<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
--------------
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------- -----------
Commission File Number 0-11268
THE CLARIDGE HOTEL AND CASINO CORPORATION
(Exact name of registrant as specified in its charter)
New York 22-2469172
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Indiana Avenue and the Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 340-3400
__________________
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
----- -----
The number of shares outstanding of each class of the Registrant's Stock
is as follows:
Number of Shares Outstanding
May 1, 1994
-----------
Class A Stock 5,062,500
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THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
----------------------------------------------------------
Index to Form 10-Q
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Introductory Notes to Consolidated
Financial Statements 3
Consolidated Balance Sheets at
March 31, 1994 and 1993 and
December 31, 1993 4
Consolidated Statements of Operations
for the three months ended March 31,
1994 and 1993 5
Consolidated Statements of Cash Flows
for the three months ended March 31,
1994 and 1993 6
Notes to Consolidated Financial
Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 18
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THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
----------------------------------------------------------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Introductory Notes to Consolidated Financial Statements
-------------------------------------------------------
The accompanying consolidated financial statements have been prepared
by The Claridge Hotel and Casino Corporation ("Corporation") without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, these financial
statements contain all adjustments necessary to present fairly the
consolidated financial position of The Claridge Hotel and Casino
Corporation and its wholly-owned subsidiaries, The Claridge at Park Place,
Incorporated ("New Claridge") and Claridge Gaming Incorporated at March
31, 1994 and 1993 and December 31, 1993, and the results of its operations
for the three months ended March 31, 1994 and 1993 and its cash flows for
the three months ended March 31, 1994 and 1993. All adjustments made are
of a normal recurring nature.
Although management believes that the disclosures included herein are
adequate to make the information contained herein not misleading, certain
information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial
statements be read in conjunction with the financial statements and the
related disclosures contained in the Corporation's Annual Report on Form
10-K for the year ended December 31, 1993 filed with the Securities and
Exchange Commission.
The results of operations for the three months ended March 31, 1994
and 1993 are not necessarily indicative of the operating results to be
expected for the full year. Historically, the gaming industry in Atlantic
City, New Jersey has been seasonal in nature with peak demand months
occurring during the summer season.
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THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1994 1993 1993
-------- -------- --------
<S> <C> <C> <C>
ASSETS
------
Current Assets:
Cash and cash equivalents $ 46,626 5,193 5,906
Receivables, net (including
$12,355 and $11,273 at March 31,
1994 and 1993, respectively
and $12,176 at December 31,
1993, due from the Partnership) 13,145 13,339 12,344
Other current assets 3,767 4,204 3,282
-------- -------- --------
Total current assets 63,538 22,736 21,532
-------- -------- --------
Gaming equipment, net 4,335 4,225 4,423
Long-term receivables due from the
Partnership (note 3) 115,655 115,494 119,803
Intangible assets and deferred charges 3,805 651 258
Other assets 3,841 3,232 2,218
-------- -------- --------
$191,174 146,338 148,234
======== ======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities:
Revolving credit line borrowings (note 4) $ -0- -0- 800
Current installments of long-term
debt (note 7) -0- -0- 3,348
Accounts payable 2,750 2,509 3,011
Loan from the Partnership (note 5) 3,600 3,600 3,600
Other current liabilities (note 6) 27,041 28,161 26,341
-------- -------- --------
33,391 34,270 37,100
-------- -------- --------
Long-term debt (note 7) 85,000 35,259 37,850
Deferred rent due to the Partnership 34,966 36,342 38,735
Deferred income taxes (note 9) 6,685 6,103 5,188
Other noncurrent liabilities (note 8) 20,000 20,000 20,000
Stockholders' equity:
Common stock 5 5 5
Additional paid in capital 5,048 5,048 5,048
Accumulated earnings 6,079 9,311 4,308
Treasury stock, 73,963 Class A
shares at $-0- cost at March 31, 1994
and December 31, 1993 -0- -0- -0-
-------- -------- --------
Total stockholders' equity 11,132 14,364 9,361
-------- -------- --------
$191,174 146,338 148,234
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
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THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the Three Months Ended March 31, 1994 and 1993
(in thousands except per share data)
1994 1993
--------- --------
Revenue:
Casino $ 30,112 34,610
Hotel 2,159 2,306
Food and beverage 3,758 4,241
Interest from the Partnership 4,402 4,572
Interest, other 253 35
Other 618 731
--------- --------
41,302 46,495
Less promotional allowances (note 2) (3,510) (3,612)
--------- --------
Net revenues 37,792 42,883
--------- --------
Costs and expenses:
Casino 18,632 18,724
Hotel 727 764
Food and beverage 2,201 2,581
Other 884 980
Rent expense to the Partnership 8,732 8,615
Rent expense, other 381 429
General and administrative 6,366 6,270
Gaming taxes 2,402 2,760
Reinvestment obligation expense 130 150
Provision for uncollectible accounts 100 137
Depreciation and amortization 437 334
Interest expense 2,186 924
--------- --------
Total costs and expenses 43,178 42,668
--------- --------
Income (loss) before income taxes (5,386) 215
Income tax expense (credit) (2,154) 86
--------- --------
Net income (loss) $ (3,232) 129
========= ========
Net income (loss) per share (based on
4,988,537 and 5,062,500 weighted
average shares outstanding for the
three months ended March 31, 1994
and 1993, respectively) $ (.65) .03
========= ========
See accompanying notes to consolidated financial statements.
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THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1994 and 1993
(in thousands)
1994 1993
------- ------
Cash flows from operating activities:
Net income (loss) $(3,232) 129
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 437 334
Deferred rent to the Partnership (1,376) (790)
Deferred interest receivable and
discount from the Partnership (273) (238)
Reinvestment obligation expenses 130 150
(Gain)/loss on disposal of assets 9 (39)
Deferred income taxes 582 239
Change in assets and liabilities:
Receivables, net, excluding
current portion of long-term
receivables 468 219
Other current assets 437 69
Accounts payable 242 1,161
Other current liabilities (1,120) (307)
------- ------
Net cash flows provided by (used in)
operating activities (3,696) 927
------- ------
Cash flows from investment activities:
Increase in intangible assets and
deferred charges (3,276) (8)
Additions to gaming equipment, net (444) (750)
Additions to other assets (740) (417)
Proceeds from disposition of property 10 40
Increase in long-term receivables (2,799) (489)
Receipt of long-term receivables 2,637 2,348
------- ------
Net cash flows provided by (used in)
investment activities (4,612) 724
------- ------
(Continued)
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THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1994 and 1993
(in thousands)
1994 1993
------- ------
Cash flows from financing activities:
Increase in long-term debt 85,000 -0-
Payment of long-term debt (33,559) (303)
Increase in revolving credit line
borrowings 7,625 14,100
Payment of revolving credit line
borrowings (9,325) (14,300)
------- ------
Net cash provided by (used in)
financing activities 49,741 (503)
------- ------
Increase in cash and cash equivalents 41,433 1,148
Cash and cash equivalents at beginning
of period 5,193 4,758
------- ------
Cash and cash equivalents at end
of period $ 46,626 5,906
======== ======
See accompanying notes to consolidated financial statements.
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Notes to Consolidated Financial Statements
1. Basis of Presentation
---------------------
The financial statements are prepared in accordance with generally
accepted accounting principles. The consolidated financial statements
include the accounts of the Corporation and its wholly-owned
subsidiaries, New Claridge and Claridge Gaming Incorporated. All
material intercompany accounts and transactions have been eliminated
in consolidation.
Claridge Gaming Incorporated was formed on March 16, 1994 for the
purpose of exploring and developing gaming opportunities in other
jurisdictions.
2. Promotional Allowances
----------------------
The retail value of complimentary rooms, food and beverages and other
complimentaries furnished to patrons is included in gross revenues and
then deducted as promotional allowances. The estimated cost of
providing such promotional allowances to casino patrons for the three
months ended March 31, 1994 and 1993 has been allocated to casino
operating expenses as follows (in thousands):
1994 1993
------ -----
Hotel $ 601 522
Food and beverage 2,339 2,335
Other (Entertainment) 168 156
Total costs allocated to ------ -----
casino operating expenses $3,108 3,013
====== =====
3. Long-Term Receivables
---------------------
Long-term receivables consist of the following amounts due from
Atlantic City Boardwalk Associates, L.P. (the "Partnership"):
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1994 1993 1993
-------- ------- -------
(in thousands)
<S> <C> <C> <C>
Expandable Wraparound Mortgage 14%,
maturities through September 30, 2002
(net of $12,021,000 discount and
$13,061,000 discount at March 31, 1994
and 1993 respectively, and $12,295,000
discount at December 31, 1993) $ 77,729 79,705 84,939
Deferred Expandable Wraparound
Mortgage interest receivable, due
September 30, 2000 20,000 20,000 20,000
FF&E promissory notes, 14% 10,059 7,504 5,409
Expansion/Construction promissory
note, 14% 7,867 8,285 9,455
-------- ------- -------
$115,655 115,494 119,803
======== ======= =======
</TABLE>
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Notes to Consolidated Financial Statements
4. Working Capital Loans
---------------------
Pursuant to the terms of the Revolving Credit and Term Loan Agreement
(the "Loan Agreement"), First Fidelity Bank, N.A., New Jersey (the
"Bank") established a revolving working capital facility, which, prior
to the full satisfaction of the Loan Agreement on January 31, 1994,
was in the amount of $7.5 million. Interest on the working capital
facility borrowings, which was payable monthly in arrears, accrued at
a rate equal to the prime rate plus four percent, as amended effective
April 1, 1993 (see Note 7, Long-Term Debt). New Claridge was also
required to pay quarterly a commitment fee equal to .5% per annum of
the unused portion of the revolving working capital facility.
On January 31, 1994, the Corporation completed an offering of $85
million of First Mortgage Notes (the "Notes") due 2002, bearing
interest at 11 3/4% (see Note 7, Long-Term Debt). A portion of the
net proceeds of $82.2 million, after deducting fees and expenses, was
used to repay in full the Corporation's outstanding debt under the
Loan Agreement, including the outstanding balance of the Corporation's
revolving credit line, which was secured by the first mortgage. In
conjunction with the full satisfaction of the Loan Agreement, the
Corporation's revolving credit line arrangement was terminated.
New Claridge's outstanding borrowings on the revolving working capital
facility at December 31, 1993 and March 31, 1993 were $1,700,000 and
$800,000, respectively.
The amount outstanding on the revolving working capital facility at
December 31, 1993 is classified as long-term debt, due to the
repayment in full on January 31, 1994, in conjunction with the full
satisfaction of the Loan Agreement.
5. Loan from the Partnership
-------------------------
In accordance with the terms of the Restructuring Agreement, on June
16, 1989 the Partnership loaned to New Claridge $3.6 million, which
represented substantially all cash and cash equivalents remaining in
the Partnership other than funds needed to pay expenses incurred
through the closing of the Restructuring. This loan is evidenced by
an unsecured promissory note and is not due and payable until such
time as the full or partial satisfaction of the Wraparound Mortgage
and the first mortgage has been made in connection with a refinancing
or sale of all or a partial interest in New Claridge.
Interest, which accrues at 12% per annum, is payable in full upon
maturity. As of March 31, 1994, such interest, which is included in
other current liabilities, amounted to $2,070,000.
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Notes to Consolidated Financial Statements
6. Other Current Liabilities
-------------------------
Other current liabilities consist of the following:
March 31, December 31, March 31,
1994 1993 1993
-------- ------- -------
(in thousands)
Deferred rent, current $ 15,078 15,078 15,078
Accrued payroll and
related benefits 6,148 6,245 5,874
Accrued interest due to
Partnership 2,070 1,962 1,638
Auto and general
liability reserves 1,315 1,404 1,399
Other current liabilities 2,430 3,472 2,352
-------- ------- -------
$ 27,041 28,161 26,341
======== ======= =======
The amount of deferred rent as of March 31, 1994 of $15,078,000
represents the maximum deferral allowed in accordance with the
Operating Lease Agreement and Expansion Operating Lease Agreement, as
amended. The deferred rent will become payable (i) upon a sale or
refinancing of the Claridge; (ii) upon full or partial satisfaction of
the Wraparound Mortgage; and (iii) upon full satisfaction of any first
mortgage then in place.
7. Long-Term Debt
--------------
Long-term debt consists of the following:
March 31, December 31, March 31,
1994 1993 1993
-------- ------- -------
(in thousands)
11 3/4% First Mortgage Notes,
due 2002 $ 85,000 -0- -0-
First Mortgage Note, prime
plus 4%, effective April 1, 1993 -0- 33,559 41,198
Revolving line of credit -0- 1,700 800
-------- ------- -------
85,000 35,259 41,998
Less current installments -0- -0- 4,148
-------- ------- -------
$ 85,000 35,259 37,850
======== ======= =======
On January 31, 1994, the Corporation completed an offering of $85
million of Notes due 2002, bearing interest at 11 3/4%. A portion of
the net proceeds of $82.2 million, after deducting fees and expenses,
was used to repay in full the Corporation's outstanding debt
under the Loan Agreement, including the outstanding balance of the
Corporation's revolving credit line, which was secured by the
First Mortgage. In conjunction with the full satisfaction of
the Loan Agreement, the Corporation's revolving credit line
arrangement was terminated. Interest on the Notes is payable
semiannually on February 1 and August 1 of each year, commencing
August 1, 1994.
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Notes to Consolidated Financial Statements
7. Long-Term Debt (cont'd.)
------------------------
On October 7, 1991, New Claridge was issued a two year license by the
Commission for the period commencing October 31, 1991. In conjunction
with the relicensing, New Claridge was required to submit to the
Commission by April 30, 1993 a plan to satisfy the balloon payment due
on the term loan on January 1, 1994, pursuant to the terms of the Loan
Agreement, with implementation of the plan by June 30, 1993. The
third amendment to the Loan Agreement was executed, effective April 1,
1993. The modifications resulting from this amendment included (i)
the extension of the maturity date of the first mortgage loan from
January 1, 1994 to December 31, 1996; (ii) an increase in the interest
rate to the prime rate of Marine Midland Bank, N.A. plus four percent
(from the previous prime rate plus one and one-half percent); (iii) an
increase in the mandatory principal payments from $1.2 million to $3
million annually, payable in equal monthly installments; (iv) an
increase in the maximum annual capital expenditure limitation from
$3.5 million per year to $5 million per year; and (v) an increase in
the co-agent's fee to $70,000 per year. Prior to this amendment, New
Claridge was required to pay a co-agent's fee equal to one-fortieth of
one percent of the average daily outstanding balance of the first
mortgage loan. In addition, New Claridge paid an extension fee of
$200,000 upon the execution of this amendment to the Loan Agreement.
In addition to the mandatory principal payments, New Claridge was also
required to pay quarterly, to the Bank, for permanent application to
the outstanding principal balance of the first mortgage loan, any
excess cash flow as defined in the Loan Agreement.
The total principal balance outstanding on the first mortgage loan at
December 31, 1993 has been classified as long-term debt, due to the
repayment in full of the first mortgage on January 31, 1994, in
conjunction with the full satisfaction of the Loan Agreement.
8. Other Non-Current Liabilities
-----------------------------
Pursuant to the Restructuring Agreement, Del Webb Corporation retained
an interest, which was assigned to a trustee for the benefit of the
United Way of Arizona on April 2, 1990, equal to $20 million plus
interest at a rate of 15% per annum, compounded quarterly, commencing
December 1, 1988, in any proceeds ultimately recovered from
operations and/or the sale or refinancing of the Claridge facility
in excess of the first mortgage loan ("Contingent Payment"), which
amount is payable under certain circumstances. Consequently, New
Claridge has deferred the recognition of $20 million of forgiveness
income with respect to the Contingent Payment obligation. Interest on
the Contingent Payment has not been recorded in the accompanying
financial statements since the likelihood of paying such amount is not
considered probable at this time. As of March 31, 1994, accrued
interest would have amounted to approximately $23.9 million.
9. Income Taxes
------------
Effective January 1, 1993, the Corporation adopted Statement No. 109
on a prospective basis. There was no effect on the Corporation's
statement of operations for the three month period ended March 31,
1993 as a result of the adoption of Statement No. 109.
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Notes to Consolidated Financial Statements
9. Income Taxes (cont'd.)
---------------------
Under the asset and liability method, deferred tax assets and
liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
basis.
The Corporation recorded an income tax credit of $2,154,000 for the
three months ended March 31, 1994 which represents the tax benefit of
losses which the Corporation believes will more likely than not be
recognized.
10. Claridge License Renewal
------------------------
On September 22, 1993, New Claridge was issued a two-year casino
license by the New Jersey Casino Control Commission (the "Commission")
for the period commencing September 30, 1993.
11. Related Party Transactions
--------------------------
In February 1992, the Corporation's Board of Directors adopted a Long-
Term Incentive Plan (the "Plan") in which certain key employees of the
Corporation and/or New Claridge participate. The Plan provides for
the grant of the 273,938 shares of the Corporation's Class A stock,
which were held as treasury shares of the Corporation, and for the
issuance of 100 Equity Units. The aggregate value of the 100 Equity
Units is equal to 5.41 percent of certain amounts as further defined
in the Plan. Specified portions of the awarded treasury shares and
Equity Units held by participants vest upon the attainment of specific
goals as described in the Plan. The treasury shares and Equity Units
fully vest upon a further restructuring or a change in control as
defined in the Plan. Payment with respect to the Equity Units
will only be made (a) upon the occurrence of a transaction in which
substantially all of the assets and business operations of the
Claridge entities are transferred to one or more entities in a merger,
sale of assets or other acquisition-type transaction, (b) upon
termination of employment of any participant in the Plan within one
year after any change in control of the Corporation occurs, as defined
in the Plan, or (c) if the Corporation pays dividends to its
stockholders, if the Partnership makes distributions to its partners,
or if the Corporation or the Partnership makes certain distributions
under the Restructuring Agreement. On April 15, 1992, the Casino
Control Commission approved the Plan and the treasury shares were
delivered to the participants. Upon the issuance of the Notes and the
repayment in full of the Corporation's outstanding debt under the Loan
Agreement, 25% of the shares and Equity Units awarded under the Plan
vested. A participant is entitled to vote all awarded shares whether
or not vested in such shares.
On July 25, 1993, Shannon Bybee, resigned his position as Chairman and
Chief Executive Officer of the Corporation, resulting in the return to
the Corporation of 73,963 shares of the Corporation's Class A stock,
which had previously been awarded under the Plan. In addition, the
Equity Units held by Mr. Bybee were returned to the Corporation upon
his resignation. Mr. Bybee continues to serve as a member of the
Board of Directors of the Corporation. On April 16, 1994, the shares
of Class A Stock and Equity Units which had been returned by Mr. Bybee
were awarded to certain officers of the Corporation and/or New
Claridge.
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<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations for the Three Months Ended March 31, 1994 and 1993
------------------------------------------------------------------------
The Corporation had a net loss of $3,232,000, for the three months
ended March 31, 1994, compared to net income of $129,000 for the same
period in 1993.
Casino revenue, which is the difference between amounts wagered by and
paid to casino patrons, for the first quarter of 1994 totalled
$30,112,000, a decrease of 13.0% from casino revenues earned in the first
quarter of 1993. Casino revenues earned by all Atlantic City properties
for the three months ended March 31, 1994 were 2.7% lower than casino
revenues earned during the same period of 1993. Citywide revenues were
adversely effected by severe snow and ice storms experienced throughout
the Northeastern United States. Claridge's dependency on customers
arriving by bus, its focus on the New York and Northern New Jersey markets
and its lack of a covered self-parking facility contributed to a
percentage decline in casino revenues greater than that experienced by
other Atlantic City properties.
Claridge table games revenue for the three months ended March 31, 1994
was $8,559,000, a decrease of 10.2% from 1993 table games revenue;
citywide table games revenue decreased .7%. The decrease in Claridge
table games revenue resulted from a 9.2% decrease in table games drop (the
amount of gaming chips purchased by patrons) compared to 1993, combined
with a lower "hold" percentage (win to drop percentage); for the first
quarter of 1994, the hold percentage was 14.8%, compared to 15.0% for the
same period of 1993. Citywide table games revenue for the first quarter
of 1994 included $9,600,000 of poker revenue, which was not an approved
gaming option in the first quarter of 1993, and is not currently offered
at the Claridge.
Slot machine revenue earned by the Claridge for the first quarter of
1994 was $21,553,000, a decrease of 14.1% from 1993 levels of $25,083,000.
Citywide slot machine revenue for the three months ended March 31, 1994
was 3.7% lower than slot machine revenue for the same period of 1993. New
Claridge offers promotional incentives through its direct marketing
program to its customers based on their casino play as well as to
prospective customers based on demographic models; during the first
quarter of 1994, coin issued through this program decreased to $2,035,000
from $2,310,000 during the same period of 1993. In addition, New Claridge
offers cash incentives in the form of coin to play slot machines to
patrons arriving by bus. Coin issued to bus patrons during the first
quarter of 1994 amounted to $1,018,000, compared to $1,507,000 in the same
period in 1993. During the first quarter of 1994, 103,000 bus passengers
arrived at the Claridge, compared to 152,000 in the same period of 1993.
Decreases in cash incentives and bus passengers reflect the impact of
severe weather conditions on patron volume.
Hotel revenues for the first quarter of 1994 of $2,159,000 were 6.4%
lower than hotel revenues for the first quarter of 1993, resulting from a
decrease in the number of rooms sold (36,400 in 1994 compared to 38,300 in
1993), combined with a lower average room rate ($59 in 1994 compared to
$60 in 1993). Food and beverage revenues for the first quarter of 1994 of
$3,758,000 were 11.4% lower than the first quarter of 1993, due to a
decrease in total covers (meals served) to 315,000 in 1994 compared to
389,000 in 1993, partially offset by a higher average cover price ($7.89
in 1994 compared to $7.14 in 1993).
Total costs and expenses for the three months ended March 31, 1994 of
$43,178,000 were 1.2% higher than first quarter 1993 expenses primarily
due to increased interest expense resulting from a higher long-term debt
balance resulting from the completion of the offering of $85 million of
<PAGE>
<PAGE> 14
Notes on January 31, 1994. Casino operating expenses for the first
quarter of 1994 were slightly lower than the first quarter of 1993
expenses.
The Corporation recorded an income tax credit of $2,154,000 for the
three months ended March 31, 1994 which represents the tax benefit of
losses which the Corporation believes will more likely than not be
recognized. The Corporation recorded income tax expense of $86,000 as a
result of the income earned for the first quarter of 1993.
Results of Operations for the Three Months Ended March 31, 1993 and 1992
------------------------------------------------------------------------
The Corporation had net income of $129,000, for the three months
ended March 31, 1993, compared to net income of $124,000 for the same
period in 1992.
Casino revenue for the first quarter of 1993 totalled $34,610,000, an
increase of 1.2% over casino revenues earned in the first quarter of 1992.
Casino revenues earned by all Atlantic City properties for the three
months ended March 31, 1993 were 1.2% lower than casino revenues earned
during the same period of 1992. Casino revenues throughout Atlantic City
during the first quarter of 1993 were adversely affected by poor weather
conditions, most notably the March 13, 1993 storm, which covered portions
of the Northeastern United States with over one foot of snow. Revenues
for the first quarter of 1993 were favorably impacted by unlimited twenty-
four hour gambling, as well as other Casino Control Commission policies
which have given casinos greater flexibility in operating (i.e. an
increase in the percentage of casino floor space allocable to slot
machines).
Claridge table games revenue for the three months ended March 31, 1993
was $9,527,000, a decrease of 7.1% from 1992 table games revenue. This
decrease resulted from a 2.0% decrease in table games drop compared to
1992, combined with a lower "hold" percentage for the first quarter of
1993, the hold percentage was 15.0%, compared to 15.8% for the same period
of 1992. Citywide table games revenue for the three months ended March
31, 1993 was 9.9% lower than 1992 revenue.
Slot machine revenue earned by the Claridge for the first quarter of
1993 was $25,083,000, an increase of 4.7% over 1992 levels of $23,960,000.
Citywide slot machine revenues for the three months ended March 31, 1993
was 4.0% higher than slot machine revenue for the same period of 1992.
During the first quarter of 1993, $2,310,000 in coin was issued through
the direct mail program, compared to $1,363,000 during the same period in
1992. In addition, coin issued to bus patrons during the first quarter of
1993 amounted to $1,507,000, compared to $2,218,000 in the same period in
1992. During the first three months of 1993, 152,000 bus passengers
arrived at the Claridge, compared to 212,000 in the same period of 1992.
Hotel revenues for the first quarter of 1993 of $2,306,000 were 5.6%
higher than 1992, due to a higher occupancy rate (87.1% in 1993 compared
to 77.0% in 1992), partially offset by a lower average room rate ($60 in
1993 compared to $63 in 1992). Food and beverage revenues for the first
quarter of 1993 of $4,241,000 were 9.4% lower than 1992, due to a decrease
in total covers (389,000 in 1993 compared to 397,000 in 1992), as well as
a lower average cover price ($7.14 in 1993 compared to $8.13 in 1992).
Total covers decreased due to the elimination of food coupons in the bus
program. The average cover price decreased as a result of offering a
$4.75 buffet in 1993 compared to a $9.95 buffet in 1992. Other revenues
for the three months ended March 31, 1993 decreased from last year due
primarily to revisions to New Claridge's entertainment policy, from the
presentation of daily Broadway-style reviews in 1992 to a headliner
performance one weekend per month in 1993.
<PAGE>
<PAGE> 15
Total costs and expenses for the three months ended March 31, 1993 of
$42,668,000 were comparable to 1992 expenses. Casino operating expenses
increased 1.8% over 1992 expenses, primarily due to higher direct
marketing coin redemption costs. Other costs decreased as a result of the
reduced entertainment schedule as previously discussed. Interest expense
of $924,000 was lower than the 1992 expense of $1,185,000, due to a lower
average outstanding balance on the term loan throughout the first quarter
of 1993.
Liquidity and Capital Resources
-------------------------------
On January 31, 1994, the Corporation completed an offering of $85
million of Notes, due 2002, bearing interest at 11 3/4%. The Notes are
secured by a non-recourse mortgage granted by the Partnership representing
a first lien on the Hotel Assets, and by a pledge granted by the
Corporation of all outstanding shares of capital stock of New Claridge.
New Claridge's guarantee of the Notes is secured by a collateral
assignment of the second lien Wraparound Mortgage, and by a lien on the
Claridge's gaming and other assets, which lien will be subordinated to
liens that may be placed on those gaming and other assets to secure any
future revolving credit line arrangement. Interest on the Notes is
payable semiannually on February 1 and August 1 of each year, commencing
August 1, 1994.
A portion of the net proceeds of $82.2 million, after deducting fees
and expenses, was used to repay in full the Corporation's outstanding debt
under the Loan Agreement, including the outstanding balance of the
Corporation's revolving credit line, which was secured by the First
Mortgage. In conjunction with the full satisfaction of the Loan
Agreement, the Corporation's revolving credit line arrangement was
terminated. The Corporation is currently seeking to obtain a new line of
credit arrangement; however, the Corporation believes that its current
resources are adequate to fund future obligations as they become due.
The balance of the net proceeds from the offering of the notes will be
used as follows:
(i) to fund internal improvements intended to expand the Claridge's
casino capacity, which will result in the addition of
approximately 550 slot machines, as well as a poker and simulcast
area. Through March 31, 1994, approximately $1.9 million has
been used to fund the costs of this internal expansion which is
anticipated to be completed by July 1994;
(ii) the possible acquisition of an adjacent parcel of land and
construction on that land of a self-parking facility. In March
1994, New Claridge acquired options to purchase two parcels of
property adjacent to its existing valet-parking facility;
(iii) the possible purchase of the Contingent Payment (see Note 8,
Other Non-Current Liabilities) granted in 1989 and now held in a
trust for the benefit of the United Way of Arizona. The
Corporation is currently negotiating to purchase the Contingent
Payment, for less than face value, from the trustee for the
United Way of Arizona. The Corporation previously offered to
purchase the Contingent Payment for $10 million, but that offer
was not accepted. Negotiations between the trustee for the
United Way of Arizona and the Corporation are continuing; and
(iv) the potential expansion of the Corporation's activities into
emerging gaming markets. On March 16, 1994, Claridge Gaming
Incorporated was formed as a wholly-owned subsidiary of the
Corporation for the purpose of exploring and developing gaming
opportunities in other jurisdictions.
<PAGE>
<PAGE> 16
At March 31, 1994, the Corporation had a working capital surplus of
$30,147,000 as compared to a working capital deficit of $11,534,000 at
December 31, 1993. This increase in the working capital is attributable
to an increase in cash of $41,433,000 and a decrease in other current
liabilities of $1,120,000, partially offset by a decrease in other current
assets of $437,000 and an increase in accounts payable of $241,000. The
working capital deficiency at March 31, 1993 was $15,568,000. Current
liabilities at March 31, 1994 and December 31, 1993 included deferred
rental payments of $15,078,000, and a $3.6 million loan from the
Partnership plus accrued interest thereon of $2,070,000 at March 31, 1994
and $1,962,000 at December 31, 1993. These amounts will only be payable
upon (i) a sale or refinancing of the Claridge; (ii) full or partial
satisfaction of the Wraparound Mortgage; and (iii) full satisfaction of
any first mortgage then in place. If these amounts were not included in
current liabilities, the Corporation's working capital surplus at March
31, 1994 and December 31, 1993 would have been $50,895,000 and $9,106,000,
respectively.
The Hotel Assets are owned by the Partnership and leased by the
Partnership to New Claridge under the terms of the Operating Lease
originally entered into on October 31, 1983, and the Expansion Operating
Lease, which covered the expansion improvements made to the Claridge in
1986. The initial terms of both leases are scheduled to expire on
September 30, 1998 and each lease provides for three 10-year renewal
options at the election of New Claridge. The Operating Lease requires
basic rental payments to be made in equal monthly installments escalating
annually up to $41,775,000 in 1997, and $32,531,000 for the remainder of
the initial lease term. Prior to the Corporation's 1989 restructuring,
basic rent expense (recognized on a leveled basis in accordance with
Statement of Financial Accounting Standards No. 13), was $31,902,000 per
year. Therefore, in the early years of the lease term, required cash
payments under the Operating Lease (not including the Expansion Operating
Lease) were significantly lower than the related expense recognized for
financial reporting purposes. Rental payments under the Expansion
Operating Lease are adjusted annually based on a Consumer Price Index with
any increase not to exceed two percent per year. Pursuant to the
Restructuring Agreement, the Operating Lease and the Expansion Operating
Lease were amended to provide for the abatement of $38.8 million of basic
rent payable through 1998 and the deferral of $15.1 million of rental
payments, thereby reducing the Partnership's cash flow to an amount
estimated to be necessary only to meet the Partnership's cash
requirements. Effective on completion of the 1989 restructuring, lease
expense recognized on a level basis was reduced prospectively, based on a
revised schedule of rent leveling based on the agreed rental abatements.
At March 31, 1994, the Corporation had accrued the maximum amount of $15.1
million of deferred rent liability under the lease arrangements. The
deferred rent liability will become payable (i) upon a sale or refinancing
of the Claridge; (ii) upon full or partial satisfaction of the Wraparound
Mortgage; and (iii) upon full satisfaction of any first mortgage then in
place. Also as of March 31, 1994, $15.6 million of basic rent had been
abated. The remaining $23.2 million of available abatement is expected to
be fully utilized by the fourth quarter of 1996. Because the initial term
of the Operating Lease continues through September 30, 1998, rental
payments after the $38.8 million abatement is fully utilized will increase
substantially to approximately $41.8 million in 1997, as compared to $31.2
million (net of projected abatement) in 1996. However, if New Claridge
exercises its option to extend the term of the Operating Lease, basic rent
during the renewal term will be calculated pursuant to a formula with
annual basic rent not to be more than $29.5 million or less than $24
million for the twelve months commencing October 1, 1998, and
subsequently, not to be greater than 10% more than the basic rent for the
immediately preceding lease year in each lease year thereafter. If New
Claridge exercises its option to extend the term of the Expansion
Operating Lease, basic rent also will be calculated pursuant to a formula
with annual basic rent not to be more than $3 million or less than $2.5
million for the twelve months commencing October 1, 1998, and
subsequently, not to be greater than 10% more than the basic rent for the
immediately preceding lease year in each lease year thereafter. If the
<PAGE>
<PAGE> 17
term of both leases is extended under their renewal options, the aggregate
basic rent payable during the initial years of renewal term will be
significantly below the 1997 level.
New Claridge is obligated under its Operating Lease with the
Partnership to lend the Partnership, at an annual interest rate of 14%,
any amounts necessary to fund the cost of furniture, fixtures and
equipment replacements. The Wraparound Mortgage, granted by the
Partnership to New Claridge, by its terms may secure up to $25 million of
additional borrowings by the Partnership from New Claridge to finance the
replacements of furniture, fixtures and equipment and facility maintenance
and engineering shortfalls. The advances to the Partnership are in the
form of FF&E Promissory Notes and are secured by the Hotel Assets. One
half of the principal is due on the 48th month following the advance, with
the remaining balance due on the 60th month following the date of
issuance. In connection with the offering of $85 million of the Notes on
January 31, 1994, the Corporation agreed to use not less than $8 million
from the net proceeds of the offering to finance certain internal
improvements to the Claridge which will be funded through additional FF&E
Loans. In connection therewith, the Wraparound Mortgage Loan agreement as
well as the Operating Lease, and the Expansion Operating Lease were
amended to provide that the principal on these additional FF&E Loans will
be payable at final maturity of the Wraparound Mortgage. New Claridge is
obligated to pay as additional rent to the Partnership the debt service on
the FF&E Promissory Notes.
The Wraparound Mortgage requires monthly principal payments to be made
by the Partnership to New Claridge, commencing in the year 1988 and
continuing through the year 1998, in escalating amounts totalling $80
million. The Wraparound Mortgage, which will mature on September 30,
2000, bears interest at an annual rate equal to 14% with the deferral
until maturity of $20 million of certain interest payments which accrued
between 1983 and 1988. In addition, in 1986 the principal amount secured
by the Wraparound Mortgage was increased to provide the Partnership with
funding for the construction of an expansion improvement, which resulted
in approximately 10,000 square feet of additional casino space and a 3,600
square foot lounge. Effective August 28, 1986, the Partnership commenced
making level monthly payments of principal and interest calculated to
provide for the repayment in full of the principal balance of this
increase in the Wraparound Mortgage by September 30, 1998. Under the
terms of the Wraparound Mortgage, New Claridge is not permitted to
foreclose on the Wraparound Mortgage and take ownership of the Hotel
Assets so long as a senior mortgage is outstanding. The face amount
outstanding of the Wraparound Mortgage at March 31, 1994 (including the
outstanding FF&E Loans and the $20 million of deferred interest) was
$138.5 million.
If the Partnership should fail to make any payment due under the
Wraparound Mortgage, New Claridge may exercise a right of offset against
rent or other payments due under the Operating Lease and Expansion
Operating Lease to the extent of any such deficiency.
<PAGE>
<PAGE> 18
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed as a part of the report.
10(au) Copy of Land Option Agreement between The Claridge at Park
Place, Incorporated and Robert Schiff dated March 21, 1994.*
10(av) Copy of Land Option Agreement between The Claridge at Park
Place, Incorporated and Abraham Schiff and Robert Schiff, t/a
Schiff Enterprises dated March 21, 1994.*
(b) The Corporation filed no reports on Form 8-K during the quarter
ended March 31, 1994.
* The Claridge Hotel and Casino Corporation has filed an application with
the Securities and Exchange Commission requesting confidential treatment
of certain provisions contained in these exhibits.
<PAGE>
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
The Claridge Hotel and Casino Corporation
-----------------------------------------
(Registrant)
By: /s/ Raymond A. Spera
--------------------------------------
Raymond A. Spera
Executive Vice President of Finance/
Chief Financial Officer
(Authorized Officer and
Principal Financial Officer)
Dated: May 12, 1994
<PAGE>
<PAGE>
<PAGE> 20
INDEX TO EXHIBITS
Exhibit
-------
Ex-10(au) Copy of Land Option Agreement between The Claridge at Park
Place, Incorporated and Robert Schiff dated March 21, 1994.*
Ex-10(av) Copy of Land Option Agreement between The Claridge at Park
Place, Incorporated and Abraham Schiff and Robert Schiff, t/a
Schiff Enterprises dated March 21, 1994.*
* The Claridge Hotel and Casino Corporation has filed an application with
the Securities and Exchange Commission requesting confidential treatment
of certain provisions contained in these exhibits.
<PAGE>
<PAGE>
<PAGE> 21
EXHIBIT 10(au)
OPTION AGREEMENT
----------------
Option granted this 21st day of March, 1994 by Robert Schiff,
Individually having an address at 1931 Boardwalk, Atlantic City, New
Jersey 084301 (hereinafter called "Seller") to Claridge at Park Place,
Incorporated., a New Jersey Corporation, having an address at Indiana
Avenue at the Boardwalk, Atlantic City, New Jersey 08401, or its assignee
or nominee (hereinafter called ("Buyer").
WITNESSETH:
-----------
1. Grant. For and in consideration of the sum of One Thousand
($1,000. 00) Dollars (hereinafter "Payment") paid by Buyer, to the order of
the Seller as follows: One Thousand ($1,000) dollars payable on the
signing of this Agreement, receipt of which is hereby acknowledged by
Seller, Seller, intending to be legally bound, hereby grants to Buyer the
right, privilege and option to purchase from Seller all that certain piece
or parcel of land, together with the buildings and improvements thereon
and the appurtenances thereto, situate in Atlantic City, New Jersey,
generally known as Lots 58 and 66 in Block 33 on the Atlantic City Tax
Map and more fully described in Exhibit "A" attached hereto and hereby
made a part hereof (hereinafter called the "Premises").
2. Exercise.
(a) Notice. The aforesaid option may be exercised by Buyer by
giving written notice (the "Notice") to Seller at any time within ninety
(90) days following the date of execution of this Agreement (hereinafter
called the "Option Expiration Date"). If Buyer does not give the Notice
on or before the Option Expiration Date, the option shall automatically
and immediately terminate without notice as of the close of business (5:00
P. M. Atlantic City time) on the option expiration date. In the event the
Option terminates, the Payment shall be retained by Seller as
consideration for the option, and thereafter Buyer shall have no further
rights under this Agreement or to the Premises.
(b) Exercise. In the event Buyer exercises the option by giving
the Notice, the Payment shall be credited against the Purchase Price, and
this Agreement, together with the Notice shall be deemed to be an
agreement of sale and purchase between Seller and Buyer with respect to
the Premises without the need for any further act or agreement. If Buyer
gives notice and exercises said option, a deposit of **(Confidential
treatment has been requested)** shall be placed with The Title Company of
Jersey, interest to Buyer, to be held in escrow until settlement. Said
deposit shall be credited toward the Purchase Price.
(c) Default. If Buyer exercises the aforesaid option and without
the right to do so and in default of its obligations hereunder, fails to
complete settlement, Seller's remedy shall be to retain the Payment, and
the deposit, and Seller shall have the right to pursue any other remedy
permitted at law or in equity against Buyer. In the event of any default
by Seller under this Agreement, except for those defaults set forth in
Paragraph 5(c) below, Buyer's sole remedy against Seller shall be an
action for specific performance. Except for the remedy of specific
performance and except for default under Paragraph 5(c), in no event shall
<PAGE>
<PAGE> 22
Seller be liable for any claims, demands, injuries, causes, judgments,
penalties, decrees, liabilities, losses, damages, costs, fees and
expenses, including without limitation, all fees, commissions, attorney's
fees and out-of-pocket expenses which may be incurred by Buyer as a result
of Seller's default hereunder.
3. Purchase Price. Purchase Price for the Premises shall be
**(Confidential treatment has been requested)**, and shall be paid at
settlement by delivery to The Title Company of Jersey (the "Title
Company") of a certified or cashier's check to the order of the Title
Company (or, if Seller shall direct otherwise prior to settlement, to the
order of Seller) in an amount equal to the Purchase Price.
4. Time and Place of Settlement. If Buyer exercises the aforesaid
option, settlement hereunder shall take place on October 4, 1994, at the
offices of The Title Company of Jersey in Margate City, New Jersey, which
time shall be of the essence.
5. Condition of Title.
(a) Title to the Premises shall be good and marketable and free and
clear of all liens, restrictions, easements and encumbrances, but shall be
subject to (i) all easements, restrictions and encumbrances of record
existing as of the date of this Agreement (other than mortgages,
judgements, tax liens, other monetary liens and leases), (ii) all
building, zoning, and environmental laws and ordinances, now in effect or
as hereinafter enacted, and (iii) such state of facts as an accurate
survey and inspection of the Premises would reveal as of the date of this
Agreement. Title shall be insurable subject to the foregoing and standard
exceptions at ordinary rates by any reputable title insurance company
selected by Buyer with offices in Atlantic County, New Jersey. Any
inspection pursuant to Section (iii) above of this Paragraph shall not be
deemed to be an inspection pursuant to Paragraph 11 hereof and shall in no
way alter or affect Buyer's obligation to accept the Premises in an "as
is" condition pursuant to Paragraph 11.
(b) All outstanding mortgages, judgements, tax liens and any other
monetary liens which can be satisfied at the time of settlement by the
payment of money in an amount which is a liquidated sum shall be paid by
Seller out of the proceeds of the sale, provided that the aggregate amount
of all such liens shall not exceed the Purchase Price. The Seller, may,
prior to the settlement, obtain releases of any such mortgages,
judgements, or liens as to the premises, by posting bonds or submitting
other collateral for the premises. In the event the aggregate amount of
all such outstanding liens exceeds said Purchase Price and the Seller is
unable to reduce the aggregate amount due thereon to an amount below the
purchase price, then Buyer shall have the option of either paying any
excess amount to satisfy the liens, taking title subject to the remaining
liens or terminating this Agreement and being repaid the Payment. No
provision in this Agreement shall preclude Buyer from bringing an action
for specific performance of Seller's obligations hereunder.
(c) Seller warrants, represents and covenants that:
(i) the premises are not presently subject to any leases or
other rights to possession of all or part of the Premises, the term of
which (including any extensions permitted thereunder) will extend beyond
sixty (60) days unless it can be terminated by Seller upon not more than
sixty (60) days notice to the tenant;
<PAGE>
<PAGE> 23
(ii) during the term of this Agreement (i. e., the period
commencing on the date hereof and expiring at settlement or, if the option
granted hereunder is not exercised, expiring on the day after the option
expiration date) any lease for the Premises or other rights to possession
of all or part of the Premises entered into by Seller shall be terminable
by Seller on no greater than sixty (60) days' notice; and
(iii) during the terms of this Agreement (as defined above),
Seller will not execute a mortgage or mortgages on the Premises which,
together with any outstanding mortgages on the premises, is for an
aggregate amount which is greater than the Purchase Price.
(d) Notwithstanding any provision herein to the contrary, Buyer
shall have the right to bring an action at law against Seller for damages
only in the event of any breach of the warranties, representations and
covenants set forth in Subparagraph 5(c) hereof, or in the event of a
default under Paragraph 2(c). If at settlement Seller is unable to convey
title to the Premises and possession of the premises to Buyer in
accordance with the terms of this Agreement, Buyer shall have the
additional right, to either (a) take such title as Seller is able to
convey without abatement or reduction of the purchase price, or (b)
terminate Buyer's obligations under this Agreement and immediately receive
Payment, with interest accrued thereon, in which event this Agreement
shall be null and void and neither party shall have any further rights or
obligations hereunder.
6. Possession. Possession of the Premises shall be given to Buyer at
the time of settlement. The Premises shall be unoccupied and free of any
leases, claims to or rights of possession. At the time of settlement,
Seller shall deliver the keys to the Premises, and Seller's bargain and
sale deed with covenants against Grantor's acts, in proper recordable
form, duly executed and acknowledged by Seller, together with Seller's
Affidavit of Title.
7. Taxes, Apportionments, and Costs. Real estate taxes and water and
sewer rents, transferable licenses and permits and other current charges
shall be apportioned pro rata on a per diem basis as of the date of
settlement. The New Jersey Realty Transfer Fees imposed on or in
connection with this transaction shall be paid by Seller. Seller shall
pay for the drawing of the deed and Buyer shall pay for all title
searches, title insurance premiums, title company charges, surveys,
permits, licenses and other costs and expenses of closing. Each party
shall bear their own attorney's fees.
8. Eminent Domain. If all or any part or parts of the Premises shall
be taken by exercise of the power of eminent domain after the date of this
Agreement or any eminent domain proceedings are commenced after the date
hereof, this Agreement shall continue in full force and effect, there
shall be no abatement or reduction of the purchase price and parties'
rights and obligations under this Agreement shall in no way be impaired or
otherwise affected. Seller shall be relieved of its duty to convey title
to the portion so taken, but Seller shall, at settlement, assign to Buyer
all rights and claims to any awards arising therefrom as well as give
credit against the purchase price for any money theretofore received by
Seller on account thereof, net of any expenses to Seller, including
reasonable attorneys' fees of collecting the same. Seller agrees to
notify Buyer of eminent domain proceedings promptly after Seller receives
written notice of any such proceedings.
<PAGE>
<PAGE> 24
9. Improvements. Seller represents and warrants that Seller has
received no written notice as of the date of this Agreement of any
municipal or other governmental improvements affecting the Premises. If
settlement takes place hereunder, Buyer shall be responsible for any
assessments for any such improvements imposed after the date of this
Agreement.
10. Assignment of Insurance Rights. If at any time during this
Agreement or prior to settlement all or any portion of the Premises is
destroyed or damaged as a result of fire or other casualty ("Casualty"),
Seller shall promptly give written notice thereof to Buyer. Any Casualty
between the date of this Agreement and the time of settlement shall not in
any way void or impair the conditions of this Agreement. Buyer shall not
be entitled to any reduction in the purchase price, Buyer shall have no
right to cancel this Agreement, and Buyer shall be required to accept the
Premises in its then damaged condition upon its exercise of the option
granted herein. In the event that a portion of the Premises is destroyed
or damaged, Seller shall have the sole option of demolishing the remaining
structures or improvements, and Seller shall have no obligation to rebuild
or restore the damaged Premises. The proceeds of any insurance with
respect to the Premises paid between the date of this Agreement and
settlement, or anytime thereafter, shall be retained by Seller together
with all unpaid claims and rights in connection with losses to the
Premises, and Buyer shall have no right or interest in any such proceeds,
claims or rights and the purchase price shall not be abated or otherwise
reduced on account of any Casualty. In the event of a Casualty occurring
prior to settlement, Seller shall be required to furnish the Premises to
Buyer reasonably free of debris.
11. Condition of Premises.
(a) The entire agreement between Seller and Buyer with respect to
the Premises and the sale thereof is expressly set forth in this
Agreement, and the parties are not bound by any agreements, understanding,
provisions, conditions, representations or warranties other than as
expressly set forth and stipulated herein. Buyer has the right to conduct
any and all inspections including, but not limited to, asbestos,
underground oil tanks and any and all environmental inspections which
Buyer deems necessary to conduct. Without in any manner limiting the
generality of the foregoing, Buyer acknowledges that it and its
representatives will have fully inspected the Premises, and will be fully
familiar with the physical condition thereof, and that the Premises,
including, without limitation, the roofing and all mechanical equipment,
if purchased by Buyer, shall be purchased by Buyer in an "as is" and
"where is" condition. The Buyer shall rely upon such inspection and not
upon any agreement, understanding, condition, warranty or representation
made by Seller or any agent or employee of Seller as to the condition of
the Premises, as to any permitted use thereof, or as to any other matter
in connection therewith. Buyer further acknowledges that neither Seller
nor any party acting on behalf of Seller has made or shall be deemed to
have made any such agreement, condition, representation or warranty.
(b) Buyer shall accept the Premises at the time of settlement in
the same condition as the same is as of the date of this Agreement as such
condition shall have been changed by reason of wear and tear, damage by
fire or other casualty and vandalism. Without limiting the generality of
the foregoing, Buyer specifically acknowledges that the fact that any
portion of the Premises or any furniture, fixtures, equipment or machinery
<PAGE>
<PAGE> 25
therein or any part thereof may not be in working order or condition at
settlement by reason of wear and tear or damage by fire or other casualty
or vandalism, or by reason of its present condition, shall not relieve
Buyer of its obligation to complete settlement hereunder without any
abatement or reduction in the purchase price and Seller shall have no
obligation to make any repairs or replacements to any of same; provided,
however, in the event of any damage by fire, other casualty or vandalism,
Seller shall furnish the Premises to Buyer reasonably free of debris.
(c) Seller has no obligation to deliver the Premises in a "broom
clean" condition. Except as set forth above, Seller may leave in the
Premises at the time of settlement all items of personal property and
equipment, partitions or debris as are now presently therein.
(d) As a condition precedent to Seller's obligation to sell the
Premises pursuant to this Agreement, Seller shall have received from the
New Jersey Department of Environmental Protection either (i) a non-
qualified approval of Seller's negative declaration or (ii) a non-
applicability letter, for which Seller shall apply pursuant to the
Environmental Cleanup Responsibility Act, N. J. S. A. 13:1K-6 et seq. and the
Industrial Site Recovery Act, S-1070, Public Law 1993-C139 and the
regulations promulgated thereunder. If this condition precedent shall not
be satisfied, then either Seller or Buyer shall have the right to either:
(i) a sixty (60) day extension of the settlement date in order to attempt
to satisfy this condition or (ii) if such extension is not exercised by
either party, or if the condition is not satisfied within the extension
period, void this Agreement on notice to the other party, in which event
Seller shall immediately return the Payment to the Buyer along with all
interest accrued thereon.
12. Property Included. The real estate described in Exhibit "A"
hereto. The sale of the Premises includes all right, title and interest,
if any, of Seller in and to any land lying in the bed of any street, road,
highway, avenue or alley (opened or unopened), existing or proposed, now
vacated or hereinafter to be vacated) in front of or adjoining the
Premises, to the center line thereof, and all right, title and interest of
Seller in and to any award made or to be made in lieu thereof and in and
to any unpaid award for damage to the Premises by reason of change of
grade of any street, road, highway, avenue or alley; and Seller agrees to
execute and deliver to Buyer, at settlement, on demand, all proper
instruments for the conveyance of such title and the assignment and
collection of any such award.
13. Recording. Buyer shall have no right to file or record this
Agreement in any public office, and any such purported filing or recording
shall be null and void, shall not constitute a lien or cloud on title and
shall constitute a default by Buyer hereunder. Buyer shall have the
right, however, to file in the Office of the Atlantic County Clerk a
Memorandum of this Agreement in a form accepted by Seller, which
acceptance shall not be unreasonably withheld; provided, however, that
there shall be executed and delivered in escrow prior to the recording of
the Memorandum, a Discharge of the Memorandum likewise to be in form
accepted by Seller. The original Discharge shall be held in escrow by The
Title Company of Jersey ("Escrow Holder"). The Escrow Holder shall
maintain custody of the Discharge pending Buyer's performance hereunder.
If Buyer (a) fails to exercise the option in accordance with the terms
hereof or (b) defaults under this Agreement, the Escrow Holder shall have
the right to file the discharge in the Office of the Clerk of Atlantic
<PAGE>
<PAGE> 26
County, after giving prior written notice to Buyer at least five (5)
business days (excluding Saturdays, Sundays and all national and state
legal holidays) prior to such filing. The Escrow Holder is hereby
exculpated from any liability to Seller or to Buyer in connection with its
capacity as Escrow Holder under this Agreement, except that the foregoing
shall not apply to any grossly wanton act or acts of bad faith. Each
party hereby indemnifies and holds harmless the Escrow Holder for all
claims, liabilities, damages and attorney fees arising out of or
occasioned by its actions or omissions as Escrow Holder except that the
foregoing shall not apply to any grossly wanton acts or acts of bad faith.
Buyer specifically acknowledges to the Escrow Holder that absent an order
entered by a court of competent jurisdiction directing the Escrow Holder
not to file the discharge, the Escrow Holder shall have the right to do so
and shall not be restricted or limited in any way in filing it should the
Escrow Holder receive notice from Seller that either the condition set
forth in subsection (a) or (b) of this Paragraph has occurred.
14. Brokerage. Buyer and Seller hereby agree that Rafferty Real Estate
Inc. located at 10 N. California Avenue, Atlantic City, New Jersey 089401
("Broker") is the Broker involved in connection with the sale of the
property to Buyer. Seller agrees to pay a three (3%) percent commission
to Broker at closing. The commission amount shall be based upon the
Purchase Price actually paid on the closing date. If any broker or other
intermediary other than the Broker claims to have dealt with Seller in
connection with this transaction or the Premises, to have introduced the
Seller to Buyer for purposes of selling the Premises to Buyer, or to have
been the inducing cause for this Agreement or the sale (other than at the
request of Buyer), Seller shall indemnify, defend and save Buyer harmless
of and from any claim for commission or compensation by such broker or other
intermediary (excluding the Broker). The provisions of this Paragraph
shall survive settlement.
15. Representations by Seller. Seller makes the following
representations and warranties to Buyer, which representations and
warranties shall survive settlement:
(a) Neither the execution, nor the consummation of this Agreement
by Seller will result in a violation or breach of any contract or
agreement to which Seller is a party, other than a "due on sale" clause in
existing mortgage(s) or other collateral documents encumbering the
Premises and furniture, fixtures and equipment. Seller has full power and
authority to enter into this Agreement and to carry out the terms hereof.
Schiff Enterprises is a duly organized and validly existing Partnership of
the State of New Jersey. The sole general partners of Schiff Enterprises
are Abraham Schiff and Robert Schiff.
(b) There are no actions, suits, claims, demands or other
proceedings or investigations, either administrative or judicial, pending
or threatened against or affecting Seller or the transaction contemplated
by this Agreement, at law or in equity, or before or by any federal,
state, municipal or other governmental department, nor by any other
commission, board, agency or instrumentality, domestic or foreign.
(c) No approval or consent of any person, firm or other entity or
body is required to be obtained by Seller to enter into this Agreement or
to consummate the transactions herein contemplated except pursuant to the
Environmental Cleanup Responsibility Act, N. J. S. A. 13:1K-6 et seq. or
Industrial Site Recovery Act, S-1070, Public Law 1993-C139, if applicable.
<PAGE>
<PAGE> 27
16. Representations by Buyer. Buyer makes the following
representations and warranties to Seller, which representations and
warranties shall not survive settlement.
(a) Neither the execution, nor the consummation of this Agreement
by Buyer will result in a violation or breach of any contract or agreement
to which Buyer is a party. Buyer is a duly organized and validly existing
corporation of the State of New Jersey, and signatory hereto has full
power and authority to enter into this Agreement and to carry out the
terms hereof.
(b) Buyer shall have obtained any approvals or consents of any
person, firm or other entity or body necessary for the consummation of the
transaction herein contemplated.
17. Notices. All notices to be given by either party to the other
hereunder shall be in writing and shall be delivered in person or given by
United States registered or certified mail, postage prepaid, return
receipt requested, addressed to the party for whom intended at the address
appearing after such party's name at the beginning of this Agreement or at
such other address as the party in question may specify in a written
notice to the party giving notice. All notices shall be deemed given on
the date delivered in person or the date received, if mailed. The date of
the Notice to Accept the option shall be the date of receipt thereof by
Seller. Notices by the parties may be given on their behalf by their
respective attorneys.
18. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of Seller and Buyer and their respective heirs, executors,
administrators successors and assigns. If there shall be more than one
Seller, they all shall be bound jointly and severally by the covenants,
conditions and agreements herein contained, and the word "Seller" shall be
deemed and taken to mean each and every person or party mentioned as a
Seller herein, be the same one or more.
19. Assignment. Buyer shall have the right to assign this Agreement
and to name a nominee to accept title to the Premises; provided, however,
that Seller be given the name and address of such nominee in writing at
least five (5) business days prior to settlement. Such assignment shall
not relieve the Buyer named herein from its obligations hereunder.
20. Entire Agreement. This is the entire agreement between the parties
and there are no other terms, obligations, covenants, representations,
statements or conditions, oral or otherwise, of any kind whatsoever. Any
agreement hereafter made shall be ineffective to change, modify, discharge
or effect an abandonment of this Agreement, in whole or in part unless
such agreement is in writing and signed by an authorized representative of
both parties.
21. Headings. The headings incorporated in this Agreement are for
convenience in reference only and are not a part of this Agreement and do
not in any way limit or add to the terms and provisions hereof.
22. Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed under and pursuant to the laws of the
State of New Jersey.
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<PAGE> 28
23. Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which shall constitute one and
the same instrument.
24. Casino Control Commission. The parties hereto acknowledge that
this Agreement and the transaction contemplated thereby may become subject
to the New Jersey Casino Control Act, N. J. S. A. 5:12-1 et seq. and the
regulations promulgated hereunder (collectively, the "CCC Act"). In the
event that this transaction becomes subject to the CCC Act, the Buyer
shall promptly submit this Agreement to the New Jersey Casino Control
Commission (the "Commission") for any and all necessary approvals,
including, but not limited to, the approvals required by N. J. S. A. 5:12-
104(b). The Buyer agrees to use its best efforts to obtain any required
approvals. The Buyer shall bear any and all costs associated with obtained
such approval of this transaction, including any filing fees, attorneys
fees, or other costs incurred by Seller if it is required to be licensed
by the Commission. In the event Buyer does not obtain all approvals
required pursuant to this Paragraph 24, this Agreement shall be null and
void.
25. Approval Process. Seller agrees to cooperate with Buyer, in making
any planning, zoning, or any other application to any administrative body
regarding future development of the Premises at no cost to Seller.
IN WITNESS WHEREOF, Seller and Buyer have duly executed this Agreement
the days and year first above written.
WITNESS: BUYER:
CLARIDGE AT PARK PLACE, INCORPORATED,
a New Jersey Corporation
By: /s/ Robert M. Renneisen, President
----------------------------------------
SELLER:
WITNESS:
By: /s/ Robert Schiff, Individually
----------------------------------------
<PAGE>
<PAGE>
<PAGE> 29
EXHIBIT 10(av)
OPTION AGREEMENT
----------------
Option granted this 21st day of March, 1994 by Abraham Schiff and
Robert Schiff, t/a Schiff Enterprises, a New Jersey Partnership having
an address at 1931 Boardwalk, Atlantic City, New Jersey 084301 (herein-
after called "Seller") to Claridge at Park Place, Incorporated., a New
Jersey Corporation, having an address at Indiana Avenue at the Boardwalk,
Atlantic City, New Jersey 08401, or its assignee or nominee (hereinafter
called ("Buyer").
WITNESSETH:
-----------
1. Grant. For and in consideration of the sum of Fifty Thousand
($50,000) Dollars (hereinafter "Payment") paid by Buyer, to the order of
the Seller as follows: Fifty Thousand ($50,000) dollars payable on the
signing of this Agreement, receipt of which is hereby acknowledged by
Seller, Seller, intending to be legally bound, hereby grants to Buyer the
right, privilege and option to purchase from Seller all that certain piece
or parcel of land, together with the buildings and improvements thereon
and the appurtenances thereto, situate in Atlantic City, New Jersey,
generally known as Lots 6 and 7 in Block 31 on the Atlantic City Tax Map
and more fully described in Exhibit "A" attached hereto and hereby made a
part hereof (hereinafter called the "Premises").
2. Exercise.
(a) Notice. The aforesaid option may be exercised by Buyer by
giving written notice (the "Notice") to Seller at any time within ninety
(90) days following the date of execution of this Agreement (hereinafter
called the "Option Expiration Date"). If Buyer does not give the Notice
on or before the Option Expiration Date, the option shall automatically
and immediately terminate without notice as of the close of business (5:00
P. M. Atlantic City time) on the option expiration date. In the event the
Option terminates, the Payment shall be retained by Seller as
consideration for the option, and thereafter Buyer shall have no further
rights under this Agreement or to the Premises.
(b) Exercise. In the event Buyer exercises the option by giving
the Notice, the Payment shall be credited against the Purchase Price, and
this Agreement, together with the Notice shall be deemed to be an
agreement of sale and purchase between Seller and Buyer with respect to
the Premises without the need for any further act or agreement. If Buyer
gives notice and exercises said option, a deposit of **(Confidential
treatment has been requested)** shall be placed with The Title Company of
Jersey, interest to Buyer, to be held in escrow until settlement. Said
deposit shall be credited toward the Purchase Price.
(c) Default. If Buyer exercises the aforesaid option and without
the right to do so and in default of its obligations hereunder, fails to
complete settlement, Seller's remedy shall be to retain the Payment, and
the deposit, and Seller shall have the right to pursue any other remedy
permitted at law or in equity against Buyer. In the event of any default
by Seller under this Agreement, except for those defaults set forth in
Paragraph 5(c) below, Buyer's sole remedy against Seller shall be an
action for specific performance. Except for the remedy of specific
performance and except for default under Paragraph 5(c), in no event shall
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<PAGE> 30
Seller be liable for any claims, demands, injuries, causes, judgments,
penalties, decrees, liabilities, losses, damages, costs, fees and
expenses, including without limitation, all fees, commissions, attorney's
fees and out-of-pocket expenses which may be incurred by Buyer as a result
of Seller's default hereunder.
3. Purchase Price. Purchase Price for the Premises shall be
**(Confidential treatment has been requested)**, and shall be paid at
settlement by delivery to The Title Company of Jersey (the "Title
Company") of a certified or cashier's check to the order of the Title
Company (or, if Seller shall direct otherwise prior to settlement, to the
order of Seller) in an amount equal to the Purchase Price.
4. Time and Place of Settlement. If Buyer exercises the aforesaid
option, settlement hereunder shall take place on October 4, 1994, at the
offices of The Title Company of Jersey in Margate City, New Jersey, which
time shall be of the essence.
5. Condition of Title.
(a) Title to the Premises shall be good and marketable and free and
clear of all liens, restrictions, easements and encumbrances, but shall be
subject to (i) all easements, restrictions and encumbrances of record
existing as of the date of this Agreement (other than mortgages,
judgements, tax liens, other monetary liens and leases), (ii) all
building, zoning, and environmental laws and ordinances, now in effect or
as hereinafter enacted, and (iii) such state of facts as an accurate
survey and inspection of the Premises would reveal as of the date of this
Agreement. Title shall be insurable subject to the foregoing and standard
exceptions at ordinary rates by any reputable title insurance company
selected by Buyer with offices in Atlantic County, New Jersey. Any
inspection pursuant to Section (iii) above of this Paragraph shall not be
deemed to be an inspection pursuant to Paragraph 11 hereof and shall in no
way alter or affect Buyer's obligation to accept the Premises in an "as
is" condition pursuant to Paragraph 11.
(b) All outstanding mortgages, judgements, tax liens and any other
monetary liens which can be satisfied at the time of settlement by the
payment of money in an amount which is a liquidated sum shall be paid by
Seller out of the proceeds of the sale, provided that the aggregate amount
of all such liens shall not exceed the Purchase Price. The Seller, may,
prior to the settlement, obtain releases of any such mortgages,
judgements, or liens as to the premises, by posting bonds or submitting
other collateral for the premises. In the event the aggregate amount of
all such outstanding liens exceeds said Purchase Price and the Seller is
unable to reduce the aggregate amount due thereon to an amount below the
purchase price, then Buyer shall have the option of either paying any
excess amount to satisfy the liens, taking title subject to the remaining
liens or terminating this Agreement and being repaid the Payment. No
provision in this Agreement shall preclude Buyer from bringing an action
for specific performance of Seller's obligations hereunder.
(c) Seller warrants, represents and covenants that:
(i) the premises are not presently subject to any leases or
other rights to possession of all or part of the Premises, the term of
which (including any extensions permitted thereunder) will extend beyond
sixty (60) days unless it can be terminated by Seller upon not more than
sixty (60) days notice to the tenant;
<PAGE>
<PAGE> 31
(ii) during the term of this Agreement (i. e., the period
commencing on the date hereof and expiring at settlement or, if the option
granted hereunder is not exercised, expiring on the day after the option
expiration date) any lease for the Premises or other rights to possession
of all or part of the Premises entered into by Seller shall be terminable
by Seller on no greater than sixty (60) days' notice; and
(iii) during the terms of this Agreement (as defined above),
Seller will not execute a mortgage or mortgages on the Premises which,
together with any outstanding mortgages on the premises, is for an
aggregate amount which is greater than the Purchase Price.
(d) Notwithstanding any provision herein to the contrary, Buyer
shall have the right to bring an action at law against Seller for damages
only in the event of any breach of the warranties, representations and
covenants set forth in Subparagraph 5(c) hereof, or in the event of a
default under Paragraph 2(c). If at settlement Seller is unable to convey
title to the Premises and possession of the premises to Buyer in
accordance with the terms of this Agreement, Buyer shall have the
additional right, to either (a) take such title as Seller is able to
convey without abatement or reduction of the purchase price, or (b)
terminate Buyer's obligations under this Agreement and immediately receive
Payment, with interest accrued thereon, in which event this Agreement
shall be null and void and neither party shall have any further rights or
obligations hereunder.
6. Possession. Possession of the Premises shall be given to Buyer at
the time of settlement. The Premises shall be unoccupied and free of any
leases, claims to or rights of possession. At the time of settlement,
Seller shall deliver the keys to the Premises, and Seller's bargain and
sale deed with covenants against Grantor's acts, in proper recordable
form, duly executed and acknowledged by Seller, together with Seller's
Affidavit of Title.
7. Taxes, Apportionments, and Costs. Real estate taxes and water and
sewer rents, transferable licenses and permits and other current charges
shall be apportioned pro rata on a per diem basis as of the date of
settlement. The New Jersey Realty Transfer Fees imposed on or in
connection with this transaction shall be paid by Seller. Seller shall
pay for the drawing of the deed and Buyer shall pay for all title
searches, title insurance premiums, title company charges, surveys,
permits, licenses and other costs and expenses of closing. Each party
shall bear their own attorney's fees.
8. Eminent Domain. If all or any part or parts of the Premises shall
be taken by exercise of the power of eminent domain after the date of this
Agreement or any eminent domain proceedings are commenced after the date
hereof, this Agreement shall continue in full force and effect, there
shall be no abatement or reduction of the purchase price and parties'
rights and obligations under this Agreement shall in no way be impaired or
otherwise affected. Seller shall be relieved of its duty to convey title
to the portion so taken, but Seller shall, at settlement, assign to Buyer
all rights and claims to any awards arising therefrom as well as give
credit against the purchase price for any money theretofore received by
Seller on account thereof, net of any expenses to Seller, including
reasonable attorneys' fees of collecting the same. Seller agrees to
notify Buyer of eminent domain proceedings promptly after Seller receives
written notice of any such proceedings.
<PAGE>
<PAGE> 32
9. Improvements. Seller represents and warrants that Seller has
received no written notice as of the date of this Agreement of any
municipal or other governmental improvements affecting the Premises. If
settlement takes place hereunder, Buyer shall be responsible for any
assessments for any such improvements imposed after the date of this
Agreement.
10. Assignment of Insurance Rights. If at any time during this
Agreement or prior to settlement all or any portion of the Premises is
destroyed or damaged as a result of fire or other casualty ("Casualty"),
Seller shall promptly give written notice thereof to Buyer. Any Casualty
between the date of this Agreement and the time of settlement shall not in
any way void or impair the conditions of this Agreement. Buyer shall not
be entitled to any reduction in the purchase price, Buyer shall have no
right to cancel this Agreement, and Buyer shall be required to accept the
Premises in its then damaged condition upon its exercise of the option
granted herein. In the event that a portion of the Premises is destroyed
or damaged, Seller shall have the sole option of demolishing the remaining
structures or improvements, and Seller shall have no obligation to rebuild
or restore the damaged Premises. The proceeds of any insurance with
respect to the Premises paid between the date of this Agreement and
settlement, or anytime thereafter, shall be retained by Seller together
with all unpaid claims and rights in connection with losses to the
Premises, and Buyer shall have no right or interest in any such proceeds,
claims or rights and the purchase price shall not be abated or otherwise
reduced on account of any Casualty. In the event of a Casualty occurring
prior to settlement, Seller shall be required to furnish the Premises to
Buyer reasonably free of debris.
11. Condition of Premises.
(a) The entire agreement between Seller and Buyer with respect to
the Premises and the sale thereof is expressly set forth in this
Agreement, and the parties are not bound by any agreements, understanding,
provisions, conditions, representations or warranties other than as
expressly set forth and stipulated herein. Buyer has the right to conduct
any and all inspections including, but not limited to, asbestos,
underground oil tanks and any and all environmental inspections which
Buyer deems necessary to conduct. Without in any manner limiting the
generality of the foregoing, Buyer acknowledges that it and its
representatives will have fully inspected the Premises, and will be fully
familiar with the physical condition thereof, and that the Premises,
including, without limitation, the roofing and all mechanical equipment,
if purchased by Buyer, shall be purchased by Buyer in an "as is" and
"where is" condition. The Buyer shall rely upon such inspection and not
upon any agreement, understanding, condition, warranty or representation
made by Seller or any agent or employee of Seller as to the condition of
the Premises, as to any permitted use thereof, or as to any other matter
in connection therewith. Buyer further acknowledges that neither Seller
nor any party acting on behalf of Seller has made or shall be deemed to
have made any such agreement, condition, representation or warranty.
(b) Buyer shall accept the Premises at the time of settlement in
the same condition as the same is as of the date of this Agreement as such
condition shall have been changed by reason of wear and tear, damage by
fire or other casualty and vandalism. Without limiting the generality of
the foregoing, Buyer specifically acknowledges that the fact that any
portion of the Premises or any furniture, fixtures, equipment or machinery
<PAGE>
<PAGE> 33
therein or any part thereof may not be in working order or condition at
settlement by reason of wear and tear or damage by fire or other casualty
or vandalism, or by reason of its present condition, shall not relieve
Buyer of its obligation to complete settlement hereunder without any
abatement or reduction in the purchase price and Seller shall have no
obligation to make any repairs or replacements to any of same; provided,
however, in the event of any damage by fire, other casualty or vandalism,
Seller shall furnish the Premises to Buyer reasonably free of debris.
(c) Seller has no obligation to deliver the Premises in a "broom
clean" condition. Except as set forth above, Seller may leave in the
Premises at the time of settlement all items of personal property and
equipment, partitions or debris as are now presently therein.
(d) As a condition precedent to Seller's obligation to sell the
Premises pursuant to this Agreement, Seller shall have received from the
New Jersey Department of Environmental Protection either (i) a non-
qualified approval of Seller's negative declaration or (ii) a non-
applicability letter, for which Seller shall apply pursuant to the
Environmental Cleanup Responsibility Act, N. J. S. A. 13:1K-6 et seq. and the
Industrial Site Recovery Act, S-1070, Public Law 1993-C139 and the
regulations promulgated thereunder. If this condition precedent shall not
be satisfied, then either Seller or Buyer shall have the right to either:
(i) a sixty (60) day extension of the settlement date in order to attempt
to satisfy this condition or (ii) if such extension is not exercised by
either party, or if the condition is not satisfied within the extension
period, void this Agreement on notice to the other party, in which event
Seller shall immediately return the Payment to the Buyer along with all
interest accrued thereon.
12. Property Included. No accounts receivable, accounts payable, cash
on hand, liquor licenses, customer lists, good will, reservations and the
like relating to the operation of the hotel on a portion of the Premises
are included in this sale. In addition to the real estate described in
Exhibit "A" hereto, the only other property included in this sale is
Inventory Exhibit "B" to be determined by Buyer and Seller. The sale of
the Premises includes all right, title and interest, if any, of Seller in
and to any land lying in the bed of any street, road, highway, avenue or
alley (opened or unopened), existing or proposed, now vacated or
hereinafter to be vacated) in front of or adjoining the Premises, to the
center line thereof, and all right, title and interest of Seller in and to
any award made or to be made in lieu thereof and in and to any unpaid
award for damage to the Premises by reason of change of grade of any
street, road, highway, avenue or alley; and Seller agrees to execute and
deliver to Buyer, at settlement, on demand, all proper instruments for the
conveyance of such title and the assignment and collection of any such
award.
13. Recording. Buyer shall have no right to file or record this
Agreement in any public office, and any such purported filing or recording
shall be null and void, shall not constitute a lien or cloud on title and
shall constitute a default by Buyer hereunder. Buyer shall have the
right, however, to file in the Office of the Atlantic County Clerk a
Memorandum of this Agreement in a form accepted by Seller, which
acceptance shall not be unreasonably withheld; provided, however, that
there shall be executed and delivered in escrow prior to the recording of
the Memorandum, a Discharge of the Memorandum likewise to be in form
accepted by Seller. The original Discharge shall be held in escrow by The
<PAGE>
<PAGE> 34
Title Company of Jersey ("Escrow Holder"). The Escrow Holder shall
maintain custody of the Discharge pending Buyer's performance hereunder.
If Buyer (a) fails to exercise the option in accordance with the terms
hereof or (b) defaults under this Agreement, the Escrow Holder shall have
the right to file the discharge in the Office of the Clerk of Atlantic
County, after giving prior written notice to Buyer at least five (5)
business days (excluding Saturdays, Sundays and all national and state
legal holidays) prior to such filing. The Escrow Holder is hereby
exculpated from any liability to Seller or to Buyer in connection with its
capacity as Escrow Holder under this Agreement, except that the foregoing
shall not apply to any grossly wanton act or acts of bad faith. Each
party hereby indemnifies and holds harmless the Escrow Holder for all
claims, liabilities, damages and attorney fees arising out of or
occasioned by its actions or omissions as Escrow Holder except that the
foregoing shall not apply to any grossly wanton acts or acts of bad faith.
Buyer specifically acknowledges to the Escrow Holder that absent an order
entered by a court of competent jurisdiction directing the Escrow Holder
not to file the discharge, the Escrow Holder shall have the right to do so
and shall not be restricted or limited in any way in filing it should the
Escrow Holder receive notice from Seller that either the condition set
forth in subsection (a) or (b) of this Paragraph has occurred.
14. Brokerage. Buyer and Seller hereby agree that Rafferty Real Estate
Inc. located at 10 N. California Avenue, Atlantic City, New Jersey 089401
("Broker") is the Broker involved in connection with the sale of the
property to Buyer. Seller agrees to pay a three (3%) percent commission
to Broker at closing. The commission amount shall be based upon the
Purchase Price actually paid on the closing date. If any broker or other
intermediary other than the Broker claims to have dealt with Seller in
connection with this transaction or the Premises, to have introduced the
Seller to Buyer for purposes of selling the Premises to Buyer, or to have
been the inducing cause for this Agreement or the sale (other than at the
request of Buyer), Seller shall indemnify, defend and save Buyer harmless
of and from any claim for commission or compensation by such broker or other
intermediary (excluding the Broker). The provisions of this Paragraph
shall survive settlement.
15. Representations by Seller. Seller makes the following
representations and warranties to Buyer, which representations and
warranties shall survive settlement:
(a) Neither the execution, nor the consummation of this Agreement
by Seller will result in a violation or breach of any contract or
agreement to which Seller is a party, other than a "due on sale" clause in
existing mortgage(s) or other collateral documents encumbering the
Premises and furniture, fixtures and equipment. Seller has full power and
authority to enter into this Agreement and to carry out the terms hereof.
Schiff Enterprises is a duly organized and validly existing Partnership of
the State of New Jersey. The sole general partners of Schiff Enterprises
are Abraham Schiff and Robert Schiff.
(b) There are no actions, suits, claims, demands or other
proceedings or investigations, either administrative or judicial, pending
or threatened against or affecting Seller or the transaction contemplated
by this Agreement, at law or in equity, or before or by any federal,
state, municipal or other governmental department, nor by any other
commission, board, agency or instrumentality, domestic or foreign.
<PAGE>
<PAGE> 35
(c) No approval or consent of any person, firm or other entity or
body is required to be obtained by Seller to enter into this Agreement or
to consummate the transactions herein contemplated except pursuant to the
Environmental Cleanup Responsibility Act, N. J. S. A. 13:1K-6 et seq. or
Industrial Site Recovery Act, S-1070, Public Law 1993-C139, if applicable.
16. Representations by Buyer. Buyer makes the following
representations and warranties to Seller, which representations and
warranties shall not survive settlement.
(a) Neither the execution, nor the consummation of this Agreement
by Buyer will result in a violation or breach of any contract or agreement
to which Buyer is a party. Buyer is a duly organized and validly existing
corporation of the State of New Jersey, and signatory hereto has full
power and authority to enter into this Agreement and to carry out the
terms hereof.
(b) Buyer shall have obtained any approvals or consents of any
person, firm or other entity or body necessary for the consummation of the
transaction herein contemplated.
17. Notices. All notices to be given by either party to the other
hereunder shall be in writing and shall be delivered in person or given by
United States registered or certified mail, postage prepaid, return
receipt requested, addressed to the party for whom intended at the address
appearing after such party's name at the beginning of this Agreement or at
such other address as the party in question may specify in a written
notice to the party giving notice. All notices shall be deemed given on
the date delivered in person or the date received, if mailed. The date of
the Notice to Accept the option shall be the date of receipt thereof by
Seller. Notices by the parties may be given on their behalf by their
respective attorneys.
18. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of Seller and Buyer and their respective heirs, executors,
administrators successors and assigns. If there shall be more than one
Seller, they all shall be bound jointly and severally by the covenants,
conditions and agreements herein contained, and the word "Seller" shall be
deemed and taken to mean each and every person or party mentioned as a
Seller herein, be the same one or more.
19. Assignment. Buyer shall have the right to assign this Agreement
and to name a nominee to accept title to the Premises; provided, however,
that Seller be given the name and address of such nominee in writing at
least five (5) business days prior to settlement. Such assignment shall
not relieve the Buyer named herein from its obligations hereunder.
20. Entire Agreement. This is the entire agreement between the parties
and there are no other terms, obligations, covenants, representations,
statements or conditions, oral or otherwise, of any kind whatsoever. Any
agreement hereafter made shall be ineffective to change, modify, discharge
or effect an abandonment of this Agreement, in whole or in part unless
such agreement is in writing and signed by an authorized representative of
both parties.
21. Headings. The headings incorporated in this Agreement are for
convenience in reference only and are not a part of this Agreement and do
not in any way limit or add to the terms and provisions hereof.
<PAGE>
<PAGE> 36
22. Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed under and pursuant to the laws of the
State of New Jersey.
23. Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which shall constitute one and
the same instrument.
24. Casino Control Commission. The parties hereto acknowledge that
this Agreement and the transaction contemplated thereby may become subject
to the New Jersey Casino Control Act, N. J. S. A. 5:12-1 et seq. and the
regulations promulgated hereunder (collectively, the "CCC Act"). In the
event that this transaction becomes subject to the CCC Act, the Buyer
shall promptly submit this Agreement to the New Jersey Casino Control
Commission (the "Commission") for any and all necessary approvals,
including, but not limited to, the approvals required by N. J. S. A. 5:12-
104(b). The Buyer agrees to use its best efforts to obtain any required
approvals. The Buyer shall bear any and all costs associated with obtained
such approval of this transaction, including any filing fees, attorneys
fees, or other costs incurred by Seller if it is required to be licensed
by the Commission. In the event Buyer does not obtain all approvals
required pursuant to this Paragraph 24, this Agreement shall be null and
void.
25. Approval Process. Seller agrees to cooperate with Buyer, in making
any planning, zoning, or any other application to any administrative body
regarding future development of the Premises at no cost to Seller.
26. If Buyer exercises this option, Buyer must also exercise the option
granted to Claridge at Park Place, Inc. by Robert Schiff for Lots 58 and
66 in Block 33, or the exercise of this option shall be null and void.
IN WITNESS WHEREOF, Seller and Buyer have duly executed this Agreement
the days and year first above written.
WITNESS: BUYER:
CLARIDGE AT PARK PLACE, INCORPORATED,
a New Jersey Corporation
By: /s/ Robert M. Renneisen, President
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SELLER:
WITNESS:
By: /s/ Abraham Schiff, Partner
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WITNESS:
By: /s/ Robert Schiff, Partner
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