as guarantor, Mortgagor, and Amalgamated Bank of Chicago as
Trustee (the "Trustee"). Pursuant to the Mortgage and Security Agreement
with Assignment of Rents dated as of May 2, 1996 given by Mortgagor to
Amalgamated Bank of Chicago, as mortgagee, the lien created by this
instrument ranks pari passu with the lien created by said Mortgage (the
"Trustee's Mortgage").
The rights of Mortgagee under this Mortgage are governed by an
intercreditor agreement dated April 16, 1993 (as the same may now or
hereafter be amended, the "Intercreditor Agreement") executed by the
Mortgagee, GNAC, the Mortgagor, GNF and the Trustee. To the extent any of
the terms of this Mortgage are inconsistent with the terms of the
Intercreditor Agreement, the terms of the Intercreditor Agreement shall
control. Any capitalized terms not defined herein or not referred to as
part of the Indenture shall have the meaning set forth in the Loan
Agreement (as hereinafter defined).
W I T N E S S E T H:
To secure the following obligations and liabilities: (a) the
payment to Mortgagee under that certain loan agreement dated as of April
16, 1993 by GNOC, Corp. as the borrower, GNAC and GNF, Corp, as guarantors,
which loan agreement was amended by the first amendment to loan agreement
dated as of December 31, 1993, which loan agreement, as amended, was
amended and restated pursuant to that certain loan agreement dated as of
September 30, 1994, and which amended and restated loan agreement was
further amended and restated pursuant to that certain second amended and
restated loan agreement dated as of May 2, 1996 by and between Mortgagor
and Mortgagee (the " Loan Agreement"), of (i) the indebtedness in the
maximum principal amount of TWENTY MILLION DOLLARS, evidenced by Revolving
Credit Notes (as defined in the Loan Agreement) issued pursuant to the
provisions of the Loan Agreement, (ii) any and all interest due or to
become due on the Revolving Credit Notes in accordance with the provisions
of the Loan Agreement and the Revolving Credit Notes, and (iii) any and all
other sums due or to become due under the Loan Agreement, the Revolving
Credit Notes, this Mortgage and any further or subsequent advances or
expenditures made under any other Loan Document (hereinafter defined) by
Mortgagee pursuant to the provisions hereof (the items set forth in clauses
(i)-(iii) 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 Mortgagor (which,
together with the Indebtedness is referred to collectively as the
"Obligations") under (i) this Mortgage, (ii) the Loan Agreement, (iii) the
Revolving Credit Notes, and (iv) the Assignment of Leases and Rents dated
as of the date hereof given by Mortgagor to Mortgagee (the "Assignment"),
(v) and other documents executed by the Mortgagor in connection with the
foregoing, and (vi) any extensions, renewals, replacements or modifications
of any of the foregoing (this Mortgage, the Loan Agreement, the Assignment,
the Revolving Credit 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").
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, 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 "Encumbered Property"):
The Mortgagor's interest in all those plots, pieces or parcels of
land more particularly described in Exhibit A-1 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 interest, right and title in and to
that certain Amended and Restated Ground Lease (the "Ground Lease") of even
date herewith between Bally's Park Place, Inc., as lessor, and Mortgagor,
as lessee, covering the land described in Exhibit A-2 annexed hereto and
made a part hereof (the "Leasehold Estate");
TOGETHER with Mortgagor's interest, right and title in and to the
buildings and other improvements now or hereafter erected on the Land
and/or the Leasehold Estate (such buildings and other improvements being
hereinafter collectively referred to as the "Buildings"), the Land, the
Leasehold Estate and the Buildings being hereinafter collectively referred
to as the "Real Property";
TOGETHER with all and singular the reversion or reversions,
remainder or remainders, rents and revenues produced in connection with the
Real Property 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 Real Property 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, casino and restaurant facilities located on the
Real Property 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 Real Property
including machinery, fixtures, systems, apparatus, fittings, materials and
equipment now or which may hereafter be used in the operation of the Real
Property, 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 personal property, fixtures, additions, substitutions
and proceeds being sometimes hereinafter collectively referred to as the
"Personal Property");
TOGETHER with Mortgagor's right, title and interest to and under
all leases, subleases, underletting, licenses and other occupancy
agreements which now or hereafter may affect the Real Property or any
portion thereof and under any and all guarantees, modifications, renewals
and extensions thereof (collectively, the "Leases") (including, without
limitation, the Ground Lease and any and all rights of Mortgagor to refunds
of rent, security deposits, real estate taxes and assessments and water,
sewer and other charges under the Ground Lease), 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
Property, together with all amendments and modifications thereof;
TOGETHER with (a) subject to the provisions of Article VI 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 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 Property or
in connection with the use or operation thereof (collectively, the
"Insurance Proceeds"), and (b) subject to the provisions of Article VII
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 VI and VII 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 acquittance 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 Real Property,
and in each such case, the foregoing shall be deemed a part of the Real
Property 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;
TOGETHER with all proceeds of any or all of the foregoing; and
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, further
represents, warrants, covenants and agrees with Mortgagee as follows:
I. Warranty of Title.
Mortgagor warrants to Mortgagee that (i) it has good and
marketable fee simple title to the Land described in Exhibit A-1, (ii)
Mortgagor is the owner of a valid and subsisting leasehold interest in the
Leasehold Estate and the Buildings described on Exhibit A-2 under the
Ground Lease, subject to no mortgage, lien, charge or encumbrance, except
the Trustee's Mortgage and an Assignment of Leases and Rents in favor of
the Trustee, (iii) it has good and marketable fee simple title to the
Buildings located on the Land and good and marketable title to the Personal
Property located on or used in connection with the Real Property, (iv) it
has the right to mortgage the Real Property and the Leases in accordance
with the provisions set forth in this Mortgage, (v) it has the right to
grant a security interest in the Personal Property and the Rents in
accordance with the provisions set forth in this Mortgage, and (vi) this
Mortgage is a valid and enforceable first lien on the Encumbered Property
(including the Leasehold Estate), subject, as of the date hereof, only to
the exceptions to title listed on Schedule B of Title Insurance Commitment
No. 963670009 issued by Chicago Title Insurance Company redated the date
hereof (collectively, the "Closing 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
Closing Encumbrances and the Permitted Liens (as that term is defined in
the Loan Agreement) (collectively, the Closing Encumbrances and the
Permitted Liens are referred to as 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.
II. Payment of Indebtedness.
A. Mortgagor 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.
III. Requirements; Proper Care and Use.
A. Subject to the right of Mortgagor to contest a Legal
Requirement (hereinafter defined) as provided in Article X hereof,
Mortgagor 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
Mortgagor 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 of 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 Mortgagor 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 Mortgagor 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 a Material Adverse
Effect.
B. Mortgagor shall except as otherwise provided herein (i) not
abandon the Encumbered Property or any portion thereof that does not have a
material adverse effect on the Encumbered Property, (ii) maintain, in all
material respects, the Encumbered Property 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 Encumbered Property which,
in the reasonable judgment of Mortgagor, 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 Encumbered Property or
the priority or security of the lien of this Mortgage, (v) not remove or
demolish any of the Encumbered Property, if such removal or demolition
might materially impair the value of the Encumbered Property except in
accordance with Article 12 of the Indenture, except that Mortgagor 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 effect the value of the 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 except in accordance
with Article 12 of the Indenture, (vi) not make, install or permit to be
made or installed any alterations or additions to the Encumbered Property
if doing so would materially impair the value of the Encumbered Property
except in accordance with Article 12 of the Indenture, (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 Encumbered Property 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 Property for the purpose of inspecting
and appraising the Encumbered Property or any portion thereof.
C. Mortgagor 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 Property 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 Mortgagor
hereby assigns to Mortgagee any and all rights to give consent for all or
any portion of the Real Property or any interest therein to be so used.
Mortgagor shall not, by any act or omission, impair the integrity of the
Real Property, as it exists today, as a single or multiple zoning lot or
lots, as the case may be, separate and apart from all its premises. Any
act or omission by Mortgagor which would result in a violation of any of
the provisions of this Article III shall be null and void. Notwithstanding
the foregoing, Mortgagor shall have the right to grant easements, rights of
way and similar interests which are subordinate to the lien of this
Mortgage and which do not materially impair the value of the Encumbered
Property.
D. Mortgagor has 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 Property, and Mortgagor has full power and
authority to carry on its business at the Real Property as currently
conducted and has not received any notice of any violation of any Legal
Requirement that materially impairs the value of the Encumbered Property.
E. During the term of this Mortgage and 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 (ii) are herein collectively
referred to as the "Operational Requirements"):
a. As of the date hereof, 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.
b. Mortgagor will keep, maintain and preserve the Operational
Requirements in full force and effect and in good standing.
c. Mortgagor will not knowingly violate, nor will it
knowingly suffer any violation of, the Operational Requirements.
d. In the event Mortgagor knows of any fact, circumstances,
or occurrence which may result in a violation of the Operation
Requirements, Mortgagor shall promptly give Mortgagee written notice
thereof.
IV. 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 Encumbered Property is located or any agency, department, bureau,
board, commission, including the Casino Control Commission as defined in
the Loan Agreement, 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 Loan Agreement and any
franchise tax), Mortgagor 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 Mortgagor 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 Loan Agreement, including, in calculating such rate of interest, any
additional interest which may be imposed under the Loan 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.
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, Mortgagor, 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 Mortgagor 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 Encumbered Property is located
which shall deduct from the value of the Encumbered Property, for purposes
of taxation, any lien thereon shall change in any way the laws for the
taxation of mortgages or debts secured by mortgages for state of 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 Mortgagor, Mortgagee, this Mortgage or the Loan
Agreement is not exempt from payment of such tax and if Mortgagor shall be
permitted by law to pay the whole or such tax in addition to all other
payments required hereunder and under the other Loan Documents, Mortgagor
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.
V. Payment of Impositions.
A. Subject to the provisions of Article X 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, Mortgagor
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 maintain
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 against Mortgagor 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 Mortgagor 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
Mortgagor's option, be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), Mortgagor may exercise
the option to pay such Imposition in such installments, and, in such event,
Mortgagor 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, Mortgagor shall deliver to
Mortgagee evidence reasonably acceptable to Mortgagee showing the payment
of such Imposition. Mortgagor 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 Mortgagor 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,
Mortgagor 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,
Mortgagor 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, Mortgagor 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 Mortgagor.
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 V (provided, however, that Mortgagee shall
have no right to pay such Imposition which Mortgagor is contesting the
validity, enforceability or application of the same pursuant to the
provisions of Article X hereof or is 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.
VI. Insurance.
A. Mortgagor 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:
1. 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 Property 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 Mortgagor 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 or for a longer period, 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 the operations conducted at the
Real Property;
2. demolition and increased cost of construction coverage;
3. if a sprinkler system shall be located in the Buildings,
sprinkler leakage insurance;
4. commercial general liability insurance in respect to the
operation of the Encumbered Property 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 Mortgagor
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 for each Mortgagor (signed by (i) a Secretary or
Assistant Secretary of each Mortgagor and (ii) the Chairman, Vice Chairman,
President, Vice President or Treasurer of each Mortgagor; provided,
however, that such certificate may be signed by two of the officers listed
in clause (ii) above in lieu of being signed by one of such officers or
directors listed in such clause (ii) and one of the officers listed in
clause (i) above) stating that Mortgagor was unable to obtain commercial
general liability insurance coverage in excess of the amount actually
obtained or on other than a "claims made" basis; and
5. 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 Encumbered Property
or conducting operations similar to the operations conducted at the Real
Property.
All insurance provided hereunder shall be in such form as is
commonly obtained by owners of property 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 Property, shall
not contain a coinsurance provision whereby Mortgagor in the event of loss
becomes 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 Mortgagees, except
policies insuring against damage by fire or other casualty, which shall
provide for loss payable as more particularly set forth in Paragraph VI(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. Anything
contained herein to the contrary notwithstanding, in no event shall the
insurance provided under clause (t) of Paragraph VI(A)(1) 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 reasonably determined from time to time by Mortgagee.
Mortgagor 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
Mortgagor or by any lessee of the Real Property or any portion thereof, or
become void or questionable by reason of the failure or impairment of the
capital of any insurer, of if for any other reason whatsoever any such
insurance shall become unsatisfactory to Mortgagee, as determined in its
reasonable judgment, Mortgagor 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 Mortgagor shall, within thirty (30) days after
demand by Mortgagee, obtain such other types of insurance, in such amounts
as may be reasonable required by Mortgagee. Mortgagor 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. Mortgagor shall (i) pay as they become due all premiums for the
insurance required hereunder (it being understood that Mortgagor 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 Mortgagor shall be in default of its obligation to so insure
or deliver any such prepaid insurance or policies or certificate or
certificates of insurance to Mortgagee in accordance with the provisions
hereof, Mortgagee, at its option (but without any obligation do so) and
upon twenty-four (24) hours notice, unless Mortgagor provides satisfactory
evidence that all insurance requirements under this Mortgage and the Loan
Agreement, have been complied with, 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. Mortgagor shall adjust the amount of insurance required to be
provided pursuant to the provisions of clause (t) of Paragraph VI(A)(1)
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. Mortgagor 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 Mortgagor 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 Mortgagor 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, Mortgagor 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, Mortgagor shall give immediate notice thereof to Mortgagee and
Mortgagor promptly shall commence and diligently shall continue and
complete the repair, restoration, replacement or rebuilding of the
Buildings in a good and workmanlike manner ("Restoration") and the Personal
Property so damage, 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 Eight Million Dollars
($8,000,000) (in either case, "Major Restoration"), then Mortgagor shall,
prior to the commencement of the Major Restoration, furnish or cause to be
furnished to Mortgagee: (1) 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 photo-static 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, Mortgagor
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. Mortgagor shall not commence any of the Major Restoration until
Mortgagor shall have complied with the applicable requirements referred to
in clause (F) above, and after commencing Major Restoration, Mortgagor
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 VI, 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:
1. If the Restoration to be done is Major Restoration, as
determined by Mortgagee, the Architect shall be in charge of the
Restoration.
2. 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 (1) 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 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).
3. Each request shall be accompanied by waivers or releases
of liens, reasonably 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.
4. There shall be no Event of Default or Potential Default
under this Mortgage, the Loan Agreement or any other Loan Document.
5. 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 not then be continuing any Event of Default or
Potential Default under any Loan Document, any Insurance Proceeds (together
with any interest earned thereon) shall be paid to the Mortgagor. Upon
failure on the part of Mortgagor promptly to commence or diligently to
continue the Restoration, Mortgagee may, subject to the terms of the
Intercreditor Agreement, 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 Loan 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 Plans in accordance
with paragraph (F) of this Article VI to Mortgagee 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, Mortgagor shall fail to commence
promptly such Major Restoration, or if thereafter Mortgagor fails
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
Mortgagor is, 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 Mortgagor 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 VI, then, in addition to all other
rights herein set forth, 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. 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 in accordance with the terms of
this Mortgage. Mortgagor hereby waives, for itself and all others holding
under it, 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 VI) 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 Ten Million
Dollars ($10,000,000), shall all be paid to Depositary and disbursed in
accordance with the provisions hereof; (ii) in the case of a loss in excess
of Eight Million Dollars ($8,000,000), but less than Ten Million Dollars
($10,000,000), the first Eight Million Dollars ($8,000,000) 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 Eight Million Dollars ($8,000,000) 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 Mortgagor 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 Eight Million Dollars ($8,000,000). Each insurer
is hereby authorized and directed to make payment of any Insurance Proceeds
or the portion thereof, as described in this Paragraph VI(J), under any
policies of insurance in connection with a loss in excess of Ten Million
Dollars ($10,000,000) directly to Depositary instead of to Mortgagor and
Depositary jointly, and Depositary is hereby authorized to endorse any
draft therefor as Mortgagor's attorney-in-fact if Mortgagor 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 Mortgagor or both,
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 Mortgagee's rights in accordance with the provisions hereof
shall transfer therewith all of Mortgagor's interest in all insurance
policies then covering the Buildings and the Personal Property or the
operations conducted at the Real Property.
M. Mortgagor hereby acknowledges 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 reasonable expense of Mortgagor, 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.
N. With respect to the Leasehold Estate, the insurance
requirements and the restoration obligations shall satisfy the requirements
of the Ground Lease.
VII. 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"), Mortgagor
shall continue to make all payments due under this Mortgage and under the
Loan Agreement and the other Loan Documents in accordance with the
provisions of this Mortgage, the Loan Agreement and the applicable
provisions of the other Loan Documents. Mortgagor shall notify Mortgagee
immediately upon obtaining knowledge of the institution of any proceedings
for any Taking or of any contemplated Taking of which Mortgagor is aware.
No such proceeding with respect to any Taking shall be settled without the
prior express written 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 Mortgagor collectively is less
than Eight Million Dollars ($8,000,000) shall not require such consent.
Each Governmental Authority is hereby authorized and directed to make
payment of any Award made in connection with any Taking directly to
Mortgagor or Depositary in accordance with the provisions of the next
succeeding sentence and Paragraph VII(B) hereof instead of to Mortgagor and
Depositary jointly, and Depositary is hereby authorized to endorse any
draft therefor as Mortgagor's attorney-in-fact if Mortgagor 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, 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 Mortgagor to continue to conduct its business at such remaining
Encumbered Property (a "Partial Taking"), (i) in the event that the Award
is less than Eight Million Dollars ($8,000,000), the same shall be paid to
Mortgagor, (ii) in the event that the Award shall be equal to or be in
excess of Eight Million Dollars ($8,000,000), but shall be less than Ten
Million Dollars ($10,000,000), the first Eight Million Dollars ($8,000,000)
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 Ten Million Dollars ($10,000,000), 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 VI 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. Mortgagor 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 VI hereof, as if such
Partial Taking had resulted in "damage or destruction to the Buildings or
Personal Property" (within the meaning of Paragraph VI(F) hereof), with
Mortgagor, Mortgagee and Depositary each having the same rights and
obligations with respect to the Award and Restoration as are set forth in
Paragraphs VI(F) through VI(J) hereof with respect to Insurance Proceeds,
except that, notwithstanding the provisions of Paragraph VI(F) hereof,
Mortgagor 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 VI(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 subject to the terms of the
Intercreditor Agreement, may 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 the Mortgagee. The
proceeds of such Award shall be distributed in accordance with the terms of
the Intercreditor Agreement.
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. Mortgagor hereby acknowledges 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 reasonable expense of Mortgagor, 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.
VIII. Sale of Encumbered Property; Additional Financing.
Except as permitted under the terms of the Loan Agreement,
Mortgagor shall not, at any time assign, transfer or convey all or any part
of the Encumbered Property or any interest therein.
IX. Discharge of Liens.
Subject to the provisions of Article X hereof and except as
permitted by the Loan Agreement or this Mortgage, Mortgagor 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, Mortgagor shall forthwith
deliver copies thereof to Mortgagee and Mortgagor shall within thirty (30)
days after request therefor by Mortgagee, cause the same to be discharged
of record by payment or bonding.
X. Right of Contest.
Mortgagor, at its 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 Mortgagor 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, (b) adequate reserves with respect thereto are maintained on
Mortgagor's books in accordance with generally accepted accounting
principles and the applicable provisions of the Loan 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 Mortgagor, 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, Mortgagor 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 Mortgagor and its
subsidiaries taken as a whole or be disadvantageous in any material respect
to the Holders. If such action or proceeding is terminated or discontinued
adversely to Mortgagor and is not subject to appeal, Mortgagor shall,
within thirty (30) days of receiving request therefor, deliver to Mortgagee
evidence reasonably satisfactory to Mortgagee of Mortgagor's 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 sole
discretion.
XI. 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. Any lessee under any
Lease may encumber any of lessee's personalty, furniture, fixtures and
equipment originally installed by such lessee in such lessee's leased
space.
B. Mortgagor shall (i) perform all of the provisions of the Leases
on the part of the lessor thereunder to be performed within the time period
required under the Leases, (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 sole 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 XI 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 XI. 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, automatically
revocable by Mortgagee upon an Event of Default, 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 XI 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.
E. With respect to any Major Lease upon notice and demand,
Mortgagee shall, from time to time, execute, acknowledge and deliver to
Mortgagor or cause to be executed, acknowledged and delivered to Mortgagor,
and to any tenant, a subordination, attornment and non-disturbance
agreement in a form reasonably acceptable to the Mortgagee. With respect
to any Major Lease in which Mortgagor requests a subordination, attornment
and non-disturbance agreement such Major Lease shall be subject to the
reasonable approval of Mortgagee.
XII. Estoppel Certificates.
Mortgagor 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.
XIII. Loan Document Expenses.
Mortgagor 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 IV hereof.
XIV. 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 Mortgagor 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 XIV shall
cure, or shall be deemed or construed to cure, any such Event of Default by
Mortgagor hereunder or waive any rights or remedies of Mortgagee hereunder
or at law or in equity by reason of any such Event of Default.
XV. Mortgagee's Costs and Expenses.
If (a) an Event of Default shall occur under this Mortgage,
beyond applicable grace periods, if any, or an Event of Default under any
other Loan Document, including the Loan Agreement, beyond any applicable
grace period, or (b) Mortgagee shall exercise any of its rights or remedies
to which it is entitled 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 Mortgagor 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 XV 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 XV are not inconsistent
therewith or violative thereof.
XVI. Events of Defaults.
The occurrence of an "Event of Default" under the terms of the
Loan Agreement shall be an Event of Default hereunder; provided, however,
if Mortgagor shall fail or neglect to comply with or otherwise perform,
keep or observe, any non-monetary term, provision, condition or covenant
contained in this Mortgage, such failure or neglect shall not constitute an
Event of Default under the Loan Agreement, this Mortgage or any other Loan
Document unless the Mortgagee shall have given written notice of such
failure or neglect to the Mortgagor, and the Mortgagor shall have failed to
cure within 30 days following such notice; provided, further, if Mortgagor
cannot cure any non-monetary breach of any provision, covenant or
condition, it shall not constitute an Event of Default if such breach
cannot reasonably be cured within such 30 day grace period because of any
strikes, lockouts, unavailability of materials, failure of power, delays in
settling insurance or condemnation claims, governmental or quasi-
governmental laws or regulations, riots, insurrections, adverse weather
conditions, war or any other reason beyond Mortgagee's reasonable control
("Force Majeure"), so long as upon the termination of the event or events
constituting the Force Majeure, the Mortgagor diligently acts to cure the
breached provision, condition or covenant within a reasonable period of
time.
If the Ground Lease is terminated, canceled or surrendered, or if any
default shall have occurred under the Ground Lease which is not remedied
within the time permitted thereunder, then an Event of Default shall be
deemed to have occurred under this Mortgage. In no event shall the time to
cure such Event of Default under this Mortgage, if any, exceed the time
permitted to cure such default under the Ground Lease.
XVII. 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 Mortgagor, take such action as
Mortgagee deems advisable, in its sole discretion, to protect and enforce
the rights of Mortgagee against the Mortgagor 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:
1. Mortgagee may elect to cause the Encumbered Property or
any portion thereof to be sold in accordance with the provisions hereof and
applicable law.
2. Mortgagee may, without releasing Mortgagor from any
Obligation under this Mortgage or any other obligation under the Guaranty
or any other Loan Document and without waiving any Event of Default,
exercise any of its rights and remedies under Article XIV hereof.
3. if the Indebtedness shall have been declared due and
payable in accordance with the provisions of the Loan 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.
4. Mortgagee, if it has not already revoked the license
granted pursuant to Article XI hereof, may revoke the license and may,
without releasing Mortgagor 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 Mortgagor and its 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
Encumbered Property, 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
Mortgagor with respect to the Encumbered Property, either in the name of
Mortgagor 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.
5. 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 XVII, 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 Property or, at Mortgagee's option, such other address
of the lessee as may be set forth in such Lease.
6. Mortgagee may declare the entire unpaid Indebtedness to be
immediately due and payable.
7. Mortgagee may institute proceedings for the complete
foreclosure of this Mortgage in which case the Encumbered Property or the
Mortgagor's interest therein may be sold for cash or upon credit in one or
more portions.
8. 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.
9. 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 the Mortgagor 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.
10. 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.
11. Mortgagee may recover judgment on the Revolving Credit
Notes either before, during or after any proceedings for the enforcement of
this Mortgage.
12. 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, any guarantor or of any
person, firm or the entity liable for the payment of the Indebtedness.
13. Mortgagee may cure such Event of Default, without
relieving the Mortgagor of any liability in connection with such Event of
Default, and (1) the Mortgagor, on demand, shall reimburse the Mortgagee
for any and all costs and expenses incurred by the Mortgagee in connection
with the curing of any Event of Default, together with any defaulted
interest payable pursuant to the Loan Agreement from the date such costs
and expenses are incurred until the same are paid to the Mortgagee, and (2)
the Mortgagee shall be entitled to apply any sums then held by the
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
14. Mortgagee may pursue such other remedies as the Mortgagee
may have under any applicable law.
B. Subject to the terms of the Intercreditor Agreement, the
purchase money proceeds or avails of any sale of the Encumbered Property
made under or by virtue of this Article XVII, together with any other sums
which then may be held by the Mortgagee under this Mortgage, whether under
the provisions of this Article XVII or otherwise, shall be applied as
follows:
First: To the payment of the costs and expenses of any such
sale, including reasonable compensation to the 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 the Mortgagee
under this Mortgage and together with interest as provided herein on all
advances made by the 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 Revolving Credit 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,
the Mortgagor. The 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, as defined in the Loan
Agreement, 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 Property 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 there-to, as a condition to receiving the benefit of the
Real Property, the Personal Property or other collateral hereby encumbered
for the benefit of Mortgagee, Mortgagor does hereby give its 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. The 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, the
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 the Mortgagee
under or by virtue of this Article XVII, the 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. The
Mortgagee is hereby irrevocably appointed the true and lawful attorney of
Mortgagor, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Encumbered Property and rights
so sold and for that purpose the Mortgagee may execute all necessary
instruments of conveyance, assignment and transfer, and may substitute one
or more persons with like power, Mortgagor hereby ratifying and confirming
all that its 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 XVII, 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 in and to the properties and rights so sold, and shall be a
perpetual bar both at law and in equity against Mortgagor and against any
and all persons claiming or who may claim the same, or any part thereof
from, through or under the Mortgagor.
G. Anything contained in the Loan Agreement or in this Mortgage to
the contrary notwithstanding, in the event of any sale made under or by
virtue of this Article XVII (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 XVII
(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), the 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 the Mortgagee is authorized to deduct under this Mortgage.
I. No recovery of any judgment by the Mortgagee and no levy of an
execution under any judgment upon the Encumbered Property or upon any
property of Mortgagor 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 the Mortgagee hereunder, but such
liens, rights, powers and remedies of the 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 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, contained herein or in
the Loan Agreement or the Revolving Credit Notes.
K. Upon the occurrence of any Event of Default hereunder, it is
agreed that Mortgagor, if it is an occupant of the Real Property or any
part thereof, shall immediately surrender possession of the Real Property
so occupied to the Mortgagee, and if such occupant is permitted to remain
in possession, the possession shall be as tenant of the Mortgagee and, on
demand such occupant subject to applicable law (a) shall pay to the
Mortgagee monthly, in advance, a reasonable rental for the space so
occupied and in default thereof, and (b) 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 Loan Agreement or the
Revolving Credit 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 Mortgagor shall pay or shall
cause to be paid interest thereon from and after the date on which such
payment first becomes due at the defaulted interest pursuant to the Loan
Agreement and such interest shall be due and payable, on demand, at such
rate until the entire amount due is paid to the 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 the
Mortgagee to obtain judgment for the Indebtedness, or of any other nature
in aid of the enforcement of the Loan Agreement, the Revolving Credit Notes
or of this Mortgage, Mortgagor 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 the 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 of any of its property, or of the Encumbered
Property or any part thereof, the Mortgagee shall be entitled to retain
possession and control of all property now and hereafter covered by this
Mortgage.
XVIII. Security Agreement under Uniform Commercial Code.
It is the intention of Mortgagor and Mortgagee that this Mortgage
shall constitute and this Mortgage does hereby constitute a Security
Agreement between Mortgagor 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 Real Property whether or not any such item is physically
attached to the Real Property 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 the Mortgagor 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 Mortgagor shall fail to execute any such financing or
continuation statements for twenty (20) days after request therefor is made
by Mortgagee, Mortgagor hereby authorizes Mortgagee, without the signature
of Mortgagor, 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.
XIX. Representations and Warranties.
Mortgagor represents and warrants that: (a) such Mortgagor has
the requisite power and lawful authority to execute and deliver this
Mortgage and to perform the Obligations it is required to perform under the
Loan Documents; (b) the execution and delivery of this Mortgage by
Mortgagor and performance of its obligations under this Mortgage will not
result in Mortgagor being in default under any provision of its Certificate
of Incorporation or By-Laws or of any deed of trust, mortgage, document,
instrument, credit or other agreement to which it is a party or by which
its assets are bound; (c) the Board of Directors of such Mortgagor has duly
authorized the execution and delivery of this Mortgage; (d) on the date
hereof, no portion of the Buildings or the Personal Property has been
materially damaged, destroyed or injured by fire or other casualty which is
not now fully restored or in the process of being restored; (e) Mortgagor
has all necessary licenses, authorizations, registrations and approvals to
own, use, occupy and operate the Encumbered Property and has full power and
authority to carry on its business at the Real Property as currently
conducted and has not received any notice of any violation of any Legal
Requirement that materially impairs the value of the Encumbered Property;
and (f) as of the date hereof, Mortgagor has not received any notice of any
Taking of the Encumbered Property as the case may be) or any portion
thereof and Mortgagor has no knowledge that any such Taking is
contemplated.
XX. No Waivers, Etc.
No failure by Mortgagee to insist upon the strict performance by
each Mortgagor 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
Mortgagor 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.
XXI. Brokerage.
Mortgagor hereby represents and warrants that it has dealt with
no broker, finder, or like agent in connection with the Loan Agreement, the
Revolving Credit Notes or this Mortgage.
XXII. Mortgage Subject to the Provisions of the Act.
Each provision of this Mortgage is subject to the provisions of
the Act, as defined in Article III, paragraph (E).
XXIII. Environmental Matters.
A. Mortgagor represents and warrants that:
1. To the best of Mortgagor's knowledge, none of the real
property owned and/ or occupied by Mortgagor and located in the State of
New Jersey, including, but not limited to, the Encumbered Property (the
"New Jersey Real Property"), has ever been used to treat, store, handle,
transfer, process or dispose of "Hazardous Wastes" as that term is defined
in applicable state or federal law. Mortgagor has not in the past, does
not at present, and shall not in the future, use, or allow the use of, in
any material respect its real property, including, but not limited to, the
Encumbered Property, for the purpose of refining, producing, storing,
handling, transferring, processing, treating, disposing of or transporting
"Hazardous Substances" as that term is defined in applicable state or
federal law. Mortgagor shall not, and shall not allow any other person to,
treat, store, dispose of or release any such Hazardous Waste on or in the
New Jersey Real Property, except for temporary storage of Hazardous Waste
generated on the property in strict compliance with all applicable laws.
2. To the best of Mortgagor's knowledge, none of the New
Jersey Real 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(1),
and said New Jersey Real Property is not now and will not be used in the
future as a "Major Facility."
3. No lien has been attached to any revenues or any New
Jersey Real Property or personal property owned by Mortgagor and located in
the State of New Jersey, including, but not limited to, the Encumbered
Property, and to the best of Mortgagor's knowledge there are no events,
conditions, facts or circumstances that could lead to the imposition of
such a lien, under any law relating to pollution or the discharge of
materials into the environment. Mortgagor shall not permit the imposition
of any such lien on any property which it owns.
4. Mortgagor has not received any summons, citation,
directive, or other written communication requiring, requesting, or
alleging the need for corrective action of Mortgagor from the New Jersey
Department of Environmental Protection and Energy or any other person or
entity relating to the releasing, spilling, leaking, pumping, pouring,
emitting, emptying, dumping or threatened release of "Hazardous
Substances," as such term is defined in applicable state or federal law.
To the best of Mortgagor's knowledge, there are no events, conditions,
facts or circumstances that could justify or give rise to any such
communication.
5. To the best of Mortgagor's knowledge, there are and have
been no underground storage tanks ("Underground Storage Tanks") on any New
Jersey Real Property as such term is defined in applicable state or federal
law and no New Jersey Real Property contains any asbestos or asbestos
containing materials other than in de minimis amounts.
B. Mortgagor covenants and agrees that:
1. If Mortgagor is presently an owner or operator of a "Major
Facility" in the State of New Jersey, as such term is defined in N.J.S.A.
58:10-23.11b(1), or if Mortgagor ever becomes such an owner or operator,
then Mortgagor shall furnish the New Jersey Department of Environmental
Protection and Energy with all the information required by N.J.S.A.
58:10-23.lld to the extent applicable.
2. Mortgagor shall not cause or permit to exist a releasing,
spilling, leaking, pumping, emitting, pouring, emptying or dumping of a
"Hazardous Substance," as such term is defined in applicable state or
federal law into waters of the State of New Jersey or onto lands from which
it might flow or drain into said waters, or into waters outside the
jurisdiction of the State of New Jersey, except in strict compliance with
the terms of applicable law, including any permit in force.
3. So long as Mortgagor shall own or operate any real
property located in the State of New Jersey, which is used as a "Major
Facility," as such term is defined in N.J.S.A. 58:10-23.11b(1), Mortgagor
shall duly file or cause to be duly filed with the Director of the Division
of Taxation in the New Jersey Department of the Treasury, a tax report or
return and shall pay or make provision for the payment of all taxes due
therewith, all in accordance with and pursuant to N.J.S.A. 58:10-23.11h to
the extent applicable.
4. In the event that there shall be filed a lien against the
Encumbered Property under any law relating to pollution or the discharge of
materials into the environment, then Mortgagor shall promptly but no later
than thirty (30) days from the date that Mortgagor is given notice that the
lien has been placed against the Encumbered Property, either (1) 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.
5. Should Mortgagor cause or permit any intentional or
unintentional action or omission resulting in the releasing, spilling,
leaking, pumping, pouring, emitting, emptying or dumping of materials into
the waters or onto lands of the State of New Jersey, or into the waters
outside the jurisdiction of the State of New Jersey, Mortgagor shall
promptly, diligently and expeditiously report and proceed to clean up such
release, spill, leak, pumping, pour, emission, emptying or dumping in
strict compliance with all applicable laws.
6. If Mortgagor shall fail to take any action required by
this Section, upon notice to Mortgagor (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 shall execute and deliver promptly after request, such
instruments as Mortgagee may deem useful or required to permit Mortgagee to
take any such action.
7. Without limiting the foregoing, Mortgagor shall comply in
all material respects with all applicable laws relating to pollution or the
discharge of materials into the environment or the indoor workplace.
8. Mortgagor 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 Mortgagor's
failure to comply with existing and future laws relating to pollution or
the discharge of materials into the environment, orders, ordinances, rules
and regulations, including those related to the presence of asbestos
affecting the Encumbered Property, 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 Revolving
Credit Notes, the Loan Agreement, or any other discharge of the
Indebtedness by operation of law or otherwise.
XXIV. Waivers by Mortgagor.
A. Mortgagor hereby waives all errors and imperfections, to the
extent permitted by law, in any proceedings instituted by Mortgagee under
this Mortgage, the Loan 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 Mortgagor 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 Loan Agreement or any other Loan
Document, nor shall Mortgagor 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. Mortgagor hereby waives 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.
XXV. 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 Mortgagor or Mortgagee, or whenever Mortgagor 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 Union National Bank
550 Broad Street
Newark, New Jersey 07101
Attn: Robert K. Strunk
and Midlantic Bank, National Association
2 Tower Center
East Brunswick, New Jersey 08816
Attn:
With a copy to:
McCarter & English
100 Mulberry Street
Newark, New Jersey 07102
Attn: Curtis A. Johnson, Esq.
B. If to Mortgagor:
GNOC, Corp.
Boston & Pacific Avenues
P.O. Box 1737
Atlantic City, New Jersey 08041
Attn: President
With a copy to:
Benesch, Friedlander, Coplan & Aronoff P.L.L.
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Attn: Chairman, Real Estate Department
C. or to such other address as Mortgagor 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.
XXVI. Conflict with Loan 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 Loan
Agreement, then, unless this Mortgage expressly provides otherwise by
specific reference to the Loan Agreement, the terms, covenants, conditions
and provisions of the Loan Agreement shall prevail.
XXVII. 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 Mortgagor
and Mortgagee. The covenants of this Mortgage shall run with the Real
Property and shall bind each Mortgagor and its 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.
XXVIII. 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 (e) "the Real
Property" shall mean "the Real Property or any portion thereof or interest
therein." Any act which Mortgagee is permitted to perform under this
Mortgage, the Loan 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 Mortgagor under this Mortgage, the Loan 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, Mortgagor 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 Mortgagor's 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 Mortgagor or any successor corporation
shall have any liability for any obligations of Mortgagor hereunder or for
any claim based on, in respect of or by reason of such obligations or its
creation. Mortgagee, by accepting this Mortgage, waives and releases all
such liability.
XXIX. Enforceability.
This Mortgage 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 Mortgage shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Mortgage 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 Mortgage. Nothing contained in this Mortgage or in any other Loan
Documents shall require Mortgagor 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
Loan Agreement or any other Loan Document would subject Mortgagee to
penalty under applicable law, then, ipso facto, the obligation of Mortgagor
to make such payment shall be reduced to the highest rate then permitted
under applicable law without penalty.
XXX. Satisfaction.
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 Mortgagor a satisfaction of this Mortgage in recordable form and
any other documents or instruments reasonably requested by Mortgagor to
release the lien of this Mortgage.
XXXI. Receipt of Copy.
Mortgagor acknowledges that it has received a true copy of this
Mortgage.
XXXII. Leasehold Mortgage Provisions.
A. Mortgagor represents and warrants that (i) the Mortgage is and
will remain a valid and enforceable first lien on the Leasehold Estate;
(ii) the Ground Lease is unmodified and in full force and effect; (iii)
Mortgagor will preserve such title and will forever warrant and defend the
same to Mortgagee and will forever warrant and defend the validity and
priority of the lien hereof against the claims of all persons and parties,
except the Trustee; (iv) all rents (including additional rents and other
charges) reserved in the Ground Lease have been paid to the extent they are
currently payable; (v) Mortgagor enjoys the quiet and peaceful possession
of the premises and improvements covered by the Ground Lease and Mortgagee
will enjoy the quiet and peaceful possession of such premises, subject to
the terms of the Ground Lease, if it succeeds to the rights of Mortgagor;
(vi) there is no default by any party under the terms of the Ground Lease
and no circumstances presently exist which, with notice and/or the passage
of time, would constitute such a default; and all conditions to the
effectiveness or continuing effectiveness thereof required to be satisfied
or performed by either party by the date hereof have been so satisfied or
performed; (vii) Mortgagor will at all times promptly and faithfully keep
and perform, or cause to be kept and performed, all the covenants and
conditions contained in the Ground Lease to be kept and performed; and
Mortgagor will not do or permit anything to be done or refrained or omitted
from being done, the doing or refraining from doing or the omission of
which will impair or tend to impair the security of the Mortgage or will be
grounds for declaring a breach under, or a forfeiture of, the Ground Lease;
(viii) the Ground Lease is prior to all liens, charges and encumbrances
whatsoever on the fee interest of the lessor thereunder, except for
Permitted Encumbrances; (ix) Mortgagor will not subordinate or consent to
the subordination of the Ground Lease to any mortgage on the fee interest
in the premises, except upon the prior written consent of Mortgagee; (x)
Mortgagor will not modify, extend or in any way alter the terms of the
Ground Lease or cancel or surrender the Ground Lease, or assign or sublet
under the Ground Lease (except as otherwise may be provided in the Loan
Agreement), or waive, excuse, condone or in any way release or discharge
any of the material obligations, covenants, conditions or agreements of the
lessor under the Ground Lease, without the consent of Mortgagee; and (xi)
Mortgagor will give immediate notice of any default given by the lessor
under the Ground Lease and promptly deliver to Mortgagee a copy of any
notice of default given to said lessor; Mortgagor will give Mortgagee
immediate notice of an assignment, conveyance, transfer or change of
ownership of the land demised thereunder; Mortgagor will immediately notify
Mortgagee of the receipt and substance of any notice, demand, request or
other material communication it receives from the lessor under the Ground
Lease, whether oral or written, and will promptly deliver a copy of the
same, if written, to Mortgagee; and it will promptly furnish all other
information which Mortgagee may request concerning the performance of the
lessee or the lessor under the Ground Lease.
B. So long as the obligations secured by the Mortgage remain
unpaid, the fee title and leasehold estate in the land demised under the
Ground Lease shall not, without the consent of Mortgagee or any purchaser
at foreclosure, merge but shall always be kept separate and distinct,
notwithstanding the union of said estates either in the lessee or in the
lessor under the Ground Lease, or in a third party, whether by purchase or
otherwise.
C. 1. The lien of this Mortgage attaches to all of
Mortgagor's rights and remedies at any time arising under or pursuant to
Section 365(h) of the Bankruptcy Code, 11 U.S.C. Section 365(h), (The
"Bankrupcy Code") including, without limitation, all of Mortgagor's rights
to retain its rights under the Ground Lease.
2. Mortgagor shall not without Mortgagee's prior written
consent elect to treat the Ground Lease as terminated under Section
365(h)(1) of the Bankruptcy Code. Any such election made without
Mortgagee's prior written consent shall be void.
3. Mortgagor hereby unconditionally assigns, transfers
and sets over to Mortgagee all of Mortgagor's claims and rights to the
payment of damages arising from any rejection by lessor of the Ground Lease
under the Bankruptcy Code. Mortgagee shall have the right to proceed in
its own name or in the name of Mortgagor in respect of any claim, suit,
action or proceeding relating to the rejection of the Ground Lease,
including, without limitation, the right to file and prosecute, to the
exclusion of Mortgagor, any proofs of claim, complaints, motions,
applications, notices and other documents, in any case in respect of lessor
under the Bankruptcy Code. This assignment constitutes a present,
irrevocable and unconditional assignment of the foregoing claims, rights
and remedies, and shall continue in effect until all of the indebtedness
and obligations secured by this Mortgage shall have been satisfied and
discharged in full. Any amounts received by Mortgagee as damages arising
out of the rejection of the Ground Lease as aforesaid shall be applied
first to all costs and expenses of Mortgagee (including, without
limitation, attorneys' fee) incurred in connection with the exercise of any
of this rights or remedies under this paragraph XXXII.
4. If pursuant to Section 365(h)(1) of the Bankruptcy
Code, Mortgagor seeks to offset against the rent reserved in the Ground
Lease the amount of any damages caused by the non-performance by the lessor
any of lessor's obligations under the Ground Lease after the rejection by
lessor of the Ground Lease under the Bankruptcy Code, Mortgagor shall,
prior to effecting such offset, notify the Mortgagee of its intent so to
do, setting forth the amounts proposed to be offset and the basis
therefore. Mortgagee shall have the right to object to all or any part of
such offset, and, in the event of such objection, Mortgagor shall not
effect any offset of the amounts so objected to by Mortgagee. If Mortgagee
has failed to object as aforesaid within ten (10) days after notice from
Mortgagor, Mortgagor may proceed to effect such offset in the amounts set
forth in Mortgagor's notice. Neither Mortgagee's failure to object as
aforesaid nor any objections or other communication between Mortgagee and
Mortgagor relating to such offset shall constitute an approval of any such
offset by Mortgagee. Mortgagor shall indemnify and save Mortgagee harmless
from and against any and all claims, demands, actions, suits, proceedings,
damages, losses, costs and expenses of every nature whatsoever (including,
without limitation, attorneys' fees) arising from or relating to any offset
by Mortgagor against the rent reserved in the Ground Lease.
5. If any action, proceeding, motion or notice shall be
commenced or filed in respect of the Mortgagor or the Encumbered Property
in connection with any case under the Bankruptcy Code, Mortgagee shall have
the option, to the exclusion of Mortgagor, exercisable upon notice from
Mortgagee to Mortgagor, to conduct and control any such litigation with
counsel of Mortgagee's choice. Mortgagee may proceed in its own name or in
the name of Mortgagor in connection with any such litigation, and Mortgagor
agrees to execute any and all powers, authorizations, consents and other
documents required by the Mortgagee in connection therewith. Mortgagor
shall, upon demand, pay to Mortgagee all costs and expenses (including
attorneys' fees) paid or incurred by Mortgagee in connection with the
prosecution or conduct of any such proceedings. Any such costs or expenses
not paid by Mortgagor as aforesaid shall be secured by the lien of this
Mortgage and shall be added to the principal amount of the indebtedness
secured hereby. Mortgagor shall not commence any action, suit, proceedings
or case, or file any application or make any motion, in respect of the
Ground Lease in any such case under the Bankruptcy Code without the prior
written consent of Mortgagee.
6. Mortgagor shall promptly after obtaining knowledge
thereof notify Mortgagee in writing of any filing by or against the lessor
under the Ground Lease of a petition under the Bankruptcy Code, Mortgagor
shall thereafter forthwith give written notice of such filing to Mortgagee,
setting forth any information available to Mortgagor as to the date of such
filing, the court in which such petition was filed, and the relief sought
therein. Mortgagor shall promptly deliver to Mortgagee following receipt
of any and all notices, summonses, pleadings, applications and other
documents received by Mortgagor in connection with any such petition and
any proceedings relating thereto.
7. If there shall be filed by or against the Mortgagor a
petition under the Bankruptcy Code, and the Mortgagor, as lessee under the
Ground Lease, shall determine to reject the Ground Lease pursuant to
Section 365(a) of the Bankruptcy Code, the Mortgagor shall give the
Mortgagee not less than ten (10) days prior notice of the date on which the
Mortgagor shall apply to the bankruptcy court for authority to reject the
Ground Lease. The Mortgagee shall have the right, but not the obligation,
to serve upon the Mortgagor within such ten (10) day period a notice
stating that (a) the Mortgagee demands that the Mortgagor assume and assign
the Ground Lease to the Mortgagee pursuant to Section 365 of the Bankruptcy
Code and (b) the Mortgagee covenants to cure or provide adequate assurance
of prompt cure of all defaults and provide adequate assurance of future
performance under the Ground Lease. If the Mortgagee serves upon the
Mortgagor the notice described in the preceeding sentence, the Mortgagor
shall not seek to reject the Ground Lease and shall comply with the demand
provided for in clause (a) of the preceding sentence within thirty (30)
days after the notice shall have been given, subject to the performance by
the Mortgagee of the covenant provided for in clause (b) of the preceding
sentence.
8. Effective upon the entry of an order for relief in
respect of the Mortgagor under the Bankruptcy Code, the Mortgagee hereby
assigns and transfers to the Mortgagee a non-exclusive right to apply to
the Bankruptcy Court under Section 365(d)(4) of the Bankruptcy Code for an
order extending the period during which the Ground Lease may be rejected or
assumed.
XXXIII. Release Provision.
The property described in Exhibit B annexed hereto and made a part
hereof (the "Sovereign Avenue Property") shall be released by Mortgagee
from the lien created by this Mortgage at such time that Mortgagee receives
a written request to release the Sovereign Avenue Property, provided,
however, that (i) there shall have been no Event of Default under the Loan
Agreement or this Mortgage which has not been cured, (ii) Mortgagee shall
have received evidence satisfactory to Mortgagee in its sole discretion
that the Sovereign Avenue Property shall be dedicated to and accepted and
maintained by the City of Atlantic City and (iii) Mortgagor shall have paid
all reasonable fees and expenses of Mortgagee's counsel in connection with
the release of the Sovereign Avenue Property.
<PAGE>
IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly
executed and acknowledged under seal as of the day and year first above
written.
MORTGAGOR:
GNOC, CORP.,
a New Jersey corporation
By:___________________________
Name: Donna M. Graham
Title: Chief Financial
Officer, Treasurer
<PAGE>
STATE OF NEW JERSEY )
)
COUNTY OF ESSEX )
On the 2nd day of May, 1996, before me personally came Donna M.
Graham, to me known, who, being by me duly sworn, did depose and say that
she is a Chief Financial Officer and Treasurer of GNOC, Corp., a New Jersey
corporation, the corporation described in and which executed the foregoing
instrument by order of the board of directors of said corporation; and that
she signed her name thereto by like order.
_________________________
<PAGE>
EXHIBIT A-1
Fee Property Description <PAGE>
EXHIBIT A-2
Leasehold Property Description<PAGE>
EXHIBIT B
Release Property Description <PAGE>
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
given by
GNOC, CORP.,
Mortgagor
to
FIRST UNION NATIONAL BANK
and
MIDLANTIC BANK, NATIONAL ASSOCIATION,
Mortgagee
Dated as of May 2, 1996
Record and Return to:
McCarter & English
Four Gateway Center
100 Mulberry Street
P.O. Box 652
Newark, New Jersey 07101-0652
Attn: Curtis A. Johnson, Esq.
<PAGE>
MORTGAGE AND SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS
TABLE OF CONTENTS
Article Page
I. Warranty of Title 5
II. Payment of Indebtedness 6
III. Requirements; Proper Care and Use 7
IV. Taxes on Mortgagee 9
V. Payment of Impositions 11
VI. Insurance 13
VII. Condemnation/Eminent Domain 23
VIII. Sale of Encumbered Property; Additional Financing 25
IX. Discharge of Liens 25
X. Right of Contest 25
XI. Leases 26
XII. Estoppel Certificates 29
XIII. Loan Document Expenses 29
XIV. Mortgagee's Right to Perform 29
XV. Mortgagee's Costs and Expenses 30
XVI. Events of Defaults 31
XVII. Remedies 31
XVIII. Security Agreement under Uniform Commercial Code 38
XIX. Representations and Warranties 39
XX. No Waivers, Etc. 39
XXI. Brokerage. 40
XXII. Mortgage Subject to the Provisions of the Act 40
XXIII. Environmental Matters 40
XXIV. Waivers by Mortgagor 43
XXV. Notices 44
XXVI. Conflict with Loan Agreement 45
XXVII. No Modification; Binding Obligations 45
XXVIII. Miscellaneous 46
XXIX. Enforceability 47
XXX. Satisfaction 47
XXXI. Receipt of Copy 47
XXXII. Leasehold Mortgage Provisions 47
XXXIII. Release Provisions 51
EXHIBIT A-1
Fee Metes and Bounds Description
EXHIBIT A-2
Leasehold Metes and Bounds Description
EXHIBIT B
Release Metes and Bounds Description
ASSIGNMENT OF LEASES AND RENTS
given by
GNOC, CORP., a New Jersey corporation,
and
GNAC, CORP., a New Jersey corporation,
Assignor
to
FIRST FIDELITY BANK, NATIONAL ASSOCIATION, NEW JERSEY,
and
Midlantic National Bank,
Assignor
Dated as of April 16, 1993
Record and Return to:
McCarter & English
100 Mulberry Street
Gateway Center Four
Newark, New Jersey 07102
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
This Agreement (hereinafter referred to as this "Assignment"),
dated as of the 16th day of April, 1993, given by GNOC, Corp. ("GNOC"), a
New Jersey corporation, having an office at Boston and Pacific Avenues,
P.O. Box 1737, Atlantic City, New Jersey 08404, and GNAC, Corp. ("GNAC"), a
New Jersey corporation, having an office at Boston and Pacific Avenues,
P.O. Box 1737, Atlantic City, New Jersey 08404, (GNOC and GNAC
collectively, "Assignor") to FIRST FIDELITY BANK, NATIONAL ASSOCIATION, NEW
JERSEY ("First Fidelity"), having an address at 550 Broad Street, Newark,
New Jersey, 07102, and MIDLANTIC NATIONAL BANK ("Midlantic"), having an
office at 499 Thornall Street, Metropark Plaza, Edison, New Jersey, 08837
their successors and assigns (First Fidelity and Midlantic collectively,
"Assignee").
W I T N E S S E T H :
Whereas, Assignor is the owner of certain real property situated
in Atlantic City, New Jersey, more particularly described on Exhibit A
annexed hereto and made a part hereof (the "Land"); 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",
the Land and the Buildings being hereinafter collectively referred to as
the "Property"); and
Whereas, GNF, Corp. ("GNF"), the Assignor and Amalgamated Bank of
Chicago, as trustee (the "Trustee") have entered into an Indenture (the
"Indenture"), dated as of March 10, 1993, pursuant to which GNF executed
and delivered its 10 5/8% First Mortgage Notes due 2003 (Series A) and 10
5/8% First Mortgage Notes due 2003 (Series B) in the principal amount of up
to TWO HUNDRED SEVENTY FIVE MILLION DOLLARS ($275,000,000);
Whereas, to secure the Indenture and the notes issued pursuant
thereto, the Assignor 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 issued
pursuant thereto, the Assignor executed and delivered to the Trustee an
Assignment of Leases and Rents covering the Property (the "Trustee's
Assignment"); and
Whereas, Assignee, the Assignor and GNF have entered into a loan
agreement (the "Loan Agreement") dated as of April 16, 1993, in which the
Assignee has agreed to lend up to TWENTY MILLION DOLLARS ($20,000,000)
under which GNOC, Corp. has issued notes evidencing its obligations to the
Assignee (the "Revolving Credit Notes"); and
Whereas, to secure the obligations of the Assignors under the
Loan Agreement and the Revolving Credit Notes, Assignor has executed and
delivered to the Assignee a Mortgage and Security Agreement with Assignment
of Rents dated April 16, 1993, covering the Property (the "Mortgage"); and
Whereas, the Trustee and the Assignee have, 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 Property; and
Whereas, Assignee is unwilling to enter into the Loan Agreement
and accept the Revolving Credit Notes unless Assignor 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 Assignor, 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 under the
terms of the Loan Agreement and the Mortgage, Assignor and hereby agrees as
follows:
32. Assignor hereby grants, transfers, bargains, sells,
assigns, conveys, and set 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 the 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").
33. Assignor further gives and grants unto Assignee the power
and authority, but not the obligation, 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 or 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 reasonable, 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 Leased 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 Leased 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), 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 the 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 Leased 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.
34. Assignee shall have the unqualified right, subject to the
provisions of applicable law, to receive, use and apply the 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 (b) for the
operation and maintenance of the Leased 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 Leased Property,
(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 attorney's 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 Paragraph 2 (xiii) hereof, shall apply all
remaining Rents and collected and received by it to the reduction of the
indebtedness secured by the Mortgage.
35. 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.
36. 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 gross 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.
37. 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 be 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).
38. 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 the 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 lessees 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 Assignor 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 collected 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 sum 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.
39. It is understood and agreed that nothing contained in this
Agreement 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 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 Assignor, 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.
40. Each Assignor jointly and severally agrees to indemnify
and hold Assignee harmless from and against any all liability, loss,
damage, cost and expense, including reasonable attorneys' fees and
disbursements, other than those which arise as a result of the gross
negligence or wilful misconduct of Assignee, which Assignee may or shall
incur under any of the Leases, 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
gross 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. 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 Loan Agreement,
including, in calculating such rate of interest, any additional interest
which may be imposed under the Loan Agreement 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
each Assignee until the same is paid by Assignor or Assignor to Assignee,
shall be jointly and severally payable by each Assignor to Assignee
immediately upon demand, or, at the option of Assignee, Assignee may
reimburse itself therefor out of any 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 otherwise to impose any obligation upon Assignee with respect to any of
the Leases.
41. Upon request of Assignee, Assignor shall execute and
deliver to Assignee such further instruments as Assignee may deem
reasonably necessary to effect this Assignment and the covenants of
Assignor 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 sole discretion.
42. 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 collected by
Assignee.
43. 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.
44. 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 hereof.
Assignor agrees to collect and receive said Rents and to use said Rents in
payment of principal and interest becoming due under the Indenture and the
Loan Agreement. Subject to the provisions of Paragraph 2(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 and the Commitments have been permanently
terminated. 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 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.
45. 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.
46. 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.
47. 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 Loan 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.
48. 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: First Fidelity Bank, National
Association, New Jersey
550 Broad Street
Newark, New Jersey 07101
and
Midlantic National Bank
499 Thornall Street
Metropark Plaza
Edison, New Jersey 08837
if to Assignor: GNAC Corp. & GNOC Corp.
Boston & Pacific Avenues
P.O. Box 1737
Atlantic City, New Jersey 08041
Attn: President
With a copy to:
Sills Cummis Zuckerman
Radin Tischman Epstein & Gross
One Riverfront Plaza
Newark, New Jersey 07102
Attn: Wayne Heicklen, Esq.
or at such different address as Assignor or Assignee shall hereafter
specify by written notice as provided herein.
49. 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.
50. Assignee acknowledges and agrees that it will not assign
this Assignment separate and apart from a sale or assignment of the Notes
and the Mortgage.
51. No director, officer, employee, stockholder or
incorporator, as such, past, present or future, of Assignor or any
successor corporation, shall have any liability for any obligations of
Assignor 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.
52. 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.
53. 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.
IN WITNESS WHEREOF, the parties have executed this Assignment as
of the day and year first above written.
ASSIGNOR:
GNOC, CORP., a New Jersey
corporation
By:______________________
Name: Donna M. Graham
Title: Chief Financial Officer,
Treasurer
GNAC, CORP., a New Jersey
corporation
By:______________________
Name: Donna M. Graham
Title: Chief Financial Officer,
Treasurer
STATE OF NEW JERSEY )
) ss.:
COUNTY OF ESSEX )
On the 16th day of April, 1993, before me personally came Donna
M. Graham, to me known, who, being by me duly sworn, did depose and say
that she resides at 26 Beacon Lane, Brigantine, New Jersey 08203; that she
is the Chief Financial Officer and Treasurer of GNOC, Corp., the
corporation described in and which executed the foregoing instrument, that
she 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 she signed her name
thereto by like order.
______________________________
Notary Public
<PAGE>
STATE OF NEW JERSEY)
) ss.:
COUNTY OF ESSEX )
On the 16th day of April, 1993, before me personally came Donna
M. Graham, to me known, who, being by me duly sworn, did depose and say
that she resides at 26 Beacon Lane, Brigantine, New Jersey 08203; that she
is the Chief Financial Officer and Treasurer of GNAC, Corp., the
corporation described in and which executed the foregoing instrument, that
she 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 she signed her name
thereto by like order.
______________________________
Notary Public
<PAGE>
Exhibit A
Land<PAGE>
Schedule I
Exceptions to Representations
and Warranties
None
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS (this "Assignment"), dated as
of the 2nd day of May 1996, given by GNOC, CORP. (successor by merger to
GNAC, Corp.), a New Jersey corporation ("Assignor"), having an office at
Boston and Pacific Avenues, P.O. Box 1737, Atlantic City, New Jersey 08404
to FIRST UNION NATIONAL BANK (formerly known as First Fidelity Bank,
National Association), a national banking association ("First Union"),
having an office at 550 Broad Street, Newark, New Jersey 07102 and
MIDLANTIC BANK, NATIONAL ASSOCIATION (formerly known as Midlantic National
Bank), a national banking association ("Midlantic"), having an address at 2
Tower Center, East Brunswick, New Jersey 08816 (First Union and Midlantic
are together referred to as the "Assignee").
W I T N E S S E T H :
Whereas, Assignor is the owner of certain real property situated
in Atlantic City, New Jersey, more particularly described on Exhibit A-1
annexed hereto and made a part hereof (the "Land"); and
Whereas, Assignor holds a leasehold interest under that certain
Amended and Restated Ground Lease (the "Ground Lease") of even date
herewith between Bally's Park Place, Inc., as lessor, and Assignor, as
lessee, covering the land described in Exhibit A-2 annexed hereto and made
a part hereof (the "Leasehold Estate"); and
Whereas, Assignor is the owner of the buildings and other
improvements now or hereafter erected on the Land and/or the Leasehold
Estate (such buildings and other improvements being hereinafter
collectively referred to as the "Buildings", the Land, the Leasehold Estate
and the Buildings being hereinafter collectively referred to as the
"Property"); and
Whereas, Assignor, GNAC, Corp. and GNF, Corp. as guarantors and
Assignee entered into a loan agreement dated April 16, 1993 in which
Assignee extended credit to the Borrower on a revolving basis in an amount
up to $20,000,000 which loan agreement was amended by the first amendment
to loan agreement dated as of December 31, 1993 (the "First Agreement");
and
Whereas, Assignor, GNAC, Corp. as guarantor, and Assignee
entered into an amended and restated loan agreement dated as of September
30, 1994, (the "Existing Agreement") among other things, releasing GNF,
Corp. as guarantor and extending the maturity of the obligations under the
First Agreement; and
Whereas, Assignor has requested and Assignee has agreed to
further modify the Existing Agreement pursuant to that certain Second
Amended and Restated Loan Agreement (the "Loan Agreement") dated as of May
2, 1996 by and between Assignor and Assignee; and
Whereas, to further secure the obligations of the Assignor under
the Loan Agreement and the Revolving Credit Notes (as defined in the Loan
Agreement), Assignor has executed and delivered to the Assignee a Mortgage
and Security Agreement with Assignment of Rents dated as of May 2, 1996,
covering the Property (the "Mortgage"); and
Whereas, Assignee is unwilling to enter into the Loan Agreement
unless Assignor makes, executes and delivers 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 Assignor, 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 under the
terms of the Loan Agreement and the Mortgage, Assignor and hereby agrees as
follows:
1. Assignor hereby grants, transfers, bargains, sells,
assigns, conveys, and set 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 the 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"). This is a present and absolute
assignment and transfer of title and not merely additional security.
2. Assignor further gives and grants unto Assignee the power
and authority, but not the obligation, 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 or 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 reasonable, 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 Leased 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 Leased 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), 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 the 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 Leased 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.
3. Assignee shall have the unqualified right, subject to the
provisions of applicable law, to receive, use and apply the 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 (b) for the
operation and maintenance of the Leased 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 Leased Property,
(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 attorney's 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 Paragraph 2 (xiii) hereof, shall apply all
remaining Rents and collected and received by it to the reduction of the
indebtedness secured by the Mortgage.
4. 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.
5. 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
gross 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.
6. 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 be 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).
7. Assignor hereby represents and warrants the following to
Assignee:
(i) to the best of the 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 lessees under such Leases;
(ii) Assignor has not executed or granted any
modifications or amendments of the Major Leases;
(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 Assignor 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 collected 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 sum 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.
8. It is understood and agreed that nothing contained in this
Agreement 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 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 Assignor, 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 agrees to indemnify and hold Assignee harmless
from and against any all liability, loss, damage, cost and expense,
including reasonable attorneys' fees and disbursements, other than those
which arise as a result of the gross negligence or wilful misconduct of
Assignee, which Assignee may or shall incur under any of the Leases, 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 gross 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. 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 Loan Agreement, including, in calculating such rate of
interest, any additional interest which may be imposed under the Loan
Agreement 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 each Assignee until the same is paid by
Assignor or Assignor to Assignee, shall be jointly and severally payable by
each Assignor to Assignee immediately upon demand, or, at the option of
Assignee, Assignee may reimburse itself therefor out of any 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 otherwise to impose any obligation upon Assignee
with respect to any of the Leases.
10. Upon request of Assignee, Assignor shall execute and
deliver to Assignee such further instruments as Assignee may deem
reasonably necessary to effect this Assignment and the covenants of
Assignor 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 sole 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 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. 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 hereof.
Assignor agrees to collect and receive said Rents and to use said Rents in
payment of principal and interest becoming due under the Indenture and the
Loan Agreement. Subject to the provisions of Paragraph 2(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 and the Commitments have been permanently
terminated. 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 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.
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 Loan 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: First Union National Bank
550 Broad Street
Newark, New Jersey 07101
Attn: Robert K. Strunk
With a copy to: McCarter & English
100 Mulberry Street
Newark, New Jersey 07102
Attn: Curtis A. Johnson, Esq.
and
Midlantic Bank, National Association
2 Tower Center
East Brunswick, New Jersey 08816
Attn:
if to Assignor: GNOC Corp.
Boston & Pacific Avenues
P.O. Box 1737
Atlantic City, New Jersey 08041
Attn: President
With a copy to: Benesch, Friedlander, Coplan & Aronoff P.L.L.
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Attn: Chairman, Real Estate Department
or at such different address as Assignor 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, shall have any liability for any obligations of
Assignor 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 Assignor has executed this Assignment as
of the day and year first above written.
GNOC, CORP.,
a New Jersey corporation
By:______________________
Name: Donna M. Graham
Title: Chief Financial
Officer, Treasurer
<PAGE>
STATE OF NEW JERSEY )
) ss.:
COUNTY OF ESSEX )
On the 2nd day of May, 1996, before me personally came Donna M.
Graham, to me known, who, being by me duly sworn, did depose and say that
she is the Chief Financial Officer and Treasurer of GNOC, Corp., the
corporation described in and which executed the foregoing instrument, that
she 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 she signed her name
thereto by like order.
______________________________
Notary Public
<PAGE>
Exhibit A-1
Land
<PAGE>
Exhibit A-2
Leasehold Estate
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT MARCH 31, 1996, THE CONSOLIDATED
STATEMENT OF OPERATIONS AND THE CONSOLIDATED STATEMENT OF STOCKHOLDERS'
EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 30,137
<SECURITIES> 0
<RECEIVABLES> 10,879
<ALLOWANCES> 5,557
<INVENTORY> 2,181
<CURRENT-ASSETS> 46,176
<PP&E> 403,597
<DEPRECIATION> 123,985
<TOTAL-ASSETS> 434,851
<CURRENT-LIABILITIES> 35,221
<BONDS> 273,361
0
0
<COMMON> 30
<OTHER-SE> 72,177
<TOTAL-LIABILITY-AND-EQUITY> 434,851
<SALES> 0
<TOTAL-REVENUES> 64,242
<CGS> 0
<TOTAL-COSTS> 48,681 <F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 210 <F2>
<INTEREST-EXPENSE> 7,730
<INCOME-PRETAX> (2,519)
<INCOME-TAX> (1,292)
<INCOME-CONTINUING> (1,227)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,227)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> THESE AMOUNTS INCLUDE TOTAL COSTS AND EXPENSES FOR CASINO, ROOMS,
FOOD AND BEVERAGE, AND OTHER OPERATING EXPENSES EXCLUDING THE PROVISION FOR
DOUBTFUL ACCOUNTS ON THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE
MONTHS ENDED MARCH 31, 1996.
<F2> THESE AMOUNTS ARE INCLUDED IN CASINO AND ROOMS COSTS AND EXPENSES ON
THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH
31, 1996.
</FN>
</TABLE>
