<PAGE>
<PAGE> 1
As Filed with the Securities and Exchange Commission on January 18, 1994
Registration No. 33-71550
============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
PRE-EFFECTIVE
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------
THE CLARIDGE HOTEL AND CASINO CORPORATION
THE CLARIDGE AT PARK PLACE, INCORPORATED
(Exact Name of each Registrant as Specified in its Charter)
New York 7011 22-2469172
New Jersey 7011 22-2469171
(State or Other Jurisdic- (Primary Standard (I.R.S. Employer
tion of Incorporation) Industrial Classification Identification Number)
Code Number)
Indiana Avenue and The Boardwalk
Atlantic City, New Jersey 08401
(609) 340-3400
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrants' Principal Executive Offices)
--------------------
FRANK A. BELLIS, JR., ESQ.
Vice President and General Counsel
The Claridge Hotel and Casino Corporation
Indiana Avenue and The Boardwalk
Atlantic City, New Jersey 08401
(Name, Address Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Copies To:
JOHN A. HEALY, ESQ. E. WAIDE WARNER, JR., ESQ.
Rogers & Wells Davis Polk & Wardwell
200 Park Avenue 450 Lexington Avenue
New York, New York 10166 New York, New York 10017
(212) 878-8000 (212) 450-4000
(Counsel to the Registrants) (Counsel to the Underwriters)
--------------------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. / /
--------------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registra-
tion Statement shall thereafter become effective in accordance with Section
8 (a) of the Securities Act of 1933 or until the Registrant Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8 (a), may determine.
============================================================================
<PAGE>
<PAGE> 2
The Claridge Hotel and Casino Corporation
The Claridge at Park Place, Incorporated
Cross-Reference Sheet Showing Locations in the Prospectus of the Responses
to the Items of Form S-1
(Pursuant to Item 501 of Regulation S-K)
Form S-1
Item Number and caption Location in Prospectus
1. Forepart of the Registration State- Outside Front Cover Page of Pro-
ment and Outside Front Cover Page of spectus
Prospectus..........................
2. Inside Front and Outside Back Cover
Pages of Prospectus................. Inside Front and Outside Back
Cover Pages of Prospectus
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges............................. Outside Front Cover Page of Pro-
spectus; Prospectus Summary; Risk
Factors; Selected Financial Data
4. Use of Proceeds..................... Prospectus Summary; The Company;
Use of Proceeds; Business
5. Determination of Offering Price..... Not Applicable
6. Dilution............................ Not Applicable
7. Selling Security Holders............ Not Applicable
8. Plan of Distribution................ Outside Front Cover Page of Pro-
spectus; Underwriting
9. Description of Securities to be Outside Front Cover Page of Pro-
Registered.......................... spectus; Prospectus Summary; Risk
Factors; Description of Notes
10. Interests of Named Experts and Not Applicable
Counsel.............................
11. Information with Respect to the Outside Front Cover Page of Pro-
Registrant.......................... spectus; Prospectus Summary; The
Company; Risk Factors; Capitaliza-
tion; Selected Financial Data;
Management's Discussion and
Analysis of Financial Condition
and Results of Operations; Busi-
ness; Management;
Principal Stockholders; Certain
Relationships and Related Transac-
tions; Consolidated
Financial Statements
12. Disclosure of Commission Position Not Applicable
on Indemnification for Securities
Act Liabilities.....................
<PAGE>
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGIS-
TRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECU-
RITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OF-
FERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SO-
LICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURI-
TIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAW-
FUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 18, 1994
PROSPECTUS
, 1994
$85,000,000
THE CLARIDGE HOTEL AND CASINO CORPORATION
% First Mortgage Notes due 2002
Guaranteed by The Claridge at Park Place, Incorporated
The % First Mortgage Notes due 2002 (the "Notes") are being offered
by The Claridge Hotel and Casino Corporation, a New York corporation (the
"Company"), and are unconditionally guaranteed on a senior secured basis
by The Claridge at Park Place, Incorporated ("CPPI"), a New Jersey corpo-
ration and a wholly-owned subsidiary of the Company. The Notes have been ap-
proved for listing on the New York Stock Exchange.
Interest on the Notes will be payable semiannually on and of
each year, commencing , 1994. The Notes will not be redeemable at the
option of the Company prior to , (except as otherwise required by
a Gaming Authority (as hereinafter defined)). On and after , 1998,
the Notes will be redeemable at any time at the option of the Company, in
whole or in part, at the redemption prices set forth herein, plus accrued
and unpaid interest to the redemption date. Upon a Change of Control (as
hereinafter defined), each holder of Notes will have the right to require
the Company to repurchase any or all outstanding Notes owned by such holder
at 101% of the principal amount thereof, plus accrued and unpaid interest to
the repurchase date. Beginning in 1995, and annually thereafter, the Company
will be required to make an offer to all holders of Notes to purchase at
100% of par the maximum amount of Notes that may be purchased with 50% of
the Company's Excess Cash (as hereinafter defined) from the preceding year.
The Notes are subject to mandatory partial redemption under certain circum-
stances, in a maximum aggregate amount not to exceed $10 million. See "De-
scription of Notes."
The Notes will be senior secured obligations of the Company and will
rank senior in right of payment to all existing and future subordinated in-
debtedness of the Company and pari passu in right of payment with the Com-
pany's senior indebtedness, including any future working capital credit fa-
cility of up to $7.5 million. The Notes will be secured by a mortgage
representing a first lien on The Claridge Hotel and Casino (the
"Claridge"), located in Atlantic City, New Jersey (except that certain
gaming and other assets will not be covered by the mortgage), and by a
pledge granted by the Company of all outstanding shares of capital stock of
CPPI. CPPI's guarantee of the Notes will be secured by a collateral assign-
ment of a second lien wraparound mortgage on the Claridge and by a lien on
certain of the Claridge's gaming and other assets, which lien will be subor-
dinated to liens that may be placed on those gaming and other assets to se-
cure any future working capital credit facility in an amount of up to $7.5
million.
See "Risk Factors" for a discussion of certain factors that prospec-
tive investors should consider prior to an investment in the Notes.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE NEW JERSEY CASINO CONTROL COMMISSION HAS NOT
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS.
- ----------------------------------------------------------------------------
Price Underwriting Proceeds
to the Discounts and to the
Public(1)(4) Commissions(2)(4) Company(1)(3)
- ----------------------------------------------------------------------------
Per Note ..................... % % %
Total ........................ $ $ $
- ----------------------------------------------------------------------------
(1) Plus accrued interest, if any, from the date of issuance.
(2) The Company has agreed to indemnify the Underwriters against certain li-
abilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expenses payable by the Company estimated at $ .
(4) Up to $250,000 aggregate principal amount of Notes may be sold to direc-
tors, officers and certain employees of the Company and CPPI at a price
net of underwriting discounts and commissions. If any Notes are sold to
those persons, underwriting discounts and commissions will be
correspondingly reduced, but proceeds to the Company will be unchanged.
The Notes are being offered by the Underwriters, subject to prior sale,
when, as and if delivered to and accepted by the Underwriters and subject to
various prior conditions, including their right to reject orders in whole or
in part. It is expected that delivery of the Notes will be made in New York,
New York on or about , 1994.
Donaldson, Lufkin & Jenrette Oppenheimer & Co., Inc.
Securities Corporation
<PAGE>
<PAGE> 4
(PHOTOGRAPH OF THE CLARIDGE HOTEL
AND CASINO BUILDING)
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith files reports, proxy statements and other informa-
tion with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and copied
at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
the New York Regional Office of the Commission, 7 World Trade Center, 13th
Floor, New York, New York 10048; and at the Chicago Regional Office of the
Commission, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission a Registration Statement on
Form S-1 (the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to this offering. This
Prospectus does not contain all of the information set forth in the Regis-
tration Statement and the exhibits thereto. Statements contained in this
Prospectus or in any document incorporated by reference as to the contents
of any contract or other documents referred to herein or therein are not
necessarily complete and, in each instance, reference is made to the copy of
such documents filed as an exhibit to the Registration Statement or such
other documents. Each such statement is qualified in its entirety by such
reference.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EF-
FECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE FIRST
MORTGAGE NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
<PAGE>
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere or incorporated by
reference in this Prospectus. See "Risk Factors" for factors a prospective
investor should consider in evaluating the Company before purchasing the
Notes.
The Company
The Claridge Hotel and Casino Corporation (the "Company"), through its
wholly-owned subsidiary, The Claridge at Park Place, Incorporated
("CPPI"), operates The Claridge Hotel and Casino (the "Claridge"). The
Claridge, located in the Boardwalk casino section of Atlantic City, New Jer-
sey, is a 26-story building that contains the Company's casino and hotel fa-
cilities. The Claridge's casino consists of approximately 43,600 square feet
of casino space on three main levels with various adjacent mezzanine levels,
and contains approximately 1,370 slot machines and 67 table games, including
blackjack, craps, roulette and a variety of other specialty games. The hotel
consists of 501 guest rooms (including 66 two- and three-room suites, 26
specialty suites and four tower penthouse suites), numerous restaurants and
lounges, a private player's club, a 600-seat theater and other amenities.
The Company intends to use part of the proceeds from this offering to fund
an expansion of the Claridge's casino. This casino expansion, which is
scheduled for completion in the summer of 1994, will add approximately 6,000
square feet of casino space for up to 550 new slot machines, as well as a
6,600 square foot poker and simulcast area used for off-track pari-mutuel
wagering. The additional casino space and slot machines are expected to pro-
mote a higher volume of traffic with an emphasis on slot play. The addition
of a poker and simulcast area is intended to take advantage of recent
changes in gaming regulations which now permit Atlantic City casinos to of-
fer those gaming options.
The Company's operating and marketing strategy is based on its "Because
Smaller is Friendlier" advertising campaign, designed to capitalize on the
Claridge's unique physical facility, which the Company believes retains an
atmosphere of Atlantic City's former grandeur, and on the Claridge's size
relative to the larger Atlantic City casinos. By emphasizing an environment
intended to be intimate, friendly and service-oriented, the Claridge targets
a different market niche from the majority of its Atlantic City competitors.
As part of its strategy, the Company focuses on customer service in order to
generate customer loyalty and satisfaction. The Company believes that this
operating and marketing strategy, which was adopted in 1989, has been suc-
cessful as evidenced by its strong operating results since that time. The
Company's Adjusted EBITDA (as hereinafter defined) was $22.6 million, $20.2
million, $21.5 million and $16.8 million in 1990, 1991, 1992 and the nine
months ended September 30, 1993, respectively. In addition, the growth in
the Company's total casino revenues improved from a level below that re-
portedly achieved by the Atlantic City casino industry as a whole in 1989 to
a level above that reported for the industry in 1992 and the first nine
months of 1993. The success of the Company's operating and marketing strat-
egy has enabled the Company to reduce significantly its first mortgage bank
debt from the principal amount of approximately $74.5 million outstanding at
June 16, 1989 to approximately $33.6 million at December 31, 1993. The Com-
pany intends to improve its operating results further by expanding its ca-
sino capacity as described above. The Company also is pursuing the potential
addition of a self-parking garage, which would complement its existing valet
parking operation and is designed to increase casino playing by attracting
more drive-in customers to the Claridge. See "Use of Proceeds."
<PAGE>
<PAGE> 6
Built in 1929 as a hotel, the Claridge was remodeled at a cost of ap-
proximately $138 million prior to its reopening as a casino hotel in 1981.
The Claridge was further renovated and expanded in 1986 at a cost of approx-
imately $20 million. Since 1991 the Claridge's exterior, lobby and other
public areas have been completely refurbished. The Claridge currently is in
the process of redecorating all of its guest rooms and has completed the re-
decoration of over 100 rooms, with the remainder scheduled for completion by
1995. Approximately $10 million is spent annually on facility maintenance,
and approximately $3 million has been spent annually on capital improvements
including the acquisition of new gaming equipment.
The Company presently expects that, while it will continue to seek to
enhance the value of the Claridge, it will also actively seek to utilize the
Company's extensive gaming management experience to expand and diversify its
activities within the United States gaming industry, particularly in emerg-
ing gaming markets. The Company previously has explored opportunities for
gaming-related activities outside Atlantic City, and expects to continue
such efforts. See "Business - Expansion Plans."
The Company's hotel and casino operations involve three entities - the
Company itself; its wholly-owned subsidiary, CPPI; and Atlantic City Board-
walk Associates, L.P., a New Jersey limited partnership (the
"Partnership"). Although the Company and the Partnership are independent
entities, over 93% of the Company's common stock is owned by persons who
also own limited partnership interests in the Partnership. This corporate
and partnership structure was formed in 1983 to furnish investors with cer-
tain tax benefits available at that time. The Claridge's casino license and
its gaming equipment (collectively, the "Casino Assets") are owned by
CPPI. CPPI leases all of the real estate assets and most of the furniture
(collectively, the "Hotel Assets") from the Partnership. The Hotel Assets
include the Claridge's buildings, parking facility and non-gaming, deprecia-
ble, tangible personal property, and the underlying land. The Notes being
offered hereby will be secured by a first mortgage on the Hotel Assets owned
by the Partnership 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 working capital credit facility in an
amount of up to $7.5 million. CPPI holds a second lien wraparound mortgage
granted by the Partnership over the Hotel Assets (the "Wraparound
Mortgage"), which will be collaterally assigned to secure the Notes. See
"The Company - Corporate Structure."
Use of Proceeds
The Company intends to use the net proceeds from this offering (i) to
repay in full its existing first mortgage bank debt in the principal amount
of approximately $35 million; (ii) to fund internal improvements intended to
expand the Claridge's casino capacity by adding approximately 6,000 square
feet of casino space for up to 550 new slot machines, as well as a 6,600
square foot poker and simulcast area used for off-track pari-mutuel wager-
ing, at an anticipated cost of approximately $14 million; and (iii) to use
the balance of approximately $32 million for general corporate purposes.
Such general corporate purposes may include, but are not limited to, (i) the
acquisition of an adjacent land parcel and construction on that land of a
self-parking garage facility which if successfully accomplished is expected
to cost an aggregate of approximately $24 million; (ii) the possible pur-
chase of the Contingent Payment (as hereinafter defined) issued by the Com-
pany in 1989 and now held by a trustee for the benefit of the United Way of
Arizona (see "Business-1989 Restructuring"); and (iii) the potential ex-
pansion of the Company's activities into emerging gaming markets. See "Use
of Proceeds."
<PAGE>
<PAGE> 7
The Offering
Issue.................... $85,000,000 aggregate principal amount of %
First Mortgage Notes due 2002 (the "Notes")
issued by the Company.
Maturity Date............ , 2002.
Interest Payment Dates... Interest on the Notes will be payable in cash
semi-annually on and of each year,
commencing , 1994.
Guarantee................ The Notes will be unconditionally guaranteed on a
senior secured basis by CPPI.
Security................. The Notes will be secured by (i) a non-recourse
mortgage (the "Mortgage") granted by the Part-
nership representing a first lien on the Cla-
ridge's Hotel Assets and (ii) a pledge granted
by the Company of all the outstanding shares of
capital stock of CPPI. CPPI's obligations under
its guarantee will be secured by a collateral
assignment of the second lien Wraparound Mort-
gage 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 working capi-
tal facility in an amount of up to $7.5 million.
If the Existing Hotel Casino (as hereinafter de-
fined) is expanded (including by the addition of
a parking facility), the Notes will be addition-
ally secured by a lien on the expansion facili-
ties. In the case of the Contemplated Expansion
(the expansion to the Existing Hotel Casino con-
templated as of the date hereof and described
under "Use of Proceeds"), the Notes will be
secured by a mortgage representing a first pri-
ority lien on the expanded facilities. In the case
of a Project Expansion (an expansion to the
Existing Hotel Casino other than the Contemplated
Expansion), the Notes will be secured by a lien
that is either senior to or pari passu with the
liens securing any indebtedness incurred by the
Company or any of its Restricted Subsidiaries (as
hereinafter defined) with respect to such
expansion. The collateral for the Notes will not
include certain gaming equipment which has been
financed by third parties and is pledged to those
parties, nor will it include certain other assets
that may be acquired in the future by the Company
or any of its subsidiaries.
Ranking.................. The Notes will be senior secured obligations of
the Company and will rank senior in right of
payment to all existing and future subordinated
indebtedness of the Company and pari passu in
right of payment with the Company's senior in-
debtedness, including any future working capital
credit facility of up to $7.5 million, which may
be secured as described above.
Optional Redemption...... The Notes will not be redeemable at the option of
the Company prior to , 1998, except as
otherwise required by a Gaming Authority (as
hereinafter defined). The Notes will be redeem-
able at the option of the Company, in whole or
<PAGE>
<PAGE> 8
in part, at the redemption prices (expressed as
percentages of principal amount) set forth be-
low, plus accrued and unpaid interest thereon to
the applicable redemption date, if redeemed dur-
ing the twelve-month period beginning on of
the year indicated below:
Year Percentage
---- ----------
1998 ........................................ %
1999 ........................................ %
2000 ........................................ %
2001 and thereafter ........................100%
Mandatory Partial
Redemption.............. The Notes will be subject to mandatory partial re-
demption under certain circumstances, in a maxi-
mum aggregate amount not to exceed $10 million.
Annual Excess Cash
Tender.................. Beginning in 1995 and annually thereafter, the
Company will be required to make an offer to all
holders of Notes to purchase at 100% of par the
maximum amount of Notes that may be purchased
with 50% of the Company's Excess Cash from the
preceding year. Excess Cash for any year is the
Company's Adjusted EBITDA (as hereinafter de-
fined) for that year less the aggregate of the
following items, to the extent paid during that
year: (i) federal and state income taxes; (ii)
cash interest; (iii) Capital Expenditures (as
hereinafter defined); (iv) Reinvestment Ob-
ligation Payments (as hereinafter defined);
and (v) the net amount of any increase (or
decrease) during that year in the amount of the
Company's working capital. If less than $5.0
million is available to make such purchases
(i.e., Excess Cash is less than $10.0 million),
no such offer need be made.
Change of Control........ Upon the occurrence of a Change of Control (as
hereinafter defined), holders of Notes will have
the right to require the Company to purchase the
Notes at a purchase price of 101% of the aggre-
gate principal amount thereof, plus accrued and
unpaid interest, if any, to the date of
purchase. The Company may not have sufficient
funds available to it to satisfy this repurchase
obligation and to repay any other debt that may
have been due upon a Change in Control.
Asset Sales.............. If the Net Proceeds (cash proceeds received, net
of direct costs) from Asset Sales (the sale of
assets by the Company or its Subsidiaries, the
sale of equity securities by the Company's Sub-
sidiaries or casualty loss or condemnation, in
each case resulting in Net Proceeds in excess of
$3 million or with a fair market value in excess
of $3 million) are not reinvested in another as-
set or business in the Gaming Related Business
(a gaming business or other businesses necessary
for, incident to, connected with or arising out
of a gaming business) within 360 days of the re-
ceipt thereof, and if the amount of Excess
Proceeds (Net Proceeds that are not reinvested by
<PAGE>
<PAGE> 9
the Company in another asset or business in the
Gaming Related Business) exceeds $10 million,
the Company will be required to make an offer to
all holders of Notes to purchase the maximum
principal amount of the Notes that may be purchased
out of Excess Proceeds at a purchase price of 100%
of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase.
Certain Covenants........ The indenture governing the Notes (the
"Indenture") will restrict, among other
things, (i) the use of proceeds from the sale of
assets or capital stock of the Company and its
Restricted Subsidiaries; (ii) the payment of
dividends on and redemptions of capital stock
and the making of investments by the Company and
its Restricted Subsidiaries; (iii) the incur-
rence of additional Indebtedness (as hereinafter
defined) by the Company and its Restricted Sub-
sidiaries; (iv) the creation of additional liens
upon the assets of the Company or its subsidiar-
ies or upon the Hotel Assets; (v) the imposition
of restrictions affecting dividend payments by
the Company's subsidiaries; (vi) the ability of
the Company or CPPI to consolidate or merge with
or into, or to transfer all or substantially all
of its assets to, another person; (vii) transac-
tions with affiliates and the Partnership; and
(viii) certain business activities. These re-
strictions are subject to a number of important
qualifications and exceptions. See "Description
of Notes."
<PAGE>
<PAGE> 10
Summary Consolidated Financial and Other Data
The summary consolidated financial and other data set forth below are
qualified in their entirety by, and should be read in conjunction with, the
information contained in this Prospectus under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consoli-
dated financial statements, notes thereto and other financial and statisti-
cal information contained elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
---------------------------------------- -------------------
1988 1989 1990 1991 1992 1992 1993
($ in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Net operating revenues............ $152,399 $150,079 $154,526 $153,407 $163,430 $127,108 $133,372
Interest income from Partnership.. 21,786 21,425 20,517 19,554 18,774 14,156 13,564
Total net revenues ............... 174,185 171,504 175,043 172,961 182,204 141,264 146,936
Depreciation and amortization..... 3,976 1,667 1,524 1,274 1,321 957 1,063
Interest expense ................. 19,872 19,175 14,552 6,344 4,240 3,306 3,165
Rent expense to Partnership(1).... 41,032 40,208 37,242 36,645 34,658 26,144 25,919
Income (loss) before extraordinary
items(2)........................ (22,312) (14,242) (1,825) 2,181 6,048 6,278 4,945
Other Financial Data:
Net Partnership Payments(3) ...... - - $ 9,370 $ 9,127 $10,489 $ 7,671 $ 8,157
Adjusted EBITDA(4) ............... - - 22,585 20,197 21,523 19,480 16,785
Capital expenditures(5) .......... 2,963 1,592 3,213 2,556 3,576 2,271 3,016
Pro Forma:(6)
Interest expense (7) ............. - - $ 9,994 $9,994 $ 9,994 $ 7,496 $7,496
Ratio of Adjusted EBITDA to inter-
est expense..................... - - 2.3x 2.0x 2.2x 2.6x 2.2x
Ratio of Adjusted EBITDA less cap-
ital expenditures to interest
expense ........................ - - 1.9 1.8 1.8 2.3 1.8
Ratio of total debt to Adjusted
EBITDA ......................... - - 3.8 4.2 3.9 - -
</TABLE>
At September 30, 1993
-------------------------
Actual As Adjusted (8)
Balance Sheet Data:
Cash and cash equivalents $6,428 $38,036
Long-term receivables due from the
Partnership(9) 116,391 125,391
Total assets 147,272 197,430
Long-term debt (including current maturities) 34,842 85,000
Deferred rent due to the Partnership(10) 36,971 36,971
Shareholders' equity 14,177 14,177
<PAGE>
<PAGE> 11
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
--------------------------------------------------- -----------------
1988 1989 1990 1991 1992 1992 1993
($ in thousands, except average data)
<S> <C> <C> <C> <C> <C> <C> <C>
Gaming Data:(11)
Atlantic City Casino
Revenue Growth ......... 10.4% 2.6% 5.2% 1.4% 7.5% 7.8% 2.3%
Claridge Slot Revenue .... $77,829 $79,809 $88,834 $94,902 $105,600 $82,328 $88,650
Claridge Table Games
Revenue ................ 55,142 48,832 45,851 40,504 40,757 31,294 31,681
-------- -------- -------- -------- -------- -------- --------
Claridge Total Casino
Revenue................. $132,971 $128,641 $134,685 $135,406 $146,358 $113,622 $120,331
Claridge Casino Revenue
Growth.................. 7.1% (3.3)% 4.7% 0.5% 8.1% 10.9% 5.9%
Avg. Monthly Casino
Revenue per Square Foot:
Atlantic City ........... $337 $350 $353 $323 $345 $355 $361
Claridge ................ 257 249 261 259 280 290 307
Avg. No. of Slot Machines:
Atlantic City ........... 18,816 18,661 20,367 21,318 22,241 22,083 23,734
Claridge ................ 1,244 1,237 1,253 1,364 1,354 1,367 1,356
Avg. Daily Slot Win
per Unit:
Atlantic City ........... $217 $232 $232 $238 $260 $269 $264
Claridge ................ 171 177 194 191 213 220 239
Avg. No. of Tables:
Atlantic City ........... 1,305 1,244 1,313 1,226 1,193 1,208 1,164
Claridge ................ 78 75 73 66 66 66 67
Avg. Daily Win per Table:
Atlantic City............ $2,606 $2,708 $2,561 $2,549 $2,531 $2,563 $2,596
Claridge ................ 1,937 1,784 1,721 1,681 1,687 1,730 1,732
NOTES TO SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
(1) For the years ended December 31, 1988, 1989, 1990, 1991 and 1992 and the
nine months ended September 30, 1992 and 1993, $4.6 million, ($2.6) mil-
lion ($6.4) million, ($4.3) million, ($2.9) million, ($2.0) million and
($2.6) million, respectively, are attributable to the requirement under
Statement of Financial Accounting Standards No. 13 to provide a level
rent expense for leases with escalating payments. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations
- Liquidity and Capital Resources."
(2) For the years ended December 31, 1989 and December 31, 1990, extraordi-
nary income items, net of income taxes, in the amounts of $69.0 million
and $39.5 million, respectively, resulted from the restructuring of the
Company's financial obligations. See "Business - 1989 Restructuring."
(3) Net Partnership Payments represent CPPI's net cash outflow to the Part-
nership, excluding funding for capital expenditures provided by CPPI to
the Partnership in the form of loans ("FF&E Loans"), see "Business -
<PAGE>
<PAGE> 12
Certain Transactions and Agreements", in accordance with the terms of
the Wraparound Mortgage, Operating Lease, Expansion Operating Lease and
other agreements. See "The Company - Corporate Structure" for a dis-
cussion of the relationship between the Company, CPPI and the Partner-
ship. Net Partnership Payments consist of amounts paid by CPPI to the
Partnership in the form of Operating Lease and Expansion Operating Lease
payments, net of abatements and deferrals, less the sum of amounts paid
by the Partnership to CPPI in the form of (a) Wraparound Mortgage inter-
est, net of discount; plus (b) Wraparound Mortgage principal; plus (c)
facilities and maintenance fees of $530,000 per year. The presentation
is not applicable for the years ended December 31, 1988 and 1989.
(4) EBITDA represents earnings before interest expense, income taxes, depre-
ciation, amortization, and other non-cash and extraordinary items. The
Company has included information concerning EBITDA because it believes
that EBITDA may be used by certain investors and industry analysts as
one measure of the Company's historical ability to service its debt.
EBITDA should not be considered as an alternative to, or more meaningful
than, operating income or cash flow. Adjusted EBITDA is equal to EBITDA
plus rent expense to the Partnership less interest income from the Part-
nership less Net Partnership Payments. The presentation is not applica-
ble for the years ended December 31, 1988 and 1989. The Company's abil-
ity to incur additional indebtedness will be restricted under the
Indenture based on the ratio of Adjusted EBITDA to Adjusted Fixed
Charges (primarily interest expense). See "Description of Notes - Cer-
tain Covenants - Incurrence of Indebtedness."
(5) Capital expenditures are the Company's expenditures for gaming equipment
and FF&E Loans made to the Partnership to fund their purchase of capital
items.
(6) The pro forma data gives effect to the sale of Notes offered hereby as-
suming an interest rate of 11 1/4% and the repayment in full of the Com-
pany's existing first mortgage and revolving credit bank debt as if the
transaction had occurred at the beginning of the respective periods pre-
sented. No effect has been given to earnings from investment of the net
proceeds from this offering.
(7) Interest expense does not include amortization of costs associated with
the issuance of the Notes offered hereby.
(8) The adjusted balance sheet data gives effect to the sale of the Notes
offered hereby and application of a portion of the net proceeds to repay
in full the Company's existing first mortgage bank debt and to fund in-
ternal improvements intended to expand the Claridge's casino capacity,
with the balance of the net proceeds retained as cash. See "Use of
Proceeds."
(9) Long-term receivable due from the Partnership under the Wraparound Mort-
gage. See Note 3 to the Company's consolidated financial statements con-
tained in this Prospectus and "The Company - Corporate Structure -
Mortgages."
(10) Deferred rent due to the Partnership is attributable to the requirement
under Statement of Financial Accounting Standards No. 13 to provide a
level rent expense for leases with escalating payments. See Note 12 to
the Company's consolidated financial statements contained in this Pro-
spectus and "The Company - Corporate Structure - Mortgages."
<PAGE>
<PAGE> 13
(11) Atlantic City gaming industry data presented here and elsewhere in this
Prospectus has been compiled from published information filed by Atlan-
tic City gaming licensees with the New Jersey Casino Control Commission.
<PAGE>
<PAGE> 14
THE COMPANY
General
The Claridge Hotel and Casino Corporation (the "Company"), through its
wholly-owned subsidiary, The Claridge at Park Place, Incorporated
("CPPI"), operates The Claridge Hotel and Casino (the "Claridge"). The
Claridge, located in the Boardwalk casino section of Atlantic City, New Jer-
sey, is a 26-story building that contains the Company's casino and hotel fa-
cilities. The Claridge's casino consists of approximately 43,600 square feet
of casino space on three main levels with various adjacent mezzanine levels.
The casino contains approximately 1,370 slot machines and 67 table games,
including 44 blackjack tables, ten craps tables, six roulette tables, two
mini-baccarat tables, one baccarat table, one big six wheel, one red dog ta-
ble, one sic bo table and one pai gow poker table. The hotel with related
amenities consists of 501 guest rooms (including 66 two- and three-room
suites, 26 specialty suites and four tower penthouse suites), five restau-
rants, a snack shop, a buffet area, three lounges, a private player's club,
a 600-seat theater, meeting rooms and convention facilities, a gift shop, a
beauty salon and a health club with an indoor swimming pool. The Company in-
tends to use part of the proceeds from this offering to fund an expansion of
the Claridge's casino. This casino expansion, which is scheduled for comple-
tion in the summer of 1994, will add approximately 6,000 square feet of ca-
sino space for up to 550 new slot machines, as well as a 6,600 square foot
poker and simulcast area used for off-track pari-mutuel wagering. The addi-
tional casino space and slot machines are expected to promote a higher vol-
ume of traffic with an emphasis on slot play. The addition of a poker and
simulcast area is intended to take advantage of recent changes in gaming
regulations which now permit Atlantic City casinos to offer those gaming op-
tions.
The Company's operating and marketing strategy is based on its "Because
Smaller is Friendlier" advertising campaign, designed to capitalize on the
Claridge's unique physical facility, which the Company believes retains an
atmosphere of Atlantic City's former grandeur, and on the Claridge's size
relative to the larger Atlantic City casinos. By emphasizing an environment
intended to be intimate, friendly and service-oriented, the Claridge targets
a different market niche from the majority of its Atlantic City competitors.
As part of its strategy, the Company focuses on customer service in order to
generate customer loyalty and satisfaction. The Company believes that this
operating and marketing strategy, which was adopted in 1989, has been suc-
cessful as evidenced by its strong operating results since that time. The
Company's Adjusted EBITDA was $22.6 million, $20.2 million, $21.5 million
and $16.8 million in 1990, 1991, 1992 and the nine months ended September
30, 1993, respectively. In addition, the growth in the Company's total ca-
sino revenues improved from a level below those reportedly achieved by the
Atlantic City casino industry as a whole in 1989 to a level above that re-
ported for the industry in 1992 and the first nine months of 1993. The suc-
cess of the Company's operating and marketing strategy enabled the Company
to reduce significantly its first mortgage bank debt from the principal
amount of approximately $74.5 million outstanding at June 16, 1989 to ap-
proximately $33.6 million at December 31, 1993. The Company intends to im-
prove its operating results further by expanding its casino capacity as de-
scribed above. The Company also is pursuing the potential addition of a
self-parking garage, which would complement its existing valet parking oper-
ation and is designed to increase casino play by attracting more drive-in
customers to the Claridge. See "Use of Proceeds."
<PAGE>
<PAGE> 15
Built in 1929 as a hotel, the Claridge was remodeled at a cost of ap-
proximately $138 million prior to its reopening as a casino hotel in 1981.
The Claridge was further renovated and expanded in 1986 at a cost of approx-
imately $20 million. Since 1991 the Claridge's exterior, lobby and other
public areas have been completely refurbished. The Claridge currently is in
the process of redecorating all of its guest rooms and has completed the re-
decoration of over 100 rooms, with the remainder scheduled for completion by
1995. Approximately $10 million is spent annually on facility maintenance,
and approximately $3 million has been spent annually on capital improvements
including the acquisition of new gaming equipment.
The Company currently expects that, while it will continue to seek to
enhance the value of the Claridge, it will also actively seek to utilize the
Company's extensive gaming management experience to expand and diversify its
activities within the United States gaming industry, particularly in emerg-
ing gaming markets. The Company previously has explored opportunities for
gaming-related activities outside Atlantic City, and expects to continue
such efforts. See "Business - Expansion Plans."
The Claridge's casino license and its gaming equipment (collectively,
the "Casino Assets") are owned by CPPI. CPPI leases all of the real estate
assets and most of the furniture (collectively, the "Hotel Assets") from
the Partnership. The Hotel Assets include the Claridge's buildings, parking
facility and non-gaming, depreciable, tangible personal property, and the
underlying land. The Notes being offered hereby will be secured by a first
mortgage on the Hotel Assets owned by the Partnership 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
working capital credit facility in an amount of up to $7.5 million
(including any replacement of any such facility). CPPI holds a second lien
wraparound mortgage granted by the Partnership over the Hotel Assets (the
"Wraparound Mortgage"), which will be collaterally assigned to secure the
Notes. The relationship among the Company, CPPI and the Partnership is de-
scribed more fully below under "The Company - Corporate Structure."
The principal executive offices of the Company and CPPI are located at
Indiana Avenue and The Boardwalk, Atlantic City, New Jersey 08401. The tele-
phone number of both of them is (609) 340-3400. The Company was incorporated
in New York on August 26, 1983. CPPI was incorporated in New Jersey on Au-
gust 29, 1983.
Corporate Structure
In 1983, CPPI acquired the Casino Assets from Del E. Webb New Jersey,
Inc. ("DEWNJ"), a wholly-owned subsidiary of Del Webb Corporation
("Webb"); leased the Hotel Assets and subleased the land on which the Cla-
ridge is located from the Partnership; and assumed certain liabilities re-
lated to the acquired assets. In connection with those transactions, the
Partnership granted the Wraparound Mortgage to CPPI. These transactions were
entered into in connection with the private placement of equity interests in
the Company and the Partnership. The offering was structured to furnish the
investors with certain tax benefits available under the federal tax law then
in effect. Following the 1983 transactions, Webb and its affiliates retained
significant interests in the Claridge. The common stock of the Company and
the limited partnership interests of the Partnership were sold together in
the private placement as units, and because there has been relatively little
trading in the stock or Partnership interests, there is a substantial simi-
larity between the equity ownership of the Company and the Partnership. Al-
though the Company and the Partnership are independent entities, over 93% of
<PAGE>
<PAGE> 16
the Company's common stock is owned by persons who also own limited partner-
ship interests in the Partnership. The Partnership does not currently engage
in any significant business activities other than those relating to the Cla-
ridge.
In October 1988, the Company and CPPI entered into an agreement to re-
structure the financial obligations of the Company and CPPI (the "Restruc-
turing Agreement"). The restructuring, which was consummated in June 1989,
resulted in (i) a reorganization of the ownership interests in the Claridge;
(ii) modifications of the rights and obligations of certain lenders; (iii)
satisfaction and termination of the obligations and commitments of Webb and
DEWNJ under the original structure; (iv) modifications of the lease agree-
ments between CPPI and the Partnership; and (v) the forgiveness by Webb of
substantial indebtedness. As a result of the restructuring, an aggregate of
$132 million of indebtedness was forgiven. The principal amount secured by
the First Mortgage (as hereinafter defined) was reduced by approximately $15
million to approximately $74.5 million outstanding at June 16, 1989, and the
Purchase Money Second Mortgage (as hereinafter defined) was subsequently
cancelled upon satisfaction of certain conditions set forth in an agreement
entered into at the time of the restructuring.
The current relationships of the Company, CPPI and the Partnership are
described below and on the diagram under "The Claridge Ownership
Structure" which follows.
Ownership; Leases. The Casino Assets are owned by CPPI. The Hotel Assets
are owned by the Partnership and leased by the Partnership to CPPI. The
lease obligations are set forth in a lease (the "Operating Lease"), origi-
nally entered into on October 31, 1983, and an expansion operating lease
(the "Expansion Operating Lease"), covering additions to the Claridge made
in 1986. Pursuant to the restructuring, the Operating Lease and Expansion
Operating Lease were amended to provide for the abatement by the Partnership
of $38.8 million of basic rent payable through 1998 and the deferral by the
Partnership of $15.1 million of rental payments. At September 30, 1993, the
Partnership had abated $12.6 million and had deferred the maximum amount of
$15.1 million of rent. For the years ended December 31, 1991 and 1992 and
the nine months ended September 30, 1993, the amounts of rent abated were
$2.4 million, $5.7 million and $4.5 million, respectively. (See Notes 7 and
12 to the Company's consolidated financial statements contained in this Pro-
spectus.) The deferred rent will become payable upon (i) a sale or refinanc-
ing of the Claridge; (ii) full or partial satisfaction of the Wraparound
Mortgage; and (iii) full satisfaction of any first mortgage then in place.
The issuance and sale of the Notes offered hereby and any future refinan-
cings of the mortgage that will secure the Notes (the "Mortgage") will not
by themselves cause the deferred rent to become payable pursuant to that
provision. The Operating Lease and Expansion Operating Lease are subordinate
to the Mortgage that will secure the Notes, and, therefore, the obligations
of the Company and CPPI to pay principal and interest on the Notes will be
senior to the obligations to pay rent to the Partnership under those leases.
Mortgages. In 1983, the Partnership granted to CPPI the Wraparound Mort-
gage which was inclusive of and subordinate to an $80 million first mortgage
(the "First Mortgage") granted by the Partnership to a group of banks and
a $47 million purchase money second mortgage (the "Purchase Money Second
Mortgage") granted by the Partnership to DEWNJ. The Purchase Money Second
Mortgage was subsequently cancelled upon satisfaction of certain conditions
set forth in an agreement entered into at the time of the restructuring. The
Wraparound Mortgage by its terms may secure up to $25 million of additional
borrowings by the Partnership from CPPI to finance replacements of furni-
<PAGE>
<PAGE> 17
ture, fixtures and equipment and facility maintenance and engineering short-
falls. Under the terms of the Wraparound Mortgage, CPPI is not permitted to
foreclose on the Wraparound Mortgage and take ownership of the Hotel Assets
so long as a senior mortgage (such as the Mortgage that will secure the
Notes) is outstanding. At September 30, 1993, the principal balance secured
by the Wraparound Mortgage was $139.1 million. The Wraparound Mortgage,
which will mature on September 30, 2000, bears interest at an annual rate
equal to 14%, with certain interest payments that accrued in 1983 through
1988 totalling $20 million being deferred until maturity. It is not pres-
ently anticipated that the Partnership will have the funds to repay the
Wraparound Mortgage in full at maturity. However, CPPI will have a contrac-
tual right of offset that will permit it to reduce payments otherwise due to
the Partnership under the Operating Lease and Expansion Operating Lease to
the extent that any amounts otherwise due from the Partnership under the
Wraparound Mortgage are not received.
At December 31, 1993, the principal balance of the obligation secured
by the First Mortgage was $33.6 million. That obligation will be repaid in
full out of the proceeds of this offering and the First Mortgage will be re-
placed by the Mortgage granted by the Partnership in favor of the trustee
for the holders of Notes (the "Trustee"), securing the Notes.
The payments scheduled to be made through 1998 under the Wraparound
Mortgage and under the leases discussed above, based on balances as of Sep-
tember 30, 1993, are set forth on the following table:
SCHEDULED LEASE AND WRAPAROUND MORTGAGE PAYMENTS THROUGH 1998
</TABLE>
<TABLE>
<CAPTION>
Minimum Lease Net
Payments(1)(2) Wraparound Mortgage Payments(3) Partnership
Period (CPPI Cash Outflows) (CPPI Cash Inflows) Payments(4)(5)
------ -------------------- ------------------------------- ---------------
($ in thousands)
Principal Interest
--------- --------
<S> <C> <C> <C> <C>
10/01/93 - 12/31/93 $ 8,683 $ 2,101 $ 3,888 $ 2,561
01/01/94 - 12/31/94 35,355 9,534 14,766 10,525
01/01/95 - 12/31/95 35,387 10,763 13,353 10,741
01/01/96 - 12/31/96 35,917 12,026 11,683 11,678
01/01/97 - 12/31/97 46,587 14,329 9,836 21,892
01/01/98 - 09/30/98 36,212 12,667 5,784 17,363
--------- ------- ------- --------
Total $198,141 $61,420 $59,310 $74,760
======== ======= ======= =======
</TABLE>
- --------------------
(1) Minimum Lease Payments represent basic rent amounts due under the Oper-
ating Lease and the Expansion Operating Lease, net of projected abate-
ments, and exclude additional lease payments related to FF&E Loans be-
cause these payments are equal to, and offset by, FF&E loan-related
amounts paid by the Partnership under the Wraparound Mortgage. FF&E
Loans are loans made by CPPI to the Partnership for capital expendi-
tures. See "Business - Certain Transactions and Agreements."
(2) The initial term of the Operating Lease and Expansion Operating Lease
expires in 1998. If the term of both leases is extended under their re-
newal option, there will initially be a substantial reduction in rent.
Basic rent under those leases will be calculated pursuant to a formula,
with annual basic rent in the aggregate not to be more than $32.5 mil-
lion or less than $26.5 million in 1999 and, subsequently, not to be
greater than 10% more than basic rent for the immediately preceding
lease year in each lease year thereafter.
<PAGE>
<PAGE> 18
(3) Wraparound Mortgage Payments represent principal and interest due under
the Wraparound Mortgage. Such amounts exclude principal and interest re-
lated to FF&E Loans which are equal to, and offset by, FF&E loan-related
lease payments from CPPI to the Partnership. The Wraparound Mortgage ma-
tures on September 30, 2000. For Wraparound Mortgage Payments after Sep-
tember 30, 1998, see "Business - Certain Transactions and Agreements -
Expandable Wraparound Mortgage."
(4) Net Partnership Payments represent CPPI's minimum projected net cash
outflow to the Partnership, exclusive of FF&E Loans. Net Partnership
Payments consist of Lease Payments to the Partnership less Wraparound
Mortgage Payments to CPPI and less facilities and maintenance fees paid
by the Partnership to CPPI, presently in the amount of $530,000 per
year.
(5) The Partnership currently spends approximately $10 million annually of
the Net Partnership Payments received by it on facilities and mainte-
nance services provided to the Claridge under the terms of the Operating
Lease and Expansion Operating Lease.
<PAGE>
<PAGE> 19
THE CLARIDGE OWNERSHIP STRUCTURE
- ------------------------
| |
| Holders of Notes |
| |
- ------------------------
|
| Debt Service
| Payments on
| the Notes
|
- -------------------------- Stock -----------------------------
| The Claridge Hotel and |----------------------| |
| Casino Corporation | | Equity |
| ("Company") | | Investors(1) |
| | | |
- -------------------------- -----------------------------
| | |
| | |
| | --100% | Limited
| | Ownership | Partnership
| | | Interests
| | |
- -------------------------- Rental Payments -----------------------------
| The Claridge at |----------------------| Atlantic City |
| Park Place, Inc. |Under Operating Leases| Boardwalk |
| ("CPPI") | | Associates, L.P. |
| (Operating Subsidiary) | Debt Service on | ("Partnership") |
| |----------------------| |
- -------------------------- Wraparound Mortgage -----------------------------
| |
| |
Owns | | Owns
| |
| |
- -------------------------- ------------------------------
| | | Claridge Land, Buildings, |
| Casino License | |Parking Facility, Furniture,|
| Gaming Equipment | | Non-Gaming Equipment |
| ("Casino Assets") | | ("Hotel Assets") |
| | | |
- -------------------------- ------------------------------
(1) Equity interests in the Partnership and the Company originally were
sold as units in 1983. At the date of this Prospectus, over 93% of
the Company's common stock is owned by persons who also own limited
partnership interests in the Partnership.
<PAGE>
<PAGE> 20
RISK FACTORS
Each prospective investor should carefully consider the following fac-
tors before purchasing Notes.
Leverage. Upon completion of this offering, the Company will be highly
leveraged. At December 31, 1993, the Company and its consolidated subsid-
iary, CPPI, had first mortgage bank debt of approximately $33.6 million. Af-
ter giving effect to this offering and the application of the estimated net
offering proceeds to repay all outstanding bank debt, the Company will have
long-term debt obligations of approximately $85 million. The Company also
has substantial minimum lease obligations under its lease arrangements with
the Partnership. See "The Company - Corporate Structure."
After completion of this offering, the Company will continue to have
substantial interest expense. The Company's ratio of earnings to fixed
charges for the year ended December 31, 1992 was 1.64 to 1 and on a pro
forma basis after giving effect to this offering and the application of the
estimated proceeds to redeem all outstanding bank debt, the Company's ratio
of earnings to fixed charges for the year ended December 31, 1992 would have
been 1.20 to 1. The Company's ability to satisfy its obligations is depen-
dent upon its future performance, which will be subject to prevailing eco-
nomic conditions and to financial, business and other factors, including
factors beyond the control of the Company, affecting the business operations
of the Company. The Company's future performance will depend in part on the
success of the Claridge's internal expansion to be funded with part of the
proceeds of this offering. If the Company is unable to generate sufficient
cash flow from operations in the future, it may be required to refinance all
or a portion of its existing debt or to obtain additional financing. There
can be no assurance that any such refinancing would be possible or that any
additional financing could be obtained on terms that are favorable or ac-
ceptable to the Company. See "Selected Financial Data."
Lease Obligations. CPPI has been permitted to pay reduced amounts of
rent under the Operating Lease pursuant to an agreement with the Partnership
providing for deferral or abatement of rent under the Operating Lease. CPPI
has fully utilized the $15.1 million of deferrals provided for in that
agreement, and it expects to fully utilize the $38.8 million of abatements
to which it is entitled prior to the end of 1996. Accordingly, CPPI's rental
payments under the Operating Lease are projected to increase significantly
for the period commencing late 1996 through September 30, 1998; however,
payments on the Operating Lease will decline immediately after that date.
Deferred Tax Liability. Under the terms of the Wraparound Mortgage, CPPI
is not permitted to foreclose on the Wraparound Mortgage and take ownership
of the Hotel Assets so long as a senior mortgage (such as the Mortgage that
will secure the Notes) is outstanding. As an alternative to continuing to
collect interest payments following a default by the Partnership under the
Wraparound Mortgage, CPPI may choose to acquire the Hotel Assets in exchange
for a discharge of the Partnership's obligations under the Wraparound Mort-
gage. Due to the structure of certain prior transactions in connection with
the restructuring, CPPI's tax basis in the Wraparound Mortgage is consider-
ably less than the face amount of the Wraparound Mortgage. Depending on the
fair market value of the Hotel Assets and the tax rates in effect at the
time, it is expected that if the Company should cause CPPI to acquire the
Hotel Assets, the Company would have a tax liability, for federal and state
income tax purposes, of between approximately $17 million and $25 million.
However, because at the time of an acquisition of the Hotel Assets the obli-
gation of CPPI to make lease payments to the Partnership would cease, this
<PAGE>
<PAGE> 21
tax liability would be substantially offset by the resulting increase in
cash flow available to CPPI. It is unlikely that the Company would receive
any cash in connection with an acquisition of the Hotel Assets with which to
pay its tax liability. It is also unlikely that the Company would choose to
acquire the Hotel Assets without such cash, unless it believed at that time
that its liquid resources would be sufficient to discharge that tax liabil-
ity and its other obligations, including its obligations to pay principal
and interest to the holders of Notes.
Pre-1989 Operating Results. The Company negotiated its 1989 restructur-
ing in order to remain financially viable and to avoid the possible need to
seek protection in bankruptcy. Although, at the time that the Restructuring
Agreement was entered into (and at all times since) the Company had (and
has) made all required payments under its existing First Mortgage, it was
clear at the time of the restructuring that the Company would not be able to
make the principal payments required on the First Mortgage in 1988 and sub-
sequent years. In the restructuring, $132 million of indebtedness was for-
given and the principal amount secured by the First Mortgage was reduced by
approximately $15 million to approximately $74.5 million. In addition, the
principal payment schedule was modified. The modification of the principal
payment schedule under the First Mortgage was sufficient, however, only to
permit the Company to demonstrate to the New Jersey Casino Control Commis-
sion (the "NJCCC") that the Company would remain financially viable for
the term of a one-year licensing renewal effective October 1988. As a re-
sult, in connection with the two-year renewals of the casino license for the
Company in 1989, 1991 and 1993, it was necessary for the Company to negoti-
ate further modifications of the principal payment schedule under the First
Mortgage. In connection with the 1993 relicensing, the First Mortgage lender
agreed for the first time to modify the principal payment schedule beyond
the two-year relicensing period. The Company believes the financial diffi-
culties it experienced prior to the 1989 restructuring were attributable
principally to its very substantial debt burden at that time. Since immedi-
ately following the 1989 restructuring and the implementation of the Com-
pany's present operating and marketing strategy, the principal amount of the
Company's First Mortgage bank debt has been reduced from approximately $74.5
million to approximately $34.8 million at September 30, 1993.
Competition in Atlantic City. Competition in the Atlantic City casino-
hotel market is intense. Twelve casino-hotels are operating in Atlantic
City, most of which are larger and newer than the Claridge, and may have
greater access to capital and resources. Competition in Atlantic City ex-
tends to the employment market as well. See "Business - Market."
Competition from New Gaming Jurisdictions. The Company believes the le-
galization of casino and other gaming ventures in states other than New Jer-
sey, including Colorado, Illinois, Indiana, Iowa, Louisiana, Mississippi,
Missouri, South Dakota and on various Native American reservations has not
had to date an adverse impact on its operations. The Company believes it is
too early to determine the effect, if any, of the recent expansion of the
Foxwoods High Stakes Casino and Bingo Hall operated by the Mashantucket Pe-
quot Indian Tribe in Ledyard, Connecticut. That facility installed its 3,150
slot machines in 1993, making it the largest casino in the United States,
and also recently added a 300-room hotel and 1500-seat theater. The legal-
ization of casino and other gaming ventures in states closer to New Jersey,
particularly Delaware, Maryland, New York or Pennsylvania, may have a seri-
ous adverse effect on the Company's business. A number of commentators be-
lieve legalization of at least limited forms of gambling in Philadelphia in
the relatively near future is a significant possibility. See "Business -
Market."
<PAGE>
<PAGE> 22
Expansion Plans. The Company's business plans for its Atlantic City fa-
cility are based on its planned internal expansion and the addition of a
self-parking garage to that facility. The completion and opening of those
expansions and additions, as well as the opening of any other expansion or
new facility which may be introduced by the Company, will be contingent upon
a variety of factors, including the Company's ability to acquire the site
for the parking facility, the completion of construction, the hiring and
training of sufficient personnel and the receipt of all regulatory licenses,
permits, allocations and authorizations. The scope of the approvals required
to construct and open a new facility or expand an existing facility may be
extensive, and the failure to obtain such approvals could prevent or delay
the completion of construction or opening of all or part of such facilities
or otherwise affect the design and features of any such project. In addi-
tion, there can be no assurance that any such expansion, including the in-
ternal improvements and the possible addition of a self-parking garage to be
funded with a portion of the net proceeds of this offering, will have a pos-
itive impact on the Company's operations.
Hotel/Gaming Business. The Company is subject to the risks inherent in
the hotel and gaming operations business. The level and profitability of
gaming activity can vary significantly as a result of a number of factors,
including the competitive environment, weather, and general economic condi-
tions, and is subject to substantial governmental regulation. For example,
the Company believes that during 1991 the Company's operations were
adversely affected by poor general economic conditions in the United States
and the war in the Persian Gulf. Additionally, hotel and gaming operations
are subject to the imposition of special taxes or assessments by regulatory
bodies. Any new tax or assessment may have an adverse impact on the
Company's operations. See "Business - Gaming Regulation and Licensing."
Ability to Realize on Collateral; Adequacy of Collateral. If a default
occurs with respect to the Notes there can be no assurance that the liquida-
tion of the collateral for the Notes would produce proceeds in an amount
sufficient to pay the principal of and accrued interest on the Notes.
The ability of the Trustee for the holders of Notes to foreclose upon
the collateral will be limited by the relevant gaming laws, which require
that persons who own or operate a casino hotel hold a casino license. No
person can hold a license in the State of New Jersey unless the person is
found qualified or suitable by the NJCCC. In order for the Trustee to be
found qualified or suitable the NJCCC would have discretionary authority to
require the Trustee and any or all of the holders of Notes to file applica-
tions, be investigated and be found qualified or suitable as a landlord or
landlords of gaming establishments. The applicant for qualification, a find-
ing of suitability or licensing, must pay all costs of such investigation.
If the Trustee is unable or chooses not to qualify, be found suitable, or
licensed to own or operate such assets, it would either have to sell such
assets or retain an entity licensed to operate such assets. In addition, in
any foreclosure sale or subsequent resale by the Trustee, licensing require-
ments under the relevant gaming laws may limit the number of potential bid-
ders and may delay any sale, either of which events could have an adverse
effect on the sale price of such collateral. See "Business - Gaming Regula-
tion and Licensing."
Regulatory Matters. The ownership and operation of casino-hotels such as
the Claridge are subject to extensive regulation by state and local gaming
authorities in New Jersey. Among other things, CPPI is required to maintain
gaming licenses and approvals for gaming activities at the Claridge. The
<PAGE>
<PAGE> 23
Company and/or its subsidiaries will be subject to similar requirements with
respect to any other gaming establishment they may own or operate. See
"Business - Gaming Regulation and Licensing."
Holders of Notes are subject to certain regulatory restrictions on own-
ership. While holders of obligations such as the Notes are generally not re-
quired to be investigated and found suitable to hold such securities, the
NJCCC has the discretionary authority to (i) require holders of debt securi-
ties of corporations governed by New Jersey gaming law to file applications;
(ii) investigate such holders; and (iii) require such holders to be found
suitable or qualified to be an owner or operator of a gaming establishment.
The applicant for a finding of suitability or qualification must pay all
costs of such investigation. Pursuant to the regulations of the NJCCC such
gaming corporations may be sanctioned, including the loss of its approvals,
if, without prior approval of the NJCCC, it (i) pays to the unsuitable or
unqualified person any dividend, interest or any distribution whatsoever;
(ii) recognizes any voting right by such unsuitable or unqualified person in
connection with the securities; (iii) pays the unsuitable or unqualified
person remuneration in any form; or (iv) makes any payments to the unsuit-
able or unqualified person by way of principal, redemption, conversion, ex-
change, liquidation, or similar transaction. If the Company is served with
notice of disqualification of any holder, such holder will be prohibited by
the New Jersey Casino Control Act from receiving any payments on, or exer-
cising any rights under, the Notes. The Indenture provides that if a holder
or beneficial owner of a Note is required to be found suitable or qualified
and does not submit, within the requested time, the necessary applications
and information for such finding or is not found suitable or qualified, the
Company will have the right (i) to require the holder or beneficial owner to
dispose of his Notes within 30 days or such earlier period as may be ordered
by the NJCCC; or (ii) redeem the holder's or beneficial owner's Notes at the
lesser of (x) the principal amount thereof, (y) the price at which the
holder or owner acquired the Notes, together with accrued interest to the
redemption date or (z) the market value of the Notes. See "Description of
Notes - Optional Redemption." The Notes will be subject to certain restric-
tions on transfer and sale to the extent required by the New Jersey Casino
Control Act.
Federal Income Tax. The existing relationship among the Company, CPPI
and the Partnership is the result of a complex series of transactions de-
scribed in this Prospectus under "The Company - Corporate Structure" and
"Business - Certain Transactions and Agreements." Although these entities
support the positions taken in respect of these transactions on their fed-
eral income tax returns filed with the Internal Revenue Service, it is pos-
sible that the Internal Revenue Service may make adjustments to the posi-
tions taken in those returns that would result in adverse tax consequences.
Fraudulent Conveyance Considerations. Under applicable provisions of
federal bankruptcy law or comparable provisions of state fraudulent transfer
law, if any of the Company or CPPI or the Partnership at the time of the is-
suance of the Notes, and CPPI's guarantee and the granting of the Mortgage
by the Partnership (a) (i) is insolvent or rendered insolvent by reason of
such issuance or grant or (ii) is engaged in a business or transaction for
which the assets of the Company or CPPI or the Partnership constituted un-
reasonably small capital or (iii) intends to incur, or believes that it
would incur, debts beyond its ability to pay such debts as they mature or
(iv) was a defendant in an action for money damages, or had a judgment for
money damages docketed against it (if, in either case, after final judgment
the judgment is unsatisfied), and (b) receives less than reasonably equiva-
lent value or fair consideration, the Notes, CPPI's guarantee, the Mortgage
<PAGE>
<PAGE> 24
and any pledge or other security interest securing such indebtedness could
be voided, or claims in respect of the Notes (including the guarantee and
the Mortgage) or such indebtedness could be subordinated to all other debts
of the Company, CPPI or the Partnership. The voiding of any of such pledges
or other security interests or any of such indebtedness could result in an
event of default with respect to such indebtedness, which could result in
acceleration thereof. In addition, the payment of interest and principal by
the Company pursuant to the Notes or the payment of amounts by CPPI pursuant
to the guarantee could be voided and be required to be returned to the Com-
pany or CPPI, or to a fund for the benefit of the creditors of the Company
or CPPI or to any judgment creditor referred to in clause (iv) above.
Other Gaming Ventures. The Company may pursue opportunities to partici-
pate in gaming outside Atlantic City. There can be no assurance that these
opportunities will be realized by the Company, or that they will be success-
ful if realized. The Company may cease pursuing additional gaming opportuni-
ties at any time. The development of any significant new venture which re-
quires the Company to make a substantial capital investment may require
additional debt or equity financing. There can be no assurance that the cash
flow generated by the operations of the Company or any other new venture
will be sufficient to service any new debt which may be incurred in connec-
tion therewith. In addition there can be no assurance that additional fi-
nancing can be obtained on terms which are acceptable to the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."
Restrictions on Payments to Holding Company. The Company is a holding
company that operates the Claridge through CPPI and expects to operate any
additional future business activities through similar subsidiaries. Divi-
dends and other payments from CPPI and any other subsidiaries are expected
to be the Company's only sources of cash to pay operating expenses, princi-
pal of and interest on debt. Such payments may, under certain circumstances,
be subject to regulatory restrictions. See "Business - Gaming Regulation
and Licensing."
Change of Control. Upon the occurrence of a Change of Control (as here-
inafter defined) each holder of Notes will have the right to require the
Company to repurchase all or any part (equal to $1,000 or an integral multi-
ple thereof) of such holder's Notes pursuant to a Change of Control Offer
(as hereinafter defined) at a purchase price equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest, if any, to the
date of purchase. Due to its highly leveraged nature, the Company may not
have adequate financial resources to purchase Notes tendered pursuant to a
Change of Control Offer and there can be no assurance that the Company would
be able to obtain such resources through a refinancing of the Notes to be
purchased or otherwise. The inability of the Company to repurchase Notes
tendered upon a Change of Control would constitute an Event of Default (as
hereinafter defined) under the Indenture. See "Description of Notes."
Market for the Notes. Although the Notes have been approved for listing
on the New York Stock Exchange, there can be no assurance that an active
public trading market in the Notes will in fact develop. If an active market
for the Notes does not develop, purchasers may be unable to sell the Notes
at the times and at the prices desired.
<PAGE>
<PAGE> 25
USE OF PROCEEDS
The net proceeds from the sale of Notes offered hereby after deducting
underwriting discounts and commissions and estimated expenses of this offer-
ing are expected to be approximately $81 million. The Company intends to use
the net proceeds from this offering (i) to repay in full its existing first
mortgage bank debt in the principal amount of approximately $35 million,
which bears interest at the prime rate of Marine Midland Bank, N.A. plus 4%
per year and matures on December 31, 1996; (ii) to fund internal improve-
ments intended to expand the Claridge's casino capacity by adding approxi-
mately 6,000 square feet of casino space for up to 550 new slot machines, as
well as a 6,600 square foot poker and simulcast area used for off-track
pari-mutuel wagering, at an anticipated cost of approximately $14 million;
and (iii) to use the balance of approximately $32 million for general corpo-
rate purposes. Such general corporate purposes may include, but are not lim-
ited to, (i) the acquisition of an adjacent land parcel and construction on
that land of a self-parking garage facility which if successfully
accomplished is expected to cost an aggregate of approximately $24 million;
(ii) the possible purchase of the Contingent Payment originally issued to
Webb in 1989 and presently held by a trustee for the benefit of the United
Way of Arizona (see "Business -1989 Restructuring"); and (iii) the poten-
tial expansion of the Company's activities into emerging gaming markets.
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization
of the Company at September 30, 1993, and as adjusted to give effect to the
sale of the Notes offered hereby and application of a portion of the net
proceeds to repay in full the Company's existing first mortgage bank debt
and to fund the construction of the internal improvements to expand the Cla-
ridge's casino capacity, with the balance of the net proceeds retained as
cash pending the uses outlined in "Use of Proceeds." This table should be
read in conjunction with the consolidated financial statements contained in
this Prospectus and the information set forth under "Management's Discus-
sion and Analysis of Financial Condition and Results of Operations."
At September 30, 1993
----------------------
Actual As Adjusted
($ in thousands)
Cash and cash equivalents .......................... $6,428 $38,036(1)
======== ========
Current maturities of long-term debt ............... 3,530 -
======== ========
Long-term debt (excluding current maturities)
Existing bank debt ............................. 31,312 -
Notes offered hereby ........................... - 85,000
------- -------
Total long-term debt ......................... 31,312 85,000
Shareholders' Equity
Common Stock, par value $.001, authorized and
issued 5,062,500 shares ...................... 5 5
Additional paid-in capital ..................... 5,048 5,048
Accumulated earnings ........................... 9,124 9,124
Total shareholders' equity ................... 14,177 14,177
------- -------
Total capitalization ............................... $45,489 $99,177
======= =======
- ------------
(1) Adjusted to reflect funding of internal improvements intended to expand
the Claridge's casino capacity at a cost of approximately $14 million.
<PAGE>
<PAGE> 26
SELECTED FINANCIAL DATA
The selected consolidated financial data set forth below as of and for
each of the Company's last five fiscal years have been derived from the Com-
pany's audited consolidated financial statements. The selected consolidated
financial data of the Company presented below as of and for the nine months
ended September 30, 1992 and 1993 are derived from unaudited consolidated
financial statements; however, in the opinion of the Company, all adjust-
ments, consisting of normal recurring adjustments, necessary for a fair pre-
sentation of the Company's financial position and results of operations for
such periods have been included. The selected consolidated financial data
set forth below are qualified in their entirety by, and should be read in
conjunction with the information contained in this Prospectus under "Man-
agement's Discussion and Analysis of Financial Condition and Results of Op-
erations" and the consolidated financial statements, the notes thereto and
other financial and statistical information included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
Nine Months
Year Ended December 31, Ended September 30,
----------------------------------------- --------------------
1988 1989 1990 1991 1992 1992 1993
($ in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenue:
Casino ......................... $ 132,971 $128,641 $134,686 $135,406 $146,357 $113,622 $120,331
Hotel, food, beverage & other .. 19,428 21,438 19,840 18,001 17,073 13,486 13,041
Interest from Partnership ...... 21,786 21,425 20,517 19,554 18,774 14,156 13,564
Total net revenue ................ 174,185 171,504 175,043 172,961 182,204 141,264 146,936
Costs & expenses:
Casino ......................... 73,013 66,507 66,848 69,694 74,348 56,103 62,402
Gaming taxes ................... 10,583 10,273 10,718 10,790 11,669 9,060 9,598
Hotel, food, beverage & other .. 18,232 17,701 17,395 18,052 17,512 13,638 13,306
General & administration ....... 29,789 30,215 28,589 26,481 28,333 21,593 23,242
Rent expense to Partnership(1) . 41,032 40,208 37,242 36,645 34,658 26,144 25,919
Depreciation & amortization .... 3,976 1,667 1,524 1,274 1,321 957 1,063
Interest expense ............... 19,872 19,175 14,552 6,344 4,240 3,306 3,165
------- ------- ------- ------- ------- ------- -------
Total costs & expenses ........... 196,497 185,746 176,868 169,280 172,081 130,801 138,695
Income (loss) before income taxes
& extraordinary items .......... (22,312) (14,242) (1,825) 3,681 10,123 10,463 8,241
Income tax expense ............... - - - 1,500 4,075 4,185 3,296
Extraordinary items, net of income
taxes(2) ....................... - 69,023 39,480 - - - -
------- ------- ------- ------- ------- ------- -------
Net income (loss) ................ $(22,312) $54,781 $37,655 $2,181 $6,048 $6,278 $4,945
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to fixed
charges(3) ..................... 0.33x 0.56x 0.93x 1.20x 1.64x 1.87x 1.70x
Other Financial Data:
Net Partnership Payments (4) ..... - - $9,370 $9,127 $10,489 $7,671 $8,157
Adjusted EBITDA (5) .............. - - 22,585 20,197 21,523 19,480 16,785
Capital expenditures(6) .......... 2,963 1,592 3,213 2,556 3,576 2,271 3,016
Pro Forma: (7)
Interest expense(8) .............. - - $9,994 $9,994 $9,994 $7,496 $7,496
Ratio of Adjusted EBITDA to inter-
est expense .................... - - 2.3x 2.0x 2.2x 2.6x 2.2x
Ratio of Adjusted EBITDA less cap-
ital expenditures to interest
expense ........................ - - 1.9 1.8 1.8 2.3 1.8
<PAGE>
<PAGE> 27
Ratio of total debt to Adjusted
EBITDA ........................... - - 3.8 4.2 3.9 - -
Balance sheet data (at period end):
Cash and cash equivalents ........ $4,342 $4,609 $5,072 $4,638 $4,758 $6,523 $6,428
Long-term receivables due from the
Partnership(9) ................. 148,526 141,095 134,547 128,025 121,713 123,339 116,391
Total assets ..................... 178,436 169,613 161,972 154,355 148,305 151,701 147,272
Long-term debt (including current
maturities) .................... 133,738 103,192 60,471 52,067 41,501 43,371 34,842
Deferred rent due to the
Partnership(10) ................ 55,747 53,133 46,691 42,409 39,525 40,368 36,971
Shareholders' equity (deficiency) (91,433) (36,652) 1,003 3,184 9,232 9,462 14,177
</TABLE>
NOTES TO SELECTED FINANCIAL DATA
(1) For the years ended December 31, 1988, 1989, 1990, 1991 and 1992 and
the nine months ended September 30, 1992 and 1993, $4.6 million, ($2.6)
million, ($6.4) million, ($4.3) million, ($2.9) million, ($2.0) million
and ($2.6) million, respectively, are attributable to the requirement
under Statement of Financial Accounting Standards No. 13 to provide a
level rent expense for those leases with escalating payments. See
"Management's Discussion and Analysis of Financial Condition and Re-
sults of Operations - Liquidity and Capital Resources."
(2) For the years ended December 31, 1989 and December 31, 1990, extraordi-
nary income items, net of income taxes, in the amounts of $69.0 million
and $39.5 million, respectively, resulted from the restructuring of the
Company's financial obligations. See "Business - 1989 Restructuring."
(3) The ratio of earnings to fixed charges has been computed by dividing
(i) income or loss before income taxes and extraordinary items plus in-
terest expense and one-third of rent expense to the Partnership by (ii)
interest expense and one-third of rent expense to the Partnership.
(4) Net Partnership Payments represent CPPI's net cash outflow to the Part-
nership, excluding FF&E Loans in accordance with the terms of the Wrap-
around Mortgage, Operating Lease, Expansion Operating Lease and other
agreements. See "The Company - Corporate Structure" for a discussion
of the relationship between the Company, CPPI and the Partnership. Net
Partnership Payments consist of amounts paid by CPPI to the Partnership
in the form of Operating Lease and Expansion Operating Lease payments,
net of abatements and deferrals, less the sum of amounts paid by the
Partnership to CPPI in the form of (a) Wraparound Mortgage interest,
net of discount; plus (b) Wraparound Mortgage principal; plus (c) fa-
cilities and maintenance fees of $530,000 per year. The presentation is
not applicable for the years ended December 31, 1988 and 1989.
(5) EBITDA represents earnings before interest expense, income taxes, de-
preciation, amortization, and other non-cash and extraordinary items.
The Company has included information concerning EBITDA because it be-
lieves that EBITDA may be used by certain investors and industry ana-
lysts as one measure of the Company's historical ability to service its
debt. EBITDA should not be considered as an alternative to, or more
meaningful than, operating income or cash flow. Adjusted EBITDA is
equal to EBITDA plus rent expense to the Partnership less interest in-
come from the Partnership less Net Partnership Payments. The presenta-
tion is not applicable for the years ended December 31, 1988 and 1989.
The Company's ability to incur additional indebtedness will be
<PAGE>
<PAGE> 28
restricted under the Indenture based on the ratio of Adjusted EBITDA to
Adjusted Fixed Charges (primarily interest expense). See "Description
of Notes - Certain Covenants - Incurrence of Indebtedness."
(6) Capital expenditures are the Company's expenditures for gaming equip-
ment and FF&E Loans made to the Partnership to fund their purchase of
capital items.
(7) The pro forma data gives effect to the sale of Notes offered hereby as-
suming an interest rate of 11 1/4% and the repayment in full of the
Company's existing first mortgage and revolving credit bank debt as if
the transaction had occurred at the beginning of the respective periods
presented. No effect has been given to earnings derived from investment
of the net proceeds from this offering.
(8) Interest expense does not include amortization of costs associated with
the issuance of the Notes offered hereby.
(9) Long-term receivable due from the Partnership under the Wraparound
Mortgage. See Note 3 to the Company's consolidated financial statements
contained in the Prospectus and "The Company - Corporate Structure -
Mortgages."
(10) Deferred rent due to the Partnership is attributable to the requirement
under Statement of Financial Accounting Standards No. 13 to provide a
level rent expense for leases with escalating payments. See Note 12 to
the Company's consolidated financial statements contained in this
Prospectus.
<PAGE>
<PAGE> 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Claridge, originally constructed in 1929 as a hotel, was completely
remodeled, at a cost of $138 million, and reopened in 1981 as a casino ho-
tel; the Claridge was further expanded in 1986 at a cost of approximately
$20 million. Financial difficulties principally due to the Company's highly
leveraged position led to a restructuring in 1989 of the financial obliga-
tions of the Company and CPPI. The restructuring resulted in (i) a reorgani-
zation of the ownership interests in the Claridge; (ii) modifications of the
rights and obligations of certain lenders; (iii) satisfaction and termina-
tion of the obligations and commitments of Webb and DEWNJ under the original
structure; (iv) modifications of the lease agreements between CPPI and the
Partnership; and (v) the forgiveness by Webb of substantial indebtedness. As
a result of the restructuring, an aggregate of $132 million of indebtedness
was forgiven. The principal amount secured by the First Mortgage was reduced
by approximately $15 million to approximately $74.5 million outstanding at
June 16, 1989, and the Purchase Money Second Mortgage was subsequently can-
celled upon satisfaction of certain conditions set forth in an agreement en-
tered into at the time of the restructuring. In 1989, the Company reduced
its expenses significantly, and refocused its operating and marketing strat-
egy to target the middle market gaming patron who is more attracted by a
smaller, more intimate and comfortable facility. As part of this strategy,
the Company conducts extensive employee customer service training to support
its claim of "Because Smaller is Friendlier." Management believes the Com-
pany's operating and marketing strategy has been successful. The Company's
Adjusted EBITDA was $22.6 million, $20.2 million, $21.5 million and $16.8
million in 1990, 1991, 1992 and the nine months ended September 30, 1993,
respectively. In addition, the growth in the Company's total casino revenues
improved from a level below those reportedly achieved by the Atlantic City
casino industry as a whole in 1989 to a level above that reported for the
industry in 1992 and the first nine months of 1993. The success of the Com-
pany's operating and marketing strategy has enabled the Company to reduce
significantly its First Mortgage bank debt from the principal amount of ap-
proximately $74.5 million outstanding at June 16, 1989 to approximately
$33.6 million at December 31, 1993.
Results of Operations
Nine Months Ended September 30, 1993 Compared to Nine Months Ended Sep-
tember 30, 1992
The Company had net income of $4,945,000 for the nine months ended Sep-
tember 30, 1993, compared to net income of $6,278,000 for the same period in
1992. Net income in 1992 was favorably affected by the reversal of progres-
sive slot liability of $2,437,000, as further discussed below.
For the nine months ended September 30, 1993, casino revenues (the dif-
ference between amounts wagered by and paid to casino patrons) of
$120,331,000 were 5.9% higher than the casino revenues of $113,622,000 re-
ported for the nine months ended September 30, 1992. By comparison, reported
casino revenues for all Atlantic City properties for the first nine months
of 1993 increased 2.3% over revenues for the same period in 1992. Casino
revenues for all Atlantic City properties, including the Claridge, were ad-
versely affected by poor weather conditions in early 1993, most notably the
March 13, 1993 storm, which covered portions of the Northeastern United
States with over a foot of snow. During the same period, however, all Atlan-
tic City properties benefitted from changes in New Jersey gaming regulations
<PAGE>
<PAGE> 30
that for the first time permitted unlimited twenty-four hour gambling and
authorized an increase in the percentage of casino floor space allocable to
slot machines.
The Claridge's table games revenues for the nine months ended September
30, 1993 were $31,681,000, an increase of 1.2% over table games revenues of
$31,294,000 for the same period in 1992. This increase resulted from a 0.7%
increase in table games drop (the amount of gaming chips purchased by pa-
trons) compared to the same period in 1992, combined with a slight increase
in the "hold" percentage (the ratio of house win to total drop). For At-
lantic City properties generally, reported table games revenues for the
first nine months of 1993 decreased 2.8% from the comparable period in 1992.
For the nine months ended September 30, 1993, Claridge earned revenue
from slot machines of $88,650,000, an increase of 7.7% over slot revenues
for the first nine months of 1992. For Atlantic City properties generally,
reported slot machine revenue for the nine months ended September 30, 1993
increased 5.0% over revenues for the comparable period of 1992. The Claridge
offers promotional incentives through its direct marketing program to its
customers selected from marketing analyses based on demographic models; coin
incentives issued through the direct marketing program (including prospect-
ing efforts) totalled $8,684,000 and $4,757,000 for the nine months ended
September 30, 1993 and 1992, respectively. These coin incentives reflected
an increased focus in 1993 on drive-in patrons, a target group management
believes to have more profit potential. In addition, the Claridge offers
cash incentives in the form of coin to play slot machines to patrons arriv-
ing by bus. During the first nine months of 1993, 640,000 bus passengers
were brought to the Claridge, and were issued $5,975,000 in coin incentives;
in the same period in 1992, $7,376,000 in coin was issued to 710,000 bus
passengers.
Hotel and food and beverage revenues for the nine months ended September
30, 1993 were $23,079,000, a 2.6% decrease from revenues for the comparable
period in 1992. Net of promotional allowances, hotel and food and beverage
revenues for the first nine months of 1993 were similar to net revenues for
the same period in 1992. Promotional allowances for the nine months ended
September 30, 1993 were lower than in the comparable period in 1992 as a re-
sult of eliminating food coupons from the bus program incentive packages.
Hotel occupancy rates for the nine months ended September 30, 1993 and 1992
were 94.8% and 88.7%, respectively, while the average room rate was $69 for
the first nine months of 1993, compared to $72 for the first nine months of
1992. The total number of covers (meals served) for the nine months ended
September 30, 1993 was 1,352,000, an 11.3% increase over the same period in
1992.
Total costs and expenses for the nine months ended September 30, 1993
were $138,695,000, a 6.0% increase over expenses for the same period in 1992
of $130,801,000. The increase is primarily evident in the casino operating
expenses, due to the reversal of progressive slot jackpot liability in 1992
of $2,437,000, resulting from the removal of certain slot machines from the
casino floor, as well as higher labor costs resulting from increased levels
of business and extended gaming hours, and higher coin redemption and other
marketing costs. In addition, general and administrative expenses increased
as a result of increased payroll costs.
For the nine months ended September 30, 1993, income tax expense of
$3,296,000 was recorded.
Year Ended December 31, 1992 Compared to Year Ended December 31, 1991
<PAGE>
<PAGE> 31
The Company had net income of $6,048,000 for the year ended December 31,
1992, as compared to net income of $2,181,000 for the year ended December
31, 1991.
Casino revenue was $146,357,000 for the year ended December 31, 1992, an
8.1% increase over 1991 casino revenues of $135,406,000, and an 8.7%
increase over 1990 casino revenues of $134,686,000. For Atlantic City prop-
erties generally, reported casino revenues for 1992 increased 7.5% over 1991
revenues. This favorable comparison can be attributed to the following fac-
tors: 1991 revenues were unfavorably impacted by the Persian Gulf War in the
first quarter of the year, as well as the depressed economic conditions in
the northeast; 1992 revenues were favorably impacted by the commencement of
unlimited twenty-four hour gaming in July, as well as improved economic con-
ditions in the final quarter of the year. In addition, the NJCCC has enacted
policies which have given casinos greater flexibility in running operations
(i.e., an increase in the percentage of casino floor space allocable towards
slot machines).
For the year ended December 31, 1992, the Claridge's table games revenue
was $40,758,000, a slight increase over 1991 table games revenue of
$40,504,000. Table games drop, which represents the amount of gaming chips
purchased by patrons, increased 1.0% to $276,036,000 in 1992 from
$273,400,000 in 1991. The 1992 hold percentage was 14.8%, comparable to the
hold percentage in 1991. For Atlantic City properties generally, table games
revenues and drop decreased 3.4% and 2.3% respectively, as compared to 1991
figures. The Company believes this decrease is attributable in part to the
industry's continued shift in focus from table games to slots.
The Claridge's slot machine revenues for the year ended December 31,
1992 were $105,599,000, an 11.3% increase over 1991 slot machine revenues.
For Atlantic City properties generally, reported slot machine revenues in-
creased 14.2% over the comparable period in 1991. Coin issued to bus patrons
for the year ended December 31, 1992 amounted to $8,816,000, compared to
$9,352,000 in 1991. This decrease was due in part to the allocation of addi-
tional coin distribution from the bus program to the direct marketing pro-
gram, which offers promotional incentives to its customers based on their
casino play. During 1992, $6,959,000 in coin was issued through this pro-
gram, as compared to $4,615,000 in 1991.
For the year ended December 31, 1992, hotel and food and beverage reve-
nues, including promotional allowances, were $30,092,000, a decrease of 4.2%
from 1991 revenues of $31,396,000. The decrease in revenues from 1991 was
attributable to a reduction in covers (1,496,000 in 1992 as compared to
1,559,000 in 1991), offset by an increase in hotel occupancy (87% in 1992 as
compared to 85% in 1991). The decrease in the number of covers from 1991 was
due primarily to the elimination of food incentives issued to bus patrons in
mid-1992. The average room rate in 1992 was $71, compared to $72 in 1991.
Total costs and expenses increased 1.7% to $172,081,000 for the year
ended December 31, 1992 compared to expenses of $169,280,000 for the compa-
rable period in 1991 due primarily to increased casino expenses relating to
unlimited, twenty-four hour gaming, as well as the increased distribution of
coin incentives. Casino expenses were reduced somewhat due to the elimina-
tion of $2.4 million of progressive slot liability, resulting from the re-
moval of certain progressive slot machines in September, 1992. In addition,
general and administrative expenses for 1992 of $25,026,000 were 10.6% over
1991 expenses, primarily due to increases in payroll costs, legal and pro-
fessional fees relating to the negotiation of union contract renewals, and
costs associated with rejoining the Atlantic City Casino Association. Inter-
<PAGE>
<PAGE> 32
est expense for the year ended December 31, 1992 of $4,240,000 decreased
33.2% from 1991 due to the reduction in the average outstanding principal
balance, as well as a lower prime interest rate in effect through 1992.
As a result of the income earned for the year ended December 31, 1992,
income tax expense of $4,075,000 was recorded.
Year Ended December 31, 1991 Compared to Year Ended December 31, 1990
For the year ended December 31, 1991, the Company had net income of
$2,181,000, as compared to losses before extraordinary items of $1,825,000
and $14,242,000 for the years ended December 31, 1990 and 1989,
respectively. In 1990, the Company recorded extraordinary income of
$39,480,000, net of income taxes, resulting from the cancellation and re-
lease of the Purchase Money Second Mortgage.
Casino revenues for the year ended December 31, 1991 were $135,406,000,
a 0.5% increase over 1990 casino revenues of $134,686,000, and 5.3% higher
than 1989 revenues of $128,641,000. For Atlantic City casinos generally, re-
ported casino revenues for 1991 were 1.3% higher than 1990 revenues; however
excluding casino revenues earned by the Taj Mahal casino, which opened its
120,000 square foot casino on April 2, 1990, citywide casino revenues actu-
ally decreased 1.5% from 1990 levels. For Atlantic City casinos generally,
reported casino revenues for 1991 were unfavorably affected by the Persian
Gulf War in the first quarter of the year, as well as the continued effects
of the depressed economic conditions in the Northeast throughout the year.
However, casino revenues in the second half of 1991 were strengthened in
part by the addition of twenty-four hour gaming weekends, holidays, and spe-
cial events, beginning with the Fourth of July weekend.
The Claridge's table games revenues for the year ended December 31, 1991
were $40,504,000, an 11.6% decrease from 1990 table games revenue of
$45,852,000. Table games drop for 1991 was $273.4 million, a decrease of
14.0% from 1990 levels. The 1991 hold percentage of 14.8% was slightly
higher than the 1990 hold percentage of 14.4%. For Atlantic City gaming
properties as a group, reported table games activity for 1991 also reflected
decreases from 1990 levels, including an 8.7% decrease in table games drop
and a 7.1% decrease in table games revenue. Excluding the Taj Mahal, for At-
lantic City gaming properties as a group, reported table games revenue for
1991 decreased 11.1% from 1990 levels.
For the year ended December 31, 1991, the Claridge's slot machine reve-
nues were $94,902,000, an increase of 6.8% over 1990 slot machine revenues.
For Atlantic City gaming properties as a group, reported slot revenues for
1991 increased 7.3% over 1990 levels; excluding Taj Mahal, citywide slot
revenues increased 5.1% over 1990 revenues. For the year ended December 31,
1991, coins issued to bus patrons amounted to $9,352,000, as compared to
$11,289,000 in 1990. This decrease was attributable to a reduction in the
number of bus passengers brought to the Claridge, as well as the allocation
of additional coin to the direct marketing program, as compared to
$2,677,000 in 1990.
CPPI's 1991 hotel and food and beverage revenues, including promotional
allowances, were $31,396,000, a decrease of approximately 6% from 1990 reve-
nues of $33,332,000, due to reductions in hotel occupancy (85% in 1991, com-
pared to 87% in 1990), average room rates ($72 in 1991 versus $74 in 1990),
and in the number of meals served (1,559,000 in 1991 as compared to
1,660,000 in 1990).
<PAGE>
<PAGE> 33
Total costs and expenses for the year ended December 31, 1991 of
$169,280,000 decreased 4.3% from 1990 expenses of $176,868,000, due prima-
rily to the reduction in interest expense attributable in part to the can-
cellation of the Purchase Money Second Mortgage as part of a restructuring.
In addition, interest expense on the First Mortgage has decreased due to the
reduction in the average outstanding principal balance, as well as a lower
prime interest rate in effect throughout 1991. Casino expenses for 1991 of
$69,694,000 increased 4.3% over 1990 expenses due in part to higher casino
regulatory fees, as well as increased costs associated with the expanded di-
rect marketing program. General and administrative expenses in 1991 of
$22,621,000 were approximately 6% lower than 1990 expenses, due in part to
lower advertising costs, as well as a decrease in administrative payroll
costs resulting from reductions in staffing levels in late 1990.
As a result of the income earned for the year ended December 31, 1991,
income tax expense of $1,500,000 was recorded.
Liquidity and Capital Resources
The Company completed an extensive restructuring in 1989, which, among
other things, reduced total liabilities by $132 million to approximately
$74.5 million. Since that time, the Company's operating results have been
sufficient to permit it to pay down outstanding debt through December 31,
1993 by $40.9 million. However, the terms of the Company's existing bank
credit facility impose very significant constraints on the Company. In par-
ticular, the facility effectively prevents the Company from accumulating
funds with which to make desired capital requirements because the terms of
the facility require excess cash flow to be applied to prepayment of princi-
pal. The Company believes that by completing this offering it will substan-
tially enhance its liquidity and improve its access to capital by eliminat-
ing the onerous constraints imposed by its bank financing while at the same
time realizing substantial net proceeds which can be effectively deployed on
several planned projects designed to enhance the Company's operations and
profitability.
The Company expects to use the net proceeds of the offering to repay in
full its existing first mortgage bank debt in the principal amount of ap-
proximately $35 million, to fund internal improvements intended to expand
the Claridge's casino capacity, at an anticipated cost of approximately $14
million, and to use the balance of approximately $32 million for general
corporate purposes, which may include among other things (i) the acquisition
of a land parcel adjacent to the Claridge's existing Atlantic City facility
and construction on that land of a self-parking garage facility which if
successfully accomplished is expected to cost an aggregate of approximately
$24 million; (ii) the possible purchase of an obligation issued by the Com-
pany and held by a trustee for the benefit of the United Way of Arizona; and
(iii) the potential expansion of the Company's activities into emerging gam-
ing markets. In addition to financing the activities described above, the
other capital requirements anticipated by the Company are (i) the accumula-
tion of a cash reserve sufficient to repay the principal amount of the Notes
at their maturity and (ii) the funding of a transaction to unify the owner-
ship of the Hotel Assets and the Casino Assets, thereby enabling the Company
to simplify its corporate structure, significantly increase its cash flow
due to the elimination of its lease obligations, and have greater access to
capital. However, such a transaction would require the approval of the lim-
ited partners of the Partnership, most of whom are shareholders of the Com-
pany, and the Indenture will contain certain restrictions on the ability of
the Company to consummate such a transaction. See "Description of Notes -
Certain Covenants - Transactions with the Partnership; Unification Transac-
<PAGE>
<PAGE> 34
tion." Although the Company is not presently pursuing such a transaction
with the Partnership (and there is no assurance it will in fact do so), it
anticipates that any such transaction would require a substantial cash pay-
ment to the limited partners in the Partnership which would enable them to
meet some or all of the large tax liability each of them would incur in any
such transaction. Any such transaction would also result in a substantial
tax liability for the Company, presently expected to be in the range of $17
million to $25 million. Therefore, because it is unlikely that CPPI would
receive any cash in connection with such a transaction with which to pay
such tax liability, it is unlikely that such a transaction would be consum-
mated, unless the Company believed at the time that its liquid resources
would be sufficient to discharge that tax liability and its other obliga-
tions, including its obligations to pay principal and interest to the hold-
ers of Notes. Although it is possible that the Company's future activities
(particularly any gaming ventures outside of Atlantic City in which the Com-
pany may participate) may require external financing, the Company presently
expects that the net proceeds from this offering, together with cash flows
generated from its operations, will be sufficient to meet the Company's
presently foreseeable capital requirements.
Under New Jersey gaming law the Company must apply at least every two
years to the NJCCC for relicensing. Among the factors considered by the
NJCCC in connection with those applications is the financial viability and
liquidity of the Company. In the past, the NJCCC has required the Company to
enhance its liquidity by having available a working capital line of credit
of not less than $7,500,000. Based on this experience, the Company expects
that in the future it will be required either to retain liquid reserves in
the amount of not less than $7,500,000, or to obtain a working capital line
of credit in that amount.
Upon the closing of the restructuring on June 16, 1989, the principal
amount of the First Mortgage was reduced by approximately $15 million and
the principal payment schedule was modified. The modification of principal
payments on the First Mortgage under the terms of the Restructuring Agree-
ment was sufficient, however, only to permit the Company to demonstrate to
the NJCCC that the Company would remain financially viable for the one year
licensing renewal effective October 1988. As a result, in connection with
the two-year renewals of the casino license for the Company in 1989, 1991
and 1993, it was necessary for the Company to negotiate further modifica-
tions of the principal payment schedule under the First Mortgage. In connec-
tion with the 1993 relicensing, the first mortgage lenders agreed for the
first time to modify the principal payment schedule beyond the two-year re-
licensing period. On September 22, 1993, CPPI was issued a two-year casino
license effective September 30, 1993 and expiring September 30, 1995.
At September 30, 1993, the Company had a working capital deficit of
$15,687,000 as compared to a working capital deficit of $13,915,000 at De-
cember 31, 1992. The increase in the working capital deficit is primarily
attributable to an increase in accounts payable of $1,412,000, an increase
in accrued federal income tax of $1,422,000, and an increase in the current
installments of long-term debt of $2,330,000, partially offset by an
increase in cash and cash equivalents of $1,670,000, an increase in prepaid
expenses of $555,000, an increase in accounts receivable of $442,000, and a
decrease in revolving credit line borrowing of $1,000,000. The working capi-
tal deficiency at September 30, 1992 was $13,844,000. Current liabilities at
September 30, 1993 and December 31, 1992 included deferred rental payments
of $15,078,000, and the $3.6 million loan from the Partnership plus accrued
interest thereon of $1,854,000 at September 30, 1993 and $1,530,000 at De-
cember 31, 1992. The deferred rental payments and the $3.6 million loan will
<PAGE>
<PAGE> 35
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. The issuance and sale of the Notes of-
fered hereby and any further refinancings of the Mortgage that will secure
the Notes will not by themselves cause these amounts to become payable pur-
suant to that provision. If these amounts were not included in current lia-
bilities, the Company's working capital surplus at September 30, 1993 and
December 31, 1992 would have been $4,845,000 and $6,293,000, respectively.
CPPI 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 Wrap-
around Mortgage, granted by the Partnership to CPPI, by its terms may secure
up to $25 million of additional borrowings by the Partnership from CPPI to
finance the replacements of furniture, fixtures and equipment, facility
maintenance, and engineering shortfalls. For the nine months ended September
30, 1993, CPPI loaned to the Partnership approximately $1,694,000 to fund
the cost of furniture, fixtures and equipment replacements. In addition, the
Company expended $1,272,000 for gaming assets during the first nine months
of 1993. The advances to the Partnership are in the form of FF&E Loans and
are secured by the Hotel Assets. One half of the principal is due on the
48th month following advance, with the remaining balance due on the 60th
month following the date of issuance. In the Indenture, the Company will
agree to use not less than $8 million from the net proceeds of this offering
to finance internal improvements to the Claridge which will be funded
through additional FF&E Loans. In connection therewith, the Wraparound Mort-
gage Loan agreement as well as the Operating Lease and the Expansion Operat-
ing Lease will be amended to provide that the principal on these additional
FF&E Loans will be payable at final maturity of the Wraparound Mortgage.
CPPI is obligated to pay as additional rent to the Partnership the debt ser-
vice on the FF&E Loans. During the nine months ended September 30, 1993,
$1,561,000 was paid as additional rent for debt service pursuant to the FF&E
Loans.
The Wraparound Mortgage requires monthly principal payments to be made
by the Partnership to CPPI, commencing in the year 1988 and continuing
through the year 1998, in escalating amounts totalling $80 million. That
mortgage, which will mature on September 30, 2000, bears interest at an an-
nual 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 princi-
pal balance of this increase in the Wraparound Mortgage by September 30,
1998. Under the terms of the Wraparound Mortgage, CPPI is not permitted to
foreclose on the Wraparound Mortgage and take ownership of the Hotel Assets
so long as a senior mortgage (such as the Mortgage that will secure the
Notes) is outstanding. The balance outstanding on the Wraparound Mortgage at
September 30, 1993 (including the outstanding FF&E Loans and the $20 million
of deferred interest) was $139.1 million.
The Hotel Assets are owned by the Partnership and leased by the Partner-
ship to CPPI, 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
<PAGE>
<PAGE> 36
provides for three 10-year renewal options at the election of CPPI. The Op-
erating Lease requires basic rental payments to be made in equal monthly in-
stallments escalating annually up to $41,775,000 in 1997, and $32,531,000
for the remainder of the initial lease term. Prior to the Company's 1989 re-
structuring, 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 fi-
nancial 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 re-
duced prospectively, based on a revised schedule of rent leveling based on
the agreed rental abatements. At September 30, 1993, the Company 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 satisfac-
tion of the Wraparound Mortgage; and (iii) upon full satisfaction of any
first mortgage then in place. The issuance and sale of the Notes offered
hereby and any future refinancings of the Mortgage that will secure the
Notes will not by themselves cause the deferred rent liability to become
payable pursuant to that provision. Also as of September 30, 1993, $12.6
million of basic rent had been abated. The remaining $26.2 million of avail-
able abatement is expected to be fully utilized by the fourth quarter of
1996. Because the initial term of the Operating Lease continues through Sep-
tember 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 abatement) in 1996. However, if CPPI
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 CPPI 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 Octo-
ber 1, 1998, and, subsequently, not to be greater than 10% more than the ba-
sic rent for the immediately preceding lease year in each lease year there-
after. If the 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.
In February 1992, the Financial Accounting Standards Board issued State-
ment No. 109, "Accounting for Income Taxes." Statement No. 109 requires a
change from the deferred method of accounting for income taxes to the asset
and liability method of accounting for income taxes. Under the asset and li-
ability 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.
<PAGE>
<PAGE> 37
Effective January 1, 1993, the Company adopted Statement No. 109 on a
prospective basis. There is no effect on the Company's statement of opera-
tions for the nine month period ended September 30, 1993 as a result of the
adoption of Statement No. 109.
No valuation allowance has been provided on deferred tax assets since
management believes that it is more likely than not that such assets will be
realized through the reversal of existing deferred tax liabilities and fu-
ture taxable income.
The effective tax rate and components of income tax expense at September
30, 1993 did not change significantly from that at December 31, 1992.
<PAGE>
<PAGE> 38
BUSINESS
General
The Company, through its wholly-owned subsidiary, CPPI, operates the
Claridge. The Claridge, located in the Boardwalk casino section of Atlantic
City, New Jersey, is a 26-story building that contains the Company's casino
and hotel facilities. The Claridge's casino consists of approximately 43,600
square feet of casino space on three main levels with various adjacent mez-
zanine levels. The casino contains approximately 1,370 slot machines and 67
table games, including 44 blackjack tables, ten craps tables, six roulette
tables, two mini-baccarat tables, one baccarat table, one big six wheel, one
red dog table, one sic bo table and one pai gow poker table. The hotel with
related amenities consists of 501 guest rooms (including 66 two- and three-
room suites, 26 specialty suites and four tower penthouse suites), five res-
taurants, a snack shop, a buffet area, three lounges, a private player's
club, a 600-seat theater, meeting rooms and convention facilities, a gift
shop, a beauty salon and a health club with an indoor swimming pool. The
Company intends to use part of the proceeds from this offering to fund an
expansion of the Claridge's casino. This casino expansion, which is sched-
uled for completion in the summer of 1994, will add approximately 6,000
square feet of casino space for up to 550 new slot machines, as well as a
6,600 square foot poker and simulcast area used for off-track pari-mutuel
wagering. The additional casino space and slot machines are expected to pro-
mote a higher volume of traffic with an emphasis on slot play. The addition
of a poker and simulcast area is intended to take advantage of recent
changes in gaming regulations which now permit Atlantic City casinos to of-
fer those gaming options.
The Company's operating and marketing strategy is based on its "Because
Smaller is Friendlier" advertising campaign, designed to capitalize on the
Claridge's unique physical facility, which the Company believes retains an
atmosphere of Atlantic City's former grandeur, and on the Claridge's size
relative to the larger Atlantic City casinos. By emphasizing an environment
intended to be intimate, friendly and service-oriented, the Claridge targets
a different market niche from the majority of its Atlantic City competitors.
As part of its strategy, the Company focuses on customer service in order to
generate customer loyalty and satisfaction. The Company believes that this
operating and marketing strategy, which was adopted in 1989, has been suc-
cessful as evidenced by its strong operating results since that time. The
Company's Adjusted EBITDA was $22.6 million, $20.2 million, $21.5 million
and $16.8 million in 1990, 1991, 1992 and the nine months ended September
30, 1993, respectively. In addition, the growth in the Company's total ca-
sino revenues improved from a level below those reportedly achieved by the
Atlantic City casino industry as a whole in 1989 to a level above that re-
ported for the industry in 1992 and the first nine months of 1993. The suc-
cess of the Company's operating and marketing strategy enabled the Company
to reduce significantly its First Mortgage bank debt from the principal
amount of approximately $74.5 million outstanding at June 16, 1989 to ap-
proximately $33.6 million at December 31, 1993. The Company intends to im-
prove its operating results further by expanding its casino capacity as de-
scribed above. The Company also is pursuing the potential addition of a
self-parking garage, which would complement its existing valet operation and
is designed to increase casino play by attracting more drive-in customers to
the Claridge. See "Use of Proceeds."
Built in 1929 as a hotel, the Claridge was remodeled at a cost of ap-
proximately $138 million prior to its reopening as a casino hotel in 1981.
The Claridge was further renovated and expanded in 1986 at a cost of approx-
<PAGE>
<PAGE> 39
imately $20 million. Since 1991 the Claridge's exterior, lobby and other
public areas have been completely refurbished. The Claridge currently is in
the process of redecorating all of its guest rooms and has completed the re-
decoration of over 100 rooms, with the remainder scheduled for completion by
1995. Approximately $10 million is spent annually on facility maintenance,
and approximately $3 million has been spent annually on capital improvements
including the acquisition of new gaming equipment.
The Company currently expects that, while it will continue to seek to
enhance the value of the Claridge, it will also actively seek to utilize the
Company's extensive gaming management experience to expand and diversify its
activities within the United States gaming industry, particularly in emerg-
ing gaming markets. The Company previously has explored opportunities for
gaming-related activities outside Atlantic City, and expects to continue
such efforts. See "Business - Expansion Plans."
Business and Marketing Strategy
The Claridge has positioned itself as the "smaller, friendlier" alter-
native to the other Atlantic City casinos. This strategy, implemented in
1989, is designed to capitalize on the Claridge's unique physical facility,
which the Company believes retains an atmosphere of Atlantic City's former
grandeur, and on the Claridge's size relative to the larger Atlantic City
casinos.
By emphasizing an environment that is intimate, friendly and service-
oriented, the Claridge targets a market niche different than that of a ma-
jority of its competitors. The Claridge seeks to attract and retain as cus-
tomers the player whose wagering, while significant, is below the
high-wagering of patrons targeted by several of the other larger Atlantic
City casinos. The Claridge's typical patron wagers less on credit and war-
rants fewer complimentaries than the higher wagering player. The majority of
the Claridge's casino revenue is generated by slot machine play. In 1992,
72% of the Claridge's casino revenue came from slot play as compared to 66%
reported for all Atlantic City properties. For the nine months ended Septem-
ber 30, 1993, the respective percentages for slot play revenue were 74% for
the Claridge and 67% for all Atlantic City properties.
The Claridge's positioning statement "Because Smaller is Friendlier"
conveys the Company's operating and marketing strategy. In order to assure
that the advertising campaign is fulfilled, all Claridge employees are edu-
cated in the Company's "Winning Ways" guest care training program, which
emphasizes courteous, customized service.
In common with other Atlantic City casinos, the Claridge operates a di-
rect marketing program. Through this program, customer loyalty is encouraged
with incentives including gifts, coupons for coins and services, and compli-
mentaries. A sophisticated computer database marketing system is utilized to
identify prospective customers, track customers who meet the Company's tar-
get profile, and analyze the effectiveness of promotional activities. Infor-
mation for this database is compiled through a customer's use of a Compcard
Gold rating card provided by the Claridge. All Claridge customers are en-
couraged to request a Compcard Gold rating card and to use it when playing
at table games and slot machines. Use of the Compcard Gold rating card pro-
vides the Claridge with data on the level, style and duration of casino play
of its customers.
<PAGE>
<PAGE> 40
In 1992, approximately 80% of the amounts wagered at the Claridge's ta-
ble games and approximately 49% of the amounts wagered at the Claridge's
slot machines were wagered by players who used the "Compcard Gold" rating
card. The database derived from use of the "Compcard Gold" rating card
furnishes the Company with a powerful marketing tool. In mid-1993, the data-
base contained approximately 360,000 profiles on active customers. This da-
tabase allows the Claridge to target identified players with incentives. In-
centives are tailored to the identified player's potential for future play,
thus assuring that direct marketing expenditures are spent effectively. Ad-
ditionally, through analysis of demographic and other information contained
in the "Compcard Gold" database, the value of customers with certain char-
acteristics can be assessed and used as a basis for identifying prospective
customers.
The Claridge, as do all other Atlantic City casinos, maintains a bus
program. Customers arriving by bus generally stay in Atlantic City six to
eight hours before returning home. Bus customers are given coupons for coins
and/or other services. The Company continually monitors the incentives of-
fered to bus customers by other Atlantic City casinos to assure that the
Claridge's offerings are attractive.
Management believes that the Company's operating and marketing strategy,
implemented in 1989, has been successful. The Company's annual casino reve-
nue increases were comparable with the Atlantic City casino industry
increases for 1990 and 1991, and surpassed the industry increases in 1992
and the first nine months of 1993. As shown in the table below, the
Claridge's casino revenue growth of 8.1% for 1992 and 5.9% for the first
nine months of 1993 exceeded total reported revenue growth of all Atlantic
City casinos for those periods. The Claridge's average monthly casino reve-
nue per square foot also shows improvement, increasing to $280 in 1992 and
$307 in the first nine months of 1993. The Claridge's average daily slot win
per machine also reflects continued improvement, increasing from 80% of the
reported Atlantic City average in 1991 to 82% in 1992 and to 91% in the
first nine months of 1993. Management believes that, if successful in at-
tracting more drive-in customers to the Claridge by adding a self-parking
garage, the Claridge's average daily slot win per machine will improve fur-
ther.
<PAGE>
<PAGE> 41
GAMING DATA(1)
($ in thousands, except average data)
<TABLE>
<CAPTION>
Nine Months
Years Ended December 31, Ended September 30,
---------------------------------------------------- ---------------------
1988 1989 1990 1991 1992 1992 1993
<S> <C> <C> <C> <C> <C> <C> <C>
Atlantic City Slot Revenue ... $1,493,578 $1,577,187 $1,724,326 $1,851,069 $2,113,803 $1,627,474 $1,708,950
Atlantic City Table Revenue .. 1,241,189 1,229,801 1,227,257 1,140,492 1,102,166 848,496 825,088
---------- ---------- ---------- ---------- ---------- ---------- ----------
Atlantic City Total Casino
Revenue..................... $2,734,767 $2,806,988 $2,951,583 $2,991,561 $3,215,969 $2,475,970 $2,534,038
Atlantic City Casino Revenue
Growth...................... 10.4% 2.6% 5.2% 1.4% 7.5% 7.8% 2.3%
Claridge Slot Revenue ........ $77,829 $79,809 $88,834 $94,902 $105,600 $82,328 $88,650
Claridge Table Revenue ....... 55,142 48,832 45,851 40,504 40,758 31,294 31,681
---------- ---------- ---------- ---------- ---------- ---------- ----------
Claridge Total Casino Revenue. $132,971 $128,641 $134,685 $135,406 $146,358 $113,622 $120,331
Claridge Casino Revenue
Growth...................... 7.1% (3.3)% 4.7% 0.5% 8.1% 10.9% 5.9%
Average Casino Square Footage:
Atlantic City............... 675,750 668,583 697,637 772,490 776,734 775,911 780,596
Claridge.................... 43,054 43,054 43,030 43,579 43,579 43,579 43,579
Average Monthly Casino
Revenue per Square Foot:
Atlantic City .............. $337 $350 $353 $323 $345 $355 $361
Claridge ................... 257 249 261 259 280 290 307
Average Number of Slot
Machines:
Atlantic City .............. 18,816 18,661 20,367 21,318 22,241 22,083 23,734
Claridge ................... 1,244 1,237 1,253 1,364 1,354 1,367 1,356
Average Daily Slot Win per
Machine:
Atlantic City .............. $217 $232 $232 $238 $260 $269 $264
Claridge ................... 171 177 194 191 213 220 239
Average Number of Table Games:
Atlantic City .............. 1,305 1,244 1,313 1,226 1,193 1,208 1,164
Claridge ................... 78 75 73 66 66 66 67
Average Daily Win per Table
Game:
Atlantic City............... $2,606 $2,708 $2,561 $2,549 $2,531 $2,563 $2,596
Claridge ................... 1,937 1,784 1,721 1,681 1,687 1,730 1,732
</TABLE>
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(1) Atlantic City gaming industry data has been compiled from published in-
formation filed by Atlantic City gaming licensees with the NJCCC.
Expansion Plans
In furtherance of the Company's business strategy, the Company intends
to expand the Claridge's casino capacity to add casino space for additional
slot machines and a poker and simulcast area used for off-track pari-mutuel
wagering. The expansion, which will be financed with approximately $14 mil-
lion of the proceeds of this offering, will be designed to ensure that the
Claridge's unique "smaller, friendlier" niche atmosphere is preserved.
<PAGE>
<PAGE> 42
The Company's management believes that the Claridge is
capacity-constrained, particularly during the summer season and on busy
weekends. The planned casino expansion is expected to provide an opportunity
for substantial incremental profit by allowing the Claridge to better accom-
modate its customers during these peak times, and permitting it to increase
traffic during non-peak periods. The expansion would add approximately 6,000
square feet of casino space for up to 550 slot machines, along with the
poker and simulcast area. In connection with this casino expansion, certain
of the Claridge's restaurant and kitchen facilities will be relocated and
enlarged.
Recent regulatory changes permit Atlantic City casinos to offer poker
and simulcasting. The addition of a poker and simulcast area will enable the
Claridge to provide its patrons with a competitive mix of gaming options.
Management believes that all Atlantic City casinos have taken or will take
advantage of these regulatory changes.
The Company believes that the addition of a self-parking garage would
further enhance the Claridge's competitiveness and operating results by at-
tracting more drive-in customers to the Claridge. Presently, the Claridge's
parking facilities consist of a valet-parking garage and an outdoor self-
parking lot. The self-parking garage would be linked to the Claridge's ex-
panded casino by a fully enclosed above-ground walkway. The Company will
seek to acquire one or more adjacent lots with a view to constructing this
facility at a total cost (inclusive of land acquisition and construction ex-
penses) of approximately $24 million. The Company has reached an agreement
in principal to acquire an option to purchase an adjacent lot. However, the
Company has not yet entered into any definitive agreement in this regard.
The Company's management believes that the development of the U.S. gam-
ing industry outside the traditional centers of Atlantic City and Nevada has
created new opportunities while at the same time increasing the exposure to
possible competition. The Company previously has explored opportunities for
gaming-related activities outside Atlantic City, and expects to continue
such efforts. The Company presently has no definitive agreements or arrange-
ments for this type of activity.
Market
Competition in the Atlantic City casino-hotel market is intense. At the
present time, 12 casino-hotels are operating in Atlantic City, most of which
are larger and newer than the Claridge, and may have greater access to capi-
tal and resources.
The primary markets for Atlantic City casino patrons are New York City,
New Jersey and Philadelphia, together with the secondary markets of central
Pennsylvania, Delaware, Baltimore and Washington, D.C. Many of the Atlantic
City casino patrons arrive by bus and stay for approximately six hours. Com-
petitive factors in Atlantic City require the payment of cash incentives in
the form of coins to play slot machines and coupons for use toward the price
of meals to patrons arriving under bus programs sponsored by the casino op-
erators. In 1992, 9.4 million casino patrons arrived in Atlantic City by
bus. Casinos also offer coin incentives to their drive-in customers based on
their casino play. In recent years competition for, and incentives offered
to, drive-in customers have increased significantly. Although the Claridge
offers similar promotional incentives to attract customers, it is at a dis-
tinct disadvantage since it remains the only casino without a public self-
parking facility. As a result, the Company is pursuing the potential addi-
tion of a self-parking garage. See "Use of Proceeds."
<PAGE>
<PAGE> 43
All casinos in Atlantic City are part of hotels which offer dining, en-
tertainment and other guest facilities. Competition among casino facilities
is based primarily on such factors as promotional allowances; advertising;
the attractiveness of the casino area; service; quality and price of rooms,
food and beverage; restaurant, convention and parking facilities; and enter-
tainment. The Atlantic City business is seasonal with the highest level of
activity occurring during the summer months and the lowest level of activity
during the winter months.
Competition in Atlantic City also extends to the employment market. The
NJCCC has promulgated regulations which require staffing levels at Atlantic
City casinos which are sharply higher than those for casino-hotels in Ne-
vada. All of CPPI's casino employees must be licensed under the New Jersey
Casino Control Act (the "Casino Control Act"). Casino employees and sup-
port personnel are subject to more stringent requirements than non-casino
employees. Non-casino employees need only be registered with the NJCCC,
while each casino employee must meet applicable standards pertaining to such
matters as financial responsibility, good character, ability, casino train-
ing and experience. Partly as a result of such requirements, there is in-
tense competition for experienced casino employees in Atlantic City. Diffi-
culties in hiring personnel licensed by the NJCCC have elevated labor costs
and licensed personnel often leave their current positions for higher paying
jobs in other casinos. In addition, competition for experienced casino man-
agement personnel has increased as a result of the expansion of casino and
other gaming revenues into other jurisdictions.
In 1992, the gaming industry continued its rapid expansion, and some
form of casino gambling is now authorized in 22 states. The most significant
growth has occurred in the riverboat and Indian land gaming segments. To
date, casino riverboat operations have commenced in Illinois, Iowa and Mis-
sissippi; have been legalized in Indiana, Louisiana and Missouri; and gaming
legalization initiatives are pending in other states, including Connecticut,
New York, Pennsylvania and Virginia. In addition, under the Indian Gaming
Regulatory Act of 1988, unrestricted gaming is permitted on Indian land in
any state that already allows similar gaming. (For example, if the state al-
lows charitable gaming for non-profit organizations, then Indians can run
similar operations on their land for profit.) Indian gaming is currently au-
thorized in 18 states including California, Connecticut, Michigan, Minnesota
and New York. There also are efforts by Indian groups to negotiate gaming
compacts in other states. A number of commentators believe legalization of
at least limited forms of gambling in Philadelphia in the relatively near
future is a significant possibility. Management believes that the effect, if
any, on Atlantic City casinos and on the Claridge of legalized gambling in
Philadelphia will depend upon the form and scope of such gambling.
On February 15, 1992, the Foxwoods High Stakes Casino and Bingo Hall
("Foxwoods"), operated by the Mashantucket Pequot Indian tribe in Ledyard,
Connecticut, commenced operations. In addition to offering the table games
found in Atlantic City, Foxwoods offers bingo rooms. In January 1993, ap-
proval was granted by the Connecticut government for Foxwoods to offer slot
machines. Foxwoods is the largest casino in the United States and contains
approximately 3,150 slot machines with the number of slot machines expected
to increase to over 4,000 in the near future. A 300-room hotel, as well as a
1500-seat theater, recently were added. The continued expansion of casino
gaming, lotteries, including video lottery terminals (VLTs), and offtrack
betting in nearby states could have a negative effect on the Atlantic City
market.
<PAGE>
<PAGE> 44
Gaming Regulation and Licensing
General. The operations of the Company are subject to extensive regula-
tion by the State of New Jersey and local governmental authorities in New
Jersey. Such regulations impose restrictions on the Company's operations in
New Jersey, including, among other things, restrictions on the manner of op-
eration of the Company's casino, licensing of officers, directors and cer-
tain key employees, and the submission of extensive financial and operating
reports. Although the Company believes that it is in substantial compliance
in all material respects with applicable local, state and federal laws,
rules and regulations, there can be no assurance that more restrictive laws,
rules and regulations will not be adopted in the future which could make
compliance much more difficult or expensive, restrict the Company's ability
to attract investors or lenders, or otherwise adversely affect the business
or prospects of the Company.
The Company also is evaluating gaming opportunities outside the state of
New Jersey. If the Company enters new gaming jurisdictions, the Company will
be required to comply with additional gaming regulations.
The New Jersey Casino Control Commission and Division of Gaming Enforce-
ment. The ownership and operation of casino-hotel facilities in Atlantic
City are subject to extensive state regulation under the Casino Control Act.
No casino-hotel may operate in Atlantic City unless necessary corporate and
individual officer, director and employee licenses are obtained from the
NJCCC. The NJCCC is authorized under the Casino Control Act to adopt regula-
tions covering a broad spectrum of gaming- related activities.
The Casino Control Act also establishes a Division of Gaming Enforcement
(the "Division") to investigate all applications for licenses, enforce the
provisions of the Casino Control Act and the regulations thereunder, and
prosecute before the NJCCC all proceedings for violations of the Casino Con-
trol Act or any regulations thereunder. The Division conducts audits and
continually reviews casino operations, maintains information with respect to
any changes in ownership of the casino-hotel and conducts investigations of
casino owners and investors when appropriate.
Under New Jersey gaming regulations, prior approval of this offering
must be granted by the NJCCC. The NJCCC approved this offering on ,
1994.
Noteholders. Holders of Notes are subject to certain regulatory restric-
tions on ownership. Although holders of obligations such as the Notes are
generally not required to be investigated and found suitable to hold such
securities, the NJCCC has the discretionary authority to (i) require holders
of debt securities of corporations governed by New Jersey gaming law to file
applications; (ii) investigate such holders; and (iii) require such holders
to be found suitable or qualified to be an owner or operator of a gaming es-
tablishment. Pursuant to the regulations of the NJCCC, a gaming corporation
may be sanctioned, including the loss of its approvals, if, without prior
approval of the NJCCC, it (i) pays to the unsuitable or unqualified person
any dividend, interest or any distribution whatsoever; (ii) recognizes any
voting right by such unsuitable or unqualified person in connection with the
securities; (iii) pays the unsuitable or unqualified person remuneration in
any form; or (iv) makes any payments to the unsuitable or unqualified person
by way of principal, redemption, conversion, exchange, liquidation, or simi-
lar transaction. If the Company is served with notice of disqualification of
any holder, such holder will be prohibited by the Casino Control Act from
receiving any payments on, or exercising any rights under, the Notes. The
<PAGE>
<PAGE> 45
Indenture provides that if any Gaming Authority requires that a holder or
beneficial owner of the Notes must be licensed, qualified or found suitable
under any applicable gaming law and the holder or beneficial owner fails to
apply for a license, qualification or a finding of suitability within 30
days after being requested to do so by the Gaming Authority, or if such
holder or such beneficial owner is not so licensed, qualified or found suit-
able, the Company will have the right, at its option, (i) to require such
holder or beneficial owner to dispose of such holder's or beneficial owner's
Notes within 30 days of receipt of such notice of such finding by the appli-
cable Gaming Authority or such earlier date as may be ordered by such Gaming
Authority or (ii) to call for the redemption of the Notes of such holder or
beneficial owner at the lesser of (x) the principal amount thereof, (y) the
price at which such holder or beneficial owner acquired the Notes, together
with accrued interest to the earlier of the date of redemption or the date
of the finding of unsuitability by such Gaming Authority, which may be less
than 30 days following the notice of redemption, if so ordered by such Gam-
ing Authority or (z) the market value of the Notes. See "Description of
Notes - Optional Redemption." The Notes will be subject to certain restric-
tions on transfer and sale to the extent required by the Casino Control Act.
In the event of a default by the Company in its obligations under the
Notes or the Indenture, and foreclosure on or the taking of possession of
the Hotel Assets which are pledged as collateral for payment of the Notes,
the NJCCC would have discretionary authority to require the Trustee under
the Indenture, the Collateral Trustee and any or all of the holders of Notes
to file applications, be investigated and be found suitable or qualified as
a landlord or landlords of gaming establishments. The finding of suitability
or licensing requires submission of a detailed personal history and personal
financial information and a thorough investigation. The applicant for a
finding of suitability, qualification, or licensing must pay all costs of
such investigation.
Licensing Requirements. The Casino Control Act provides that various
categories of persons or entities must hold casino licenses. The Casino Con-
trol Act also provides that each officer, director and person who directly
or indirectly holds any beneficial interest or ownership in a casino lic-
ensee; or any person who, in the opinion of the NJCCC, has the ability to
control a casino licensee or elect a majority of the board of directors; or
each principal employee or any other employee of a casino licensee (and any
lender to or underwriter, agent or employee of the licensee) whom the NJCCC
may consider appropriate for approval or qualification, be qualified for ap-
proval pursuant to the provisions of the Casino Control Act. In addition,
all contracts and leases entered into by the licensee may, upon request of
the NJCCC, have to be submitted to the NJCCC, are subject to its review,
and, if found unacceptable, are voidable. All enterprises which provide
gaming-related services to the licensee must be licensed. All other enter-
prises dealing with the licensee must register with the NJCCC, which may re-
quire that they be licensed if they do $75,000 or more per year in business
with a single licensee, and $225,000 or more per year if with more than one
licensee.
CPPI holds a casino license because it carries on the casino business of
the Claridge and owns the Casino Assets. As a result, CPPI's officers and
directors are subject to NJCCC qualification. The Company, as the sole
stockholder of CPPI, also is required to be qualified. As a part of its de-
termination of the Company's qualification, the NJCCC will require the qual-
ification of each officer, each director, and each person who directly or
indirectly holds any beneficial interest or ownership in the Company, and
who the NJCCC requires to be qualified, or any person who, in the opinion of
<PAGE>
<PAGE> 46
the NJCCC, has the ability to control the Company or elect a majority of its
Board of Directors; or each principal employee or any other employee whom
the NJCCC may consider appropriate for approval or qualification. The NJCCC
may, in its discretion, require holders of Notes offered hereby to be li-
censed. See "Noteholders" above.
Licensing Status. The NJCCC issues casino licenses, which are renewable
every two years, subject to a series of requirements including a requirement
of demonstrating financial viability. In 1989, and again in 1991, the first
mortgage lender agreed to modify the schedule of principal payments in order
in part to allow CPPI to demonstrate financial viability to the NJCCC. In
connection with the 1993 relicensing, for the period ending in 1995, the
first mortgage lender agreed for the first time to modify the schedule of
principal payments to beyond the two-year licensing period, and CPPI was re-
licensed on September 22, 1993. Although scheduled, mandatory principal pay-
ments have been repeatedly modified by the holders of the First Mortgage as
described above, CPPI's agreement with the banks requires it to pay excess
cash flow (as defined under the First Mortgage) to these banks. Pursuant to
that requirement, CPPI made principal payments of $9.3 million in 1991 and
$9.6 million in 1992 and in 1993 has made principal payments of $6.7 million
through September 30, 1993.
Investigations and Disqualifications. The NJCCC may find any holder of
any amount of securities of the Company not qualified to own securities of
the Company. Further, as required by New Jersey, the charter and the by-laws
of the Company and CPPI provide that securities of the Company and CPPI are
held subject to the condition that if a holder is found to be disqualified
by the NJCCC the holder must dispose of the securities of the Company or
CPPI, as the case may be. The names and addresses of holders of Notes will
be reported periodically to the NJCCC as is required for all publicly traded
holding companies that have wholly-owned subsidiaries holding casino
licenses.
Casino Fees and Taxes. The Casino Control Act provides for a casino li-
cense issue fee of not less than $200,000, based upon the cost of the inves-
tigation and consideration of the license application, and an annual renewal
fee of not less than $100,000, based upon the cost of maintaining control
and regulatory activities. In addition, a licensee is subject to a tax of
eight percent (8%) of gaming revenues, less the provision for bad debt, and
to an annual license fee of $500 on each slot machine and an alcoholic bev-
erage fee computed on the basis of the cost of investigatory time spent mon-
itoring each beverage outlet. The Casino Control Act as amended in December
1984 further provides for the imposition of an investment obligation pursu-
ant to criteria set forth in the Act or the payment of an alternative tax.
The investment obligation is 1.25% of the total gaming revenues for each
calendar year. Gaming revenues are the total revenues derived from gaming
operations less the provision for bad debt. If the casino licensee opts not
to make an investment, it is assessed an alternative tax of 2.5% of total
gaming revenues less the provision for bad debt.
New laws and regulations as well as amendments to existing laws and reg-
ulations relating to gaming activities in Atlantic City are periodically
adopted. Effective July 1, 1993, the New Jersey state legislature passed a
law requiring the payment of parking fees by casinos in New Jersey in the
amount of $2.00 per day for each motor vehicle parked in a casino parking
space. In 1992 the New Jersey state legislature passed a law requiring the
payment of a tourism marketing fee of $2.00 per occupied room by casino ho-
<PAGE>
<PAGE> 47
tels in Atlantic City. While the Company believes that these fees have not
had a significant impact on its operations, there is no assurance that fu-
ture laws or changes in existing laws will not have an adverse effect.
Employees
As of September 30, 1993, CPPI employed approximately 2,450 persons of
whom approximately 800 are represented by labor unions. Approximately 600 of
the 800 are represented by the Hotel, Restaurant Employees and Bartenders
International Union, AFL-CIO, Local 54. During the past two years, local
unions have been active in their efforts to organize non-union employees in
Atlantic City.
The management of the Claridge believes that its employee relations are
generally satisfactory. All of the employees represented by labor unions are
covered by collective bargaining agreements which prohibit work stoppages
during their terms. The Company's collective bargaining agreement covering
the approximately 600 employees represented by Local 54 is scheduled to ex-
pire in September 1994. The collective bargaining agreements of all Atlantic
City properties with respect to Local 54 also expire at that time.
Properties
The Claridge hotel was constructed in 1929 at the northeastern end of
Absecon Island, on which Atlantic City is located. After remodeling, modern-
ization and expansion at a cost of approximately $138 million, the Claridge
opened as a casino-hotel in July 1981. Located in the Boardwalk Casino sec-
tion of Atlantic City on Brighton Park, approximately 550 feet from the
Boardwalk, the Claridge occupies three parcels of property.
The casino-hotel, situated on the main parcel (41,408 square feet), is a
26-story concrete steel frame structure. The garage, situated on an adjacent
parcel of land (21,840 square feet) west of the casino-hotel site, is an
eight-level reinforced concrete ramp structure, built in 1981. Including the
bus drive-through area, a bus patron waiting room and an electrical room, it
totals an area of 197,100 square feet and provides parking for approximately
475 automobiles. The office building, situated on an adjacent parcel of land
(7,766 square feet) north of the casino-hotel site, is a two-story
reinforced concrete and brick structure with a flat roof. The building is
utilized as an administration facility, and totals an area of 14,020 square
feet. All of these facilities are owned by the Partnership and are leased to
CPPI under the Operating Lease and the Expansion Operating Lease.
Appraisal
The Company has obtained an appraisal report prepared by Landauer Asso-
ciates, Inc. ("Landauer") for the holder of the existing First Mortgage on
the Hotel Assets. In the appraisal report dated August 3, 1993, Landauer es-
timated that the market value of the fee simple estate in the Claridge Ca-
sino Hotel as of March 31, 1993 was $147 million. A fee simple estate is ab-
solute ownership unencumbered by any other interest or estate; subject only
to the limitations of eminent domain, escheat, police power and taxation.
The value conclusion assumed a reconfiguration of various spaces that would
yield a 5,000 square-foot poker and simulcast facility and 100 additional
slot machines. In the appraisal, both the Hotel Assets and the Casino As-
sets, exclusive of working capital, are included in the fee simple estate.
For the purposes of the appraisal, market value was defined as the most
probable price that a property should bring in a competitive and open market
<PAGE>
<PAGE> 48
under all conditions requisite to a fair sale, the buyer and seller each
acting prudently and knowledgeably and assuming price is not affected by un-
due stimulus.
In the course of its estimate of the market value of the Claridge, Lan-
dauer reviewed data relating to the Claridge, Atlantic County and Atlantic
City in general, the neighborhood of the site, the Atlantic City casino ho-
tel market, zoning, real estate taxes and assessments and the highest and
best use of the property. Although Landauer gave consideration to all three
recognized methods of valuation in the appraisal, the cost approach, the
sales comparison approach and the capitalization of income approach, Lan-
dauer determined that the sales comparison approach and cost approach were
not applicable; accordingly, Landauer's value conclusion is based on the
value indicated by the income capitalization approach to value. For the in-
come capitalization approach, Landauer employed the yield capitalization
technique to estimate the present value of the projected cash flows. Accord-
ing to accepted appraisal methods, the yield capitalization technique in-
volves two steps: first, the residual proceeds are estimated by capitalizing
the last year's income, and second, the annual income and the residual pro-
ceeds are discounted at an appropriate rate (IRR) to provide and estimate of
present value. Cash flow projections were based in part on information pro-
vided by the Company, including management's internal reports of historical
operating performance, management's budgeted operating performance and oper-
ating statistics from the other 11 casino hotels in Atlantic City. However,
the cash flow projections estimated by Landauer were not provided by the
Company's management and do not represent the opinions of the Company's man-
agement as to the future of operating results. The underlying revenue and
expense assumptions encompassed numerous factors, including the prolifera-
tion of casino gaming in the United States, the addition of a 5,000 square-
foot simulcast area and 100 slot machines and an analysis of the current
state of and the prospects for the Atlantic City casino market, including
the addition of the Regency Hotel as a casino hotel. The costs that were
used in the appraisal, related to the reconfiguration of the space and addi-
tional equipment, were not final estimates. Further, the continued prolifer-
ation of gaming initiatives subsequent to the date of the appraisal may af-
fect casino revenues in Atlantic City and thus at the Claridge.
Landauer projected compound annual revenue growth for the casino-hotel
over the 11 year analysis period at 4.9% per annum. Total operating expenses
were projected to increase at a compound annual rate of 4.7%. A capitaliza-
tion rate of 17.0% was applied to Landauer's projection of the Claridge's
net income at the end of the projection period to determine the residual
value; a discount rate of 19.0% was applied to projected net income and re-
sidual proceeds.
An appraisal is an estimate or opinion of value and cannot be relied
upon as a precise measure of value or worth. All of the assumptions and lim-
iting conditions as well as the detailed analysis and methodology included
in the appraisal report are an integral portion of the value conclusion. A
thorough understanding of all of the assumptions and limiting conditions
made throughout the appraisal report should be achieved before any reliance
is placed on the value conclusion. The amount that might be realized from
the sale of the Claridge may be more or less than its appraised value. Lan-
dauer did not solicit any offers or inquiries with respect to the Claridge
from potential purchasers, and therefore, the appraisal should not be read
to suggest that a buyer was, in fact, available, or if one were available,
that it would be willing to pay the appraised value. Accordingly, no assur-
ance can be given as to the value that could be obtained from the sale of
the Claridge. Additionally, whatever the value of the Claridge may be in a
<PAGE>
<PAGE> 49
sale under the conditions assumed in the appraisal, a sale under distress
conditions would likely result in a substantially lower price. The appraisal
should not be relied upon to give any indication of the amount that may be
realized in a foreclosure on the Mortgage securing the Notes following a de-
fault.
Landauer has been engaged in the real estate appraisal business since
1946, and currently maintains offices in five cities in the United States
and in one city in Australia. Landauer was selected on the basis of its ex-
perience and expertise in evaluating income producing properties, including
hotels and casino hotels.
The service performed by Landauer were performed in accordance with the
Code of Professional Ethics and the Uniform Standards of Professional Ap-
praisal Practice of the Appraisal Institute. Landauer has no financial or
other interest, direct or indirect, present or prospective, in the Claridge
or a personal interest or bias with respect to the Company or any of its af-
filiates. Landauer's employment and compensation were in no way contingent
upon the amount of the valuation or on any action or even resulting from the
analysis of opinions or conclusions in, or the use of the appraisal. In con-
sideration for its services, Landauer has been paid fees totaling approxi-
mately $28,000. A copy of the entire appraisal report has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Certain Transactions and Agreements
On October 31, 1983, the Company and/or CPPI completed the following
transactions and entered into the following agreements. On March 17, 1986,
certain of these agreements were amended and certain new agreements were en-
tered into relating to the construction and financing of an expansion to the
Claridge's facility (the "1986 Facility Expansion"). On June 16, 1989,
with the closing of the restructuring described below, and at various times
thereafter, certain of these agreements were amended further.
* 1983 Placement of Class A Stock and Partnership Interests. The Company
issued 4,500,000 shares of its Class A Stock in a private placement of units
consisting of Class A Stock and limited partnership interests in the Part-
nership. Oppenheimer & Co., Inc. acted as placement agent in that transac-
tion, and certain of its affiliates and employees participated as investors.
Net proceeds after payment of selling commissions and fees (but before pay-
ment of other expenses of the offering) were approximately $5,552,000 to the
Company and approximately $37,149,000 to the Partnership.
* Asset Purchase Agreement. Pursuant to an asset purchase agreement,
CPPI purchased the Casino Assets from DEWNJ, as successor to Claridge Lim-
ited ("Old Claridge") and assumed related liabilities and paid approxi-
mately $5 million. CPPI assumed the collective bargaining contracts and em-
ployment contracts of employees of Old Claridge employed in connection with
the operation of the Claridge other than those providing maintenance and en-
gineering services, which employees were employed by DEWNJ.
* Operating Leases. CPPI leased from the Partnership the Hotel Assets
and subleased from the Partnership the land on which the Claridge is located
for an initial term of 15 years with three 10-year renewal options. Basic
annual rent payable during the initial term of the Operating Lease in equal
monthly installments was $36,055,000 in 1992 and escalates yearly thereafter
up to $41,775,000 in 1997 and $32,531,000 for the nine month period ending
September 30, 1998. If CPPI exercises its option to extend the term of the
Operating Lease, basic rent during the renewal term will be calculated pur-
<PAGE>
<PAGE> 50
suant to a formula, with annual basic rent not to be more than $29,500,000
nor less than $24,000,000 in 1999 and, subsequently, not to be greater than
10% more than the basic rent for the immediately preceding lease year in
each lease year thereafter. See the table under "The Company - Corporate
Structure" for minimum lease payments due under the Operating Lease and the
Expansion Operating Lease. CPPI is also required to pay additional amounts
including certain taxes, insurance and other charges relating to the occu-
pancy of the land and Hotel Assets, certain expenses and debt service relat-
ing to furniture, fixture and equipment replacements and building improve-
ments (collectively, "FF&E Replacements") and the general and
administrative costs of the Partnership. The Partnership will be required
during the entire term of the Operating Lease to provide FF&E Replacements
to CPPI and until September 30, 1998 will be required to provide facility
maintenance and engineering services to CPPI.
Under the Operating Lease, CPPI is required to lend the Partnership any
amounts ("FF&E Loans") necessary to fund the cost of FF&E Replacements,
and if the Partnership's cash flow, after allowance for certain distribu-
tions, is insufficient to provide the facility maintenance and engineering
services required of it, CPPI also is required to lend the Partnership the
funds required to provide those services. Any advances by CPPI for either of
the foregoing will be secured. In the Indenture, the Company will agree to
use not less than $8 million from the net proceeds of this offering to fi-
nance internal improvements to the Claridge which will be funded through
FF&E Loans. In connection therewith, the Operating Lease will be amended to
provide that the principal on those FF&E Loans will be payable at the final
maturity of the Wraparound Mortgage and not in the fourth and fifth years
after funding, as is the case with other FF&E Loans. This arrangement will
help ensure that the granting of the Mortgage securing the Notes will comply
with certain provisions of the Wraparound Mortgage. See "Expandable Wrap-
around Mortgage," below. Under the terms of the existing Operating Lease,
CPPI has an option to purchase, on September 30, 1998 and, if it renews the
Operating Lease, on September 30, 2003, the Hotel Assets and the underlying
land for their fair market value at the time the option is exercised.
Effective with the consummation of the restructuring in June 1989, the
Operating Lease and the Expansion Operating Lease were amended to provide
for the abatement of basic rent payable through 1998, and to provide for the
deferral of up to $15,078,000 of rental payments during the period July 1,
1988 through the beginning of 1992. During the third quarter of 1991, the
maximum deferral of rent was reached. On August 1, 1991, the Operating Lease
and Expansion Operating Lease were amended further to revise the abatement
provisions so that, commencing January 1, 1991, for each calendar year
through 1998, the lease abatements may not exceed $10 million in any one
calendar year, and $38,820,000 in the aggregate. At September 30, 1993,
abatements in the aggregate amount of $12.6 million had been utilized pursu-
ant to that provision and are expected to be fully utilized by the fourth
quarter of 1996. For the years ended December 31, 1991 and 1992 and the nine
months ended September 30, 1993, the amounts of rent abated were $2.4 mil-
lion, $5.7 million and $4.5 million, respectively.
On March 17, 1986, CPPI entered into the Expansion Operating Lease
Agreement with the Partnership under which CPPI leased the 1986 Facility Ex-
pansion for an initial term beginning March 17, 1986 and ending on September
30, 1998 with three 10-year renewal options. Basic annual rent payable dur-
ing the initial term of the Expansion Operating Lease was $3,870,000 in 1986
(prorated based on the day that the 1986 Facility Expansion opened to the
public) and determined based on the cost of the construction of the 1986 Fa-
cility Expansion. Annually thereafter the rental amount will be adjusted
<PAGE>
<PAGE> 51
based on the Consumer Price Index with any increase not to exceed two per-
cent per annum. Basic annual rent for 1992 was $4,358,000. If CPPI exercises
its option to extend the term of the Expansion Operating Lease, basic rent
during the renewal term will be calculated pursuant to a formula, with an-
nual basic rent not to be more than $3 million nor less than $2.5 million
and, subsequently, not to be greater than 10% more than the basic annual
rent for the immediately preceding lease year in each lease year thereafter.
(See Notes 7 and 12 to the Company's consolidated financial statements con-
tained in this Prospectus.)
CPPI also is required under the Expansion Operating Lease to pay as ad-
ditional rent amounts equal to certain expenses and the debt service relat-
ing to FF&E Replacements and building improvements (collectively "Expansion
FF&E Replacements") for the 1986 Facility Expansion. The Partnership will
be required during the entire term of the Expansion Operating Lease to pro-
vide CPPI with Expansion FF&E Replacements and until September 30, 1998,
will be required to provide facility maintenance and engineering services to
CPPI. CPPI will be obligated to lend the Partnership any amounts necessary
to fund the cost of Expansion FF&E Replacements. Any advances by CPPI for
the foregoing will be secured under the Wraparound Mortgage.
The Operating Lease and the Expansion Operating Lease were amended in
1989 and again in 1991 to provide for abatements and deferrals of rental
payments. In addition, those leases will be amended to extend the maturity
of certain FF&E Loans. The Operating Lease and Expansion Operating Lease are
subordinate to the Mortgage that will secure the Notes, and, therefore, the
obligations of the Company and CPPI to pay principal and interest on the
Notes will be senior to the obligations to pay rent to the Partnership under
those leases.
* Expandable Wraparound Mortgage. On October 31, 1983, the Partnership
executed and delivered to CPPI the Wraparound Mortgage, which was subordi-
nate to the First Mortgage and the Purchase Money Second Mortgage. The Pur-
chase Money Second Mortgage, which was due on September 30, 2000, was can-
celled upon satisfaction of certain conditions set forth in an agreement
entered into at the time of the restructuring. By its terms, the Wraparound
Mortgage may secure up to $25 million of additional borrowings by the Part-
nership from CPPI to finance FF&E Replacements and facility maintenance and
engineering shortfalls. The Wraparound Mortgage provides that, so long as
the Partnership is not in default on its obligations under the Wraparound
Mortgage, CPPI is obligated to make payments required under any senior mort-
gage indebtedness (initially, the First Mortgage and the Purchase Money Sec-
ond Mortgage). The indebtedness secured by the Wraparound Mortgage, which
will mature on September 30, 2000, bears interest at an annual rate equal to
14% with certain interest installments that accrued in 1983 through 1988 to-
talling $20 million being deferred until maturity. In addition, the Partner-
ship is required under the Wraparound Mortgage to make payments of principal
and interest in respect of any loans made to finance FF&E Replacements or
facility maintenance or engineering costs as described above. To the extent
those borrowings exceed $25 million in the aggregate outstanding at any
time, they will be secured under separate security agreements and not by the
lien of the Wraparound Mortgage. At September 30, 1993, the principal bal-
ance outstanding secured by the Wraparound Mortgage was $139.1 million.
On March 17, 1986, the First Mortgage was amended and assumed by CPPI.
The amount of the amended and assumed First Mortgage was increased to secure
up to $96.5 million to provide financing for the 1986 Facility Expansion.
Indebtedness secured by the Wraparound Mortgage was increased by an amount
up to $17 million to provide the Partnership with the necessary funding.
<PAGE>
<PAGE> 52
Effective August 28, 1986, the Partnership commenced making level
monthly payments of principal and interest so as to repay on September 30,
1998, in full, the principal balance of this $17 million increase in the
Wraparound Mortgage. The Wraparound Mortgage was amended to require that the
$127 aggregate principal amount secured by it would be repayable in install-
ments during the years 1988 through 1998 in escalating amounts totalling
$80,000,000, with a further balloon payment of $47,000,000 and an additional
payment of $20,000,000 due on September 30, 2000.
The Wraparound Mortgage permits the creation of a new or replacement
first mortgage encumbering the Hotel Assets, such as the Mortgage that will
secure the Notes, provided that certain conditions are met. One of those
conditions is a requirement that at no time will the aggregate principal
amount of the indebtedness secured by the Wraparound Mortgage be less than
the aggregate principal amount of indebtedness secured by an underlying
first mortgage (such as the Mortgage that will secure the Notes). Based on
forecasts prepared by the Company, and assuming that the amendment described
above to the Operating Lease extending the maturity of certain FF&E Loans is
valid, the Company believes that this requirement will be satisfied at all
relevant times while the Notes are outstanding. In order further to ensure
compliance with this requirement, however, the Indenture will contain a pro-
vision requiring immediate mandatory redemption of a portion of the Notes to
the extent necessary at any time to cause the aggregate principal amount of
the Notes following such redemption to be less than the aggregate principal
amount of indebtedness secured by the Wraparound Mortgage. See "Description
of Notes - Mandatory Partial Redemption."
1989 Restructuring
On October 27, 1988, the parties with an economic interest in the Com-
pany and CPPI, including the banks holding the First Mortgage, executed the
Restructuring Agreement with respect to the restructuring of the financial
obligations of the Company and CPPI. Had the Company not entered into the
Restructuring Agreement, CPPI probably would not have been relicensed by the
NJCCC for the license period beginning October 31, 1988 and ending October
31, 1989, and would have had to consider filing for bankruptcy protection.
The Restructuring Agreement by its terms was subject to approval by at least
two-thirds in interest of the limited partners of the Partnership and the
holders of at least two-thirds of the Class A Stock of the Company. These
approvals were received, and the restructuring was consummated, in June
1989. The restructuring resulted in (i) a reorganization of the ownership
interests in the Company; (ii) modifications of the rights and obligations
of certain lenders; (iii) satisfaction and termination of the obligations
and commitments of Webb and DEWNJ under the original structure; (iv) modifi-
cations of the lease agreements between CPPI and the Partnership; and (v)
the forgiveness by Webb of substantial indebtedness. As a result of the re-
structuring, an aggregate of $132 million of indebtedness was forgiven. The
principal amount secured by the First Mortgage was reduced by approximately
$15 million to approximately $74.5 million outstanding at June 16, 1989, and
the Purchase Money Second Mortgage was subsequently cancelled upon satisfac-
tion of certain conditions set forth in an agreement entered into at the
time of the restructuring.
DEWNJ assigned to the First Mortgage lender all right, title and inter-
est of DEWNJ in, to and under the Purchase Money Second Mortgage previously
executed and delivered by the Partnership. CPPI retained the right to re-
quire the lenders under the First Mortgage to cancel and release the Pur-
chase Money Second Mortgage and the obligations secured thereunder upon the
occurrence of one or more specified conditions. CPPI met one of these condi-
<PAGE>
<PAGE> 53
tions, and accordingly, the First Mortgage lender cancelled the Purchase
Money Second Mortgage, including interest which accrued at 14%, and released
the obligations secured thereunder.
At the closing of the restructuring on June 16, 1989, Webb transferred
all of its right, title, and interest to its Claridge land, easements, and
air rights to the Partnership, which had the effect of eliminating the land
lease between Webb and the Partnership and of subjecting that land to a di-
rect lease (rather than a sublease) from the Partnership to CPPI.
Pursuant to amendments to the Operating Lease and Expansion Operating
Lease, the Partnership agreed to deferrals of basic rent. See "Business -
Certain Transactions and Agreements."
In addition, the Partnership loaned $3.6 million to CPPI. That amount
represented substantially all the cash and cash equivalents remaining in the
Partnership as of June 16, 1989 other than funds needed to pay expenses in-
curred through the closing of the restructuring. The Partnership paid to
CPPI $100,000 for the cancellation of an option agreement relating to the
land underlying the Claridge.
The Restructuring Agreement provided for Webb to retain an interest
equal to $20 million plus interest from December 1, 1988 at the rate of 15%
per annum compounded quarterly (the "Contingent Payment") in any proceeds
ultimately recovered from the operations and/or the sale or refinancing of
the Claridge facility in excess of the first mortgage loan and other liabil-
ities. To give effect to this Contingent Payment, the Company and the Part-
nership agreed not to make any distributions to the holders of their equity
securities, whether derived from operations or from sale or refinancing pro-
ceeds, until Webb had received the Contingent Payment. The issuance and sale
of the Notes offered hereby will not cause this payment to Webb to become
due.
In connection with the restructuring, Webb agreed to grant those inves-
tors ("Releasing Investors") from whom Webb had received written releases
from all liabilities rights ("Contingent Payment Rights") to receive cer-
tain amounts to the extent available for application to the Contingent Pay-
ment. Approximately 81% in interest of the investors provided releases and
became Releasing Investors. Payments to Releasing Investors are to be made
in accordance with the following schedule of priorities:
(i) Releasing Investors would receive 81% of the first $10 million
of any net proceeds from operations or a sale or a refinancing of the
Claridge facility pursuant to an agreement executed within five years
("Five-Year Payments") after the Restructuring (i.e., the sum obtained
by multiplying the lesser of $10 million of, or the total of, any Five-
Year Payments by 81%, with the balance of any such funds to be applied
against the Contingent Payment), and
(ii) All distributions of funds other than Five-Year Payments, or of
Five-Year Payments in excess of the $10 million, will be shared by Webb
and Releasing Investors in the following proportions: Releasing Inves-
tors will receive 40.5% (one-half of 81%) of any such excess proceeds,
with the balance of any such funds to be applied against the Contingent
Payment, until the Contingent Payment is paid in full ($20 million plus
accrued interest.)
<PAGE>
<PAGE> 54
On April 2, 1990, Webb transferred its interest in the Contingent Pay-
ment to an irrevocable trust for the benefit of the United Way of Arizona,
and upon such transfer Webb was no longer required to be qualified or li-
censed by the NJCCC. As a result, the Releasing Investors and the Trustee
for the United Way of Arizona share the Contingent Payment granted to Webb.
The existence of these contingent payment rights is likely to make any fu-
ture refinancing or reorganization of the Claridge interests difficult to
achieve, because a substantial portion of the net cash proceeds from any
such transaction remaining after repayment of prior obligations, including
obligations under the Notes, would be required to be paid to the holders of
those contingent rights. The Notes are senior in right of payment to the
contingent rights. The Company expects that on completion of this offering
it will attempt to purchase the Contingent Payment, for less than face
value, from the Trustee for the United Way of Arizona. The Company previ-
ously 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 Company are continuing. See "Use of Proceeds."
Possible Unification Transaction
The Company expects that together with the Partnership, it will seek to
enter into a transaction or series of transactions prior to the year 2000 to
unify the ownership of the Hotel Assets and the Casino Assets. Such a trans-
action would enable the Company to simplify its corporate structure, signif-
icantly increase its cash flow due to the elimination of its lease obliga-
tions, and have greater access to capital. See "Risk Factors - Deferred Tax
Liability." There can be no assurance, however, that any such transaction
will be consummated or that the costs of such a transaction, including the
potential tax liability, if incurred, will not seriously adversely affect
the ability of the Company to make payment on the Notes. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources." The Indenture governing the Notes will
provide that such a transaction may not be consummated unless a financial
test is met based on the ratio of outstanding debt to adjusted EBITDA. See
"Description of Notes - Certain Covenants - Transactions with the
Partnership; Unification Transaction."
Legal Proceedings
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Company or CPPI
is a party or of which any of their property is subject.
<PAGE>
<PAGE> 55
MANAGEMENT
Executive Officers and Directors
The executive officers and directors of the Company and CPPI as of Janu-
ary 18, 1994 are as set forth below. Unless otherwise indicated, these execu-
tive officers and directors hold the same position with the Company and
CPPI.
Name Age Office
---- --- ------
David W. Brenner 57 Chairman, Director
Robert M. Renneisen 47 President, Chief Executive Officer, Director
Raymond A. Spera 37 Executive Vice President of Finance and Corpo-
rate Development, Chief Financial Officer, Trea-
surer, Assistant Secretary
Albert T. Britton 37 Vice President of Operations (Company);
Executive Vice President of Operations (CPPI)
Peter F. Tiano 57 Vice President of Administration (Company);
Executive Vice President of Administration
(CPPI)
Frank A. Bellis, Jr. 40 Vice President, General Counsel, Secretary
Glenn S. Lillie 45 Vice President of Public Affairs
Gloria E. Soto 45 Vice President of Government and Corporate Af-
fairs, Assistant Secretary
Brian Duffey 38 Vice President of Hotel Operations (CPPI)
Arthur Lucchesi 47 Vice President of Management Information Ser-
vices (CPPI)
JoAnn McDermott 50 Vice President of Marketing (CPPI)
Jean I. Abbott 38 Director
Shannon L. Bybee 55 Director
John D. Feehan 64 Director
James W. O'Brien 58 Director
Mark H. Sayers 44 Director
Mr. Brenner has served as a member of the Board of Directors of the Com-
pany since February 1991, and became Chairman of the Board of Directors in
August 1993. He has served as President of the Philadelphia Sports Congress
since January 1987. He was with the accounting firm of Arthur Young & Com-
pany from 1957 to September 1983. He was managing partner of the Philadel-
phia office of Arthur Young from November 1969 until March 1980.
Mr. Renneisen has served as President of the Company since June 1992,
and as Chief Executive Officer since July 1993. Previously, Mr. Renneisen
served as Executive Vice President of the Company from June 1991 to June
1992. He also has served as President of CPPI since January 1991 and as
Chief Operating Officer of CPPI from January 1991 to July 1993. He became
Chief Executive Officer of CPPI in July 1993. Mr. Renneisen served as Execu-
tive Vice President of CPPI, responsible for marketing and later casino op-
erations from February 1988 to January 1991. Prior to joining CPPI, Mr. Ren-
neisen served from January 1987 to December 1987 as Vice President of
Marketing of Treasure Island Hotel and Casino in St. Maarten. From June 1986
to May 1987, he served as President of Renneisen, Kincade & Associates, Inc.
of Las Vegas, Nevada, a marketing consulting firm. He also served as Senior
Vice President of Marketing of the Tropicana Hotel and Casino in Atlantic
City, New Jersey from May 1982 to August 1984.
<PAGE>
<PAGE> 56
Mr. Spera has served as Executive Vice President of the Company since
August 1993. He served as Vice President of the Company from December 1989
to August 1993, and as Assistant Secretary of the Company since December
1991. He also has served as Executive Vice President of Finance and Corpo-
rate Development of CPPI since December 1992. Previously, Mr. Spera served
as Senior Vice President of Finance and Corporate Development of CPPI from
December 1991 to December 1992, and as Vice President of Finance of CPPI
from December 1989 to December 1991. From April 1982 through November 1989,
Mr. Spera has held various accounting positions with CPPI and its corporate
predecessor. Prior to joining the Claridge, he spent three years with the
accounting firm of KPMG Peat Marwick.
Mr. Britton has served as Vice President of the Company since June 1992,
and as Executive Vice President of Operations of CPPI since October 1992. He
also served as Senior Vice President of Operations of CPPI from December
1991 to December 1992, and as Vice President of Casino Operations of CPPI
from June 1990 to December 1991. From July 1981 through June 1990, Mr. Brit-
ton held various positions in both accounting and casino operations with
CPPI and its corporate predecessor.
Mr. Tiano has served as Vice President of the Company since June 1992,
and as Executive Vice President of Administration of CPPI since December
1992. Mr. Tiano also served as Senior Vice President of Administration of
CPPI from December 1991 to December 1992, as Vice President of Administra-
tion of CPPI from September 1986 to December 1991, and as Director of Human
Resources of CPPI from June 1984 to September 1986. Prior to joining the
Claridge, Mr. Tiano was Assistant Director of Human Resources for the Insti-
tute of Scientific Information from 1972 to 1984.
Mr. Bellis has served as Vice President, General Counsel and Secretary
to the Company since August 1993. He also has served as Vice President and
General Counsel of CPPI since September 1992, and as Secretary of CPPI since
August 1993. Previously, from May 1985 to August 1992, Mr. Bellis served as
Corporate Counsel and Secretary to Inductotherm Industries, Inc., a group of
manufacturing companies headquartered in Rancocas, New Jersey. During 1984
and 1985, Mr. Bellis was Associate General Counsel for CPPI. Prior to join-
ing the Claridge in 1984, he was a Deputy Attorney General in the New Jersey
Division of Criminal Justice in the State Attorney General's office.
Mr. Lillie has served as Vice President of the Company since June 1992,
and as Vice President of Public Affairs of CPPI since February 1990. He also
served as Vice President of Marketing Communications of CPPI from April 1985
to February 1990, as Director of Public Relations of CPPI from March 1982 to
December 1983, and as Training Manager of CPPI from November 1980 to March
1982. From January 1983 to April 1985, Mr. Lillie was employed as the Direc-
tor of Public Relations of the Tropicana Hotel and Casino in Atlantic City.
Ms. Soto has served as Vice President of the Company since February
1987, and as Assistant Secretary of the Company since August 1993. She
served as Secretary of the Company from February 1987 to August 1993. Ms.
Soto also has served as Vice President, Legal and Governmental Affairs of
CPPI since December 1991. She previously served as Vice President of Compli-
ance of Legal Affairs of CPPI from November 1986 to December 1991, and as
Director of Regulatory Affairs of CPPI from August 1985 to November 1986.
Before joining CPPI, Ms. Soto served as Associate General Counsel for Har-
rah's in Atlantic City. In 1980, former Governor Byrne appointed Ms. Soto to
the New Jersey State Parole Board, where she served as a member until 1983.
<PAGE>
<PAGE> 57
Mr. Duffey has served as Vice President of Hotel Operations for CPPI
since June 1991. He joined CPPI in September 1985 as Director of Hotel Oper-
ations. In May 1986 he was promoted to Executive Director of Hotel Opera-
tions.
Mr. Lucchesi has served as Vice President of Management Information Ser-
vices of CPPI since July 1990. He previously served as Executive Director of
Management Information Services from September 1987 to July 1990 and Data
Processing Manager from April 1982 to September 1987.
Ms. McDermott has served as Vice President of Marketing of CPPI since
June 1991. She previously served as Executive Director of Marketing from
September 1989 to June 1991. Ms McDermott joined CPPI in 1985 and served in
various management roles in the Marketing Department.
Ms. Abbott has served as a member of the Board of Directors of the Com-
pany since August 1989, and currently serves as a consultant to the Company.
From October 1992 to July 1993, Ms. Abbott was Finance Director for the
United Way of Atlantic County, New Jersey. She was Assistant Professor at
Stockton State College from September 1989 to June 1991. She served as Se-
nior Vice President, Treasurer of the Company from May 1987 to September
1989. Ms. Abbott served as Senior Vice President, Controller of CPPI from
May 1987 to August 1989 and Vice President, Controller of CPPI from October
1985 to May 1987. She served as Director of Finance of CPPI from April 1984
to October 1985. From October 1980 through April 1984, Ms. Abbott held vari-
ous executive positions with CPPI and its corporate predecessor.
Mr. Bybee has served as a member of the Board of Directors of the Com-
pany since July 1988. He presently serves as President and Chief Operating
Officer for United Gaming, Inc., a position he has held since July 1993. Mr.
Bybee also served as the Company's Chairman of the Board from November 1988
to July 1993, and from August 1988 to October 1988. In June 1989, Mr. Bybee
was appointed, subject to NJCCC approval received in August 1989, to serve
as the Chief Executive Officer of the Company and CPPI, a position held
through July 1993. Mr. Bybee has been of counsel in the law firm of Schreck,
Jones, Bernhard, Woloson & Godfrey since 1978. From 1983 to 1987 he served
as Senior Vice President of Golden Nugget, Incorporated, now Mirage Resorts,
Incorporated, which operated the Golden Nugget Casino Hotel in Atlantic
City, New Jersey. From 1981 to 1983 Mr. Bybee served as President of GNAC
Corporation, which operated the Golden Nugget Casino Hotel in Atlantic City,
New Jersey.
Mr. Feehan has served as a member of the Board of Directors of the Com-
pany since April 1990. He served as Chairman of the Board of Atlantic En-
ergy, Incorporated from 1983 until 1989 and Chairman, President and Chief
Executive Officer of Atlantic Energy from 1983 to 1985.
Mr. O'Brien has served as a member of the Board of Directors of the Com-
pany since June 1988. Mr. O'Brien also served as the Company's Acting Chair-
man of the Board from October 20, 1988 to November 22, 1988. Mr. O'Brien
served as Vice President of Human Resources of Genesco, Inc. of Nashville,
Tennessee from July 1987 to August 1993. He served as Vice President of Hu-
man Resources of Southwest Forest Industries of Phoenix, Arizona from Febru-
ary 1986 to May 1987. He served as President of Del E. Webb Hotel Group from
April 1982 to January 1986 and as Chief Executive Officer and a Director of
the Company from October 1983 to January 1986.
<PAGE>
<PAGE> 58
Mr. Sayers has served as a member of the Board of Directors of the Com-
pany since February 1990. Mr. Sayers has served as Vice President of EMES
Management Corporation, a real estate management and development company
based in New York, New York, since February 1976.
Compensation of Directors
Directors who are not employees (other than the Company's Chairman) of
the Company or CPPI receive an annual retainer of $16,000 and a fee of
$1,000 for each meeting of the Board of Directors and each Committee meeting
attended and $250 per hour for telephonic meetings. The Company's Chairman
receives the same meeting fees and an annual retainer of $60,000. Directors
who serve as committee chair's receive an additional $1,000 retainer per
year. Members of the Special Committee, which was discontinued in June 1993,
also received a monthly retainer: Mr. Sayers received a monthly retainer of
$10,000 and Ms. Abbott and Mr. Brenner each received a monthly retainer of
$2,500. The Special Committee members also received a meeting fee of $1,000
for Special Committee meetings attended and $250 per hour for telephonic
meetings.
Compensation of Executive Officers
The following table sets forth the annual and long-term compensation
awarded to, earned by or paid to (i) the Company's Chief Executive Officer,
and (ii) the four most highly compensated executive officers of CPPI for
services rendered to the Company and CPPI during the last three completed
fiscal years ended December 31, 1992. Because certain executive officers of
CPPI, the Company's subsidiary, perform policy-making functions for the Com-
pany, such executive officers are included in the table below.
<PAGE>
<PAGE> 59
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- -------------
NAME AND RESTRICTED ALL OTHER
PRINCIPAL POSITIONS YEAR SALARY($) BONUS STOCK AWARDS (2) COMPENSATION (3)
------------------- ---- --------- ----- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
SHANNON L. BYBEE ................... 1992 $267,693 $95,000 73,963 $3,491
Chief Executive Officer and........ 1991 244,423 - - -
Chairman of the Board (1).......... 1990 205,000 102,500 - -
ROBERT M. RENNEISEN................. 1992 217,693 80,000 60,266 2,369
President and Chief Operating...... 1991 187,308 - - -
Officer (1)........................ 1990 136,785 34,880 - -
ALBERT T. BRITTON................... 1992 126,548 30,878 32,873 2,531
Executive Vice President of 1991 102,166 - - -
Operations......................... 1990 79,594 15,560 - -
RAYMOND A. SPERA.................... 1992 124,625 30,409 32,873 2,492
Executive Vice President of........ 1991 101,823 - - -
Finance and Corporate.............. 1990 81,154 17,245 - -
Development/Chief Financial
Officer .........................
PETER F. TIANO...................... 1992 123,558 30,148 32,873 1,890
Executive Vice President of 1991 104,452 - - -
Administration..................... 1990 88,117 18,725 - -
</TABLE>
- ------------
(1) Mr. Bybee served as the Company's Chief Executive Officer and Chairman
of the Board during the fiscal years covered by the Summary Compensation
Table, and resigned effective July 25, 1993. Mr. Renneisen has served as
the Company's Chief Executive Officer since that date and also continues
to serve as President. Shares held by Mr. Bybee were returned to the
Company upon his resignation.
(2) Number of Shares awarded in 1992 under the Long-Term Management Incen-
tive Plan described under "Management - Compensation Plans." The
shares are subject to vesting provisions under the Plan, and none of the
shares awarded under the Plan have vested. The Company does not believe
the shares have any value.
(3) Amounts reported in this column were paid pursuant to the Retirement
Savings Plan of CPPI described under "Management - Compensation
Plans." In accordance with the transitional provisions applicable to
the rules on disclosure of executive officer and director compensation
adopted by the Securities and Exchange Commission, amounts reported in
this column are excluded for the 1990 and 1991 fiscal years.
Employment Agreements
Until his resignation as the Company's Chief Executive Officer in July
1993, Shannon L. Bybee was a party to an employment agreement with the Com-
pany dated July 1, 1991. That agreement provided for automatic annual re-
newal and increases in annual base salary at the discretion of the Board of
Directors. In February 1993, Mr. Bybee's annual base salary was increased to
$280,000, payable in weekly installments. The agreement also provided that
if Mr. Bybee were to be terminated without cause (as defined), he would be
entitled to receive a termination payment in an amount equal to his current
base annual salary.
<PAGE>
<PAGE> 60
CPPI is a party to an employment agreement with Robert M. Renneisen
dated June 26, 1991. The agreement automatically is renewed annually unless
either party gives notice of termination not less than 90 days in advance of
the renewal date (May 31 of each year). CPPI's Board of Directors may, from
time to time, in their sole discretion, increase the base annual salary. In
February 1993, Mr. Renneisen's annual base salary was increased to $230,000,
payable in weekly installments. In August 1993, Mr. Renneisen's base salary
was increased to $275,000 annually. In the event that Mr. Renneisen is ter-
minated without cause (as defined), he is entitled to receive a termination
payment in an amount equal to his current base annual salary.
CPPI also is a party to employment agreements with Albert T. Britton,
Raymond A. Spera and Peter F. Tiano, each dated November 1, 1992. The agree-
ments automatically are renewed annually unless either party gives notice of
termination not less than 90 days in advance of such renewal date. CPPI's
Board of Directors may, from time to time, in their sole discretion,
increase the base annual salary. In October 1992, Mr. Britton's annual base
salary was increased to $150,000, payable in weekly installments. In Decem-
ber 1992, Mr. Spera's annual base salary was increased to $150,000 and Mr.
Tiano's annual base salary was increased to $130,000, both payable in weekly
installments. In the event that Messrs. Britton, Spera or Tiano are termi-
nated without cause (as defined in the agreements), they are entitled to re-
ceive a termination payment in an amount equal to their current base annual
salary.
Compensation Plans
Senior Officer Medical Plan. CPPI maintains a senior officer medical
plan under which eligibility is limited to officers and certain employees of
CPPI. The plan covers medical expenses of the participant (up to a maximum
of $7,500 per year) not paid by CPPI's medical reimbursement plan which is
available to all employees not covered by collective bargaining agreements.
Retirement Savings Plan. CPPI employees participate in a profit sharing
plan named the "Retirement Savings Plan." This plan is intended to be
qualified under Section 401(k) of the Internal Revenue Code of 1986, as
amended. Under the Retirement Savings Plan, for up to the first 5% of an em-
ployee's salary which is contributed at the direction of the employee from
amounts he or she would otherwise have received as current compensation,
CPPI contributed an amount equal to 40% of the employee's contribution in
1992 and will contribute 45% in 1993. Employees could contribute a maximum
of 15% of their base salary but not in excess of $8,728 for 1992 and may
contribute up to $8,994 in 1993. An employee's account may be paid out, at
the employee's election, in one cash payment or in installments over a ten-
year period.
Management Incentive Plan. Under CPPI's 1992 Management Incentive Plan,
key management personnel were eligible to receive bonuses expressed as a
percentage of base salary, depending upon the achievement of specific finan-
cial objectives that were established at the beginning of the plan year.
CPPI reserves the right to not pay bonuses to participants if operating
earnings do not meet minimum requirements. For the year ended December 31,
1992, $476,000 in bonuses were awarded under this plan. These bonuses were
paid in March 1993.
Other Bonus Compensation. Messrs. Bybee and Renneisen were eligible for
incentive bonuses up to 50% of their respective 1992 salaries. The incentive
bonuses were based on their respective performances and were issued at the
sole discretion of the outside members of the Board of Directors of the Com-
<PAGE>
<PAGE> 61
pany and CPPI. For 1992, Mr. Bybee was awarded a bonus of $95,000 and Mr.
Renneisen was awarded a bonus of $80,000. The bonuses were paid in February
1993. Only Mr. Renneisen is eligible for this incentive bonus in 1993.
Long-Term Management Incentive Plan. In February 1992, the Company's
Board of Directors adopted a Long-Term Management Incentive Plan (the
"Plan") in which certain key employees of the Company and/or CPPI partici-
pate. The Plan provides for the grant of the 273,938 shares of the Company's
Class A Stock, which were held as treasury shares of the Company ("Treasury
Shares"), 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, generally
equal to the equity of the Claridge entities, 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 ter-
mination of employment of any participant in the Plan within one year after
any change of control of the Company occurs, as defined in the Plan, or (c)
if the Company pays dividends to its stockholders, if the Partnership makes
distributions to its partners, or if the Company or the Partnership makes
certain distributions under the Restructuring Agreement. A participant is
entitled to vote all awarded Treasury Shares whether or not such shares are
vested.
Set forth in the table below is certain information regarding the Equity
Units granted in 1992 under the Plan to the named executive officers of the
Company and/or CPPI:
LONG-TERM MANAGEMENT INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
OR OTHER NON-STOCK PRICE-BASED PLANS
NUMBER PERIOD UNTIL ----------------------------------------
OF UNITS MATURATION OR
NAME AWARDED PAYOUT THRESHOLD ($) TARGET ($) MAXIMUM ($)
- ---- -------- ------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
SHANNON L. BYBEE (1)(2) 27 Uncertain (3) 0 (4) 648,000 (5) - (6)
ROBERT M. RENNEISEN (1) 22 Uncertain (3) 0 (4) 528,000 (5) - (6)
ALBERT T. BRITTON 12 Uncertain (3) 0 (4) 288,000 (5) - (6)
RAYMOND A. SPERA 12 Uncertain (3) 0 (4) 288,000 (5) - (6)
PETER F. TIANO 12 Uncertain (3) 0 (4) 288,000 (5) - (6)
</TABLE>
- ------------
(1) Mr. Bybee served as the Company's Chief Executive Officer and Chairman
of the Board during the fiscal years covered by the Summary Compensation
Table, and resigned effective July 25, 1993. Mr. Renneisen has served as
the Company's Chief Executive Officer since that date and also continues
to serve as President.
(2) The Units held by Mr. Bybee were returned to the Company upon his resig-
nation.
(3) As described above, payment with respect to the Equity Units under the
Plan will only be made under certain limited circumstances. The Company
is unable to determine when or if these circumstances will occur.
<PAGE>
<PAGE> 62
(4) "Threshold" refers to the minimum amount payable under the Plan. Be-
cause any payment with respect to the Equity Units under the Plan is
largely dependent on the value of certain transactions involving the
Company that may occur in the future, as to which value there can be no
assurance, the minimum potential payout under the plan is zero.
(5) "Target" refers to the amount payable if specified performance targets
are reached. The amount included under this column is an estimate of the
amount that would be payable under the Plan if the transactions pursuant
to which payouts are to be made were to occur at September 30, 1993 and
are based on an estimate by the management of the Company of the fair
market value of the Company. There can be no assurance that, if and when
such a transaction occurs, the value of the Company will not be greater
than or less than such estimate.
(6) "Maximum" refers to the maximum payout possible under the Plan. The
Plan does not set a dollar limit on the maximum amount that may be paid
under the Plan. The amount that may be paid out under the Plan is
largely dependent on the value of certain transactions involving the
Company, which may or may not occur at a future date for an as yet un-
specified amount. Accordingly, no reliable estimate of a maximum amount
can be made.
<PAGE>
<PAGE> 63
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of September 30, 1993
based on information obtained from the persons named below, with respect to
the beneficial ownership of the Company's common stock by all persons known
by the Company to be the beneficial owners of more than 5% of its outstand-
ing common stock, each director of the Company, by all executive officers of
the Company and/or CPPI named in the Summary Compensation Table, and by all
officers and directors of the Company and/or CPPI as a group. All of the
shares set forth below are owned beneficially pursuant to the Long-Term Man-
agement Incentive Plan described under "Management - Compensation Plans."
Issuance of these shares is subject to certain vesting provisions contained
in that plan, and as of the date hereof none of such shares have vested. Re-
cipients under that plan are permitted, however, to vote all shares granted
whether or not vesting has occurred. Except as indicated in the footnotes to
the table, the persons named below have sole voting and investment power
with respect to all shares of common stock beneficially owned by them.
<TABLE>
<CAPTION>
NAME OF NUMBER OF
BENEFICIAL OWNER TITLE SHARES OWNED PERCENT OF CLASS
---------------- ----- ------------ -----------------
<S> <C> <C> <C>
Shannon L. Bybee (1)(2) Former Chairman of the 0 0 %
Board and Chief Executive
Officer
Robert M. Renneisen (1) President and Chief 60,266 1.20
Executive
Officer
Albert T. Britton Executive Vice President 32,873 0.65
of Operations
Raymond A. Spera Executive Vice President 32,873 0.65
of Finance and Corporate
Development/
Chief Financial Officer
Peter F. Tiano Executive Vice President 32,873 0.65
of Administration
Directors and officers as a group (9 persons) 199,975 3.95%
</TABLE>
- --------------------
(1) Mr. Bybee served as the Company's Chief Executive Officer and Chairman
of the Board during the fiscal years covered by the Summary Compensation
Table, and resigned effective July 25, 1993. Mr. Renneisen has served as
the Company's Chief Executive Officer since that date and continues to
serve as President.
(2) Shares previously held by Mr. Bybee were returned to the Company upon
his resignation.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The existing relationship among the Company, CPPI, the Partnership and
Webb is the result of a complex series of transactions described in this
Prospectus under "The Company - Corporate Structure" and "Business - Cer-
tain Transactions and Agreements." In addition, over 93% of the Company's
common stock is owned by persons who also own limited partnership interests
in the Partnership.
<PAGE>
<PAGE> 64
DESCRIPTION OF NOTES
General
The Notes will be issued pursuant to an Indenture (the "Indenture")
among the Company, CPPI, and IBJ Schroder Bank & Trust Company, a banking
corporation organized and existing under the laws of the State of New York,
as trustee (the "Trustee"). The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Notes
are subject to all such terms, and holders of Notes are referred to the In-
denture and the Trust Indenture Act for a statement thereof. The following
summary of certain provisions of the Indenture does not purport to be com-
plete and is qualified in its entirety by reference to the Indenture, in-
cluding the definitions therein of certain terms used below. A copy of the
proposed form of the Indenture has been filed as an exhibit to the Registra-
tion Statement of which this Prospectus is a part. The definitions of cer-
tain terms used in the following summary are set forth below under "Certain
Definitions."
The Notes will rank senior in right of payment to all subordinated In-
debtedness of the Company. The Notes will rank pari passu in right of pay-
ment with all senior Indebtedness of the Company. The Notes will be secured
by (i) the Mortgage which will be a first lien on the Claridge's Hotel As-
sets and (ii) a pledge granted by the Company of all the outstanding shares
of capital stock of CPPI. Payment of principal and interest on the Notes
will be unconditionally guaranteed by CPPI. CPPI's obligations under its
guarantee will be secured by a collateral assignment of the Wraparound Mort-
gage (which encumbers the Hotel Assets) and by a lien on the Claridge's gam-
ing and other assets, which lien will be subordinated to liens that may be
placed on those gaming and other assets to secure any future working capital
credit facility in an amount of up to $7.5 million. If the Existing Hotel
Casino is expanded (including by the addition of a parking facility), the
Notes will be additionally secured by a lien on the expansion facilities. In
the case of the Contemplated Expansion, the Notes will be secured by a mort-
gage representing a first priority lien. In the case of a Project Expansion,
the Notes will be secured by a lien that is either senior to or pari passu with
the lien securing any indebtedness incurred with respect to such expansion. The
collateral for the Notes will not include certain gaming equipment that has
been financed by third parties and is pledged to those parties, nor will it
include certain other assets that may be acquired in the future by the
Company or any of its subsidiaries. The Partnership is not an obligor on the
Notes. In the event of a Default under the Indenture, recourse to the
Partnership will be limited to the Collateral in respect of which a Lien
is granted under the Mortgage and the other Related Documents to which the
Partnership is a party.
The Company is a holding company that operates the Claridge through CPPI
and expects to operate any additional future business operations through
CPPI or other subsidiaries. Dividends and other payments from CPPI and any
other subsidiaries are expected to be the Company's only sources of cash to
pay operating expenses, and principal of and interest on debt. The ability
of the subsidiaries to make payments to the Company may, under certain cir-
cumstances, be subject to regulatory approval by the NJCCC in the event that
such payment would affect the "financial stability" of such subsidiary.
Under New Jersey gaming law a company's "financial stability" is evaluated
pursuant to certain financial standards, including, (i) cash availability to
pay gaming wagers and gaming and nongaming expenditures; (ii) ability to
<PAGE>
<PAGE> 65
make capital and maintenance expenditures in a timely manner; and (iii)
ability to provide for the servicing of debt. Any subsidiaries operating in
the future in other states probably will be subject to similar restrictions.
Principal, Maturity and Interest
The Notes are limited in aggregate principal amount to $85 million and
will mature on ,
2002. Interest on the Notes will accrue at the rate of % per annum and
will be payable semi-annually on and , commencing on , 1994,
to holders of record on the immediately preceding and . In-
terest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of original
issuance. Interest will be computed on the basis of a 360-day year comprised
of twelve 30-day months. The Notes will be payable both as to principal and
interest at the office or agency of the Company maintained for such purpose
within the City and State of New York or, at the option of the Company, pay-
ment of interest may be made by check mailed to the holders of Notes at
their respective addresses set forth in the register of holders of Notes.
Until otherwise designated by the Company, the Company's office or agency in
New York will be the office of the Trustee maintained for such purpose. The
Notes will be issued in registered form, without coupons, and in denomina-
tions of $1,000 and integral multiples thereof.
Optional Redemption
The Notes are not redeemable at the Company's option prior to ,
1998 except as may be required by a Gaming Authority as provided below. The
Notes will be subject to redemption at the option of the Company, in whole
or in part, upon not less than 30 nor more than 60 days' notice, at the re-
demption prices (expressed as percentages of principal amount) set forth be-
low, plus accrued and unpaid interest thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on of the
years indicated below:
Year Percentage
---- ----------
1998 ............... %
1999 ............... %
2000 ............... %
2001 and thereafter 100%
If any Gaming Authority requires that a holder or beneficial owner of
Notes must be licensed, qualified or found suitable under any applicable
gaming law and the holder or beneficial owner fails to apply for a license,
qualification or a finding of suitability within 30 days after being
requested to do so by the Gaming Authority, or if such holder or such bene-
ficial owner is not so licensed, qualified or found suitable, the Company
shall have the right, at its option, (i) to require such holder or benefi-
cial owner to dispose of such holder's or beneficial owner's Notes within 30
days of receipt of such notice of such finding by the applicable Gaming Au-
thority or such earlier date as may be ordered by such Gaming Authority or
(ii) to call for the redemption of the Notes of such holder or beneficial
owner at the lesser of (x) the principal amount thereof, (y) the price at
which such holder or beneficial owner acquired the Notes, together with ac-
crued interest to the earlier of the date of redemption or the date of the
finding of unsuitability by such Gaming Authority, which may be less than 30
days following the notice or redemption, if so ordered by such Gaming Au-
thority or (z) the market value of the Notes. The Company is required under
<PAGE>
<PAGE> 66
the Indenture to notify the Trustee in writing of any such redemption as
soon as practicable. Any holder or beneficial owner of Notes applying for a
license, qualification or a finding of suitability must pay all costs of the
licensure or investigation for such qualification or finding of suitability.
Mandatory Redemption
The Indenture will require that at all times while the Notes are out-
standing, the Company will monitor the outstanding principal balance of in-
debtedness secured by the Wraparound Mortgage. If at any time the Company
determines that principal payments scheduled to be made on the Wraparound
Mortgage (other than principal payments scheduled to be made at the final
maturity of the Wraparound Mortgage) during the 180-day period immediately
following that determination will cause the aggregate principal amount of
the indebtedness secured by the Wraparound Mortgage to be less than the ag-
gregate principal amount of the Notes, then the Company promptly will call
for redemption a portion of the Notes which, after giving effect to the re-
demption and the principal payments (other than principal payments scheduled
to be made at the final maturity of the Wraparound Mortgage) scheduled to be
made during the 180-day period on the indebtedness secured by the Wraparound
Mortgage, will cause the aggregate principal amount of the Notes to be less
than the aggregate principal amount of indebtedness secured by the
Wraparound Mortgage. Any Notes redeemed in this way will be selected by lot.
The redemption price will be 100% of principal amount, plus accrued and un-
paid interest to the date of redemption, plus (i) if so redeemed prior to
, 1998, the Applicable Premium or (ii) if so redeemed on or after
, 1998 the premium, if any, that would otherwise be payable in the
case of an optional redemption by the Company on such date. The maximum ag-
gregate principal amount of Notes that may be redeemed pursuant to this pro-
vision is $10 million. To minimize the possibility of mandatory redemption,
the Indenture will require that the Company and its subsidiaries not accept
any voluntary prepayment under the Wraparound Mortgage. In addition, the In-
denture will require that the Company use not less than $8 million from the
net proceeds of this offering to finance internal improvements to the Cla-
ridge which will be funded through FF&E Loans. In connection therewith, the
Operating Lease will be amended to provide that the principal on those FF&E
Loans will be payable at final maturity of the Wraparound Mortgage rather
than in the forth and fifth years after funding, as in the case with the ex-
isting FF&E Loans. See "Business - Certain Transactions and Agreements."
Based on internal forecasts prepared by the Company's management of amounts
expected to be outstanding under the Wraparound Mortgage and certain other
assumptions, the Company does not expect that mandatory redemption of this
type will be required. See "Business - Certain Transactions and
Agreements."
Except as provided above and as set forth below under "Annual Excess
Cash Tender" and "Redemption or Repurchase at the Option of Holders," the
Company is not required to make mandatory redemption or sinking fund payment
with respect to the Notes.
Selection and Notice
If less than all of the Notes are to be redeemed at any time, selection
of Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata ba-
sis, by lot or by such method as the Trustee shall deem fair and appropri-
ate, provided that no Notes of $1,000 or less shall be redeemed in part. No-
tice of redemption shall be mailed by first class mail at least 30 but not
<PAGE>
<PAGE> 67
more than 60 days before the redemption date to each holder of Notes to be
redeemed at its registered address. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in prin-
cipal amount equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon cancellation of the original Note. On and
after the redemption date, interest ceases to accrue on Notes or portions of
them called for redemption.
Annual Excess Cash Tender
The Indenture will require that beginning in 1995 and annually thereaf-
ter, within 30 days after the publication of the Company's audited financial
statements for the immediately preceding fiscal year, the Company will make
an offer (an "Excess Cash Offer") to all holders of Notes to purchase the
maximum principal amount of Notes that may be purchased out of an amount
equal to 50% of the Company's Excess Cash from the immediately preceding
fiscal year (the "Available Excess Funds"), at an offer price in cash in
an amount equal to 100% of the outstanding principal amount thereof in ac-
cordance with the procedures set forth in the Indenture. To the extent that
the aggregate amount of Notes tendered pursuant to an Excess Cash Offer is
less than the Available Excess Funds, the Company may use the remaining
amount for general corporate purposes. If the aggregate principal amount of
Notes tendered by holders in response to an Excess Cash Offer exceeds the
amount of Available Excess Funds, the Trustee will select the Notes to be
purchased on a pro rata basis. No Excess Cash Offer will be required to be
made to the extent the Excess Cash for the immediately preceding fiscal year
is less than $10 million (i.e., any Excess Cash Offer will be for at least
$5 million principal amount of Notes). Excess Cash from any year will not be
carried forward or be used to compute Excess Cash in any subsequent fiscal
year.
"Excess Cash" means, with respect to any year, the Company's Adjusted
EBITDA for that year, less the aggregate of the following items, to the ex-
tent paid that year: (i) federal and state income taxes; (ii) cash interest;
(iii) Capital Expenditures; (iv) Reinvestment Obligation Payments;
and (v) the net amount of any increase (or decrease) during that year in
the amount of the Company's working capital, all as would be shown on the
Company's financial statements.
Redemption or Repurchase at the Option of Holders
Change of Control
Upon the occurrence of a Change of Control, each holder of Notes shall
have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such holder's Notes pursuant
to the offer described below (the "Change of Control Offer") at a purchase
price equal to 101% of the aggregate principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase (the "Change of Con-
trol Price"). Within 30 days following any Change of Control, the Company
shall mail a notice to each holder stating: (i) that the Change of Control
Offer is being made pursuant to the covenant entitled "Change of Control"
and that all Notes tendered will be accepted for payment; (ii) the purchase
price and the purchase date (the "Purchase Date"), which shall be no ear-
lier than 30 days nor later than 40 days from the date such notice is mailed
(unless a longer period is required by law); (iii) that any Note not ten-
dered will continue to accrue interest; (iv) that, unless the Company de-
faults in the payment of the Change of Control Price, all Notes accepted for
<PAGE>
<PAGE> 68
payment pursuant to the Change of Control Offer shall cease to accrue inter-
est after the Purchase Date; (v) that holders electing to have any Notes
purchased pursuant to a Change of Control Offer will be required to surren-
der the Notes, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third business
day preceding the Purchase Date; (vi) that holders will be entitled to with-
draw their election if the Payment Agent receives, not later than the close
of business on the second business day preceding the Purchase Date, a tele-
gram, telex, facsimile transmission or letter setting forth the name of the
holder, the principal amount of Notes delivered for purchase, and a state-
ment that such holder is withdrawing his election to have such Notes pur-
chased; and (vii) that holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased por-
tion of the Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof.
The Indenture requires that on the Purchase Date, the Company will, to
the extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer; (ii) deposit with the Paying Agent
an amount equal to the Change of Control Price in respect of all Notes or
portions thereof so tendered; and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted together with an Officers' Certificate
stating the Notes or portions thereof tendered to the Company. The Paying
Agent shall promptly mail to each holder of Notes so accepted payment in an
amount equal to the purchase price for such Notes, and the Trustee shall
promptly authenticate and mail to each holder a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered, if any;
provided, that each such new Note shall be in a principal amount of $1,000
or an integral multiple thereof. The Company will publicly announce the re-
sults of the Change of Control Offer on or as soon as practicable after the
Purchase Date.
Due to its highly leveraged nature, the Company may not have adequate
financial resources to purchase Notes tendered pursuant to a Change of Con-
trol Offer and there can be no assurance that the Company would be able to
obtain such resources through a refinancing of the Notes to be repurchased
or otherwise. The inability of the Company to repurchase Notes tendered upon
a Change of Control would constitute an Event of Default under the Inden-
ture.
Except as described above with respect to a Change of Control, the In-
denture does not contain any other "event risk" provisions that permit the
holders of Notes to require that the Company repurchase or redeem the Notes
in the event of a takeover, recapitalization or similar restructuring.
The Change of Control purchase feature of the Notes may in certain cir-
cumstances make more difficult or discourage a takeover of the Company, and,
thus, the removal of incumbent management. The Change of Control purchase
feature, however, is not the result of management's knowledge of any spe-
cific effort to accumulate the Company's stock or to obtain control of the
Company by means of a merger, tender offer, solicitation or otherwise, or
part of a plan by management to adopt a series of anti-takeover provisions.
Instead, the Change of Control purchase feature is a result of negotiations
between the Company and the Underwriters. Management has no present inten-
tion to engage in a transaction involving a Change of Control, although it
is possible that the Company would decide to do so in the future. Subject to
the limitations discussed below, the Company could, in the future, enter
into certain transactions including acquisitions, refinancings or other re-
<PAGE>
<PAGE> 69
capitalizations, that would not constitute a Change of Control under the In-
denture, but that could increase the amount of Indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit rat-
ings. The Company intends to comply with all applicable laws, including
without limitation Section 14(e) of the Exchange Act and the rules thereun-
der, in the event that it is required to offer to repurchase any Notes upon
a Change of Control.
The Company and the Trustee may not waive or modify any rights of the
holders of Notes upon a Change of Control without the consent of the holders
of the principal amount of the then outstanding Notes required by the Inden-
ture.
For these purposes, "Change of Control" is defined in the Indenture to
mean the occurrence of any of the following events: (i) the sale, lease,
transfer, conveyance or other disposition of all or substantially all of the
assets of (x) the Company and its Subsidiaries or (y) the Partnership; (ii)
the liquidation or dissolution of the Company or CPPI; (iii) the Company be-
comes aware of (by way of a report or any other filing pursuant to Section
13(d) of the Exchange Act, proxy vote, written notice or otherwise) the ac-
quisition by any "person" or related group (within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provi-
sions to either of the foregoing, including any "group" acting for the
purpose of acquiring, holding or disposing of securities within the meaning
of Rule 13d-5(b)(1) under the Exchange Act), other than the Company's Exist-
ing Management, in a single transaction or in a related series of transac-
tions, by way of merger, consolidation or other business combination or pur-
chase of beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act, or any successor provision) of 50% or more of the total voting
power entitled to vote in the election of the Board of Directors of the Com-
pany or such other person surviving the transaction; (iv) during any period
of two consecutive years, individuals who at the beginning of such period
constituted the Company's Board of Directors (together with any new direc-
tors whose election or appointment by such board or whose nomination for
election by the shareholders of the Company was approved by a vote of a ma-
jority of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority of
the Company's Board of Directors then in office; (v) the Company fails to
own, directly or indirectly, 100% of the capital stock of CPPI or 100% of
the capital stock of any other person holding a gaming license to operate
the Existing Hotel Casino; or (vi) the ownership of the Claridge by any en-
tity other than the Partnership, the Company, CPPI or any successor entity
or Subsidiary or Affiliate of any of them; provided, however, that a Unifi-
cation Transaction effected in accordance with the terms of the Indenture
shall not constitute a Change of Control. See "Certain Covenants - Transac-
tions with the Partnership; Unification Transaction."
"Existing Management" is defined to mean the persons who at the Issue
Date are directors or executive officers of the Company.
The definition of Change of Control includes a phrase relating to the
sale, lease, transfer, conveyance or other disposition of "all or substan-
tially all" of the Company's assets. Although there is a developing body of
case law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under applicable law. Accordingly, the
ability of a holder of Notes to require the Company to repurchase such Notes
<PAGE>
<PAGE> 70
as a result of a sale, lease, transfer, conveyance or other disposition of
less than all of the assets of the Company and its Subsidiaries to another
person may be uncertain.
There are currently no liabilities that would need to be repaid or con-
sents or waivers that would need to be obtained prior to or concurrently
with the Company's repurchase of the Notes upon a Change of Control. How-
ever, it is possible that terms of the Company's future senior indebtedness
will prohibit or restrict the Company's repurchase of the Notes upon a
Change of Control.
Asset Sales
The Indenture will provide that the Company will not, and will not per-
mit any of its Restricted Subsidiaries to, cause, make or suffer to exist
any Asset Sale (other than to the Company or any wholly owned Restricted
Subsidiary) unless (i) no Default exists or is continuing immediately prior
to and after giving effect to such Asset Sale; (ii) the Company (or the Sub-
sidiary, as the case may be) receives consideration at the time of each such
Asset Sale at least equal to the fair market value (evidenced by a resolu-
tion of the Board of Directors set forth in an Officers' Certificate deliv-
ered to the Trustee) of the assets or equity securities sold or otherwise
disposed of; and (iii) at least 90% of the consideration therefor received
by the Company or such Subsidiary is in the form of cash; provided, however,
that the amount of (x) any liabilities (as shown of the Company's or such
Subsidiary's most recent balance sheet or in the notes thereto), of the Com-
pany or any Subsidiary (other than liabilities that are by their terms sub-
ordinated to the Notes or any Guaranty thereof) that are assumed by the
transferee of any such assets and (y) any notes or other obligations
received by the Company or any such Subsidiary from such transferee that are
immediately converted by the Company or such Subsidiary into cash, shall be
deemed to be cash (to the extent of the cash received) for purposes of this
provision.
"Asset Sale" means (i) any sale, lease, transfer, conveyance or other
disposition of any assets (including by way of a sale-and-leaseback) other
than the sale or transfer of inventory or goods held for sale in the ordi-
nary course of business and other than any sale, lease, transfer, conveyance
or other disposition of assets, goods, inventory or equipment that have be-
come obsolete (provided that the term "Asset Sale" shall not include any
transaction which is governed by the provisions of the Indenture described
under the captions "Change of Control" or "Merger, Consolidation or Sale
of Assets"); (ii) any issuance, sale, lease, transfer, conveyance or other
disposition of any equity securities of any of its Subsidiaries (other than
a Non-Recourse Subsidiary) to any person other than the Company or any
wholly owned Subsidiary (other than a Non-Recourse Subsidiary); or (iii) any
Event of Loss, in each case, whether in a single transaction or a series of
related transactions, that in the case of each of clauses (i), (ii) and
(iii), (a) involves assets having a fair market value in excess of $3 mil-
lion or (b) results in Net Proceeds in excess of $3 million.
"Event of Loss" means, with respect to any property or asset (tangible
or intangible, real or personal), any of the following: (i) any loss, de-
struction or damage of such property or asset; (ii) any institution of any
proceedings for the condemnation or seizure of such property or asset or for
the exercise of any right of eminent domain or navigational servitude; or
(iii) any actual condemnation, seizure or taking, by exercise of the power
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<PAGE> 71
of eminent domain or otherwise, of such property or asset, or confiscation
of such property or asset or the requisition of the use of such property or
assets.
Within 360 days after any Asset Sale, the Company (or the Subsidiary, as
the case may be) may reinvest or cause to be reinvested the Net Proceeds
from such Asset Sale in another asset or business in a Gaming Related Busi-
ness, provided, that if there is an Asset Sale with respect to any Collat-
eral and the Net Proceeds from such Asset Sale (either individually or when
combined with the Excess Proceeds from Asset Sales of Collateral during such
360-day period) exceeds $3 million, then such Net Proceeds shall be held in a
segregated account (which may, at the Company's option, be invested in Mar-
ketable Securities) which will be pledged to the Trustee as collateral agent
to secure the Company's obligations under the Notes or the Indenture or the
obligations of the Guarantors under each of their respective Subsidiary
Guaranties or the Indenture until such Net Proceeds are either reinvested or
applied to redeem the Notes as described below; provided, further that if
there is an Asset Sale with respect to any Collateral and the Net Proceeds
from such Asset Sale are reinvested, such Net Proceeds shall only be rein-
vested in assets defined as Collateral under the Related Documents and the
assets acquired by such reinvestment will be pledged to the Trustee to se-
cure the Company's obligations under the Notes or the Indenture or the obli-
gations of the Guarantors under each of their respective Subsidiary Guaran-
ties or the Indenture. Any Net Proceeds from any Asset Sale that are not
reinvested as provided in the preceding sentence constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $10 mil-
lion, the Company will make an offer (an "Asset Sale Offer") (i) to all
holders of Notes to purchase the maximum principal amount of Notes that may
be purchased out of the Excess Proceeds or (ii) at the Company's option, to
redeem outstanding Notes and pari passu Indebtedness, on a pro rata basis in
relation to the outstanding aggregate principal amount of such Indebtedness
and the aggregate principal amount of the Notes then outstanding, in each
case at an offer price in cash in an amount equal to 100% of the outstanding
principal amount thereof plus accrued and unpaid interest, if any, to the
date fixed for the closing of such offer, in accordance with the procedures
set forth in the Indenture. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer to purchase is less than the Excess
Proceeds, the Company may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes surrendered by holders
thereof exceeds the amount of Excess Proceeds, the Trustee will select the
Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds will be reset at zero.
Notwithstanding the permitted reinvestment referred to in the first sen-
tence of the immediately preceding paragraph, in the case of an Asset Sale
involving an Event of Loss with respect to the Existing Hotel Casino in ex-
cess of $10 million, the Company shall make an Asset Sale Offer to all hold-
ers of Notes to purchase the maximum principal amount of Notes that may be
purchased out of the Net Proceeds from such Asset Sale, provided, however,
that the Company may reinvest the Net Proceeds from such Asset Sale in a
Gaming Related Business in Atlantic City, New Jersey, so long as the Company
delivers or causes to be delivered to the Trustee a written opinion from a
reputable architect and an Officers' Certificate to the effect that an oper-
ating casino containing at least 80% of the slot machines and 80% of the ta-
ble games which existed immediately prior to the Event of Loss could be op-
erational through the reinvestment of the Net Proceeds from such Event of
Loss and such reinvestment will be completed within two years of such Asset
Sale.
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<PAGE> 72
Certain Covenants
Restricted Payments
The Indenture will provide that the Company will not, and will not per-
mit any of its Restricted Subsidiaries to, directly or indirectly: (i) de-
clare or pay any dividend or make any distribution on account of the Com-
pany's or any of its Restricted Subsidiaries' Equity Interests (other than
dividends or distributions payable in Equity Interests (other than Disquali-
fied Stock) of the Company or such Restricted Subsidiary, dividends or dis-
tributions payable to the Company or any wholly owned Restricted Subsidiary
of the Company, or dividends by a Subsidiary on its common stock if such
dividends are paid pro rata to all holders of such common stock); (ii) pur-
chase, redeem or otherwise acquire or retire for value any Equity Interests
of the Company or any Subsidiary or other Affiliate of the Company (other
than any such Equity Interests owned by the Company or any wholly owned Re-
stricted Subsidiary of the Company); (iii) voluntarily purchase, redeem, de-
fease or otherwise acquire or retire for value any Indebtedness that is pari
passu with or subordinated to the Notes (other than Indebtedness incurred
under clauses (i), (ii), (iii), (v) and (viii) of the exceptions to the
"Incurrence of Indebtedness" covenant); or (iv) make any Restricted In-
vestment (all such payments and other actions set forth in clauses (i)
through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be con-
tinuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1 of additional Indebtedness pursuant
to the Adjusted Fixed Charge Coverage Ratio test set forth in the cove-
nant entitled "Incurrence of Indebtedness;" and
(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Subsidiaries after
the date of the Indenture (including Restricted Payments permitted by
clauses (i) and (ii) of the next succeeding paragraph but excluding any
Restricted Payments permitted by clauses (iii)-(ix) of the next succeed-
ing paragraph), is less than the amount which is equal to (without dupli-
cation): (w) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from January 1, 1994 to the end
of the Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted Payment
(or, if such Consolidated Net Income for such period is a deficit, less
100% of such deficit), plus (x) 100% of the aggregate net cash proceeds
received by the Company from the issuance or sale of Equity Interests of
the Company (other than Equity Interests sold to a Subsidiary of the Com-
pany and other than Disqualified Stock) since the Issue Date, plus (y) Ex-
cess Non-Recourse Subsidiary Cash Proceeds received after the Issue Date,
less (z) Unification Transaction Payments. For the purposes of this
paragraph (c), Consolidated Net Income shall exclude any extraordinary
gain (but not extraordinary loss), together with any related provisions
for taxes on such extraordinary gain (but not extraordinary loss), real-
ized in connection with any Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions).
<PAGE>
<PAGE> 73
The foregoing provisions will not prohibit (i) the payment of any divi-
dend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement or other acquisition
of any Equity Interests of the Company in exchange for, or out of the pro-
ceeds of, the substantially concurrent sale (other than to a Subsidiary of
the Company) of other Equity Interests of the Company (other than any Dis-
qualified Stock); (iii) Investments by the Company or any Subsidiary in an
amount not to exceed $10 million in the aggregate (measured as of the date
such Investments were made) in any Non-Recourse Subsidiaries engaged in a
Gaming Related Business; (iv) Investments by the Company or any Subsidiary
in any Non-Recourse Subsidiary engaged in a Gaming Related Business in an
amount (measured as of the date such Investments were made) not to exceed in
the aggregate 100% of all cash received by the Company or any wholly owned
Subsidiary (other than a Non-Recourse Subsidiary) from any Non-Recourse Sub-
sidiary (other than cash which is or may be required to be repaid or
returned to such Non-Recourse Subsidiary) up to $10 million in the aggregate
and thereafter 50% of all cash received by the Company or any wholly owned
Subsidiary (other than a Non-Recourse Subsidiary) from any Non-Recourse Sub-
sidiary (other than cash which is or may be required to be repaid or
returned to such Non-Recourse Subsidiary); (v) the purchase, redemption, de-
feasance, or other acquisition or retirement for value of any pari passu In-
debtedness with the substantially concurrent purchase, redemption, defeas-
ance, or other acquisition or retirement for value of the Notes (on a pro
rata basis in relation to the outstanding aggregate principal amount of such
Indebtedness and the aggregate principal amount of the outstanding Notes);
(vi) any voluntary purchase, redemption, defeasance or other acquisition or
retirement for value of any pari passu Indebtedness with the proceeds of the
substantially concurrent issuance of Refinancing Indebtedness relating to
such pari passu Indebtedness in accordance with the "Incurrence of Indebt-
edness" covenant; (vii) any purchase, redemption, defeasance or other ac-
quisition or retirement for value of any pari passu Indebtedness (other than
pursuant to clause (v) or (vi) above) up to $10 million in aggregate princi-
pal amount; (viii) any Unification Transaction otherwise permitted under the
Indenture; and (ix) the purchase of the Contingent Payment for aggregate
consideration (excluding consideration in the form of Equity Interests of
the Company other than Disqualified Stock) not to exceed $10 million; pro-
vided, however, that (A) with respect to clauses (iii)-(ix) above, immedi-
ately after giving effect to the transaction contemplated therein, no De-
fault or Event of Default shall have occurred and be continuing or would
occur as a consequence thereof and (B) with respect to clauses (iv)-(vii)
above at the time of such transaction and after giving pro forma effect
thereto as if such transaction had been entered into by the Company at the
beginning of the applicable four-quarter period, the Company would have been
permitted to incur at least $1 of additional Indebtedness pursuant to the
Adjusted Fixed Charge Coverage Ratio test set forth in the first paragraph
of the "Incurrence of Indebtedness" covenant.
Any Guaranty that is an Investment in a Non-Recourse Subsidiary shall
cease to be deemed an Investment (and shall be deemed to have not been made)
if and to the extent that the Guaranty is unconditionally released without
payment of the obligations guarantied by the Company or any Subsidiary
(other that a Non-Recourse Subsidiary).
Incurrence of Indebtedness
The Indenture will provide that the Company will not, and will not per-
mit any of its Subsidiaries to, directly or indirectly, create, incur, is-
sue, assume, guaranty or otherwise become directly or indirectly liable with
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<PAGE> 74
respect to or become responsible for (collectively, "incur") any Indebted-
ness and the Company will not issue any Disqualified Stock and will not per-
mit any of its Subsidiaries to issue any shares of preferred stock;
provided, however, that the Company or any Subsidiary may incur Indebtedness
if (i) the Adjusted Fixed Charge Coverage Ratio on the date immediately pre-
ceding the date on which such additional Indebtedness is incurred is greater
than the appropriate ratio set forth below, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom, including,
without limitation, the earnings of any business or asset acquired with the
proceeds of such Indebtedness) as if the additional Indebtedness had been
incurred at the beginning of such four-quarter period; (ii) no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof; and (iii) the Indebtedness to be incurred has a
Weighted Average Life to Maturity that exceeds the remaining Weighted Aver-
age Life to Maturity of the Notes.
For Indebtedness incurred in: Ratio:
----------------------------- ------
1994 ................. 2.25 to 1
1995 ................. 2.50 to 1
1996 ................. 2.75 to 1
1997 and thereafter .. 3.00 to 1
The foregoing limitations will not apply to the incurrence by the Com-
pany or any Subsidiary of (i) Indebtedness under any Working Capital Credit
Agreement for working capital purposes in an aggregate principal amount out-
standing at any one time not to exceed $7.5 million, provided, however, that
there shall be no such Indebtedness outstanding for a period of 14 consecu-
tive days in each calendar year (other than in respect of standby letters of
credit); (ii) the incurrence by the Company and its subsidiaries of the Ex-
isting Indebtedness; (iii) Gaming Business Purchase Money Obligations not to
exceed $10 million outstanding at any one time; (iv) Indebtedness
represented by the Notes and by any Guaranty of the Notes; (v) Indebtedness
represented by Hedging Obligations entered into with counterparties that are
Qualified Issuers with respect to floating rate Indebtedness otherwise per-
mitted under this paragraph; (vi) the incurrence by the Company of Indebted-
ness issued in exchange for, or the proceeds of which are used to extend,
refinance, renew, replace, or refund Indebtedness referred to in clauses (i)
through (v) above (the "Refinancing Indebtedness"), provided, however,
that (A) the principal amount of such Refinancing Indebtedness shall not ex-
ceed the principal amount of Indebtedness so extended, refinanced, renewed,
replaced, substituted or refunded (plus the amount of reasonable expenses
incurred in connection therewith); (B) the Refinancing Indebtedness shall
have a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of the Indebtedness being extended, refi-
nanced, renewed, replaced or refunded; (C) the Refinancing Indebtedness
shall be subordinated in right of payment to the Notes on terms at least as
favorable to the holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced or
refunded; and (D) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; (vii) Non-Recourse Debt
incurred by a Non-Recourse Subsidiary; and (viii) Indebtedness between the
Company and any wholly owned Restricted Subsidiary, provided, however, that
if any such wholly owned Restricted Subsidiary ceases to be a wholly owned
Restricted Subsidiary or transfers such Indebtedness (other than to the Com-
pany or a wholly owned Restricted Subsidiary), such events shall be deemed,
in each case, to constitute the incurrence of such Indebtedness by the Com-
pany or by such Subsidiary, as the case may be, at the time of such event.
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<PAGE> 75
Liens
The Indenture will provide that neither the Company nor any of its Sub-
sidiaries may directly or indirectly create, incur, assume or suffer to ex-
ist any Lien on any asset now owned or hereafter acquired, or any income or
profits therefrom or assign or convey any right to receive income therefrom,
except: (i) Liens existing on the Issue Date (other than Liens securing In-
debtedness to be repaid on the Issue Date); (ii) Liens on the assets
acquired or leased with the proceeds of Gaming Business Purchase Money Obli-
gations permitted to be incurred under the "Incurrence of Indebtedness"
covenant; (iii) Permitted Liens; (iv) Liens securing Refinancing Indebted-
ness incurred pursuant to clause (vi) under the "Incurrence of Indebted-
ness" covenant; provided that the Refinancing Indebtedness so issued and
secured by such Lien shall not be secured by any property or assets of the
Company or any of its Subsidiaries other than the property or assets subject
to the Liens securing such Indebtedness being refinanced and provided, fur-
ther, that if such Refinancing Indebtedness is pari passu Indebtedness, the
holders of such Indebtedness or any trustee or other representative thereof
become a party to an Intercreditor Agreement and exercise rights and reme-
dies in accordance with the provisions thereof; (v) Liens on the assets of
any Non-Recourse Subsidiary to secure Non-Recourse Debt of such Non-Recourse
Subsidiary; (vi) Liens created pursuant to the Related Documents to secure
the obligations under the Notes, any Guaranty of the Notes and the Inden-
ture; (vii) Liens on the Casino Assets securing Indebtedness and related ob-
ligations under any Working Capital Credit Agreement to the extent such In-
debtedness and related obligations are permitted under the "Incurrence of
Indebtedness" covenant; provided that if such Indebtedness is pari passu
Indebtedness, the holders of such Indebtedness or any trustee or other rep-
resentative thereof become a party to an Intercreditor Agreement and exer-
cise rights and remedies in accordance with the provisions thereof; (viii)
Liens on a Project Expansion securing any Indebtedness permitted to be in-
curred under the "Incurrence of Indebtedness" covenant which is used to
finance the Project Costs of a Project Expansion; provided that (A) such
Lien is junior to or pari passu with the Lien securing the Notes, (B) the
aggregate principal amount of such Indebtedness does not exceed 70% of the
aggregate Project Costs of such Project Expansion; and (C) the Notes are se-
cured by such Project Expansion on a senior or pari passu basis with respect
to such Lien; and provided, further, that the holder of such Indebtedness or
any trustee or other representative thereof becomes a party to an Intercre-
ditor Agreement and exercises rights and remedies in accordance with the
provisions thereof; and (ix) Liens on a New Project to secure Indebtedness
incurred to finance the costs of such New Project pursuant to the Adjusted
Fixed Charge Coverage Ratio test described under "Incurrence of Indebted-
ness" above.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture will provide that the Company will not, and will not per-
mit any of its Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction
on the ability of any Subsidiary to (a) pay dividends or make any other dis-
tributions to the Company or any of its Subsidiaries (i) on its Capital
Stock or (ii) with respect to any other interest or participation in, or
measured by, its profits; or (b) pay any Indebtedness owed to the Company or
any of its Subsidiaries; (c) make loans or advances to the Company or any of
its Subsidiaries; or (d) transfer any of its properties or assets to the
Company or any of its Subsidiaries, except for such encumbrances or restric-
tions existing under or by reason of (i) Existing Indebtedness as in effect
on the Issue Date (other than Indebtedness to be repaid on the Issue Date),
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<PAGE> 76
(ii) the Indenture and the Notes, (iii) applicable law, (iv) any instrument
governing Indebtedness or Capital Stock of a person acquired by the Company
or any of its Subsidiaries as in effect at the time of such acquisition (ex-
cept to the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any person, or the properties or assets of any person, other
than the person, or the property or assets of the person, so acquired, pro-
vided that the Adjusted Consolidated Cash Flow of such person is not taken
into account in determining whether such acquisition was permitted by the
terms of the Indenture, (v) by reason of customary non-assignment provisions
in leases entered into in the ordinary course of business and consistent
with past practices, (vi) with respect to clause (c) above, purchase money
obligations for property acquired in the ordinary course of business, (vii)
permitted Refinancing Indebtedness, provided that the restrictions contained
in the agreements governing such Refinancing Indebtedness are no more re-
strictive than those contained in the agreements governing the Indebtedness
being refinanced, or (viii) restrictions imposed on any Non-Recourse Subsid-
iary by any Non-Recourse Debt.
Merger, Consolidation, or Sale of Assets
The Indenture will provide that neither the Company nor CPPI may consoli-
date or merge with or into (whether or not the Company or CPPI is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose
of all or substantially all of its properties or assets in one or more re-
lated transactions to, another corporation, person or entity unless (i) the
Company or CPPI, as the case may be, is the surviving corporation or the en-
tity or the person formed by or surviving any such consolidation or merger
(if other than the Company or CPPI) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made is a
corporation organized or existing under the laws of the United States, any
state thereof or the District of Columbia; (ii) the entity or person formed
by or surviving any such consolidation or merger (if other than the Company
or CPPI) or the entity or person to which such sale, assignment, transfer,
lease, conveyance or other disposition will have been made assumes all the
obligations of the Company or CPPI, as the case may be, pursuant to a sup-
plemental indenture in a form reasonably satisfactory to the Trustee, under
the Notes and the Indenture; (iii) immediately before and after such trans-
action no Default or Event of Default exists or would exist; (iv) the Com-
pany or any entity or person formed by or surviving any such consolidation
or merger, or to which such sale, assignment, transfer, lease, conveyance or
other disposition will have been made (A) will have Consolidated Net Worth
(immediately after the transaction but prior to any purchase accounting ad-
justments resulting from the transaction) equal to or greater than the Con-
solidated Net Worth of the Company immediately preceding the transaction and
(B) will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applica-
ble four-quarter period, be permitted to incur at least $1 of additional In-
debtedness pursuant to the Adjusted Fixed Charge Coverage Ratio test set
forth in the covenant entitled "Incurrence of Indebtedness"; except that
this condition (iv) need not be satisfied in connection with any Unification
Transaction; (v) such transactions would not require any holder of Notes to
obtain a gaming license or be qualified under the laws of any applicable
gaming jurisdiction, provided that such holder would not have been required
to obtain a gaming license or be qualified under the laws of any applicable
gaming jurisdiction in the absence of such transactions; and (vi) such
transactions would not result in the loss of any qualification or any mate-
rial license of the Company or its Subsidiaries necessary for any Gaming Re-
lated Business then operated by the Company or its Subsidiaries.
<PAGE>
<PAGE> 77
Additional Subsidiary Guaranties
The Indenture will provide that if (i) the Company or any of its
Restricted Subsidiaries shall transfer or cause to be transferred, in one or
a series of related transactions, any Collateral having a book value in ex-
cess of $5 million or shall otherwise make an Investment having a book value
in excess of $5 million to or in any Subsidiary (other than a Non-Recourse
Subsidiary) that is not a Guarantor, or (ii) the Company establishes a Sub-
sidiary other than CPPI that operates the Existing Hotel Casino, then such
Subsidiary shall become a Guarantor of the Notes to the same extent as CPPI
and deliver to the Trustee appropriate documents in accordance with the
terms of the Indenture.
Transactions with Affiliates
The Indenture will provide that the Company will not, and will not per-
mit any of its Subsidiaries to sell, lease, transfer or otherwise dispose of
any of its properties or assets to, or purchase any property or assets from,
or enter into or maintain any contract, agreement, understanding, loan, ad-
vance or guaranty with, or for the benefit of, any Affiliate (each of the
foregoing, an "Affiliate Transaction"), unless (a) such Affiliate Transac-
tion is on terms that are no less favorable to the Company or the relevant
Subsidiary than those that would have been obtained in a comparable transac-
tion by the Company or such Subsidiary with an unrelated person, and (b)
such Affiliate Transaction is approved by a majority of disinterested mem-
bers of the Company's board of directors, and (c) the Company delivers to
the Trustee (1) with respect to any Affiliate Transaction involving aggre-
gate payments in excess of $1 million, an Officers' Certificate certifying
that such Affiliate Transaction complies with clause (a) above and such Af-
filiate Transaction is approved by a majority of the disinterested members
of the Company's board of directors, and (2) with respect to any Affiliate
Transaction involving aggregate payments in excess of $5 million, an opinion
as to the fairness to the Company or such Subsidiary from a financial point
of view issued by an investment banking firm of national standing; provided,
however, that the following shall not be deemed Affiliate Transactions: (i)
any employment agreement entered into by the Company or any of its Subsid-
iaries in the ordinary course of business and consistent with the past prac-
tice of the Company or such Subsidiary; (ii) any consulting or similar ar-
rangements entered into by the Company or any of its subsidiaries under
which payments do not exceed $200,000 with respect to any individual, and do
not exceed $500,000 in the aggregate, in any calendar year; (iii) transac-
tions between or among the Company and/or its wholly owned Restricted Sub-
sidiaries; (iv) transactions permitted by the provisions of the Indenture
described above under the covenant "Restricted Payments"; (v) payments by
the Company pursuant to the indemnification agreement with its directors and
officers in such director's or officer's capacity as a director or officer
of the Company or a wholly owned Restricted Subsidiary; (vi) loans to em-
ployees of the Company or any wholly owned Restricted Subsidiary, in an
amount approved by a majority of the disinterested members of the Board of
Directors of the Company or any wholly owned Restricted Subsidiary, as the
case may be, not to exceed $500,000 in aggregate principal outstanding at
any one time; (vii) the Claridge Lease and the Wraparound Mortgage, each as
in effect on the Issue Date, with such changes as may be permitted under the
covenant "Transactions with the Partnership; Unification Transaction";
(viii) any Unification Transaction; and (ix) any other transaction with the
Partnership permitted under the "Transactions with the Partnership; Unifi-
cation Transaction" covenant.
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<PAGE> 78
Transactions with the Partnership; Unification Transaction
The Indenture will provide that the Company and its Subsidiaries will
not agree to any amendment or waiver of the terms of or take any action (or
omit to take any action) the result of which would be to abrogate, termi-
nate, reduce or otherwise adversely affect any of its or their rights under
the Claridge Lease or the Wraparound Mortgage (in each case as in effect on
the Issue Date); provided, however, that (i) the Company and its Restricted
Subsidiaries may enter into an amendment of the Claridge Lease that provides
solely for a deferral, reduction or abatement of rent thereunder, provided
that the Trustee shall have been provided with an opinion of counsel (a
"Tax Opinion") to the effect that any such amendment would not result in
material adverse federal income tax consequences to the Company or any of
its Restricted Subsidiaries or the holders of Notes and (ii) the Company and
its Restricted Subsidiaries may enter into any amendment to, or terminate,
the Claridge Lease or the Wraparound Mortgage as necessary or appropriate in
connection with a Unification Transaction permitted hereunder; (iii) the
Company and its Subsidiaries may consummate a Unification Transaction,
provided, however, that (A) on a pro forma basis after giving effect to the
Unification Transaction and the payment of Unification Transaction Payments,
the ratio of Adjusted Indebtedness to Adjusted EBITDA at such date is less
than 3.0 to 1, (B) the Company shall have obtained from a nationally recogniz-
ed investment banking firm an opinion as to the fairness of the Unification
Transaction to the Company from a financial point of view, and (C) the Company,
CPPI or such successor entity of either of them which owns the Hotel Assets
expressly assumes all of the obligations of the mortgagor under the Mortgage
and of the pledgor under the other applicable Related Documents and delivers
appropriate documents and other instruments to the Trustee or the Collateral
Trustee, as the case may be; and (D) after giving effect to such Unification
Transaction, no Default or Event of Default shall have occurred and be
continuing or would occur as a result thereof; (iv) the Company and its
Restricted Subsidiaries shall, if so requested by the Trustee or the Collateral
Trustee, enter into any amendment to and grant their consent or waiver under
the Claridge Lease or the Wraparound Mortgage to permit the Trustee or the
Collateral Trustee, as the case may be, to more effectively enforce the Liens
over the Collateral and exercise the rights granted to the Collateral Trustee
under any of the Related Documents; and (v) the Company and its Restricted
Subsidiaries may enter into any amendment to the Wraparound Mortgage and the
Claridge Lease as necessary or appropirate in connection with any future
acquisition of land or facility construction by the Partnership used or to
be used in the business of the Claridge on terms no less favorable to the
Company and its Restricted Subsidiaries than the existing arrangements.
The Indenture will also provide that, subject to the foregoing, the Company
shall renew the term of the Claridge Lease in accordance with its terms.
Business Activities
The Indenture will provide that the Company will not, and will not per-
mit any Subsidiary to, engage in any business other than those necessary
for, incident to, connected with or arising out of the gaming business (in-
cluding developing and operating hotel casinos, sports or entertainment fa-
cilities, transportation services or other related activities or enterprises
and any additions or improvements thereto). The Company or its Subsidiaries
may not enter into any gaming jurisdictions in which the Company or its Sub-
sidiary is not presently licensed if all of the holders of Notes will be re-
quired to be licensed, provided, however, that this sentence shall not pro-
hibit the Company or its Subsidiary from entering any jurisdiction that does
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<PAGE> 79
not require the licensing or qualification of all of the holders of Notes,
but reserves the discretionary right to license or qualify any holder of the
Notes.
Insurance
The Indenture will provide that, until the Notes have been paid in full,
the Company will, and will cause its Subsidiaries, to maintain insurance
with responsible carriers against such risks and in such amounts as is cus-
tomarily carried by similar businesses with such deductibles, retentions,
self-insured amounts and coinsurance provisions as are customarily carried
by similar businesses of similar size, including, without limitation, prop-
erty and casualty loss, workers' compensation and interruption of business
insurance, and shall provide satisfactory evidence of such insurance to the
Trustee at least 30 days prior to the anniversary or renewal date of each
such policy, which certificate shall expressly state such expiration date
for each policy listed. Notwithstanding the foregoing, customary insurance
coverage for the purposes of this Indenture shall include the following: (i)
workers' compensation insurance in full compliance with all applicable state
and federal laws and regulations, (ii) property insurance protecting prop-
erty, including, without limitation, the Hotel Assets, against loss or dam-
age by fire, lightning, windstorm, tornado, water damage, vandalism, riot,
earthquake, civil commotion, malicious mischief, hurricane, and such other
risks and hazards as are from time to time covered by an "all-risk" policy
or a property policy covering "special" causes of loss. Such insurance
shall provide coverage in not less than 100% of actual replacement value and
with a deductible no greater than $1,000,000 (as determined at each policy
renewal based on the F.W. Dodge Building Index or some other nationally rec-
ognized means) of any improvements, and (iii) business interruption insur-
ance for a period not less than one year, and in an amount based upon 100%
of estimated continuing expenses and lost cash flow for the fiscal year with
respect to which the insurance coverage is in effect less non-continuing ex-
penses.
All insurance under this provision shall name the Trustee or the Collat-
eral Trustee as an additional insured or loss payee, as applicable. All such
insurance shall be issued by carriers having an A.M. Best & Company, Inc.
rating of A- or higher and a financial size category of not less than XI, or
if such carrier is not rated by A.M. Best & Company, Inc., having the finan-
cial stability and size deemed appropriate by the Issuer after consultation
with a reputable insurance broker.
Redesignation of Non-Recourse Subsidiary
Any Non-Recourse Subsidiary may be redesignated by the Company as a Sub-
sidiary that is not a Non-Recourse Subsidiary, provided, however, that at
the time of such designation and after giving pro forma effect to such des-
ignation as if it occurred at the beginning of the applicable four-quarter
period, (i) the Company could incur $1 of additional Indebtedness pursuant
to the Adjusted Fixed Charge Coverage Ratio test set forth in the first
paragraph of the "Incurrence of Indebtedness" covenant and (ii) no Default
or Event of Default shall have occurred and be continuing or occur as a con-
sequence thereof.
Reports
The Indenture will provide that, whether or not the Company is required
to be subject to Section 13(a) or 15(d) of the Exchange Act, so long as any
Notes are outstanding, the Company will file with the Securities and
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<PAGE> 80
Exchange Commission (the "Commission") all quarterly and annual reports
and other documents required pursuant to such Sections, and to mail to all
holders of Notes and the Trustee copies of such reports.
Payments for Consent
Neither the Company nor any of its Subsidiaries shall, directly or indi-
rectly, pay or cause to be paid any consideration, whether by way of inter-
est, fee or otherwise, to any holder of any Notes for or as an inducement to
any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid or
agreed to be paid to all holders of Notes that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
Use of Proceeds
The Indenture will provide that the Company will, immediately upon con-
summation of the issuance and sale of the Notes, contribute the net proceeds
therefrom to the equity capital of CPPI.
CPPI Guarantee
CPPI will unconditionally and irrevocably guarantee the full and punc-
tual payment (whether at stated maturity, upon acceleration or otherwise) of
the principal of and premium and interest on each Note and all other amounts
payable by the Company under the Indenture. Certain other Subsidiaries will
be required under the Indenture to become Guarantors. See "Additional Sub-
sidiary Guaranties."
The obligations of each Guarantor under its guarantee will be uncondi-
tional and absolute, irrespective of any invalidity, illegality, unenforcea-
bility of any Note or the Indenture or any extension, compromise, waiver or
release in respect of any obligation of the Company or any other Guarantor
under any Note or the Indenture, or any modification or amendment of or sup-
plement to the Indenture.
The obligations of each Guarantor under its guarantee will rank senior
in right of payment to all subordinated indebtedness of such Guarantor and
pari passu in right of payment with all other senior indebtedness of such
Guarantor.
Under the Indenture, CPPI and any other Guarantor may consolidate with,
merge with or into, or transfer all or substantially all of its assets to
any other person to the same extent that the Company may consolidate with,
merge with or into, or transfer all or substantially all of its assets to
any other person; provided the other person assumes such person's obliga-
tions.
If CPPI or any other Guarantor is or becomes insolvent, the guarantee
given by that entity could be challenged, including, but not limited to, un-
der applicable provisions of federal bankruptcy law or comparable provisions
of state fraudulent transfer law, and the payment of amounts by guarantor
pursuant to the guarantee could be voided and be required to be returned to
such guarantor, or to a fund for the benefit of the creditors of such guar-
antor or to certain judgment creditor thereof.
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<PAGE> 81
Separate financial statements of CPPI are not included herein because
such Guarantor is jointly and severally liable with the Company in respect
of the Notes, and the consolidated net assets, earnings and equity of CPPI
are substantially equivalent to the net assets, earnings and equity of the
Company on a consolidated basis.
Security
The Notes will be secured by (i) a non-recourse mortgage granted by the
Partnership representing a first priority lien on the Hotel Assets and (ii)
a pledge granted by the Company of all the outstanding shares of capital
stock of CPPI. The obligations of CPPI under its guarantee will be secured
by (x) a collateral assignment of the Wraparound Mortgage and (y) 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 a work-
ing capital facility in an amount of up to $7.5 million. If the Existing Ho-
tel Casino is expanded (including by the addition of a parking facility),
the Notes will be additionally secured by a lien on the expansion facili-
ties. In the case of the Contemplated Expansion, the Notes will be secured
by a mortgage representing a first priority lien. In the case of a Project
Expansion, the Notes will be secured by a lien that is either senior to or pari
passu with the liens securing any indebtedness incurred to finance the costs
of such expansion. The collateral for the Notes will not include (i) certain
gaming equipment that has been financed by third parties and is pledged to
those parties, or (ii) security interests in a New Project to secure indebted-
ness incurred to finance the costs of such New Project pursuant to the
Adjusted Fixed Charge Coverage Ratio test described under "Incurrence of
Indebtedness" above.
In the event of a foreclosure proceeding resulting from an Event of De-
fault, the Collateral Trustee could seek the appointment of a receiver
through a petition to the appropriate state courts for the taking of posses-
sion of the Claridge. The receiver would be required to obtain the approval
of the NJCCC to continue gaming operations until the foreclosure sale. If
the Collateral Trustee acquired the Claridge, it could contract for the op-
eration of the Claridge pursuant to an arrangement under which the holders
of Notes would not share in the profits or losses of gaming operations of
the Claridge (including a lease, on a flat rate basis, of the Claridge) to
an independent operator which would be required to comply with the licensing
requirements and other restrictions imposed by the applicable NJCCC. If the
Collateral Trustee acquires and operates the Claridge, the Trustee and the
holders of Notes will, if they share in the profits and losses, and may, in
any event, be required to comply with the licensing requirements under ap-
plicable gaming laws. See "Business - Gaming Regulation and Licensing."
In any foreclosure sale, licensing requirements under applicable gaming
laws may limit the number of potential bidders and may delay the sale, ei-
ther of which could adversely affect the sale price of the Claridge.
Events of Default and Remedies
The Indenture will provide that each of the following constitutes an
Event of Default: (i) default in payment when due at maturity, upon any re-
demption, pursuant to the provisions described under "Annual Excess Cash
Tender," "Redemption or Repurchase at the Option of Holders," by declara-
tion or otherwise, of principal on the Notes by the Company; (ii) default
for 30 days in the payment when due of interest on the Notes or any other
amount payable to holders under the Indenture by the Company; (iii) failure
by the Company or any Subsidiary thereof or the Partnership for 30 days af-
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<PAGE> 82
ter notice to comply with any of the other provisions of the Indenture or
the Related Documents; (iv) default under any mortgage, indenture or instru-
ment under which there may be issued or by which there may be secured or ev-
idenced any Indebtedness for money borrowed by the Company or any Restricted
Subsidiary, or the payment of which is guaranteed by the Company or any Re-
stricted Subsidiary, whether such indebtedness or guaranty now exists, or is
created after the date of the Indenture, which default (A) is caused by a
failure to pay when due principal or interest on such indebtedness within
the grace period provided in such indebtedness (which failure continues be-
yond any applicable grace period) (a "Payment Default") or (B) results in
the acceleration of such indebtedness prior to its express maturity and, in
each case, the principal amount of any such indebtedness, together with the
principal amount of any other such indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$2.5 million or more; (v) failure by the Company or any Restricted Subsid-
iary to pay any final judgments aggregating in excess of $5 million, which
judgments are not stayed within 60 days after their entry; (vi) an event of
default under any of the Related Documents; (vii) except as permitted by the
Indenture, any guarantee of the Notes is held in any judicial proceeding to
be unenforceable or invalid or ceases for any reason to be in full force and
effect or any guarantor, or any person acting on behalf of any guarantor,
denies or disaffirms its obligations under its guarantee; (viii) the loss or
suspension for more than 90 consecutive days of any license required for the
operation of the Claridge; (ix) the cessation of business at the Claridge
beyond such time period covered by business interruption insurance; (x) any
material default of the Partnership under the Wraparound Mortgage other than
the failure of the Partnership to make payments of principal when due upon
maturity so long as CPPI may exercise a right of offset in respect thereof
under the Claridge Lease, which default continues uncured for a period of 30
days after notice; (xi) any material default of CPPI or the Partnership un-
der the Claridge Lease, which default continues uncured for a period of 30
days after notice (the exercise by CPPI of its right of offset will not
constitute a default); (xii) failure by the Company to own, directly or
indirectly, 100% of the outstanding capital stock of CPPI (other than by
reason of a Unification Transaction); (xiii) the termination of the Claridge
Lease other than a termination in connection with a Unification Transaction;
and (xiv) certain events of bankruptcy or insolvency with respect to the
Company, the Partnership or any of the Company's Restricted Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain
events of bankruptcy or insolvency with respect to the Company or CPPI, all
outstanding Notes will become due and payable without further action or no-
tice. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, holders of a ma-
jority in principal amount of the then outstanding Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
holders of Notes notice of any continuing Default or Event of Default (ex-
cept a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Notes pursuant
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<PAGE> 83
to the optional redemption provisions of the Indenture, an equivalent pre-
mium shall also become and be immediately due and payable to the extent per-
mitted by law upon the acceleration of the Notes. If an Event of Default oc-
curs prior to , 1998 by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding
the prohibition on redemption of the Notes prior to , 1998, then the
premium specified in the Indenture shall also become immediately due and
payable to the extent permitted by law upon the acceleration of the Notes.
The holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the holders of
all of the Notes waive any existing Default or Event of Default and its con-
sequences under the Indenture except a continuing Default or Event of De-
fault in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee
a statement specifying such Default or Event of Default.
No Personal Liability of Directors, Officers, Employees and Shareholders
No director, officer, employee, incorporator or shareholder of the Com-
pany or CPPI, as such, shall have any liability for any obligations of the
Company or CPPI under the Notes, the Indenture or the Related Documents or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each holder of the Notes by accepting a Note waives and re-
leases all such liability. The waiver and release are part of the consider-
ation for issuance of the Notes. Such waiver may not be effective to waive
liabilities under the federal securities laws, and it is the view of the
Commission that such a waiver is against public policy.
Defeasance and Discharge of the Indenture and the Notes
The Indenture will provide that the Company at any time may terminate
all of its obligations under the Notes and the Indenture ("legal defeas-
ance"), except for certain obligations, including those with respect to the
defeasance trust and obligations to register the transfer or exchange of the
Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain
a registrar and paying agent in respect of the Notes. If the Company exer-
cises its legal defeasance option, payment of the Notes may not be acceler-
ated because of an Event of Default with respect thereto. Subject to the
conditions described below, the Company at any time may terminate its obli-
gations under the covenants described under "Annual Excess Cash Tender,"
"Redemption or Repurchase at the Option of Holders" and "Certain Cove-
nants" and the operation of the provisions described in clauses (iii),
(iv), (x), (xi) and (xiii) under "Event of Default" ("covenant defeas-
ance"). The Company may exercise its legal defeasance option notwithstand-
ing its prior exercise of its covenant defeasance option.
In order to exercise either defeasance option, (i) the Company must ir-
revocably deposit in trust (the "defeasance trust") with the Trustee,
money, U.S. Governmental Obligations, or a combination thereof sufficient to
pay the principal of, premium, if any, and interest on the Notes to redemp-
tion or maturity, as the case may be; (ii) the Company delivers to the
Trustee a certificate from a nationally recognized firm of independent ac-
countants expressing their opinion that the payments of principal and inter-
est when due and without reinvestment on the deposited U.S. Government Obli-
gations plus any deposited money without investment will provide cash at
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<PAGE> 84
such times and in such amounts as will be sufficient to pay principal, pre-
mium, if any, and interest when due on all the Notes to maturity or redemp-
tion, as the case may be; (iii) the Company shall have delivered to the
Trustee an opinion of counsel to the effect that all preference periods ap-
plicable to the defeasance trust have expired under any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; (iv) no Default or Event of Default shall have occurred
and be continuing on the date of such deposit or insofar as Events of De-
fault from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit; (v) such legal de-
feasance or covenant defeasance shall not result in a material breach or vi-
olation of or constitute a default under any other material agreement
or instrument to which the Company is a party or by which the Company
is bound; (vi) the Company delivers to the Trustee an opinion of counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under the In-
vestment Company Act of 1940, as amended; (vii) the Company shall have de-
livered an opinion of counsel to the effect that a valid trust is created at
the time of such deposit and the holders of Notes shall have a perfected se-
curity interest under applicable law in the U.S. Government Obligations so
deposited; (viii) in the case of legal defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reason-
ably acceptable to the Trustee confirming that (a) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling
or (b) since the date of the Indenture, there has been a change in the ap-
plicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the holders of
Notes will not recognize income, gain or loss for federal income tax pur-
poses as a result of such legal defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such legal defeasance had not occurred; (ix) in
the case of covenant defeasance, the Company shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that the holders of Notes will not recognize income,
gain or losses for federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and (x) the Company shall have deliv-
ered to the Trustee an officers' certificate and an opinion of counsel, each
stating that all conditions precedent provided for relating to either the
legal defeasance or the covenant defeasance, as the case may be, have been
complied with.
Upon the occurrence of either defeasance, the Collateral shall be re-
leased.
Transfer and Exchange
A holder may transfer or exchange Notes in accordance with the Inden-
ture. The registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or ex-
change any Note selected for redemption. Also, the Company is not required
to transfer or exchange any Note for a period of 15 days before a selection
of Notes to be redeemed. The Notes will be subject to certain restrictions
on transfer and sale under applicable gaming laws.
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<PAGE> 85
The registered holder of a Note will be treated as the owner of it for
all purposes.
Amendment, Supplement and Waiver
Except as provided in the next succeeding paragraph, the Indenture or
the Notes may be amended or supplemented with the consent of the holders of
at least a majority in principal amount of the Notes then outstanding (in-
cluding consents obtained in connection with a tender offer or exchange of-
fer for Notes), and any existing default or compliance with any provision of
the Indenture or the Notes may be waived with the consent of the holders of
a majority in principal amount of the then outstanding Notes (including con-
sents obtained in connection with a tender offer or exchange offer for
Notes).
Without the consent of each holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting holder of Notes) (i)
reduce the principal amount of Notes whose holders must consent to an amend-
ment, supplement or waiver; (ii) reduce the principal of or change the fixed
maturity of any Note; (iii) alter the provisions with respect to the redemp-
tion or repurchase of the Notes in any manner adverse to the holders; (iv)
reduce the rate of or change the time for payment of interest on any Note;
(v) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of accelera-
tion of the Notes by the holders of at least a majority in aggregate princi-
pal amount of the Notes and a waiver of the payment default that resulted
from such acceleration); (vi) make any Note payable in money other than that
stated in the Notes; (vii) make any change in the provisions of the Inden-
ture relating to waivers of past Defaults or the rights of holders of Notes
to receive payments of principal of or interest on the Notes or make any
change in the foregoing amendment and waiver provisions; (viii) waive a re-
demption payment with respect to any Note; or (ix) directly or indirectly
release the Liens on all or substantially all of the Claridge securing the
obligations under the Indenture, the Notes or any Subsidiary Guaranty
thereof or directly or indirectly release the Liens on all or substantially
all of the Collateral securing the obligations under the Indenture, the
Notes or any Subsidiary Guaranty thereof.
Notwithstanding the foregoing, without the consent of any holder of
Notes, the Company and the Trustee may amend or supplement the Indenture or
the Notes to cure any ambiguity, defect or inconsistency, to provide for un-
certificated Notes in addition to or in place of certificated Notes, to pro-
vide for the assumption of the Company's or any Guarantor's obligations to
holders of Notes in the case of a merger or consolidation, to provide any
additional Collateral for the benefit of the holders of Notes, to make any
change that would provide any additional rights or benefits to the holders
of Notes or that does not adversely affect the legal rights under the Inden-
ture of any such holder, or to comply with requirements of the Commission in
order to effect, or maintain the qualification of the Indenture under the
Trust Indenture Act or to execute and deliver any documents necessary or ap-
propriate to release Liens on any Collateral as permitted by the Indenture.
Concerning the Trustee
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
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<PAGE> 86
in other transactions; however, if it acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting
any proceeding for exercising any remedy available to the Trustee, subject
to certain exceptions. The Indenture provides that in case an Event of De-
fault shall occur (which shall not be cured), the Trustee will be required,
in the exercise of its power, to use the degree of care of a prudent man in
the conduct of his own affairs. Subject to such provisions, the Trustee will
be under no obligation to exercise any of its rights or powers under the In-
denture at the request of any holder of Notes, unless such holder shall have
offered to the Trustee security and indemnity satisfactory to it against any
loss, liability or expense.
Additional Information
Anyone who receives this Prospectus may obtain a copy of the Indenture
without charge by writing to The Claridge Hotel and Casino Corporation, In-
diana Avenue and The Boardwalk, Atlantic City, New Jersey 08401, Attention:
Frank A. Bellis, Jr., Esq., Secretary.
Certain Definitions
Set forth below are certain defined terms used in the Indenture. Refer-
ence is made to the Indenture for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Adjusted EBITDA" means, with respect to the Company at any date, the
amount which is equal to (a) the Consolidated Net Income of the Company plus
(b) an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale (to the extent such losses were deducted in
computing Consolidated Net Income), plus (c) provision for taxes based on
income or profits to the extent such provision for taxes was included in
computing Consolidated Net Income, plus (d) consolidated interest expense
for such period, whether paid or accrued (including amortization of original
issue discount, non-cash interest payments, amortization of deferred financ-
ing charges and the interest component of capital lease obligations), to the
extent such expense was deducted in computing Consolidated Net Income, plus
(e) depreciation, amortization (including amortization of goodwill and other
intangibles) and other non-cash charges (excluding any such non-cash charge
that requires an accrual of or reserve for cash charges for any future pe-
riod and excluding any such non-cash charge that is included in consolidated
interest expense or consolidated tax expense) of such person to the extent
such depreciation, amortization and other non-cash charges were deducted in
computing Consolidated Net Income, plus (f) Rent Expense to the Partnership,
plus (g) Reinvestment Obligation Expenses, less (h) Interest from the Part-
nership, in the case of each of (a) through (h) for the Reference Period,
less (i) Net Partnership Payments for the Adjustment Period, in each case,
on a consolidated basis and determined in accordance with GAAP.
"Adjusted Fixed Charges" means, with respect to the Company at any
date, the sum of (a) consolidated interest expense of the Company for the
Reference Period, whether paid or accrued, to the extent such expense was
deducted in computing Consolidated Net Income (including amortization of
original issue discount, non-cash interest payments and the interest compo-
nent of capital leases but excluding amortization of deferred financing fees
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<PAGE> 87
and excluding capitalized interest and interest on the Loan from the Part-
nership), plus (b) the product of (i) all cash dividend payments (and non-
cash dividend payments in the case of a Subsidiary) on any series of pre-
ferred stock, times (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state
and local statutory tax rate of the Company, expressed as a decimal, in each
case, on a consolidated basis and in accordance with GAAP.
"Adjusted Fixed Charge Coverage Ratio" means, with respect to the Com-
pany and its Restricted Subsidiaries at any date, the ratio of (A) Adjusted
EBITDA of the Company and its Restricted Subsidiaries at such date to (B)
Adjusted Fixed Charges of the Company and its Restricted Subsidiaries for
the Reference Period, provided that (a) in the event that the Company or any
of its Subsidiaries (other than any Non-Recourse Subsidiary) incurs,
assumes, guaranties or redeems any Indebtedness (other than revolving credit
borrowings) or issues preferred stock subsequent to the commencement of the
Reference Period but prior to the event for which the calculation of the Ad-
justed Fixed Charge Coverage Ratio is made, then the Adjusted Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incur-
rence, assumption, guaranty or redemption of Indebtedness, or such issuance
or redemption of preferred stock, as if the same had occurred at the begin-
ning of the applicable period, (b) in making such computation, the Fixed
Charges attributable to interest on any Indebtedness bearing a floating in-
terest rate shall be computed on a pro forma basis as if the rate in effect
on the date of computation had been the applicable rate for the entire pe-
riod, (c) in making such computation, the Fixed Charges attributable to in-
terest on any Indebtedness under a revolving credit facility shall be com-
puted on a pro forma basis based upon the average daily balance of such
Indebtedness outstanding during the applicable period, (d) in the event that
the Company or any of its Restricted Subsidiaries consummates a material ac-
quisition or an Asset Sale subsequent to the commencement of the Reference
Period, then the Adjusted Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such material acquisition or Asset Sale
(including the incurrence of any Indebtedness in connection therewith), as
if the same had occurred at the beginning of the applicable period, and (e)
in the event that the Company or any of its Restricted Subsidiaries
purchases any assets or property which was previously leased by the Company
or any of its Restricted Subsidiaries subsequent to the commencement of the
Reference Period but prior to the event for which the calculation of the Ad-
justed Fixed Charge Coverage Ratio is made, then the Adjusted Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such purchase
as if the same had occurred at the beginning of the applicable period.
"Adjusted Indebtedness" means, with respect to the Company and its Re-
stricted Subsidiaries at any date, (i) the amount of Indebtedness outstand-
ing, less (ii) cash, cash equivalents and Marketable Securities, as would be
shown on a consolidated balance sheet of the Company and its Restricted Sub-
sidiaries at such date prepared in accordance with GAAP.
"Adjustment Period" means the Reference Period unless Net Partnership
Payments for the Subsequent Period are greater than Net Partnership Payments
for the Reference Period, in which case it means the Subsequent Period.
"Affiliate" of any specified person means any other individual, corpo-
ration, partnership, trust, incorporated or unincorporated association,
joint venture, joint stock company, government or other entity of any kind
directly or indirectly controlling or controlled by or under direct or indi-
rect common control with such specified person. For purposes of this defini-
tion, "control" (including, with correlative meanings, the terms "con-
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<PAGE> 88
trolling," "controlled by" and "under common control with"), as used
with respect to any person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of such person, whether through the ownership of voting securi-
ties, by agreement or otherwise; provided, however, that beneficial owner-
ship of 10% or more of the voting securities of a person shall be deemed to
be control.
"Applicable Premium" means, with respect to any Note called for re-
demption by the Company in the circumstances described under "Mandatory Re-
demption," or with respect to any Note which has been accelerated in cer-
tain circumstances described under "Events of Default and Remedies," the
greater of (i) 100% of the then outstanding principal amount of such Note,
and (ii) the difference of (A) the present value of all required interest
and principal payments due on such Note, computed using a discount rate
equal to the Treasury Rate plus 75 basis points, minus (B) the then
outstanding principal amount of such Note, minus (C) any accrued and unpaid
interest paid on each Note on the redemption date.
"Capital Expenditures" means the Company's expenditures for gaming
equipment and all FF&E Loans.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock, includ-
ing, without limitation, partnership interests.
"Casino Assets" means the casino license and gaming equipment of the
Existing Hotel Casino, which as of the date hereof are owned by CPPI.
"Claridge Lease" means, collectively, the Operating Lease dated Octo-
ber 31, 1983 between the Partnership and CPPI, as amended, and the Expansion
Operating Lease dated March 17, 1986 between the Partnership and CPPI, as
amended, and any replacements, extensions or renewals thereof on terms no
less favorable in the aggregate to CPPI.
"Claridge Lease Payments" means, with respect to the Company and its
Restricted Subsidiaries for any period, payments made or if not yet made,
scheduled to be made or reasonably projected in good faith by the Board of
Directors of the Company to be made as evidenced by an Officer's Certifi-
cate, in such period by the Company and its Restricted Subsidiaries to the
Partnership in respect of the Claridge Lease.
"Collateral" means any property or assets of the Company, the Guaran-
tor, the Partnership or any of their Subsidiaries in respect of which a Lien
is purported to be granted pursuant to any of the Related Documents.
"Collateral Trustee" means (i) IBJ Schroder Bank & Trust Company in
its capacity as collateral trustee under the Collateral Trust Agreement, and
any co-trustee appointed pursuant to Article VI thereunder, in its capacity
as such, together with their respective successors in such capacities, or
(ii) in respect of any Collateral as to which any separate trustee for the
Secured Parties shall be appointed pursuant to Article VI thereunder, such
separate trustee in its capacity as such, and any successor in such capac-
ity.
"Consolidated Net Income" means, with respect to any person for any
period, the aggregate of the Net Income of such person and its Subsidiaries
for such period, on a consolidated basis, determined in accordance with
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<PAGE> 89
GAAP; provided, that (i) the Net Income of any person that is not a Subsid-
iary or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions paid
to the referent person or a wholly owned Subsidiary; (ii) the Net Income of
any person that is a Subsidiary (other than a Restricted Subsidiary of which
at least 80% of the Capital Stock having ordinary voting power for the elec-
tion of directors or other governing body of such Subsidiary is owned by the
referent person directly or indirectly through one or more Subsidiaries)
shall be included only to the extent of the amount of dividends or distribu-
tions paid to the referent person; (iii) the Net Income of any person ac-
quired in a pooling of interests transaction for any person on the date of
such acquisition shall be excluded; and (iv) the cumulative effect of a
change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any person, the sum of
(i) the consolidated equity of the common stockholders of such person and
its consolidated Subsidiaries plus (ii) the respective amounts reported on
such person's most recent balance sheet with respect to any series of pre-
ferred stock (other than Disqualified Stock) that by its terms is not enti-
tled to the payment of dividends unless such dividends may be declared and
paid only out of net earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by such person upon is-
suance of such preferred stock, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible as-
sets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value
of any asset owned by such person or a consolidated Subsidiary of such per-
son, (y) all investments in unconsolidated Subsidiaries and in persons that
are not Subsidiaries (except, in each case, Permitted Investments), and (z)
all unamortized debt discount and expense and unamortized deferred charges,
all of the foregoing determined in accordance with GAAP.
"Contemplated Expansion" means the expansion to the Existing Hotel Ca-
sino contemplated as of the date hereof, consisting of the addition of (i)
approximately 6,000 square feet of casino space for up to 550 new slot ma-
chines, (ii) a 6,600 square foot poker and simulcast area used for
pari-mutuel wagering and (iii) a self-parking garage, or any replacement or
expansion of or addition to any of the foregoing.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock which, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeem-
able at the option of the holder thereof, in whole or in part, on or prior
to the final maturity date of the Notes.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for Capital Stock), and the Contingent
Payment or any portion thereof.
"Excess Non-Recourse Subsidiary Cash Proceeds" means 50% of the sum of
(x) all cash received by the Company or any wholly owned Subsidiary (other
than a Non-Recourse Subsidiary) from any Non-Recourse Subsidiary, less (y)
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<PAGE> 90
such cash that is or may be required to be returned or repaid to such Non-
Recourse Subsidiary or is otherwise reinvested (or set aside for reinvest-
ment) in any Non-Recourse Subsidiary, less (z) $10.0 million.
"Existing Hotel Casino" means The Claridge Hotel and Casino located in
Atlantic City, New Jersey.
"Existing Indebtedness" means Indebtedness of the Company or its Sub-
sidiaries in existence on the date of the Indenture, other than Indebtedness
being repaid with the net proceeds from the sale of the Notes offered
hereby, until such amounts are repaid.
"FF&E Loans" means loans made by CPPI to the Partnership under the
Wraparound Mortgage to fund the purchase of capital items.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the Ameri-
can Institute of Certified Public Accountants and statements and pronounce-
ments of the Financial Accounting Standards Board or in such other state-
ments by such other entity as approved by a significant segment of the
accounting profession, which are in effect from time to time.
"Gaming Authority" means any agency, authority, board, bureau, commis-
sion, department, office or instrumentality of any nature whatsoever of the
United States federal or foreign government, any state, province or any city
or other political subdivision or otherwise and whether now or hereafter in
existence, or any officer or official thereof, including, without limita-
tion, the New Jersey Casino Control Commission, with authority to regulate
any gaming operation (or proposed gaming operation) owned, managed or oper-
ated by the Company or any of its Subsidiaries.
"Gaming Business Purchase Money Obligations" means Indebtedness in-
curred in respect of the purchase or construction of property, plant or
equipment in the Gaming Related Business.
"Gaming Related Business" means any enterprise or activity the princi-
pal purpose of which is to engage in the gaming business or any other busi-
ness necessary for, incident to, connected with or arising out of the gaming
business (including developing and operating lodging facilities, sports or
entertainment facilities, transportation services or other related activi-
ties or enterprises and any additions or improvements thereto).
"Hedging Obligations" means, with respect to any person, the obliga-
tions of such person under (i) interest rate swap agreements, interest rate
cap agreements and interest rate collar agreements and (ii) other agreements
or arrangements designed to protect such person against fluctuations in in-
terest rates.
"Hotel Assets" means the buildings, parking facility and non-gaming,
depreciable, tangible personal property, and the underlying land of the Ex-
isting Hotel Casino, which are owned by the Partnership and leased to CPPI.
"Indebtedness" of any person means, without duplication, (i) the prin-
cipal of and premium (if any) in respect of (A) indebtedness of such person
for money borrowed and (B) indebtedness evidenced by notes, debentures,
bonds or other similar instruments for the payment of which such person is
responsible or liable; (ii) all capitalized lease obligations of such per-
son; (iii) all obligations of such person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such person
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<PAGE> 91
and all obligations of such person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business); (iv) all obligations of such person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit secur-
ing obligations (other than obligations described in clauses (i), (ii) and
(iii) above) entered into in the ordinary course of business of such person
to the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later than the third busi-
ness day following receipt by such person of a demand for reimbursement fol-
lowing payment on the letter of credit); (v) the amount of all obligations
of such person with respect to the redemption, repayment or other repurchase
of any Disqualified Stock (but excluding any accrued distributions or divi-
dends); (vi) all obligations existing at the time under Hedging Obligations,
foreign currency hedges and similar agreements; (vii) all obligations of the
type referred to in clauses (i) through (vi) of other persons and all divi-
dends and distributions of other persons for the payment of which, in either
case, such person is responsible or liable as obligor, guarantor or other-
wise or in respect of which such person has issued an Investment Guaranty;
and (viii) all obligations of the type referred to in clause (i) through
(vi) of other persons secured by any Lien on any property or asset of such
person (whether or not such obligation is assumed by such person), the
amount of such obligation being deemed to be the lesser of the value of such
property or assets or the amount of the obligation so secured.
"Interest from the Partnership" means, for any period, Wraparound
Mortgage Payments to the extent such Wraparound Mortgage Payments are, were
or would be included in computing Consolidated Net Income for such period.
"Investment Guaranty" means, with respect to any person, any direct or
indirect liability, contingent or otherwise, of such person with respect to
any Indebtedness of another person, including, without limitation, any In-
debtedness directly or indirectly guarantied, endorsed (otherwise than for
collection or deposit in the ordinary course of business) or discounted or
sold with recourse by such person, or in respect of which such person is
otherwise directly or indirectly liable, or any other obligation under which
any contract which, in economic effect, is substantially equivalent to a
guaranty, including, without limitation, any Indebtedness of a partnership
in which such person is a general partner or of a joint venture in which
such person is a joint venturer (other than Indebtedness in respect of which
there is no recourse to such person), and any Indebtedness in effect guaran-
teed by such person through any agreement (contingent or otherwise) to pur-
chase, repurchase or otherwise acquire such Indebtedness or any security
therefor, or to provide funds for the payment or discharge of such Indebted-
ness (whether in the form of loans, advances, stock purchases, capital con-
tributions or otherwise) or to maintain the solvency or any balance sheet or
other financial condition of the obligor of such Indebtedness, or to make
payment for any products, materials or supplies or for any transportation or
services regardless of the non-delivery or nonfurnishing thereof, in any
such case if the purpose or intent of such agreement is to provide assurance
that such Indebtedness will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such Indebt-
edness will be protected against loss in respect thereof.
"Investments" means, with respect to any person, all investments by
such person in other persons (including Affiliates) in the forms of loans,
Investment Guaranties, advances or capital contributions (excluding commis-
sion, travel and similar advances to officers and employees made in the or-
dinary course of business), purchases or other acquisitions for consider-
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<PAGE> 92
ation of Indebtedness, Equity Interests or other securities and all other
items that are or would be classified as investments on a balance sheet pre-
pared in accordance with GAAP.
"Issue Date" means , 1994, the date on which the Notes are first
authenticated and issued.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such as-
set, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Loan from the Partnership" means the loan in the original principal
amount of $3.6 million made by the Partnership to CPPI in June 1989.
"Marketable Securities" means (1) U.S. Government Obligations; (2) any
certificate of deposit, maturing not more than 90 days after the date of ac-
quisition, issued by, or time deposit of, a commercial banking institution
that has combined capital and surplus of not less than $100,000,000 or its
equivalent in foreign currency, whose debt is rated at the time as of which
any investment is made, of "A" (or higher) according to Standard & Poor's
Rating Group ("S&P") or "A2" (or higher) according to Moody's Investor Service,
Inc. ("Moody's"), or if none of S&P or Moody's shall then exist, the equivalent
of such rating by any other nationally recognized securities rating agency;
(3) commercial paper, maturing not more than 90 days after the date of
acquisition, issued by a corporation (other than an Affiliate or Subsidiary
of the Guarantor) with a rating, at the time as of which any investment
therein is made, of "A-1" (indicating that the degree of timely payment is
strong) (or higher) according to S&P or "P-1" (having a superior capacity for
punctual repayment of short-term promissory obligations) (or higher) according
to Moody's, or if neither of S&P and Moody's shall then exist, the equivalent
of such rating by any other nationally recognized securities rating agency;
and (4) any bankers acceptances or any money market deposit accounts, in each
case, issued or offered by any commercial bank having capital and surplus in
excess of $100,000,000 or its equivalent in foreign currency, whose debt is
rated at the time as of which any investment there is made of "A" (an upper
medium grade bond obligation) (or higher) according to S&P or Moody's, or if
none of S&P or Moody's shall then exist, the equivalent of such rating by
any other nationally recognized securities rating agency.
"Net Income" means, with respect to any person, the net income (loss)
of such person, determined in accordance with GAAP, excluding, however, (i)
any gain (but not loss), together with any related provision for taxes on
such gain (but not loss), realized in connection with any Asset Sale (in-
cluding, without limitation, dispositions pursuant to sale and leaseback
transactions) and (ii) any extraordinary gain (but not loss), together with
any related provision for taxes on such extraordinary gain (but not loss).
"Net Partnership Payments" for any period means the sum (which may be
a negative number) of (i) Claridge Lease Payments for such period, less (ii)
Wraparound Mortgage Payments and facilities and maintenance fees paid or
payable by the Partnership to CPPI for such period.
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<PAGE> 93
"Net Proceeds" means the aggregate cash proceeds received by the Com-
pany or any of its Subsidiaries in respect of any Asset Sale (including in-
surance proceeds), net of the direct costs relating to such Asset Sale (in-
cluding, without limitation, reasonable legal, accounting and investment
banking fees, and sales commissions) and any relocation expenses incurred as
a result thereof, taxes paid or payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing ar-
rangements), amounts required to be applied to the repayment of Indebtedness
(other than the Notes) secured by a Lien on the asset or assets which are
the subject of such Asset Sale and any reserve for adjustment in respect of
the sale price of such asset or assets.
"New Project" means (i) any assets acquired or leased after the Issue
Date by the Company or any of its Subsidiaries in a location other than At-
lantic City, New Jersey, or (ii) any Gaming Related Business established or
entered into after the Issue Date by the Company or any of its Subsidiaries
in a jurisdiction other than Atlantic City, New Jersey.
"Non-Recourse Debt" means Indebtedness or that portion of Indebtedness
(a) as to which none of the Company, the Guarantors and any of their respec-
tive Subsidiaries (other than a Non-Recourse Subsidiary): (i) provides
credit support (including any undertaking, agreement or instrument which
would constitute Indebtedness); or (ii) is directly or indirectly liable;
and (b) no default with respect to which (including any rights which the
holders thereof may have to take enforcement action against a Non-Recourse
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness of the Company, the Guarantors or any of their re-
spective Subsidiaries (other than a Non-Recourse Subsidiary) to declare a
default on such other Indebtedness or cause the payment thereof to be accel-
erated or payable prior to its stated maturity.
"Non-Recourse Subsidiary" means (i) a Subsidiary (other than any Guar-
antor) or (ii) any entity in which the Company or any of its Subsidiaries
has an equity investment and pursuant to a contract or otherwise has the
right to direct the day-to-day operation of such entity, designated by the
Company and that, in each case, (a) at the time of its designation as a Non-
Recourse Subsidiary has not acquired any assets (other than as specifically
permitted by the "Restricted Payments" covenant), at any previous time,
directly or indirectly from the Company, or any of its respective Subsidiar-
ies, (b) does not own, operate or manage the Existing Hotel Casino or any
part thereof, and (c) has no Indebtedness other than Non-Recourse Debt, pro-
vided that at the time of such designation, after giving pro forma effect to
such designation as if it occurred at the beginning of the applicable four-
quarter period, (x) the Company could incur $1 of additional Indebtedness
pursuant to the Adjusted Fixed Charge Coverage Ratio test set forth in the
"Incurrence of Indebtedness" covenant, and (y) the Company's Adjusted
Fixed Charge Coverage Ratio is not less than 70% of the Company's Adjusted
Fixed Charge Coverage Ratio immediately prior to such designation.
"Partnership" means Atlantic City Boardwalk Associates, L.P.
"Permitted Investments" means (a) any Investments in the Company or in
a wholly owned Restricted Subsidiary of the Company; (b) any Investments in
Marketable Securities; and (c) Investments by the Company or any Subsidiary
of the Company in a person, if as a result of such Investment (i) such per-
son becomes a wholly owned Subsidiary of the Company (other than a
Non-Recourse Subsidiary) or (ii) such person is merged, consolidated or
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<PAGE> 94
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a wholly owned Subsidiary
of the Company (other than a Non-Recourse Subsidiary).
"Permitted Liens" mean (a) Liens in favor of the Company; (b) Liens on
property of a person existing at the time such person is merged into or con-
solidated with the Company or any Subsidiary of the Company; provided that
such Liens (x) are not created, incurred or assumed in connection with, or
in contemplation of, such merger or consolidation and (y) do not extend to
any other Property of the Company or any of its Subsidiaries; (c) Liens on
property existing at the time of acquisition thereof by the Company or any
Subsidiary of the Company; provided that such Liens (x) are not created, in-
curred or assumed in connection with, or in contemplation of, such assets
being acquired by the Company or any of its subsidiaries and (y) do not ex-
tend to any other Property of the Company or any of its Subsidiaries; (d)
Liens to secure the performance of statutory obligations, surety or appeal
bonds, performance bonds or other obligations of a like nature incurred in
the ordinary course of business; (e) Liens for taxes, assessments or govern-
mental charges or claims that are not yet delinquent or that are being con-
tested in good faith by appropriate proceedings promptly instituted and dil-
igently concluded; provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(f) ground leases in respect of the real property on which facilities owned
or leased by the Company or any of its Subsidiaries are located; (g) Liens
arising from UCC financing statements regarding property leased by the Com-
pany or any of its Subsidiaries; and (h) easements, rights-of-way, naviga-
tional servitudes, restrictions, minor defects or irregularities in title
and other similar charges or encumbrances which do not interfere in any ma-
terial respect with the ordinary conduct of business of the Company and its
Subsidiaries.
"Project Costs" means, with respect to a Project Expansion, the aggre-
gate costs required to complete such Project Expansion, including direct
costs related thereto including, but not limited to, construction manage-
ment, architectural, engineering, interior design, legal and other profes-
sional fees, site work, utility installation, permits, certificates and
bonds, but excluding principal or interest payments on any Indebtedness, op-
erating expenses (including, but not limited to non-construction supplies
and pre-opening payroll) and any allocation to corporate overhead or admin-
istrative expenses of the Company, and Guarantor, or any Subsidiary.
"Project Expansion" means any addition, improvement, extension or cap-
ital repair to the Existing Hotel Casino or any contiguous or adjacent prop-
erty, including the purchases of real estate or improvements thereon; but
excluding separable furniture and excluding the Contemplated Expansion.
"Qualified Issuer" means any governmental, corporate or other issuer
whose securities would constitute Marketable Securities.
"Reference Period" means, with respect to the Company at any date, the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding such date.
"Reinvestment Obligation Expenses" means, with respect to the Company
for any period, expenses relating to investments in or approved by the Ca-
sino Reinvestment Development Authority under the authority of the New Jer-
sey Casino Control Act, as would be shown on an income statement of the Com-
pany for such period prepared in accordance with GAAP.
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<PAGE> 95
"Reinvestment Obligation Payments" means, with respect to the Company
for any period, payments to the Casino Reinvestment Development Authority
under the authority of the New Jersey Casino Control Act.
"Related Documents" means, collectively, the Mortgage, the pledge
agreements, the security agreements, the collateral assignments and the sub-
ordination agreement and any and all pledges, security agreements, guaran-
ties, financing statements, filings, instruments or other agreements or as-
signments executed by the Company, the Partnership or the Guarantors in
order to evidence, secure, perfect, notice or guaranty the Notes or any
guaranty of the foregoing obligations.
"Rent Expense" means, for any period, Claridge Lease Payments to the
extent such amounts are, were or would be deducted in computing Consolidated
Net Income for such period.
"Restricted Investment" means an Investment other than a Permitted In-
vestment.
"Restricted Subsidiary" means (i) each direct or indirect subsidiary
of the Company existing on the date of the Indenture and (ii) any other di-
rect or indirect subsidiary of the Company formed, acquired or existing af-
ter the date of the Indenture which is not designated as a Non-Recourse Sub-
sidiary.
"Subordinated Indebtedness" means all Indebtedness of the Company if
it is provided in the instrument creating or evidencing the same or pursuant
to which the same is outstanding that such Indebtedness is subordinated in
right of payment to the Notes.
"Subsequent Period" means, with respect to the Company at any date,
the four consecutive fiscal quarters commencing with the first day of the
fiscal quarter in which such date falls and ending on the day immediately
preceding the anniversary of such first day.
"Subsidiary" means (i) any corporation, association or other business
entity of which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by any person or one or more of
the other Subsidiaries of that person or a combination thereof and (ii) any
Non-Recourse Subsidiary.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled
by, and published in, the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two business days
prior to the date fixed for redemption of the Notes following a Change of
Control (or, if such Statistical Release is no longer published, any pub-
licly available source of similar market data)) most nearly equal to the
then remaining Weighted Average Life to Maturity of the Notes; provided,
however, that if the Weighted Average Life to Maturity of the Notes is not
equal to the constant maturity of a United States Treasury security for
which a weekly average yield is given, the Treasury Rate shall be obtained
by linear interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the Weighted Average Life to Ma-
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<PAGE> 96
turity of the Notes is less than one year, the weekly average yield on actu-
ally traded United States Treasury securities adjusted to a constant matu-
rity of one year shall be used.
"U.S. Government Obligations" means securities that are (a) direct ob-
ligations of the United States of America for the timely payment of which
its full faith and credit is pledged or (b) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of
the United States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America, which, in either case, are not callable or redeemable at the option
of the issuer thereof, and shall also include a depository receipt issued by
a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended), as custodian with respect to any such U.S. Government Obligation
or a specific payment of principal of or interest on any such U.S. Govern-
ment Obligation held by such custodian for the account of the holder of such
depository receipt; provided that (except as required by law) such custodian
is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian
in respect of the U.S. Government Obligation or the specific payment of
principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
"Unification Transaction" means a transaction or series of transac-
tions among the Company and its Subsidiaries and the Partnership which re-
sults in the ownership of the Hotel Assets and/or the Casino Assets being
transferred to the Company, CPPI, a Restricted Subsidiary of the Company
or any successor entity.
"Unification Transaction Payments" means, in connection with a Unifi-
cation Transaction, the sum of (i) all payments made by the Company or any
of its Subsidiaries (other than Non-Recourse Subsidiaries) to the Partner-
ship (including deferred rent under the Claridge Lease) or any of its partners
(but excluding payments in the form of Equity Interests of the Company other
than Disqualified Stock); (ii) all federal and state income taxes payable by
the Company or any of its subsidiaries (other than Non-Recourse Subsidiaries)
by reason of taxable income or gain realized upon the consummation of the
Unification Transaction; and (iii) the costs and expenses to the Company or
any of its Subsidiaries (other than Non-Recourse Subsidiaries) incurred in
connection with a Unification Transaction.
"Weighted Average Life to Maturity" means, when applied to any Indebt-
edness at any date, the number of years obtained by dividing (i) the then
outstanding aggregate principal amount of such Indebtedness into (ii) the
sum of the products obtained by multiplying (a) the amount of each then re-
maining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof (other
than payments required upon a change of control or with the net proceeds of
asset sales), by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such pay-
ment.
"Wraparound Mortgage" means the Expandable Wraparound Mortgage and Se-
curity Agreement dated October 31, 1983 between the Partnership and CPPI, as
amended, and any replacements, extensions, or renewals thereof, including the
notes thereunder, the loan agreement secured thereby and all additional
documents given as security therefor.
<PAGE>
<PAGE> 97
"Wraparound Mortgage Payments" means, with respect to the Company and
its Restricted Subsidiaries for any period, payments made or reasonably pro-
jected to be made in such period by the Partnership to the Company and its
Restricted Subsidiaries in respect of the Wraparound Mortgage.
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement (the
"Underwriting Agreement") between the Company and Donaldson, Lufkin & Jen-
rette Securities Corporation and Oppenheimer & Co., Inc. (collectively, the
"Underwriters"), the Underwriters have severally agreed to purchase from
the Company, and the Company has agreed to sell to the Underwriters, at the
public offering price set forth on the cover page of this Prospectus less
the underwriting discount, the following respective principal amounts of
Notes:
Principal
Underwriters Amount of Notes
Donaldson, Lufkin & Jenrette Securities Corporation ........ $
Oppenheimer & Co., Inc. ....................................
-----------
$85,000,000
===========
The Underwriting Agreement provides that the obligations of the Under-
writers thereunder are subject to certain conditions precedent. The Under-
writing Agreement also provides that the Company will indemnify the Under-
writers and their controlling persons against certain liabilities and
expenses, including liabilities under the Securities Act or will contribute
to payments that the Underwriters may be required to make in respect
thereof. The nature of the Underwriters' obligation is such that they are
required to purchase all of the Notes if any of the Notes are purchased.
The Underwriters propose initially to offer the Notes to the public at
the public offering price set forth on the cover page of this Prospectus,
and to certain dealers at such price less a concession not in excess of %
of the principal amount. The Underwriters may allow, and such dealers may
re-allow, a concession not in excess of % of principal amount of the
Notes to certain other dealers. After the initial public offering, the pub-
lic offering price, concession and re-allowance may be changed by the Under-
writers. At the request of the Company, the Underwriters have reserved up to
$250,000 aggregate principal amount of Notes for sale to directors, officers
and certain employees of the Company and CPPI at the public offering price
net of underwriting discounts and commissions. If any Notes are sold to those
persons, underwriting discounts and commissions will be correspondingly
reduced, but proceeds to the company will be unchanged.
The Underwriters have advised the Company that they currently intend to
make a market in the Notes, but they are not obligated to do so and may dis-
continue any such market-making at any time without notice. Accordingly,
there can be no assurance as to the liquidity of the trading market for the
Notes or that an active public market for the Notes will develop.
Oppenheimer & Co., Inc. ("Oppenheimer") has rendered certain financial
advisory and investment banking services to the Company in the past and may
do so in the future. During the year ended December 31, 1992, the Company
paid Oppenheimer $205,000 in connection with such services. No amounts have
been paid during the nine months ended September 30, 1993.
<PAGE>
<PAGE> 98
LEGAL MATTERS
The validity of the Notes will be passed upon for the Company by Rogers
& Wells, New York, New York, and for the Underwriters by Davis Polk & Ward-
well, New York, New York. Certain legal matters also will be passed upon for
the Company and CPPI by Frank A. Bellis, Jr., General Counsel of the Company
and CPPI.
EXPERTS
The consolidated financial statements and schedules of the Company and
its subsidiary as of December 31, 1991 and 1992, and for each of the years
in the three-year period ended December 31, 1992 included herein and else-
where in the Registration Statement, have been included herein and elsewhere
in the Registration Statement in reliance upon the reports of KPMG Peat Mar-
wick, independent certified public accountants, included herein and else-
where in the Registration Statement, and upon the authority of said firm as
experts in accounting and auditing.
The references to Landauer Associates, Inc. and the appraisal are in-
cluded herein on reliance upon the authority of Landauer Associates, Inc. as
experts with respect to the matters contained in the appraisal. A copy of
the appraisal is an exhibit to the Registration Statement of which this Pro-
spectus forms a part.
The statements made in this Prospectus under the caption "Risk Factors
- - Regulatory Matters" and "Business - Gaming Regulation and Licensing"
have been reviewed and approved by Frank A. Bellis, Jr., General Counsel of
the Company and CPPI, and are included herein in reliance upon that review
and approval.
<PAGE>
<PAGE> 99
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report........................................ F-2
Consolidated Balance Sheets as of December 31, 1991 and 1992 and un-
audited as of September 30, 1993 ................................. F-3
Consolidated Statements of Operations and Accumulated Earnings (Def-
icit) for the years ended December 31, 1990, 1991 and 1992 and un-
audited for the nine months ended September 30, 1992 and 1993 .... F-4
Consolidated Statements of Cash Flows for the years ended December
31, 1990, 1991 and 1992 and unaudited for the nine months ended
September 30, 1992 and 1993 ...................................... F-5
Notes to Consolidated Financial Statements. ........................ F-6
<PAGE>
<PAGE> 100
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
The Claridge Hotel and Casino Corporation:
We have audited the accompanying consolidated balance sheets of The Cla-
ridge Hotel and Casino Corporation and subsidiary as of December 31, 1991
and 1992, and the related consolidated statements of operations and accumu-
lated earnings (deficit), and cash flows for each of the years in the three-
year period ended December 31, 1992. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to ob-
tain reasonable assurance about whether the financial statements are free of
material misstatement. An audit also includes assessing the accounting prin-
ciples used and significant estimates made by management, as well as evalu-
ating the overall financial statement presentation. We believe that our au-
dits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The Cla-
ridge Hotel and Casino Corporation and subsidiary as of December 31, 1991
and 1992, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1992 in conformity
with generally accepted accounting principles.
KPMG Peat Marwick
Short Hills, New Jersey
March 4, 1993, except as to
notes 8 and 14a, which
are as of March 26, 1993
<PAGE>
<PAGE> 101
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
($ in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
------------- -------------
1991 1992 1993
---- ---- ----
(unaudited)
<S> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents ........................................ $ 4,638 $ 4,758 $ 6,428
Receivables, net (including $10,222 and $11,065 in 1991 and 1992,
respectively, and $11,611 at September 30, 1993, due from Part-
nership) (note 3) .............................................. 12,455 12,274 12,716
Inventories ...................................................... 285 292 392
Prepaid expenses and other current assets ........................ 3,699 3,059 3,865
-------- -------- -------
Total current assets ........................................... 21,077 20,383 23,401
-------- -------- -------
Gaming equipment ..................................................... 13,909 13,600 14,383
Less accumulated depreciation .................................... (10,036) (9,639) (10,029)
-------- -------- -------
Net gaming equipment ........................................... 3,873 3,961 4,354
Long-term receivables due from Partnership (note 3) .................. 128,025 121,713 116,391
Intangible assets and deferred charges at cost, less accumulated amor-
tization ........................................................... 264 297 235
Other assets (note 4) ................................................ 1,116 1,951 2,891
-------- -------- -------
$154,355 $148,305 $147,272
======== ======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Revolving credit line borrowings (note 5) ........................ $ 0 $ 1,000 $ -0-
Current installments of long-term debt (note 8) .................. 1,200 1,200 3,530
Accounts payable ................................................. 1,602 1,850 3,262
Loan from the Partnership (note 6) ............................... 3,600 3,600 3,600
Other current liabilities (note 7) ............................... 27,883 26,648 28,696
-------- -------- -------
Total current liabilities ...................................... 34,285 34,298 39,088
-------- -------- -------
Long-term debt (note 8) .............................................. 50,867 40,301 31,312
Deferred rent due to Partnership (note 12) ........................... 42,409 39,525 36,971
Deferred income taxes (note 11) ...................................... 3,610 4,949 5,724
Other noncurrent liabilities (note 9) ................................ 20,000 20,000 20,000
Commitments and contingent liabilities (notes 12 and 14)
Stockholders' equity (notes 15 and 16):
Common stock
Class A, par value $.001, authorized and issued 5,062,500 shares 5 5 5
Additional paid-in capital ....................................... 5,048 5,048 5,048
Accumulated earnings (deficit) ................................... (1,869) 4,179 9,124
Treasury stock, 273,938 and 73,963 Class A shares at cost in 1991
and 1993, respectively ......................................... 0 0 0
-------- -------- -------
Total stockholders' equity ..................................... 3,184 9,232 14,177
-------- -------- -------
$154,355 $148,305 $147,272
======== ======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE> 102
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARY
Consolidated Statements of Operations and Accumulated Earnings (Deficit)
($ in thousands, except per share data)
<TABLE>
<CAPTION>
Year Ended December 31, Nine Months Ended September 30,
------------------------ -------------------------------
1990 1991 1992 1992 1993
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenue:
Casino ......................................... $134,686 $135,406 $146,357 $113,622 $120,331
Hotel .......................................... 11,490 10,807 11,121 8,722 8,829
Food and beverage .............................. 21,832 20,589 18,971 14,985 14,250
Interest from the Partnership .................. 20,517 19,554 18,774 14,156 13,564
Interest, other ................................ 270 207 157 119 124
Other .......................................... 3,230 2,891 3,625 2,978 2,226
-------- -------- -------- -------- --------
192,025 189,454 199,005 154,582 159,324
Less promotional allowances (note 10) .......... 16,982 16,493 16,801 13,318 12,388
-------- -------- -------- -------- --------
Net revenues ............................... 175,043 172,961 182,204 141,264 146,936
-------- -------- -------- -------- --------
Costs and expenses:
Casino ......................................... 66,848 69,694 74,348 56,103 62,402
Hotel .......................................... 3,554 3,340 3,162 2,388 2,407
Food and beverage .............................. 9,236 9,787 9,244 7,191 7,881
Other .......................................... 4,605 4,925 5,106 4,059 3,018
Rent expense to the Partnership ................ 37,242 36,645 34,658 26,144 25,919
Rent expense, other ............................ 1,599 1,836 1,776 1,347 1,289
General and administrative ..................... 24,726 22,621 25,026 18,994 20,997
Gaming taxes ................................... 10,718 10,790 11,669 9,060 9,598
Reinvestment obligation expenses
(note 4) ..................................... 1,510 1,465 977 835 516
Provision for uncollectible accounts ........... 754 559 554 417 440
Depreciation and amortization .................. 1,524 1,274 1,321 957 1,063
Interest expense ............................... 14,552 6,344 4,240 3,306 3,165
-------- -------- -------- -------- --------
Total costs and expenses ................... 176,868 169,280 172,081 130,801 138,695
-------- -------- -------- -------- --------
Income (loss) before income taxes and extraordi-
nary items ..................................... (1,825) 3,681 10,123 10,463 8,241
Income tax expense (note 11) ..................... -0- 1,500 4,075 4,185 3,296
-------- -------- -------- -------- --------
Income (loss) before extraordinary items ......... (1,825) 2,181 6,048 6,278 4,945
Extraordinary items, net of income taxes (note 13) 39,480 -0- -0- -0- -0-
-------- -------- -------- -------- --------
Net income ....................................... 37,655 2,181 6,048 6,278 4,945
-------- -------- -------- -------- --------
Accumulated earnings (deficit) at beginning of pe-
riod ........................................... (41,705) (4,050) (1,869) (1,869) 4,179
-------- -------- -------- -------- --------
Accumulated earnings (deficit) at end of period .. $ (4,050) $ (1,869) $ 4,179 $ 4,409 $ 9,124
======== ======== ======== ======== ========
Income (loss) per share before extraordinary item
(note 2(g)) .................................... $ (.38) $ .46 $ 1.21 $ 1.27 $ .98
======== ======== ======== ======== ========
Net income per share (note 2(g)) ................. $ 7.86 $ .46 $ 1.21 $ 1.27 $ .98
======== ======== ======== ======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE> 103
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
($ in thousands)
<TABLE>
<CAPTION>
Nine Months
Year Ended December 31, Ended September 30,
---------------------- -------------------
1990 1991 1992 1992 1993
---- ---- ---- ---- ----
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income............................................ $ 37,655 $ 2,181 $ 6,048 $ 6,278 $ 4,945
Adjustments to reconcile net income to net cash pro-
vided by (used in) operating
activities:
Depreciation and amortization....................... 1,524 1,274 1,321 957 1,063
Deferred rent to the Partnership.................... (6,442) (4,282) (2,884) (2,041) (2,554)
Deferred interest payable and discount.............. 497 -0- -0- -0- -0-
Deferred interest receivable and discount from the
Partnership....................................... (661) (760) (873) (643) (739)
Valuation reserve................................... 1,510 1,465 977 835 516
Gain on disposal of assets.......................... (62) (149) (18) (13) (41)
Debt forgiveness resulting from Restructuring....... (42,410) -0- -0- -0- -0-
Deferred income taxes - noncurrent.................. 2,580 1,030 1,339 1,054 775
Change in assets and liabilities:
Receivables, net, excluding current portion of
long-term receivables........................... 852 232 1,036 447 219
Inventories....................................... 21 7 (7) 35 (100)
Prepaid expenses and other current assets exclud-
ing current portion of reinvestment obligation
credit.......................................... (198) (296) 124 (304) (806)
Accounts payable.................................. (889) (973) 248 1,074 1,412
Other current liabilities excluding in 1990 inter-
est forgiven in conjunction with the Restructur-
ing............................................. 11,872 3,731 (1,235) (323) 2,048
-------- -------- -------- ------- --------
Net cash flows provided by operating
activities............................................ 5,849 3,460 6,076 7,356 6,738
-------- -------- -------- ------- --------
Cash Flows from Investment Activities:
Increase in intangible assets and deferred charges.... $ (125) $ (248) $ (230) $ (231) $ (72)
Additions to gaming equipment......................... (2,055) (1,213) (1,281) (508) (1,322)
Additions to other assets, net........................ (369) (302) (1,296) (900) (1,456)
Proceeds from disposition of property................. 27 149 87 24 42
Increase in long-term receivables..................... (1,158) (1,343) (2,295) (1,763) (1,694)
Receipt of long-term receivables...................... 8,798 8,367 8,625 6,603 7,093
-------- -------- -------- ------- --------
Net cash flows provided by investment
activities............................................ 5,118 5,410 3,610 3,225 2,591
-------- -------- -------- ------- --------
Cash Flows from Financing Activities:
Payment of long-term debt............................. (10,404) (8,404) (10,566) (8,696) (6,659)
Payment of revolving credit line borrowings........... (13,350) (25,000) (6,000) (4,600) (18,600)
Increase in revolving credit line borrowings.......... 13,250 24,100 7,000 4,600 17,600
-------- -------- -------- ------- --------
Net cash flows used in financing activities............. (10,504) (9,304) (9,566) (8,696) (7,659)
-------- -------- -------- ------- --------
Increase (decrease) in cash and cash equivalents........ 463 (434) 120 1,885 1,670
Cash and cash equivalents at beginning of
period................................................ 4,609 5,072 4,638 4,638 4,758
-------- -------- -------- ------- --------
Cash and cash equivalents at end of period.............. $ 5,072 $ 4,638 $ 4,758 $ 6,523 $ 6,428
======== ======== ======== ======= ========
Supplemental cash flow disclosures:
Interest paid......................................... $ 7,592 $ 5,912 $ 3,808 $ 2,982 $ 2,841
======== ======== ======== ======= ========
Income taxes paid..................................... $ 123 $ 220 $ 2,841 $ 2,101 $ 1,068
======== ======== ======== ======= ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<PAGE> 104
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Including Data Applicable to Unaudited Periods)
1. THE CORPORATION
a) Organization
The Claridge Hotel and Casino Corporation (the "Company"), was formed
on August 26, 1983 to hold all of the shares of capital stock of The Cla-
ridge at Park Place, Incorporated ("CPPI"), which was formed on August 29,
1983. On October 31, 1983, CPPI acquired certain assets of The Claridge Ho-
tel and Casino (the "Claridge"), including gaming equipment (the "Casino
Assets"), from Del E. Webb New Jersey, Inc. ("DEWNJ"), a wholly-owned
subsidiary of Del Webb Corporation ("Webb"); leased certain other of the
Claridge's assets, including the buildings, parking facility and non-gaming,
depreciable, tangible property of the Claridge (the "Hotel Assets"), from
Atlantic City Boardwalk Associates, L.P. (the "Partnership"); subleased
the land on which the Claridge is located from the Partnership; assumed cer-
tain liabilities related to the acquired assets; and undertook to carry on
the business of the Claridge.
b) Claridge Restructuring
On October 27, 1988, the Company, together with CPPI, entered into the
Restructuring Agreement in an attempt to implement a plan pursuant to which
it could remain financially viable through at least October 1989. Had the
Company not entered into the Restructuring Agreement, CPPI would probably
not have been relicensed for the license period beginning October 31, 1988
and ending October 31, 1989, and would have had to consider filing for pro-
tection under bankruptcy. The Restructuring Agreement was subject to
approval by at least two-thirds in interest of the limited partners of the
Partnership and at least two-thirds of the holders of the Class A capital
stock of the Company. Such approval was solicited through a Proxy Statement
- - Consent Solicitation and Prospectus issued by the Company, the Partnership
and Webb. Investor approval was received on June 13, 1989. On June 16, 1989,
the restructuring of the financial obligations of the Company and CPPI was
concluded pursuant to the terms of the Restructuring Agreement.
On June 16, 1989, Webb made a payment to First Fidelity Bank, N.A., New
Jersey ("Bank") of approximately $14.5 million, resulting in the reduction
of the outstanding balance of the first mortgage loan from $89,015,000 to
$74,557,000. The Bank entered into the Revolving Credit and Term Loan Agree-
ment ("Loan Agreement") with CPPI, which constitutes an amendment to
CPPI's First Mortgage Agreement. In addition, Webb forgave and cancelled all
accrued but unpaid management fees, interest, a $500,000 unsecured loan, and
$10.35 million of the working capital loans which it had made to CPPI. CPPI
repaid an additional $4.65 million of working capital loans to Webb at the
closing of the Restructuring. Webb also made a payment of approximately $5
million to Manufacturers Hanover Trust Company to satisfy fully the working
capital advances made by Manufacturers Hanover Trust Company to CPPI under a
line of credit which Webb had guaranteed on behalf of CPPI. All options,
cross options, and land options existing between Webb or DEWNJ, on the one
hand, and the Partnership or CPPI, on the other were terminated.
DEWNJ assigned, without recourse and without representation or warranty,
of any kind or nature, to the Bank all right, title and interest of DEWNJ
in, to and under the Purchase Money Second Mortgage (the "Second
<PAGE>
<PAGE> 105
Mortgage") entered into with the Partnership. CPPI retained the right to
require the Bank to cancel and release the Second Mortgage and the obliga-
tions secured thereunder upon the occurrence of one or more of certain con-
ditions. Subsequently, CPPI met one of these conditions, and accordingly,
the Bank cancelled the Second Mortgage, including interest which accrued at
14%, and released the obligations secured thereunder (see note 13, Extraor-
dinary Items).
At the closing of the Restructuring on June 16, 1989, Webb transferred
all of its right, title, and interest to its Claridge land, easement, and
air rights to the Partnership.
Pursuant to amendments to the Operating Lease and Expansion Operating
Lease between CPPI and the Partnership, the Partnership agreed to defer up
to $15,078,000 in rentals during the period July 1, 1988 through the begin-
ning of 1992, and to provide for the abatement of basic rent thereafter,
thereby reducing its cash flow to the extent necessary to pay Partnership
expenses until a sale or further refinancing of the Claridge. The receipt of
amounts deferred is contingent upon the realization of profits or distribu-
tions from such sale or further refinancing. During the third quarter of
1991, the maximum deferral of basic rent allowable under the Operating Lease
of $15,078,000 was reached. On August 1, 1991, the Operating Lease Agreement
and Expansion Operating Lease Agreement were further amended to revise the
abatement as follows: commencing January 1, 1991, for each calendar year
through 1998, the lease abatements may not exceed $10 million in any one
calendar year, and $38,820,000 in the aggregate.
In addition, the Partnership loaned $3.6 million to CPPI representing
substantially all cash and cash equivalents remaining in the Partnership as
of June 16, 1989 other than funds needed to pay expenses incurred through
the closing of the Restructuring. The Partnership paid to CPPI $100,000 for
the cancellation of the Land Option Agreement relating to the real property
underlying the Claridge.
The Restructuring Agreement provides for Webb to retain an interest,
equal to $20 million plus interest from December 1, 1988 at the rate of 15%
per annum compounded quarterly (the "Contingent Payment"), in any proceeds
ultimately recovered from the operations and/or the sale or refinancing of
the Claridge facility in excess of the first mortgage loan and other liabil-
ities. The Company, CPPI, and the Partnership agreed not to make any distri-
butions to the investors whether derived from operations or from sale or re-
financing proceeds, until Webb had received the Contingent Payment. On April
2, 1990, Webb, subject to the Company's consent, transferred its interest in
the Contingent Payment to an irrevocable trust for the benefit of the United
Way of Arizona, and upon such transfer, Webb was no longer required to be
qualified or licensed by the New Jersey Casino Control Commission
("NJCCC"). Webb agreed to permit those investors from whom Webb had re-
ceived written releases from all liabilities ("Releasing Investors"), 81%
in interest of the investors, to receive certain amounts ("Contingent Pay-
ment Rights"), to the extent available, in accordance with the following
schedule of priorities:
(i) Releasing Investors would receive 81% of the first $10 million
of any net proceeds from operations or a sale or a refinancing of the
Claridge facility pursuant to an agreement executed within five years
after the Restructuring ("Five Year Payments") (i.e., the sum obtained
by multiplying the lesser of $10 million of, or the total of, any Five-
Year Payments by 81%, with the balance of any such funds to be applied
against the Contingent Payment); and
<PAGE>
<PAGE> 106
(ii) All distributions of funds other than Five-Year Payments, or of
Five-Year Payments in excess of the $10 million, will be shared by Webb
and Releasing Investors in the following proportions: Releasing Inves-
tors will receive 40.5% (one-half of 81%) of any such excess proceeds,
with the balance of any such funds to be applied against the Contingent
Payment, until the Contingent Payment is paid in full ($20 million plus
accrued interest).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Presentation
The financial statements are prepared in accordance with generally ac-
cepted accounting principles. The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary, CPPI. All mate-
rial intercompany accounts and transactions have been eliminated in consoli-
dation.
The financial information as of September 30, 1993 and for the nine
months ended September 30, 1992 and 1993 have been prepared in conformity
with the accounting principles and practices reflected in the audited finan-
cial statements included herein. The unaudited financial statements contain
all adjustments, consisting only of normal, recurring adjustments, necessary
to present fairly the operating results and cash flows for the nine months
ended September 30, 1992 and 1993. Results for interim periods are not nec-
essarily indicative of those to be expected for the year.
b) Cash and Cash Equivalents
Cash and cash equivalents includes investments in interest bearing re-
purchase agreements in government securities with maturities of three months
or less when purchased. Interest income is recorded as earned.
c) Casino Receivables and Revenues
Credit is issued to certain casino customers and the Company records all
unpaid credit as casino receivables on the date the credit was issued. Al-
lowances for estimated uncollectible casino receivables are provided to re-
duce these receivables to amounts anticipated to be collected. The Company
recognizes as casino revenue, the net win (which is the difference between
amounts wagered and amounts paid to winning patrons) from gaming activity.
d) Inventories
Inventories are stated at the lower of cost or market, cost being deter-
mined principally on a first-in, first- out basis.
e) Gaming Equipment
Gaming equipment is stated at cost. Depreciation is provided over the
estimated useful lives (5 years) of the respective assets using the straight
line method.
f) Income Taxes
Deferred income taxes are provided for timing differences between finan-
cial statement reporting and income tax reporting for rent levelling provi-
sions, asset basis differences, and various other expenses recorded for fi-
nancial statement purposes.
<PAGE>
<PAGE> 107
g) Earnings Per Share
Earnings per share is calculated based on the weighted average shares
outstanding (4,788,562 for the years ended December 31, 1990, and 1991,
4,983,696 for the year ended December 31, 1992, and 4,957,524 and 5,044,077
for the nine months ended September 30, 1992 and 1993, respectively).
3. RECEIVABLES
Receivables at December 31, 1991 and 1992 and September 30, 1993 con-
sists of the following:
December 31, September 30,
--------------- -------------
1991 1992 1993
---- ---- ----
(in thousands)
Current Receivables
Casino, less allowance for doubtful
accounts of $1,216,000 and
$1,424,000 at December 31, 1991 and
1992, respectively, and $1,498,000
at September 30, 1993 .............. $ 1,451 $ 836 $ 394
Hotel, less allowance for doubtful ac-
counts of $37,000 and $7,000 at De-
cember 31, 1991 and 1992, respec-
tively, and $56,000 at September 30,
1993 ............................... 367 257 334
Interest receivable due from the Part-
nership ............................ 1,597 1,519 1,468
Current portion Expandable Wraparound
Mortgage due from the Partnership .. 6,000 7,000 7,750
Current portion of FF&E Loans ........ 1,464 1,146 912
Current portion of Expansion/Construc-
tion promissory note ............... 1,161 1,335 1,481
Other, less allowance for doubtful ac-
counts of $25,000 and $13,000 at De-
cember 31, 1991 and 1992, respec-
tively, and $13,000 at September 30,
1993 ............................... 415 181 377
-------- -------- --------
$ 12,455 $ 12,274 $ 12,716
======== ======== ========
Long-Term Receivables
$127,000,000 Expandable Wraparound
Mortgage 14%, maturities through
September 30, 2000 (net of
$14,172,000 discount and $13,299,000
discount at December 31, 1991 and
1992, respectively, and $12,559,000
discount at September 30, 1993) .... $ 92,828 $ 86,701 $ 81,441
Deferred interest receivable, due Sep-
tember 30, 2000 .................... 20,000 20,000 20,000
FF&E Loans, 14% ...................... 4,043 5,193 6,261
Expansion/Construction promissory
note, 14% .......................... 11,154 9,819 8,689
-------- -------- --------
$128,025 $121,713 $116,391
======== ======== ========
<PAGE>
<PAGE> 108
The Expandable Wraparound Mortgage Loan Agreement ("Expandable Wrap-
around Mortgage") was executed and delivered by the Partnership to CPPI and
is secured by all property of the Partnership. As part of the agreement,
CPPI will service the First Mortgage and the Partnership's debt under the
Purchase Money Second Mortgage indebtedness (note 8). $20,000,000 in inter-
est was deferred between 1983 and 1988 and will be due upon maturity. Prin-
cipal payments required under the Expandable Wraparound Mortgage commenced
in 1988.
The Expandable Wraparound Mortgage also includes a provision whereby
CPPI will loan the Partnership up to $25,000,000 in the form of FF&E Loans,
secured under the Expandable Wraparound Mortgage, for the purchase of prop-
erty and equipment. One half of the principal is due in 48 months and the
remaining balance is due 60 months from the date of the respective FF&E
Loan. During the year ended December 31, 1993, $1,146,000 of principal pay-
ments will become due.
The Expandable Wraparound Mortgage was increased up to $17 million to
provide the Partnership with funding for the construction of the expansion.
Effective on the date that the expansion opened to the public (August 28,
1986), the Partnership commenced making level monthly payments of principal
and interest so as to repay on September 30, 1998, in full, the principal
balance of this increase in the Expandable Wraparound Mortgage. The Expand-
able Wraparound Mortgage was amended to require, in addition to the above,
principal payments (in equal monthly installments) due during the years 1988
through 1998 in escalating amounts totalling $80,000,000 and on September
30, 2000 a balloon payment of $67,000,000 which includes $20,000,000 of de-
ferred interest.
4. OTHER ASSETS
The Casino Control Act as amended in December 1984 provides for the im-
position of an investment obligation pursuant to criteria set forth in the
Act or the payment of an alternative tax. The investment obligation is cal-
culated at 1.25% of the total gaming revenues each calendar year. Gaming
revenues are the total revenues derived from gaming operations less the pro-
vision for bad debt. If the casino licensee opts not to make an investment
as required, it is assessed an alternative tax of 2.5% of total gaming reve-
nues less the provision for bad debt. The licensee has two options in satis-
fying its investment obligation: it can make a direct investment in a
project which must be approved by the Casino Reinvestment Development Au-
thority ("CRDA"), which is the agency responsible for administering this
portion of the Casino Control Act, or it can buy bonds issued by the CRDA
which shall, if tax exempt, bear interest at the rate of 66 2/3% of the av-
erage rate of Bond Buyer Weekly 25 Revenue Bond Index for the 26 weeks pre-
ceding the issue of the bonds. If the bonds are not tax exempt they shall
bear interest at the rate of 66 2/3% of the average rate of Moody's A Rated
Utility Index for 26 weeks preceding the issue of CRDA bonds. The investment
obligation must be paid on the 15th day of the first, fourth, seventh, and
tenth months of each year based on the estimated gaming revenues for the
three month period preceding the first day of those months. The alternative
tax must be paid not later than April 30 of the following year. The Company
has deposited its reinvestment funds with the State Treasurer. Through De-
cember 31, 1992, $10,881,000 has been deposited with the State. On March 16,
1987 CRDA had its first bond issue of which CPPI's mandatory share was
$602,000. On April 30, 1987, a second bond issue was executed. CPPI's por-
tion amounted to $1,052,000. Additional bond issuances executed through Sep-
tember 30, 1993 have totalled $371,000. All purchases were made from funds
already deposited with the State Treasurer.
<PAGE>
<PAGE> 109
It was determined on January 15, 1990 that certain bonds issued by the
CRDA had become impaired and that the payment of principal and interest was
uncertain. CPPI's investment in these bonds totals $1,654,000. The bonds are
to pay interest at two-thirds of market rate. Consequently, CPPI had
recorded a valuation allowance of approximately $538,000 at the time of pur-
chase. Given the uncertainty regarding the receipt of principal and inter-
est, CPPI recorded an additional valuation allowance of $1,116,000 during
the fourth quarter of 1989 so as to fully reserve its investment.
On December 1, 1989, CPPI made a donation to the CRDA in the amount of
$6,659,000. The amount donated represents amounts paid to the CRDA and in-
cluded all of CPPI's obligations (a) incurred from January 1, 1984 through
September 30, 1989 allocable to Atlantic City; and (b) incurred prior to
January 1, 1984 and allocable to Atlantic City which had not, as of November
30, 1989, been applied to the purchase of bonds. In exchange for the dona-
tion, CPPI received a credit equal to $3,396,000, 51% of its donation, to be
applied to its obligations commencing after September 30, 1989. During the
fourth quarter of 1989, CPPI recorded an expense of $1,102,000 to write-down
the book value of the donated amount to $3,396,000.
A second donation was made to the CRDA, effective July 1, 1990, of funds
previously paid to the CRDA which were allocable to the purchase of obliga-
tions of the New Jersey Development Authority for Small Businesses, Minori-
ties and Women's Enterprises ("SBMWE"). In exchange for this donation,
which was in the amount of $429,000, CPPI received a credit equal to
$219,000 (51% of the donation), to be applied to obligations commencing af-
ter June 30, 1990. During the third quarter of 1990, CPPI recorded an ex-
pense of $71,000 to write-down the book value of the donated amount to
$219,000.
5. WORKING CAPITAL LOANS
Pursuant to the terms of the Revolving Credit and Term Loan Agreement
("Loan Agreement") as amended on the closing of the Restructuring, First
Fidelity Bank, N.A., New Jersey ("Bank") established a revolving working
capital facility in the amount of $5.4 million subject to increase to up to
$7.5 million to the extent that during 1989 CPPI made payments of principal
other than scheduled payments of principal on the first mortgage loan. The
Loan Agreement was amended subsequent to the Restructuring, on September 29,
1989, on April 23, 1991 and again on April 1, 1993. The current terms of the
Loan Agreement provide a revolving working capital facility in the amount of
$7.5 million. Interest on the working capital facility borrowings, which is
payable monthly in arrears, accrues at a rate equal to the prime rate plus
four percent, as amended effective April 1, 1993 (see Note 8, Long-Term
Debt). CPPI is also required to pay quarterly a commitment fee equal to .5%
per annum of the unused portion of the revolving working capital facility.
There were no outstanding borrowings on the revolving working capital
facility as of December 31, 1991 and September 30, 1993. At December 31,
1992, $1,000,000 of borrowings were outstanding on the revolving working
capital facility.
6. LOAN FROM THE PARTNERSHIP
In accordance with the terms of the Restructuring Agreement, on June 16,
1989 the Partnership loaned to CPPI $3.6 million, which represented substan-
tially all cash and cash equivalents remaining in the Partnership other than
funds needed to pay expenses incurred through the closing of the Restructur-
ing. This loan is evidenced by an unsecured promissory note and is not due
<PAGE>
<PAGE> 110
and payable until such time as the full or partial satisfaction of the Wrap-
around Mortgage and the First Mortgage has been made in connection with a
refinancing or sale of all or a partial interest in the Claridge.
Interest which accrues at 12% per annum is payable in full upon matu-
rity. As of December 31, 1992, such interest, which is included in other
current liabilities, amounted to $1,530,000.
7. OTHER CURRENT LIABILITIES
Other current liabilities at December 31, 1991 and 1992 and September
30, 1993 consist of the following:
December 31, September 30,
-------------- -------------
1991 1992 1993
---- ---- ----
(in thousands)
Deferred Rent, current ................. $15,078 $15,078 $15,078
Accrued payroll and related benefits ... 4,878 5,685 5,345
Progressive jackpots liability ......... 2,924 483 64
Auto/General insurance reserves ........ 1,611 1,425 1,346
Accrued interest due to Partnership .... 1,098 1,530 1,854
Other current liabilities .............. 2,294 2,447 5,009
------- ------- -------
$27,883 $26,648 $28,696
======= ======= =======
The amount of deferred rent as of December 31, 1991 and 1992 and Septem-
ber 30, 1993 of $15,078,000 represents the maximum deferral allowed in ac-
cordance with the Operating Lease Agreement and Expansion Operating Lease
Agreement, as amended. Payment of the deferred rent, current is contingent
upon the realization of profits or distributions from a sale or further re-
financing.
In September 1992, certain progressive slot machines were removed from
the casino, resulting in the reversal of $2,437,000 of progressive jackpot
liability. During the nine months ended September 30, 1993, $403,000 of pro-
gressive jackpot liability was reversed as a result of removing additional
progressive slot machines. The removal of these units was made following re-
ceipt of approval from the NJCCC.
8. LONG-TERM DEBT
Long-term debt at December 31, 1991 and 1992 and September 30, 1993 con-
sists of the following:
December 31, September 30,
-------------- -------------
1991 1992 1993
---- ---- ----
(in thousands)
First Mortgage Note, prime plus 4.0%,
effective April 1, 1993 .............. $ 52,067 $ 41,501 $ 34,842
Less current installments .............. 1,200 1,200 3,530
-------- -------- --------
$ 50,867 $ 40,301 $ 31,312
======== ======== ========
As a result of the Restructuring which was concluded on June 16, 1989,
the first mortgage balance was reduced in accordance with the Restructuring
Agreement from $89,015,000 to $74,557,000. The Loan Agreement, which consti-
tutes an amendment to CPPI's First Mortgage Agreement, was amended subse-
quent to the Restructuring, on September 29, 1989, on April 23, 1991 and
again effective April 1, 1993. The terms of the Loan Agreement, prior to the
<PAGE>
<PAGE> 111
April 1, 1993 amendment, required principal payments on the first mortgage
loan of $1.2 million annually (payable in equal monthly installments), for
1992 and 1993, with a balloon payment due on January 1, 1994.
On October 7, 1991, CPPI was issued a two year license by the NJCCC for
the period commencing October 31, 1991. The relicensing approval was based
in part on the execution of the second amendment to the Loan Agreement on
April 23, 1991. In addition, CPPI was required to submit to the NJCCC 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 implemen-
tation of the plan by June 30, 1993.
On March 26, 1993, the Company, CPPI, and the Bank reached an agreement
to modify the terms of the Loan Agreement in order to satisfy this license
condition. Effective April 1, 1993, the third amendment to the Loan Agree-
ment was executed. The modifications resulting from this amendment are as
follows:
(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). Interest on the term loan is payable monthly
in arrears;
(iii) an increase in the mandatory principal payments from $1.2 mil-
lion to $3 million annually, payable in equal monthly installments;
(iv) an increase in the maximum annual capital expenditure limita-
tion 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, CPPI 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, CPPI paid an extension fee of $200,000 upon the execution
of this amendment to the Loan Agreement.
CPPI is also required to pay, quarterly, to the Bank, for permanent ap-
plication to the outstanding principal balance of the first mortgage loan,
any excess cash flow as defined in the Loan Agreement. CPPI made principal
payments totalling $7,055,000 in 1991 and $9,068,000 in 1992, representing
its excess cash flow as calculated per the terms of the Loan Agreement.
The terms of the Loan Agreement also limit the amount CPPI can expend
for capital expenditures to $5 million per annum, as amended effective April
1, 1993. CPPI is permitted to carry over to the first quarter of the suc-
ceeding year up to $350,000 not expended during any year. In addition, the
terms of the Loan Agreement restrict the amount of any "delayed payments"
(payments made in a succeeding year for items delivered in any subject year)
to a maximum amount of $1 million.
9. OTHER NONCURRENT LIABILITIES
Pursuant to the Restructuring Agreement, Webb retained an interest,
which was assigned to the United Way of Arizona on April 2, 1990, equal to
$20 million plus interest at a rate of 15% per annum, compounded quarterly,
<PAGE>
<PAGE> 112
in any proceeds ultimately recovered from operations and/or the sale or re-
financing of the Claridge facility in excess of the first mortgage loan
("Contingent Payment"), which amount is payable under certain
circumstances. Therefore, in 1989, CPPI deferred the recognition of $20 mil-
lion of forgiveness income with respect to the Contingent Payment obliga-
tion. Interest on the Contingent Payment is not being accrued since the
likelihood of paying such amount is not considered probable at this time. As
of December 31, 1992, accrued interest would have amounted to approximately
$16,500,000.
10. PROMOTIONAL ALLOWANCES
The retail value of complimentary rooms, food and beverages and other
complimentaries furnished to patrons is included in gross revenue and then
deducted as promotional allowances. The estimated cost of providing such
promotional allowances for the years ended December 31, 1990, 1991 and 1992
and the nine months ended September 30, 1992 and 1993 has been allocated to
casino expenses as follows (in thousands):
Nine Months
Year Ended December 31, Ended September 30,
------------------------- -------------------
1990 1991 1992 1992 1993
---- ---- ---- ---- ----
Hotel .................. $ 1,353 $ 1,540 $ 1,972 $ 1,541 $1,730
Food and beverage ...... 10,166 9,167 9,936 7,810 7,356
Entertainment .......... 816 1,409 981 839 541
------- ------- ------- ------- ------
Total ................ $12,335 $12,116 $12,889 $10,190 $9,627
======= ======= ======= ======= ======
11. INCOME TAXES
The provision for income taxes is comprised of the following (in thou-
sands):
December 31,
---------------------------------------
1990 1991 1992
Current ---- ---- ----
Federal................ $-0- $ 280 $2,325
State.................. -0- 190 411
Deferred ............... -0- 1,030 1,339
---- ------ ------
$-0- $1,500 $4,075
==== ====== ======
For the year ended December 31, 1990, $2,930,000 of income taxes has
been provided and netted against extraordinary income (see note 13). Such
taxes are comprised of $350,000 in current and $2,580,000 in deferred.
The principal items comprising the deferred tax provision in 1991 in-
cluded bad debt expense of $480,000, rent levelling of $1,720,000,
Wraparound Mortgage discount expense of $304,000, and income related to debt
forgiveness of ($1,538,000).
The principal items comprising the deferred tax provision in 1992 in-
cluded rent levelling of $1,150,000, Wraparound Mortgage discount expense of
$350,000, reversal of progressive jackpot liability of $615,000, bad debt
expense of ($66,000), and income related to debt forgiveness of ($678,000).
The provision for income tax differs from the amount computed at the
statutory rate as follows (in thousands):
<PAGE>
<PAGE> 113
December 31,
----------------------------
1990 1991 1992
---- ---- ----
Federal income tax at statutory rates .. $(621) $1,251 $3,442
State income tax less Federal benefit .. -0- 249 633
Unrecognized tax benefit utilized
against extraordinary item ........... 621 -0- -0-
------ ------- ------
$ -0- $1,500 $4,075
====== ======= ======
At December 31, 1990, 1991 and 1992, there were no available net operat-
ing loss carryforwards for financial statement or tax purposes. As a result
of the Second Mortgage forgiveness, the remaining financial statement net
operating losses were utilized which resulted in the recording of net de-
ferred tax credits of approximately $2,580,000. As a result of the restruc-
turing in 1989, the amount of debt forgiven resulted in the loss or reduc-
tion of various tax attributes including tax operating loss carryforwards of
$30,400,000, unused tax credits of $1,041,000 and reduction in tax basis of
assets by $89,178,000. As a result of the reduction in tax basis of assets,
cash payments for income taxes will significantly exceed income tax expense
for financial statement purposes in future years. The above amounts have
been adjusted to reflect settlements of the IRS audits of the years 1983
through 1987.
In February 1992, the Financial Accounting Standards Board issued State-
ment No. 109, "Accounting for Income Taxes". Statement No. 109 requires a
change from the deferred method of accounting for income taxes to the asset
and liability method of accounting for income taxes.
Under the asset and liability method, deferred tax assets and liabili-
ties 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.
Effective January 1, 1993, the Company adopted Statement No. 109 on a
prospective basis. There is no effect on the Company's statement of opera-
tions for the nine month period ended September 30, 1993 as a result of the
adoption of Statement No. 109.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at January 1, 1993 are
presented below (in thousands):
Deferred tax asset/(liability):
Depreciation ............................................... $ (721)
Rent leveling .............................................. 15,364
Difference between book and tax basis of receivables ....... (1,699)
Accrued expenses ........................................... 823
Difference between book and tax basis of Wraparound Mortgage
receivable ............................................... (19,252)
Other differences between tax and financial statement values 536
---------
Net Deferred Tax Liability ................................. $ (4,949)
=========
No valuation allowance has been provided on deferred tax assets since
management believes that it is more likely than not that such assets will be
realized through the reversal of existing deferred tax liabilities and fu-
ture taxable income.
<PAGE>
<PAGE> 114
The effective tax rate and components of income tax expense at September
30, 1993 did not change significantly from that at December 31, 1992.
12. OPERATING LEASE
CPPI leases the Hotel Assets and subleased the land on which The Cla-
ridge Hotel and Casino is located from the Partnership under an Operating
Lease. The initial lease term is 15 years with three ten-year renewal op-
tions.
Minimum future basic lease payments under the Operating Lease, as
amended, as of December 31, 1992 (net of expected abatements, as discussed
below) are as follows (in thousands):
01/01/93 - 12/31/93 ............................ $ 30,617
01/01/94 - 12/31/94 ............................ 30,642
01/01/95 - 12/31/95 ............................ 30,570
01/01/96 - 12/31/96 ............................ 31,589
01/01/97 - 12/31/97 ............................ 41,775
01/01/98 - 09/30/98 ............................ 32,531
--------
Total Minimum $197,724
========
Also, additional rent payments are required based upon fixed assets pur-
chased by the Partnership (the FF&E Replacements, note 3) and then leased to
CPPI. For the years ended December 31, 1990, 1991 and 1992, expense result-
ing from the Operating Lease amounted to $37,242,000, $36,645,000, and
$34,658,000, respectively, of which ($6,442,000), ($4,282,000), and
($2,884,000), respectively, of rental expense is attributable to the
requirement under Statement of Financial Accounting Standards #13 to provide
a level rent expense for those leases with escalating payments. Under terms
of the Operating Lease, the Partnership is responsible for taxes, assess-
ments, insurance, maintenance and repairs and other costs related to use and
occupancy of the Hotel Assets.
CPPI entered into an Expansion Operating Lease Agreement with the Part-
nership whereby CPPI leased the expansion facility for an initial term be-
ginning March 17, 1986 and ending on September 30, 1998 with three 10-year
renewal options. Basic annual rent payable during the initial term of the
Expansion Operating Lease was $3,870,000 in 1986 (prorated based on the day
that the Expansion Improvements opened to the public) and determined based
on the cost of the construction of the Expansion Improvements. Annually
thereafter the rental amount is adjusted based on the Consumer Price Index
but any increase may not exceed two percent per annum. Basic annual rent for
1990, 1991, and 1992 amounted to $4,189,000, $4,273,000, and $4,358,000, re-
spectively. If the term of the Expansion Operating Lease is extended, basic
annual rent will be calculated pursuant to a formula, with such rent not to
be more than $3,000,000 nor less than $2,500,000 and not to be greater than
10% more than the basic annual rent for the immediately preceding lease year
in each lease year thereafter. CPPI is also required to pay as additional
rent certain expenses and the debt service relating to Furniture, Fixture
and Equipment Replacements and building improvements (collectively
"Expansion FF&E Replacement") for the expanded facility. The Partnership
will be required during the entire term of the Expansion Operating Lease to
provide CPPI with Expansion FF&E Replacements and until September 30, 1998,
will be required to provide facility maintenance and engineering services to
CPPI. CPPI will be obligated to lend the Partnership any amounts necessary
to fund the cost of Expansion FF&E Replacements. Any advances by CPPI for
the foregoing will be secured under the Expandable Wraparound Mortgage. CPPI
will have the option to purchase, on September 30, 1998 and, if it renews
<PAGE>
<PAGE> 115
the Expansion Operating Lease, on September 30, 2003, the expansion facility
(including air rights) for their fair market value at the time the option is
exercised.
In conjunction with the closing of the Restructuring, the Operating
Lease Agreement and the Expansion Operating Lease Agreement were amended to
provide for the deferral of $15,078,000 of rental payments during the period
July 1, 1988 through the beginning of 1992, and to provide for the abatement
of basic rent thereafter. During the third quarter of 1991, the maximum de-
ferral of basic rent allowable under the Operating Lease of $15,078,000 was
reached. On August 1, 1991, the Operating Lease Agreement and Expansion Op-
erating Lease Agreement were further amended to revise the abatement as fol-
lows: commencing January 1, 1991, for each calendar year through 1998, the
lease abatements may not exceed $10 million in any one calendar year, and
$38,820,000 in the aggregate.
Effective with the closing of the Restructuring on June 16, 1989, lease
expense recognized on a level basis is reduced prospectively, from the use
of a revised schedule of rent levelling relative to the abatement of certain
rental beginning in 1992.
CPPI also leases supplemental office, warehouse, and surface parking
spaces in nearby lots. For the years ended December 31, 1990, 1991, and
1992, operating lease expense for these facilities amounted to $1,599,000,
$1,836,000 and $1,776,000, respectively. The minimum future lease payments
due under these leases total $1,353,000 in 1993, $840,000 in 1994, $626,000
in 1995, $600,000 in 1996, and $600,000 in 1997.
On March 8, 1991, CPPI entered into an operating lease agreement to
lease certain computer equipment. For the years ended December 31, 1991 and
1992, operating lease expense for the computer equipment amounted to
$231,000 and $308,000, respectively. The minimum future lease payments due
under this agreement are $308,000 in 1993 and $76,950 in 1994. CPPI has an
option to acquire the equipment at the end of the lease term at the then
fair market value of the equipment.
On June 11, 1991, CPPI entered into an operating lease agreement to
lease one hundred slot machines for a period of thirty-six months. For the
years ended December 31, 1991 and 1992, operating lease expense for these
slot machines amounted to $83,000 and $170,000, respectively. The minimum
future lease payments due under this agreement are $170,000 in 1993 and
$86,000 in 1994. At the end of the three-year lease term, CPPI has the op-
tion to purchase the slot machines for an amount as specified in the lease
agreement, or to extend the lease term for two additional one year periods.
On February 24, 1992, CPPI entered into an operating lease agreement to
lease an additional one hundred slot machines, under the same terms and con-
ditions as the June 11, 1991 lease agreement. Operating lease expense for
these slot machines amounted to $146,000 for the year ended December 31,
1992. Minimum future lease payments under this agreement are as follows:
$174,000 in 1993, $174,000 in 1994, and $28,000 in 1995.
13. EXTRAORDINARY ITEMS
At the closing of the Restructuring on June 16, 1989, DEWNJ assigned
without recourse and without representation or warranty, of any kind or na-
ture to the Bank all right, title and interest of DEWNJ in, to and under the
Purchase Money Second Mortgage (the "Second Mortgage") entered into with
the Partnership. CPPI retained the right to require the Bank to cancel and
<PAGE>
<PAGE> 116
release the Second Mortgage and the obligations secured thereunder upon the
occurrence of one or more of certain conditions. As of December 1, 1990,
CPPI had met one of these conditions and accordingly, the Bank cancelled the
Second Mortgage, including interest which accrued at 14%, and released the
obligations secured thereunder. For the year ended December 31, 1990, the
extraordinary items which resulted from the cancellation and release of the
Second Mortgage and accrued interest thereon and the related tax effect con-
sist of the following (in thousands):
Second Mortgage (net discount) forgiven .................... $32,814
Accrued interest forgiven .................................. 9,596
-------
42,410
Income taxes ............................................... 16,234
-------
Extraordinary item, net of income taxes .................... 26,176
Extraordinary item: Reduction of income taxes arising from
prior year operating losses .............................. 13,304
-------
Total extraordinary items ................................ $39,480
=======
14. CONTINGENCIES
a) Licensing
On October 7, 1991, CPPI was issued a two-year casino license by the
NJCCC for the period commencing October 31, 1991. The relicensing approval
was based in part on the execution of the second amendment to the Loan
Agreement on April 23, 1991 (as discussed in note 8, Long-Term Debt). In ad-
dition, CPPI was required to submit to the NJCCC by April 30, 1993 a plan to
satisfy the balloon payment due on the first mortgage loan on January 1,
1994, pursuant to the terms of the Loan Agreement, with implementation of
the plan by June 30, 1993.
On March 26, 1993, the Company, CPPI, and the Bank reached an agreement
to modify the terms of the Loan Agreement in order to satisfy this license
condition. Effective April 1, 1993, the third amendment to the Loan Agree-
ment was executed; the modifications resulting from this amendment are out-
lined in Note 8, Long-Term Debt. Executed copies of this amendment were sub-
mitted to the NJCCC, thus satisfying the October 1991 relicensing condition.
(See Note 18).
b) Legal Proceedings
The Company and CPPI are defendants in various legal proceedings arising
in the normal course of business. In the opinion of management, it is not
reasonably likely that any such matters individually or collectively would
result in an outcome having a material adverse effect on the consolidated
financial statements.
15. OTHER EVENTS
On December 30, 1992, the Company and Fitzgeralds Las Vegas, L.P. exe-
cuted a Letter of Intent to combine the business and assets of the two orga-
nizations. A definite agreement was not reached, and the Letter of Intent
expired by its own terms on June 28, 1993.
<PAGE>
<PAGE> 117
16. RELATED PARTY TRANSACTIONS
a) The Restructuring Agreement provided for Webb to retain an inter-
est, equal to $20 million plus interest at a rate of 15% per annum, com-
pounded quarterly, in any proceeds ultimately recovered from operations
and/or in the sale or refinancing of the Claridge facility in excess of
the first mortgage loan. Webb was also entitled to retain a seat on the
Board of Directors of the Company and CPPI (a right it subsequently re-
linquished). Effective with the closing of the Restructuring on June 16,
1989, all or substantially all of the financial, contractual, ownership,
guarantee and other relationships of the Company and CPPI with Webb were
terminated.
b) The Partnership has a direct material interest in the Expandable
Wraparound Mortgage Loan Agreement, the Operating Lease and the Expan-
sion Operating Lease together with the amendments thereto as described
in the preceding notes.
The ownership interests in the Partnership which have a relationship
to the Company are currently as follows:
- Limited Partners representing approximately 98% interest in
the Partnership own approximately 4,500,000 shares of the Company's
Class A Stock; and
- Special Limited Partners (Oppenheimer Holdings, Inc. and cer-
tain officers and employees of Oppenheimer & Co., Inc.) represent
approximately 1% interest in the Partnership and prior to March 24,
1989 owned the remaining 562,500 shares of Class A Stock. On March
24, 1989, Oppenheimer Holdings, Inc. returned to the Company all of
its shares (273,938) of the Company's Class A Stock.
See footnote 1.b, Claridge Restructuring, for a summary of the
transactions consummated pursuant to the terms of the Restructuring
Agreement.
c) In February 1992, the Company's Board of Directors adopted a
Long-Term Incentive Plan ("Plan") in which certain key employees of
the Company and/or CPPI participate. The Plan provides for the grant of
the 273,938 shares of the Company's Class A stock, which were held as
treasury shares of the Company, and for the issuance of 100 Equity
Units. The aggregate value of the 100 Equity Units is equal to 5.41 per-
cent of certain amounts as further defined in the Plan. Specified por-
tions of the awarded treasury shares and Equity Units held by partici-
pants vest upon the attainment of specific goals as described in the
Plan. The treasury shares and Equity Units fully vest upon a further re-
structuring or a change in control as defined. Payment with respect to
the Equity Units will only be made (a) upon the occurrence of a transac-
tion 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, or (b) if
any change of control of the Company occurs, as defined in the Plan.
With respect to such Plan, no vesting has occurred through December 31,
1992.
On April 15, 1992, the NJCCC approved the Plan and the treasury
shares were delivered to the participants. A participant is entitled to
vote all awarded treasury shares whether or not vested in such shares.
<PAGE>
<PAGE> 118
17. PARENT COMPANY INFORMATION
The Company owns all of the outstanding common stock of CPPI, which it
purchased for $5,000,000. Other than the investment in its subsidiary at De-
cember 31, 1991 and 1992 the balance sheet accounts of the Company include
cash of $900 and $-0-, respectively, and related current liabilities of
$4,364,000 and $4,974,000, respectively. Expenses amounted to $435,000 for
the year ended December 31, 1990 and $321,000 and $611,000 for the years
ended December 31, 1991 and 1992, respectively. These amounts represent the
net loss of the Company for the respective periods before equity in the re-
sults of CPPI. For the year ended December 31, 1990, CPPI had net income of
$38,090,000 as compared to net income of $2,502,000 and $6,659,000 for the
years ended December 31, 1991 and 1992, respectively.
18. SUBSEQUENT EVENTS (UNAUDITED)
On July 25, 1993, Shannon Bybee, Chairman and Chief Executive Officer of
the Company, resigned, resulting in the return to the Company of 73,963
Shares of the Company's Class A Stock, which had previously been awarded un-
der the Plan. In addition, the Equity Units held by Mr. Bybee were returned
to the Company upon his resignation.
On September 22, 1993, CPPI was issued a two-year casino license by the
NJCCC for the period commencing September 30, 1993. The relicensing approval
was based in part on the execution of the third amendment to the Loan Agree-
ment on April 1, 1993.
In November 1993, the Company filed a Registration Statement on Form S-1
with the Securities and Exchange Commission to register $85 million of First
Mortgage Notes.
<PAGE>
<PAGE> 119
(PHOTOGRAPH OF TABLE GAMES)
(PHOTOGRAPH OF SLOT MACHINES)
(PHOTOGRAPH OF LOBBY)
Claridge
Atlantic City
Because smaller is friendlier
<PAGE>
<PAGE> 120
<TABLE>
<CAPTION>
=============================================================================================================
<S> <C>
No dealer, salesman or other person has $85,000,000
been authorized to give any information or to
make any representations other than those THE CLARIDGE
contained in this Prospectus in connection with HOTEL AND CASINO
the offering made hereby. If given or made, such CORPORATION
information or representation must not be relied
upon as having been authorized by the Company or % First Mortgage Notes
the Underwriters. This Prospectus does not due 2002
constitute an offer to sell or a solicitation of
an offer to buy any securities offered hereby in Guaranteed by The Claridge at
any jurisdiction in which or to any person to Park Place, Incorporated
whom it is unlawful to make such offer or
solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, --------------
under any circumstances, create any implication
that there has been no change in the affairs of PROSPECTUS
the Company since the date hereof or that the
information herein is correct as of any --------------
time subsequent to the date hereof.
Donaldson, Lufkin & Jenrette
---------------- Securities Corporation
TABLE OF CONTENTS Oppenheimer & Co., Inc.
Page
----
Available Information................... 2
Prospectus Summary...................... 3
The Company ............................ 11
The Claridge Ownership Structure........ 15
Risk Factors............................ 16
Use of Proceeds......................... 20
Capitalization.......................... 20
Selected Financial Data................. 21
Management's Discussion and Analysis
of Financial Condition and Results
of Operations......................... 23
Business................................ 30
Management.............................. 44
Principal Stockholders.................. 50
Certain Relationships and Related , 1994
Transactions.......................... 50
Description of Notes.................... 51
Underwriting............................ 76
Legal Matters........................... 77
Experts................................. 77
Index to Consolidated Financial
Statements............................ F-1
------------------------
=============================================================================================================
<PAGE>
<PAGE> 121
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses in connection with
the sale and distribution of the securities being registered, other than un-
derwriting discounts and commissions. All amounts are estimated except the
SEC Registration Fee and the NASD Filing Fee.
SEC Registration Fee........................................ $ 29,310.35
NASD Filing Fee ............................................ 9,000.00
Printing and Engraving ..................................... 72,000.00
Legal Fees and Expenses .................................... 400,000.00
Accounting Fees and Expenses ............................... 90,000.00
Blue Sky Qualification Fees and Expenses ................... 15,000.00
Miscellaneous .............................................. 5,000.00
-----------
Total .................................................... $620,310.35
===========
Item 14. Indemnification of Directors and Officers.
Sections 721-726 of the Business Corporation Law of the State of New
York (the "NYBCL") empower a corporation, under certain conditions and
subject to certain limitations, to indemnify its directors and officers
against expenses (including attorneys' fees), incurred by them in connection
with any proceeding to which they are or are threatened to be made a party
provided that they acted, in good faith, for a purpose that they reasonably
believed to be in, or in the case of service for any other corporation or
partnership, not opposed to, the best interests of the corporation and, in
criminal actions or proceedings, in addition had no reasonable cause to be-
lieve that their conduct was unlawful.
Article Ninth of the Company's Certificate of Incorporation provides
that, to the fullest extent permitted under the NYBCL, a director of the
Company shall not be held personally liable to the Company or its sharehold-
ers for damages for any breach of duty as a director of the Company. Article
X of the Company's Bylaws provides that the Company shall, to the fullest
extent permitted by Sections 722 and 723 of the NYBCL or any successor to
such sections, indemnify any and all persons whom it shall have power to in-
demnify under said sections from and against any and all expenses, liabili-
ties, or other matters referred to in or covered by said sections.
Article X of the Company's Bylaws also provides that the Company may
purchase and maintain, to the fullest extent permitted by Section 727 of the
NYBCL or any successor to such section, insurance for indemnification of the
Company and all persons it shall have the power to insure under said section
from and against any and all expenses, liabilities or other matters referred
to in or covered by said section.
Section 3-5 of the Business Corporation Act of the State of New Jersey
empowers a corporation, under certain conditions and subject to certain lim-
itations, to indemnify its directors and officers against expenses
(including attorneys' fees), incurred by them in connection with any pro-
ceeding to which they are a party so long as they acted in good faith and in
<PAGE>
<PAGE> 122
a manner reasonably believed to be in or not opposed to the best interest of
the corporation, and, with respect to a criminal action or proceeding, so
long as they had no reasonable cause to believe their conduct was unlawful.
Neither the Certificate of Incorporation nor the Bylaws of CPPI contain
any provision with respect to indemnification of directors and officers.
The Underwriting Agreement (filed as Exhibit 1.1 hereto) also contains
provisions under which the Underwriters agree to indemnify the Company,
CPPI, their respective directors, the officers who sign this Registration
Statement and each person who controls the Company or CPPI within the mean-
ing of the Securities Act of 1933, as amended, with respect to information
furnished by the Underwriters for use in this Registration Statement.
Item 15. Recent Sales of Unregistered Securities.
Pursuant to its Long-Term Management Incentive Plan (the "Plan"), the
Company granted to certain key employees (as defined in the Plan) of the
Company and/or CPPI an aggregate of 273,938 shares of the Company's Class A
Stock ("Treasury Shares") and 100 Equity Units on February 12, 1992. See
"Management - Compensation Plans" in the Prospectus contained in this Reg-
istration Statement. The Treasury Shares and Equity Units were issued pursu-
ant to an exemption from registration under Section 4(2) Securities Act of
1933, as amended.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Company, as amended.(1)
3.2 Bylaws of the Company, as amended.(2)
3.3 Certificate of Amendment to the Certificate of Incorporation of the
Company dated June 15, 1989.(3)
3.4 Certificate of Amendment of the Certificate of Incorporation of the
Company dated June 26, 1991.(4)
*3.5 Certificate of Incorporation of CPPI, dated August 29, 1983.
*3.6 Bylaws of CPPI, as amended.
4.1 Form of Indenture (including the Guarantee of The Claridge at Park
Place, Incorporated).
4.2 Form of % First Mortgage Note due 2002 certificate (included in Ex-
hibit 4.1).
4.3 Form of Mortgage, Assignment of Leases and Rents, Security Agreement
and Financing Statement.
4.4 Form of Collateral Trust Agreement among the Company, CPPI, the Part-
nership and the Collateral Trustee.
4.5 Form of Company Pledge Agreement between the Company and the Collat-
eral Trustee.
4.6 Form of CPPI Pledge Agreement between CPPI and the Collateral
Trustee.
4.7 Form of CPPI Cash Collateral Pledge Agreement between CPPI and the
Collateral Trustee.
4.8 Form of CPPI Security Agreement between CPPI and the Collateral
Trustee.
4.9 Form of CPPI Trademark Security Agreement between CPPI and the Col-
lateral Trustee.
4.10 Form of Collateral Assingment of Expandable Wraparound Mortgage and
Security Agreement.
<PAGE>
<PAGE> 123
4.11 Form of Partnership Security Agreement between the Partnership and
the Collateral Trustee.
4.12 Form of Partnership Cash Collateral Pledge Agreement between the
Partnership and the
Collateral Trustee.
4.13 Form of Collateral Assignment of Lessor's Interest in Operating
Leases.
4.14 Form of Subordination Agreement among the Partnership, CPPI and the
Collateral Trustee.
4.15 Form of Assignment of Leases and Rents and Other Contract Rights.
4.16 Form of Intercreditor Agreement for Working Capital Facility.
4.17 Form of Intercreditor Agreement for Pari Passu Indebtedness of The
Claridge Hotel and Casino Corporation.
5.1 Opinion of Rogers & Wells.
5.2 Opinion of Frank A. Bellis, Jr., Esq. (contained in Exhibit 5.1).
10.1 Operating Lease Agreement between CPPI and Atlantic City Boardwalk
Associates, L.P.(5)
10.2 Expandable Wraparound Mortgage and Security Agreement between CPPI
and Atlantic City Boardwalk Associates, L.P.(6)
10.3 Expandable Wraparound Mortgage Loan Agreement between CPPI and Atlan-
tic City Boardwalk Associates, L.P.(7)
10.4 Expansion Operating Lease Agreement between CPPI and Atlantic City
Boardwalk Associates, L.P.(8)
*10.5 Amendment to Operating Lease Agreement and Expansion Operating Lease
Agreement between CPPI and Atlantic City Boardwalk Associates, L.P.,
dated June 15, 1989.
*10.6 Second Amendment to Operating Lease Agreement and Expansion Operating
Lease Agreement between CPPI and Atlantic City Boardwalk Associates,
L.P., dated March 27, 1990.
*10.7 Third Amendment to Operating Lease Agreement and Expansion Operating
Lease Agreement between CPPI and Atlantic City Boardwalk Associates,
L.P., dated August 1, 1991.
*10.8 First Amendment to Expandable Wraparound Mortgage Loan Agreement be-
tween CPPI and Atlantic City Boardwalk Associates, L.P., dated March
17, 1986.
*10.9 Second Amendment to Expandable Wraparound Mortgage Loan Agreement be-
tween CPPI and Atlantic City Boardwalk Associates, L.P., dated June
15, 1989.
10.10 First Supplemental Amendment to Expandable Wraparound Mortgage and
Security Agreement between CPPI and Atlantic City Boardwalk Associ-
ates, L.P.(9)
*10.11 Second Amendment to Expandable Wraparound Mortgage and Security
Agreement between CPPI and Atlantic City Boardwalk Associates, L.P.,
dated June 15, 1989.
10.12 Restructuring Agreement among the Company, CPPI, Del Webb Corpora-
tion, Del E. Webb New Jersey, Inc., Atlantic City Boardwalk Associ-
ates, L.P. and First Fidelity Bank, National Association, New Jersey,
dated October 27, 1988.(10)
10.13 Employment Agreement between Shannon L. Bybee and the Company dated
July 1, 1990.(11)
10.14 Employment Agreement between Robert M. Renneisen and CPPI dated June
26, 1991.(12)
*10.15 Employment Agreement between Albert T. Britton and CPPI dated Novem-
ber 1, 1992.
*10.16 Employment Agreement between Raymond A. Spera and CPPI dated November
1, 1992.
<PAGE>
<PAGE> 124
*10.17 Employment Agreement between Peter F. Tiano and CPPI dated November
1, 1992.
*10.18 The 1992 Claridge Management Incentive Plan.
*10.19 The 1993 Claridge Management Incentive Plan.
10.20 Long-Term Management Incentive Plan of the Company effective January
1, 1992.(13)
*12.1 Statement of Computation of Ratio of Earnings to Fixed Charges.
21.1 Subsidiaries of the Registrants.(14)
*23.1 Consent of KPMG Peat Marwick.
23.2 Consent of Rogers & Wells (contained in Exhibit 5.1).
*23.3 Consent of Landauer Associates, Inc.
*23.4 Consent of Frank A. Bellis, Jr.
*24.1 Powers of Attorney (contained on Signature Pages to Registration
Statement).
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1.
*99.1 Appraisal of The Claridge by Landauer Associates, Inc. dated as of
March 31, 1993.
- ------------
*Previously filed as an exhibit to this Registration Statement on Form S-1.
(1) Incorporated by reference to Exhibit 3.1 to Form 8 Amendment No. 1 to
Form 10 dated February 21, 1984.
(2) Incorporated by reference to Exhibit 3(b) to Form 10-K for the period
August 26, 1983 to December 31, 1983.
(3) Incorporated by reference to Exhibit 3(c) to Form 10-K for the year
ended December 31, 1991.
(4) Incorporated by reference to Exhibit 3(d) to Form 10-K for the year
ended December 31, 1991.
(5) Incorporated by reference to Exhibit 2.2 to Form 8 Amendment No. 1 to
Form 10 dated February 23, 1984.
(6) Incorporated by reference to Exhibit 10(b) to Form 10-K for the period
August 26, 1983 to December 31, 1983.
(7) Incorporated by reference to Exhibit 10(c) for Form 10-K for the period
August 26, 1983 to December 31, 1983.
(8) Incorporated by reference to Exhibit 10(h) to Form 10-K for the year
ended December 31, 1985.
(9) Incorporated by reference to Exhibit 10(i) to Form 10-K for the year
ended December 31, 1985.
(10) Incorporated by reference to Exhibit 10(n) to Form 10-Q for the quarter
ended September 30, 1988.
(11) Incorporated by reference to Exhibit 10(v) to Form 10-Q for the quarter
ended June 30, 1991.
(12) Incorporated by reference to Exhibit 10(w) to Form 10-Q for the quarter
ended June 30, 1991.
(13) Incorporated by reference to Exhibit 10(x) to Form 10-Q for the year
ended December 31, 1991.
(14) Incorporated by reference to Exhibit 22.1 Form 8 Amendment No. 1 to
Form 10 dated February 21, 1984.
(b) Financial Statement Schedules
Independent Auditors' Report on Financial Statement Sched-
ules...................................................... Page S-2
Schedule VIII: Valuation and Qualifying Accounts - Years
ended December 31, 1990, 1991 and 1992 ................... Page S-3
Schedule X: Supplementary Income Statement Information -
Years ended December 31, 1990, 1991 and 1992 ............. Page S-4
<PAGE>
<PAGE> 125
All other schedules for which provision is made in the applicable ac-
counting regulations promulgated by the Securities and Exchange Commission
are not required under the related instructions or are inapplicable and
therefore have been omitted.
Item 17. Undertakings.
The Registrants hereby undertake that:
(1) for purposes of determining any liability under the Securities Act
of 1933, as amended (the "Act"), the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrants
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to
be part of this registration statement as of the time it was declared effec-
tive; and
(2) for the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the registrants
pursuant to the foregoing provisions, or otherwise, the Registrants have
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event a claim for indemnification
against such liabilities (other than the payment by the Registrants of ex-
penses incurred or paid by a director, officer or controlling person of the
Registrants in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrants will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such indemnifi-
cation by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
<PAGE>
<PAGE> 126
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Regis-
trant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and has duly caused this Amend-
ment No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Atlantic City, State
of New Jersey on this 18th day of January, 1994.
THE CLARIDGE HOTEL AND CASINO CORPORATION
By: /s/ ROBERT M. RENNEISEN
------------------------------------------
Robert M. Renneisen
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amend-
ment No. 2 to the Registration Statement has been signed below by the fol-
lowing persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
President, Chief Executive January 18, 1994
/s/ ROBERT M. RENNEISEN Officer and Director
- --------------------------
Robert M. Renneisen
Chairman of the Board and January 18, 1994
/s/ DAVID W. BRENNER Director
- --------------------------
David W. Brenner
Executive Vice President of January 18, 1994
/s/ RAYMOND A. SPERA Finance and Corporate Devel-
- -------------------------- opment and Chief Financial
Raymond A. Spera Officer (Principal Financial
and Accounting Officer)
Director January 18, 1994
/s/ JAMES W. O'BRIEN
- --------------------------
James W. O'Brien
Director January 18, 1994
/s/ JEAN I. ABBOTT
- --------------------------
Jean I. Abbott
Director January 18, 1994
/s/ MARK H. SAYERS
- --------------------------
Mark H. Sayers
Director January 18, 1994
/s/ JOHN D. FEEHAN
- --------------------------
John D. Feehan
Director January 18, 1994
/s/ SHANNON L. BYBEE
- --------------------------
Shannon L. Bybee
<PAGE>
<PAGE> 127
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Regis-
trant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and has duly caused this Amend-
ment No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Atlantic City, State
of New Jersey on this 18th day of January, 1994.
THE CLARIDGE AT PARK PLACE, INCORPORATED
By: /s/ ROBERT M. RENNEISEN
------------------------------------------
Robert M. Renneisen
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amend-
ment No. 2 to the Registration Statement has been signed below by the fol-
lowing persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
President, Chief Executive January 18, 1994
/s/ ROBERT M. RENNEISEN Officer and Director
- --------------------------
Robert M. Renneisen
Chairman of the Board and January 18, 1994
/s/ DAVID W. BRENNER Director
- --------------------------
David W. Brenner
Executive Vice President of January 18, 1994
/s/ RAYMOND A. SPERA Finance and Corporate Devel-
- -------------------------- opment (Principal Financial and
Raymond A. Spera Accounting Officer)
Director January 18, 1994
/s/ JAMES W. O'BRIEN
- --------------------------
James W. O'Brien
Director January 18, 1994
/s/ JEAN I. ABBOTT
- --------------------------
Jean I. Abbott
Director January 18, 1994
/s/ MARK H. SAYERS
- --------------------------
Mark H. Sayers
Director January 18, 1994
/s/ JOHN D. FEEHAN
- --------------------------
John D. Feehan
Director January 18, 1994
/s/ SHANNON L. BYBEE
- --------------------------
Shannon L. Bybee
<PAGE>
<PAGE> 128
INDEX TO FINANCIAL STATEMENT SCHEDULES
Page
----
Independent Auditors' Report on Financial Statement Schedules......... S-2
Schedule VIII: Valuation and Qualifying Accounts - Years ended Decem-
ber 31, 1990, 1991 and 1992......................................... S-3
Schedule X: Supplementary Income Statement Information - Years ended
December 31, 1990, 1991 and 1992 ................................... S-4
<PAGE>
<PAGE> 129
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
The Board of Directors and Stockholders
The Claridge Hotel and Casino Corporation:
Under date of March 4, 1993, except as to notes 8 and 14a, which are as of
March 26, 1993, we reported on the consolidated balance sheets of The Cla-
ridge Hotel and Casino Corporation and subsidiary as of December 31, 1991
and 1992 and the related consolidated statements of operations and accumu-
lated (deficit) and cash flows for each of the years in the three-year pe-
riod ended December 31, 1992, which are included in the prospectus. In con-
nection with our audits of the aforementioned financial statements, we also
audited the related financial statement schedules as listed in the accompa-
nying index. These financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements schedules based on our audits.
In our opinion, such financial statement schedules, when considered in rela-
tion to the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick
Short Hills, New Jersey
March 4, 1993, except as to
notes 8 and 14a, which
are as of March 26, 1993
<PAGE>
<PAGE> 130
SCHEDULE VIII
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARY
Valuation and Qualifying Accounts
Years Ended December 31, 1990, 1991 and 1992
($ in thousands)
Balance Charged to Charged to Balance
Beginning Costs and Other at End of
Description of Period Expenses Accounts Deductions Period
----------- --------- -------- -------- ---------- --------
Year Ended December 31,
1990
Allowance for Doubtful
Accounts ........... $2,761 754 -0- 1,023(1) 2,492
Year Ended December 31,
1991
Allowance for Doubtful
Accounts ........... $2,492 559 -0- 1,773(1) 1,278
Year Ended December 31,
1992
Allowance for Doubtful
Accounts ........... $1,278 554 -0- 388(1) 1,444
- ------------
(1) Accounts written-off.
<PAGE>
<PAGE> 131
SCHEDULE X
THE CLARIDGE HOTEL AND CASINO CORPORATION AND SUBSIDIARY
Supplementary Income Statement Information
Years Ended December 31, 1990, 1991 and 1992
($ in thousands)
1990 1991 1992
---- ---- ----
Charged to Costs and Expenses:
Maintenance and Repairs (1) .......... $ -0- -0- -0-
======= ====== ======
Depreciation and Amortization of in-
tangible assets, pre-opening cost
and similar deferrals:
Intangible assets .................... $ 43 96 197
======= ====== ======
Taxes, other than payroll and income
taxes:
New Jersey casino gross revenue tax .. $10,718 10,790 11,669
Property taxes ....................... 3,666 3,876 3,575
------- ------ ------
$14,384 14,666 15,244
======= ====== ======
Advertising Costs..................... $ 3,829 3,099 2,376
======= ====== ======
- ------------
(1) In accordance with the terms of the Operating Lease Agreement between
CPPI and Atlantic City Boardwalk Associates, L.P., the Partnership is
required to provide facility maintenance and engineering services to
CPPI.
<PAGE>
</TABLE>
<PAGE>
<PAGE>
REGISTRATION STATEMENT
ON FORM S-1
Under
THE SECURITIES ACT OF 1933
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------- ----------------------
EX-1.1 Form of Underwriting Agreement.
EX-3.1 Certificate of Incorporation of the Company, as amended.(1)
EX-3.2 Bylaws of the Company, as amended.(2)
EX-3.3 Certificate of Amendment to the Certificate of Incorporation of
the Company dated June 15, 1989.(3)
EX-3.4 Certificate of Amendment of the Certificate of Incorporation of
the Company dated June 26, 1991.(4)
*EX-3.5 Certificate of Incorporation of CPPI, dated August 29, 1983.
*EX-3.6 Bylaws of CPPI, as amended.
EX-4.1 Form of Indenture (including the Guarantee of The Claridge at
Park Place, Incorporated).
EX-4.2 Form of % First Mortgage Note due 2002 certificate (included
in Exhibit 4.1).
EX-4.3 Form of Mortgage, Assignment of Leases and Rents, Security
Agreement and Financing Statement.
EX-4.4 Form of Collateral Trust Agreement among the Company, CPPI, the
Partnership and the Collateral Trustee.
EX-4.5 Form of Company Pledge Agreement between the Company and the
Collateral Trustee.
EX-4.6 Form of CPPI Pledge Agreement between CPPI and the Collateral
Trustee.
EX-4.7 Form of CPPI Cash Collateral Pledge Agreement between CPPI and
the Collateral Trustee.
EX-4.8 Form of CPPI Security Agreement between CPPI and the Collateral
Trustee.
EX-4.9 Form of CPPI Trademark Security Agreement between CPPI and the
Collateral Trustee.
EX-4.10 Form of Collateral Assignment of Expandable Wraparound Mortgage
and Security Agreement.
EX-4.11 Form of Partnership Security Agreement between the Partnership
and the Collateral Trustee.
EX-4.12 Form of Partnership Cash Collateral Pledge Agreement between the
Partnership and the Collateral Trustee.
EX-4.13 Form of Collateral Assignment of Lessor's Interest in Operating
Leases.
EX-4.14 Form of Subordination Agreement among the Partnership, CPPI and
the Collateral Trustee.
EX-4.15 Form of Assignment of Leases and Rents and Other Contract
Rights.
EX-4.16 Form of Intercreditor Agreement for Working Capital Facility.
EX-4.17 Form of Intercreditor Agreement for Pari Passu Indebtedness of
The Claridge Hotel and Casino Corporation.
EX-5.1 Opinion of Rogers & Wells.
EX-5.2 Opinion of Frank A. Bellis, Jr., Esq. (contained in Exhibit
5.1).
EX-10.1 Operating Lease Agreement between CPPI and Atlantic City Board-
walk Associates, L.P.(5)
<PAGE>
<PAGE>
Exhibit
Number Description of Exhibit
------- ----------------------
EX-10.2 Expandable Wraparound Mortgage and Security Agreement between
CPPI and Atlantic City Boardwalk Associates, L.P.(6)
EX-10.3 Expandable Wraparound Mortgage Loan Agreement between CPPI and
Atlantic City Boardwalk Associates, L.P.(7)
EX-10.4 Expansion Operating Lease Agreement between CPPI and Atlantic
City Boardwalk Associates, L.P.(8)
*EX-10.5 Amendment to Operating Lease Agreement and Expansion Operating
Lease Agreement between CPPI and Atlantic City Boardwalk Associ-
ates, L.P., dated June 15, 1989.
*EX-10.6 Second Amendment to Operating Lease Agreement and Expansion Op-
erating Lease Agreement between CPPI and Atlantic City Boardwalk
Associates, L.P., dated March 27, 1990.
*EX-10.7 Third Amendment to Operating Lease Agreement and Expansion Oper-
ating Lease Agreement between CPPI and Atlantic City Boardwalk
Associates, L.P., dated August 1, 1991.
*EX-10.8 First Amendment to Expandable Wraparound Mortgage Loan Agreement
between CPPI and Atlantic City Boardwalk Associates, L.P., dated
March 17, 1986.
*EX-10.9 Second Amendment to Expandable Wraparound Mortgage Loan Agree-
ment between CPPI and Atlantic City Boardwalk Associates, L.P.,
dated June 15, 1989.
EX-10.10 First Supplemental Amendment to Expandable Wraparound Mortgage
and Security Agreement between CPPI and Atlantic City Boardwalk
Associates, L.P.(9)
*EX-10.11 Second Amendment to Expandable Wraparound Mortgage and Security
Agreement between CPPI and Atlantic City Boardwalk Associates,
L.P., dated June 15, 1989.
EX-10.12 Restructuring Agreement among the Company, CPPI, Del Webb Corpo-
ration, Del E. Webb New Jersey, Inc., Atlantic City Boardwalk
Associates, L.P. and First Fidelity Bank, National Association,
New Jersey, dated October 27, 1988.(10)
EX-10.13 Employment Agreement between Shannon L. Bybee and the Company
dated July 1, 1990.(11)
EX-10.14 Employment Agreement between Robert M. Renneisen and CPPI dated
June 26, 1991.(12)
*EX-10.15 Employment Agreement between Albert T. Britton and CPPI dated
November 1, 1992.
*EX-10.16 Employment Agreement between Raymond A. Spera and CPPI dated No-
vember 1, 1992.
*EX-10.17 Employment Agreement between Peter F. Tiano and CPPI dated No-
vember 1, 1992.
*EX-10.18 The 1992 Claridge Management Incentive Plan.
*EX-10.19 The 1993 Claridge Management Incentive Plan.
EX-10.20 Long-Term Management Incentive Plan of the Company effective
January 1, 1992.(13)
*EX-12.1 Statement of Computation of Ratio of Earnings to Fixed Charges.
EX-21.1 Subsidiaries of the Registrants.(14)
*EX-23.1 Consent of KPMG Peat Marwick.
EX-23.2 Consent of Rogers & Wells (contained in Exhibit 5.1).
*EX-23.3 Consent of Landauer Associates, Inc.
*EX-23.4 Consent of Frank A. Bellis, Jr.
*EX-24.1 Powers of Attorney (contained on Signature Pages to Registration
Statement).
<PAGE>
<PAGE>
Exhibit
Number Description of Exhibit
------- ----------------------
EX-25.1 Statement of Eligibility and Qualification of Trustee on Form T-1
*EX-99.1 Appraisal of The Claridge by Landauer Associates, Inc. dated as
of March 31, 1993.
- ------------
*Previously filed as an exhibit to this Registration Statement on Form S-1.
(1) Incorporated by reference to Exhibit 3.1 to Form 8 Amendment No. 1 to
Form 10 dated February 21, 1984.
(2) Incorporated by reference to Exhibit 3(b) to Form 10-K for the period
August 26, 1983 to December 31, 1983.
(3) Incorporated by reference to Exhibit 3(c) to Form 10-K for the year
ended December 31, 1991.
(4) Incorporated by reference to Exhibit 3(d) to Form 10-K for the year
ended December 31, 1991.
(5) Incorporated by reference to Exhibit 2.2 to Form 8 Amendment No. 1 to
Form 10 dated February 23, 1984.
(6) Incorporated by reference to Exhibit 10(b) to Form 10-K for the period
August 26, 1983 to December 31, 1983.
(7) Incorporated by reference to Exhibit 10(c) for Form 10-K for the period
August 26, 1983 to December 31, 1983.
(8) Incorporated by reference to Exhibit 10(h) to Form 10-K for the year
ended December 31, 1985.
(9) Incorporated by reference to Exhibit 10(i) to Form 10-K for the year
ended December 31, 1985.
(10) Incorporated by reference to Exhibit 10(n) to Form 10-Q for the quarter
ended September 30, 1988.
(11) Incorporated by reference to Exhibit 10(v) to Form 10-Q for the quarter
ended June 30, 1991.
(12) Incorporated by reference to Exhibit 10(w) to Form 10-Q for the quarter
ended June 30, 1991.
(13) Incorporated by reference to Exhibit 10(x) to Form 10-Q for the year
ended December 31, 1991.
(14) Incorporated by reference to Exhibit 22.1 Form 8 Amendment No. 1 to
Form 10 dated February 21, 1984.
<PAGE>
<PAGE>
$85,000,000
THE CLARIDGE HOTEL
AND CASINO CORPORATION
__% FIRST MORTGAGE NOTES DUE 2002
UNDERWRITING AGREEMENT
January __, 1994
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
OPPENHEIMER & CO., INC.
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
140 Broadway
New York, New York 10005
Dear Sirs:
The Claridge Hotel and Casino Corporation, a New
York corporation (the "Company") proposes to issue and sell
$85,000,000 principal amount of its __% First Mortgage Notes
due 2002 (the "Securities") to the several underwriters
named in Schedule I hereto (the "Underwriters"). The
Securities are to be issued pursuant to the provisions of an
Indenture to be dated as of January __, 1994 (the
"Indenture") among the Company, The Claridge at Park Place,
Incorporated, as guarantor (the "Guarantor"), and IBJ
Schroder Bank & Trust Company, as Trustee (the "Trustee").
The Securities will be unconditionally guaranteed by the
Guarantor pursuant to a guarantee (the "Guarantee") and will
be secured by a first mortgage over The Claridge Hotel and
Casino and certain related assets.
<PAGE>
1. Registration Statement and Prospectus. The
Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with
the provisions of the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder
(collectively called the "Act"), a registration statement on
Form S-1 including a prospectus relating to the Securities,
which may be amended. The registration statement as
amended at the time when it becomes effective, including
information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A
under the Act, is hereinafter referred to as the
Registration Statement; and the prospectus in the form first
used to confirm sales of Securities is hereinafter referred
as the Prospectus.
2. Agreements to Sell and Purchase. On the
basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, the
Company agrees to issue and sell, and each Underwriter
agrees, severally and not jointly, to purchase from the
Company the principal amount of Securities set forth
opposite the name of such Underwriter in Schedule I hereto,
at ____% of the principal amount thereof (the "Purchase
Price") plus accrued interest thereon, if any, from
__________ __, 1994 to the date of payment and delivery.
3. Terms of Public Offering. The Company is
advised by you that the Underwriters propose (i) to make a
public offering of their respective portions of the
Securities as soon after the effective date of the
Registration Statement as in your judgment is advisable and
(ii) initially to offer the Securities upon the terms set
forth in the Prospectus.
4. Delivery and Payment. Delivery to the
Underwriters of and payment for the Securities shall be made
at 10:00 A.M., New York City time, on the fifth business day
(the "Closing Date") following the date of the initial
public offering at such place as you shall designate. The
Closing Date and the location of delivery of and the form of
payment for the Securities may be varied by agreement
between you and the Company.
Certificates for the Securities shall be
registered in such names and issued in such denominations as
you shall request in writing not later than two full
business days prior to the Closing Date. Such certificates
shall be made available to you for inspection not later than
9:30 A.M., New York City time, on the business day next
preceding the Closing Date. Certificates in definitive
2
<PAGE>
form evidencing the Securities shall be delivered to you on
the Closing Date with any transfer taxes thereon duly paid
by the Company, for the respective accounts of the several
Underwriters, against payment of the Purchase Price therefor
by certified or official bank checks payable in New York
Clearing House funds to the order of the Company.
5. Agreements of the Company. The Company
agrees with you:
(a) To use its best efforts to cause the
Registration Statement to become effective as promptly
as reasonably practicable.
(b) To advise you promptly and, if requested by
you, to confirm such advice in writing, (i) when the
Registration Statement has become effective and when
any post-effective amendment to it becomes effective,
(ii) of any request by the Commission for amendments to
the Registration Statement or amendments or supplements
to the Prospectus or for additional information, (iii)
of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the
Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for such purposes, and
(iv) of the happening of any event during the period
referred to in paragraph (e) below which makes any
statement of a material fact made in the Registration
Statement or the Prospectus untrue or which requires
the making of any additions to or changes in the
Registration Statement or the Prospectus in order to
make the statements therein not misleading. If at any
time the Commission shall issue any stop order
suspending the effectiveness of the Registration
Statement, the Company will make every reasonable
effort to obtain the withdrawal or lifting of such
order at the earliest possible time.
(c) To furnish to you, without charge, two signed
copies of the Registration Statement as first filed
with the Commission and of each amendment to it,
including all exhibits, and to furnish to you and each
Underwriter designated by you such number of conformed
copies of the Registration Statement as so filed and of
each amendment to it, without exhibits, as you may
reasonably request.
(d) Not to file any amendment or supplement to
the Registration Statement, whether before or after the
time when it becomes effective, or to make any
3
<PAGE>
amendment or supplement to the Prospectus of which you
shall not previously have been advised or to which you
shall reasonably object in writing within three
business days after being furnished a copy thereof; and
to prepare and file with the Commission, promptly upon
your reasonable request, any amendment to the
Registration Statement or supplement to the Prospectus
which may be necessary or advisable in connection of
the distribution of the Securities by you, and to use
its best efforts to cause the same to become promptly
effective.
(e) Promptly after the Registration Statement
becomes effective, and from time to time thereafter for
such period as in the opinion of counsel for the
Underwriters a prospectus is required by law to be
delivered in connection with sales of the Securities by
an Underwriter or a dealer, to furnish to each
Underwriter and dealer as many copies of the Prospectus
(and of any amendment or supplement to the Prospectus)
as such Underwriter or dealer may reasonably request.
(f) If during the period specified in paragraph
(e) any event shall occur as a result of which, in the
opinion of counsel for the Underwriters it becomes
necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of
the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with any
law, forthwith to prepare and file with the Commission
an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as
so amended or supplemented, will not in the light of
the circumstances when it is so delivered, be
misleading, or so that the Prospectus will comply with
law, and to furnish to each Underwriter and to such
dealers as you shall specify, such number of copies
thereof as such Underwriter or dealers may reasonably
request. In the case of any such amendment or
supplement after one year from the date hereof, the
Underwriters will reimburse the Company for its out-of-
pocket expenses (other than legal and accounting
expenses) incurred in connection with the preparation
and delivery thereof.
(g) Prior to any public offering of the
Securities, to cooperate with you and counsel for the
Underwriters in connection with the registration or
qualification of the Securities for offer and sale by
the several Underwriters and by dealers under the state
4
<PAGE>
securities or Blue Sky laws of such jurisdictions as
you may request, to continue such qualification in
effect so long as required for distribution of the
Securities and to file such consents to service of
process or other documents as may be necessary in order
to effect such registration or qualification except
that in no event shall the Company be obligated in
connection therewith to qualify as a foreign
corporation or take any action that would subject it to
service of process in any jurisdiction.
(h) To make generally available to its security
holders in a manner contemplated by Rule 158 under the
Act as soon as reasonably practicable an earnings
statement covering a period of at least twelve months
after the effective date of the Registration Statement
(but in no event commencing later than 90 days after
such date) which shall satisfy the provisions of
Section 11(a) of the Act, and to advise you in writing
when such statement has been so made available.
(i) During the period of five years after the
date of this Agreement, (i) to mail as soon as
reasonably practicable after the end of each fiscal
year to the record holders of its Securities a
financial report of the Company and its subsidiaries on
a consolidated basis (and a similar financial report of
all unconsolidated subsidiaries, if any), all such
financial reports to include a consolidated balance
sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated
statement of shareholders' equity as of the end of and
for such fiscal year, together with comparable
information as of the end of and for the preceding
year, certified by independent certified public
accountants, and (ii) to mail and make generally
available as soon as practicable after the end of each
quarterly period (except for the last quarterly period
of each fiscal year) to such holders, a consolidated
balance sheet, a consolidated statement of operations
and a consolidated statement of cash flows (and similar
financial reports of all unconsolidated subsidiaries,
if any) as of the end of and for such period, and for
the period from the beginning of such year to the close
of such quarterly period, together with comparable
information for the corresponding periods of the
preceding year.
(j) During the period of three years after the
effective date of the Registration Statement, to
furnish to you as soon as available a copy of each
5
<PAGE>
report or other publicly available information of the
Company mailed to the security holders of the Company
or filed with the Commission and such other publicly
available information concerning the Company and its
subsidiaries as you may reasonably request.
(k) To pay all costs, expenses, fees and taxes
incident to (i) the preparation, printing, filing and
distribution under the Act of the Registration
Statement (including financial statements and
exhibits), each preliminary prospectus and all
amendments and supplements to any of them prior to or
during the period specified in paragraph (e) (except as
contemplated by (f) and excluding legal fees and
expenses of counsel to the Underwriters in connection
therewith), (ii) the printing and delivery of the
Prospectus and all amendments or supplements to it
during the period specified in paragraph (e) (excluding
legal fees and expenses of counsel to the Underwriters
in connection therewith), (iii) the printing and
delivery of this Agreement, the Preliminary and
Supplemental Blue Sky Memoranda and all other
agreements, memoranda, correspondence and other
documents printed and delivered in connection with the
offering of the Securities (including in each case any
disbursements of counsel for the Underwriters relating
to such printing and delivery of the Preliminary and
Supplemental Blue Sky Memoranda), (iv) the registration
or qualification of the Securities for offer and sale
under the securities or Blue Sky laws of the several
states (including in each case the fees and
disbursements of counsel for the Underwriters relating
to such registration or qualification and memoranda
relating thereto), (v) filings and clearance with the
National Association of Securities Dealers, Inc. in
connection with the offering, (vi) furnishing such
copies of the Registration Statement, the Prospectus
and all amendments and supplements thereto as may be
requested for use in connection with the offering or
sale of the Securities by the Underwriters or by
dealers to whom Securities may be sold, (vii) fees and
expenses in listing the securities on the New York
Stock Exchange and (viii) taxes, fees and disbursements
incurred in filing and recording the Mortgage and the
liens created by the Related Documents, obtaining the
releases of existing liens and searches related
thereto. It is understood, however, that, except as
provided in this Section 5, Section 7 and Section 10
hereof, the Underwriters shall pay all of their own
costs and expenses, including fees of their counsel,
any transfer taxes due upon resale of any of the
6
<PAGE>
Securities by them and any advertising expenses
incurred in connection with any offers they may make.
(l) To use its best efforts to maintain the
listing of the Securities on the New York Stock
Exchange (or other national securities exchange or the
NASDAQ Stock Market) for a period of five years after
the effective date of the Registration Statement.
(m) To use its best efforts to do and perform all
things required or necessary to be done and performed
under this Agreement by the Company prior to the
Closing Date and to satisfy all conditions precedent to
the delivery of the Securities.
6. Representations and Warranties of the
Company. The Company and the Guarantor, jointly and
severally, represent and warrant to each Underwriter that:
(a) (i) When the Registration Statement becomes
effective, the Registration Statement and any
amendments thereto will comply in all material respects
with the provisions of the Act and will not contain any
untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary to make the statements therein not
misleading; and (ii) the Prospectus and any supplements
thereto will not contain any untrue statement of a
material fact or omit to state any material fact
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made, not misleading, except that the representations
and warranties contained in this paragraph (a) shall
not apply to statements or omissions in the
Registration Statement or the Prospectus (or any
supplement or amendment to them) based upon information
relating to any Underwriter furnished to the Company in
writing by or on behalf of any Underwriter through you
expressly for use therein.
(b) Each preliminary prospectus filed as part of
the registration statement as originally filed or as
part of any amendment thereto, or filed pursuant to
Rule 424 under the Act, complied when so filed in all
material respects with the Act.
(c) The Company and each of its subsidiaries has
been duly incorporated, is validly existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate
power and authority to carry on its business as it is
7
<PAGE>
currently being conducted and to own, lease and operate
its respective properties, and each is duly qualified
and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing
of property requires such qualification, except where
the failure to be so qualified would not have a
material adverse effect on the Company and its
subsidiaries, taken as a whole.
(d) All of the outstanding shares of capital
stock of, or other ownership interests in, each of the
Company's subsidiaries have been duly authorized and
validly issued and are fully paid and non-assessable,
and are owned by the Company, free and clear of any
security interest, claim, lien, encumbrance or adverse
interest of any nature, except for liens securing
outstanding indebtedness that will be released upon the
closing of the transactions contemplated hereby and
liens securing the Securities.
(e) The Securities have been duly authorized and,
when executed and authenticated in accordance with the
provisions of the Indenture and delivered to the
Underwriters against payment therefor as provided by
this Agreement, will be entitled to the benefits of the
Indenture, and will be valid and binding obligations of
the Company, enforceable in accordance with their terms
except as (i) the enforceability thereof may be limited
by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies
may be limited by equitable principles of general
applicability.
(f) The Guarantee has been duly authorized by all
necessary action on the part of the Guarantor and, when
executed by the Guarantor and when the Securities have
been delivered to the Underwriters against payment
therefor as provided by this Agreement, will be a valid
and binding obligation of the Guarantor enforceable in
accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by
equitable principles of general applicability.
(g) This Agreement has been duly authorized,
executed and delivered by each of the Company and the
Guarantor and is a valid and binding agreement of the
8
<PAGE>
Company and the Guarantor enforceable in accordance
with its terms except as (i) rights to indemnity and
contribution hereunder may be limited by applicable law
and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable
principles of general applicability.
(h) The Indenture has been duly qualified under
the Trust Indenture Act of 1939, as amended, and has
been duly authorized, executed and delivered by each of
the Company and the Guarantor and is a valid and
binding agreement of the Company and the Guarantor,
enforceable in accordance with its terms except as (i)
the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting
creditors' rights generally, and (ii) rights of
acceleration and the availability of equitable remedies
may be limited by equitable principles of general
applicability.
(i) Each of the Collateral Trust Agreement, the
Company Pledge Agreement, the CPPI Pledge Agreement,
the CPPI Cash Collateral Pledge Agreement, the CPPI
Security Agreement, the CPPI Trademark Security
Agreement, the Subordination Agreement, the CPPI
Assignment of Leases and Rents and Other Contracts and
the CPPI Collateral Assignment (the "Obligor Related
Documents") to which any of the Company or the
Guarantor (the "Obligors") is a party has been duly
authorized, executed and delivered by such Obligor and
is a valid and binding agreement of such Obligor,
enforceable in accordance with its terms except as (i)
the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting
creditors' rights generally the New Jersey Casino
Control Act, N.J.S.A. 5:12-1 et seq., the regulations
adapted pursuant thereto, or rulings of the New Jersey
Casino Control Commission, and as such laws,
regulations or rulings may now or hereafter be in
effect, and (ii) rights of acceleration and the
availability of equitable remedies may be limited by
equitable principles of general applicability.
(j) The Securities conform as to legal matters to
the description thereof contained in the Prospectus.
(k) Neither the Company nor any of its
subsidiaries is in violation of its respective charter
or by-laws or in default in the performance of any
obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of
9
<PAGE>
indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of
the Company and its subsidiaries, taken as a whole, to
which the Company or any of its subsidiaries is a party
or by which it or any of its subsidiaries or their
respective property is bound, which violation or
default would have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or
would materially interfere in any way with the issuance
and sale of the Securities or the consummation of the
transactions contemplated hereby and by the Indenture.
(l) The execution and delivery and performance of
this Agreement, the Indenture, the Obligor Related
Documents and the Securities and compliance by the
Obligors with all the provisions hereof and thereof,
and the consummation of the transactions contemplated
hereby and thereby, except as disclosed in the
Prospectus, (i) will not require any consent, approval,
authorization or other order of any court, regulatory
body, administrative agency or other governmental body
(except as such may be required under the Act, the
Trust Indenture Act of 1939, as amended, or the
securities or Blue Sky laws of the various states and
except for consents from the New Jersey Casino Control
Commission ("NJCCC"), which consents have been
obtained), (ii) will not conflict with or violate the
charter or by-laws of any of the Obligors and (iii)
will not conflict with or constitute a breach of any of
the terms or provisions of, or a default under, any
agreement, indenture or other instrument to which any
of the Obligors is a party or by which any of the
Obligors or their respective property is bound, or
violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to
the any of the Obligors or their respective property,
except for such breaches, defaults or violations that
would not, individually or in the aggregate, (A) affect
the validity or enforceability of this Agreement, the
Indenture, the Related Documents (as defined in the
Indenture) or the Securities, (B) impair the ability of
the Company or any of its subsidiaries to perform in
any material respect the obligations which it has under
this Agreement, the Indenture, the Related Documents or
the Securities, (C) impair the value of the Collateral
pledged pursuant to the Related Documents or (D) have a
material adverse effect on the Company and its
subsidiaries taken as a whole.
(m) Except as otherwise set forth in the
Prospectus, there are no material legal or governmental
10
<PAGE>
proceedings pending to which the Company or any of its
subsidiaries is a party or of which any of their
respective property is the subject that are required to
be disclosed in the Registration Statement and are not
so described, and, to the best of the Company's
knowledge, no such proceedings are threatened or
contemplated. No contract or document of a character
required to be described in the Registration Statement
or the Prospectus or to be filed as an exhibit to the
Registration Statement is not so described or filed as
required.
(n) Neither the Company nor any of its
subsidiaries has violated any foreign, federal, state
or local law or regulation relating to the protection
of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), nor any federal or
state law relating to discrimination in the hiring,
promotion or pay of employees nor any applicable
federal or state wages and hours laws, nor any
provisions of the Employee Retirement Income Security
Act or the rules and regulations promulgated
thereunder, which in each case might result in any
material adverse change in the business, prospects,
financial condition or results of operation of the
Company and its subsidiaries, taken as a whole.
(o) Except as described in the Prospectus and
except to the extent that the failure to obtain or file
such permits, licenses, franchises or authorizations of
governmental or regulatory authorities ("permits"),
including, without limitation under the NJCCC, would
not have a material adverse effect on the Company and
its Subsidiaries, taken as a whole, the Company and
each of its subsidiaries has such permits, as are
necessary to own, lease and operate its respective
properties and to conduct its business in the manner
described in the Prospectus and to comply with this
Agreement, the Indenture and the Obligor Related
Documents; the Company and each of its subsidiaries has
fulfilled and performed all of its material obligations
with respect to such permits and no event has occurred
which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in
any other material impairment of the rights of the
holder of any such permit.
(p) Except as previously disclosed in writing to
you and your counsel, there are no costs and
liabilities in respect of any Environmental Laws that
11
<PAGE>
would, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries,
taken as a whole.
(q) Except as otherwise set forth in the
Prospectus or such as are not material to the business,
prospects, financial condition or results of operation
of the Company and its subsidiaries, taken as a whole,
the Company and each of its subsidiaries has good and
marketable title, free and clear of all liens, claims,
encumbrances and restrictions except liens for taxes
not yet due and payable, liens securing outstanding
indebtedness that will be released upon the closing of
the transactions contemplated hereby and liens securing
the Securities, to all property and assets described in
the Registration Statement as being owned by it. All
leases to which the Company or any of its subsidiaries
is a party are valid and binding and no default has
occurred or is continuing thereunder, which might
result in any material adverse change in the business,
prospects, financial condition or results of operation
of the Company and its subsidiaries taken as a whole,
and the Company and its subsidiaries enjoy peaceful and
undisturbed possession under all such leases to which
any of them is a party as lessee with such exceptions
as do not materially interfere with the use made by the
Company or such subsidiary.
(r) Each of the representations and warranties on
the part of the Obligors in the Related Documents is
true and correct in all material respects.
(s) The Company and each of its subsidiaries
maintains reasonably adequate insurance.
(t) KPMG Peat Marwick are independent public
accountants with respect to the Company as required by
the Act.
(u) The Claridge at Park Place, Incorporated is
the only subsidiary of the Company.
(v) The financial statements, together with
related schedules and notes forming part of the
Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly the
consolidated financial position, results of operations
and changes in financial position of the Company and
its subsidiaries on the basis stated in the
Registration Statement at the respective dates or for
the respective periods to which they apply; such
12
<PAGE>
statements and related schedules and notes have been
prepared in accordance with generally accepted
accounting principles consistently applied throughout
the periods involved, except as disclosed therein; and
the other financial and statistical information and
data set forth in the Registration Statement and the
Prospectus (and any amendment or supplement thereto)
is, in all material respects, accurately presented and
prepared on a basis consistent with such financial
statements and the books and records of the Company.
(w) The Company is not an "investment company" or
a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of
1940, as amended.
7. Indemnification. (a) The Company and the
Guarantor, jointly and severally, agree to indemnify and
hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), from and against any
and all losses, claims, damages, liabilities and judgments
caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement
or the Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto)
or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses,
claims, damages, liabilities or judgments are caused by any
such untrue statement or omission or alleged untrue
statement or omission based upon information furnished in
writing to the Company by or on behalf of any Underwriter
through you expressly for use therein.
(b) In case any action shall be brought against
any Underwriter or any person controlling such Underwriter,
based upon any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment or supplement
thereto and with respect to which indemnity may be sought
against the Company and the Guarantor, such Underwriter
shall promptly notify the Company in writing and the Company
or the Guarantor shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses. Any
Underwriter or any such controlling person shall have the
right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such
13
<PAGE>
Underwriter or such controlling person unless (i) the
employment of such counsel shall have been specifically
authorized in writing by the Company, (ii) the Company or
the Guarantor shall have failed to assume the defense and
employ counsel or (iii) the named parties to any such action
(including any impleaded parties) include both such
Underwriter or such controlling person and the Company or
the Guarantor, and such Underwriter or such controlling
person shall have been advised by such counsel that there
may be one or more legal defenses available to it which are
different from or additional to those available to the
Company or the Guarantor (in which case the Company and the
Guarantor shall not have the right to assume the defense of
such action on behalf of such Underwriter or such
controlling person, it being understood, however, that the
Company and the Guarantor shall not, in connection with any
one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for all such
Underwriters and controlling persons, which firm shall be
designated in writing by Donaldson, Lufkin & Jenrette
Securities Corporation and that all such fees and expenses
shall be reimbursed as they are incurred). The Company or
the Guarantor shall not be liable for any settlement of any
such action effected without its written consent but if
settled with the written consent of the Company and the
Guarantor, the Company and the Guarantor agree to indemnify
and hold harmless any Underwriter and any such controlling
person from and against any loss or liability by reason of
such settlement. Notwithstanding the foregoing sentence, if
at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for
fees and expenses of counsel as contemplated by the second
sentence of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement
is entered into more than 10 business days after receipt by
such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to
the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of
such proceeding.
14
<PAGE>
(c) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company and the
Guarantor, their respective directors, the officers who sign
the Registration Statement and any person controlling the
Company or the Guarantor, within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company and the
Guarantor to each Underwriter but only with reference to
information furnished in writing by or on behalf of such
Underwriter through you expressly for use in the
Registration Statement, the Prospectus or any preliminary
prospectus or any amendment or supplement thereto. In case
any action shall be brought against the Company, the
Guarantor or any of their respective directors, any such
officer or any person controlling the Company and the
Guarantor based on the Registration Statement, the
Prospectus or any preliminary prospectus or any amendment or
supplement thereto and in respect of which indemnity may be
sought against any Underwriter, the Underwriter shall have
the rights and duties given to the Company and the Guarantor
(except that if the Company or the Guarantor shall have
assumed the defense thereof, such Underwriter shall not be
required to do so, but may employ separate counsel therein
and participate in the defense thereof but the fees and
expenses of such counsel shall be at the expense of such
Underwriter), and the Company, the Guarantor, their
respective directors, any such officers and any person
controlling the Company or the Guarantor shall have the
rights and duties given to the Underwriters by Section 7(b)
hereof.
(d) If the indemnification provided for in this
Section 7 is unavailable to an indemnified party in respect
of any losses, claims, damages, liabilities or judgments
referred to therein, then each indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and
judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and
the Guarantor on the one hand and the Underwriters on the
other hand from the offering of the Securities or (ii) if
the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company, the
Guarantor and the Underwriters in connection with the
statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any
other relevant equitable considerations. The relative
benefits received by the Company and the Guarantor on the
15
<PAGE>
one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the
Company, and the total underwriting discounts and
commissions received by the Underwriters, bear to the total
price to the public of the Securities, in each case as set
forth in the table on the cover page of the Prospectus. The
relative fault of the Company, the Guarantor and the
Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact
relates to information supplied by the Company, the
Guarantor or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Company, the Guarantor and the Underwriters
agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined
by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other
method of allocation which does not take account of the
equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this
Section 7, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price
at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations
to contribute pursuant to this Section 7(d) are several in
proportion to the respective number of Securities purchased
by each of the Underwriters hereunder and not joint.
8. Conditions of Underwriters' Obligations. The
several obligations of the Underwriters to purchase the
Securities under this Agreement are subject to the
satisfaction of each of the following conditions:
16
<PAGE>
(a) All the representations and warranties of the
Company and the Guarantor contained in this Agreement
shall be true and correct in all material respects on
the Closing Date with the same force and effect as if
made on and as of the Closing Date and all the
representations and warranties of the Company and the
Guarantor contained in the Obligor Related Documents
shall be true and correct in all material respects on
the Closing Date with the same force and effect as if
made on and as of the Closing Date.
(b) The Registration Statement shall have become
effective not later than 5:00 P.M., New York City time,
on the date of this Agreement or at such later date and
time as you may approve in writing, and at the Closing
Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no
proceedings for that purpose shall have been commenced
or shall be pending before or, to the knowledge of the
Company, contemplated by the Commission.
(c) Subsequent to the execution and delivery of
this Agreement and prior to the Closing Date, there
shall not have been any downgrading, nor shall any
notice have been given of any intended or potential
downgrading or of any review for a possible change that
does not indicate the direction of the possible change,
in the rating accorded any of the Company's securities
by any "nationally recognized statistical rating
organization", as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act.
(d) (i) Since the date of the latest audited
balance sheet included in the Registration Statement
and the Prospectus, there shall not have been any
material adverse change, or any development involving a
prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, affairs or
business prospects, whether or not arising in the
ordinary course of business, of the Company, (ii) since
the date of the latest audited balance sheet included
in the Registration Statement and the Prospectus there
shall not have been any change, or any development
involving a prospective material adverse change, in the
capital stock or in the long-term debt of the Company
from that set forth in the Registration Statement and
Prospectus and any amendment or supplement thereto,
(iii) the Company and its subsidiaries shall have no
liability or obligation, direct or contingent, which is
material to the Company and its subsidiaries, taken as
a whole, other than those reflected in the Registration
17
<PAGE>
Statement, the Prospectus, financial statements
(including related schedules and notes) forming a part
of the Registration Statement and Prospectus and (iv)
on the Closing Date you shall have received a
certificate dated the Closing Date, signed by the Chief
Executive Officer and Chief Financial Officer,
confirming the matters set forth in paragraphs (a),
(b), (c) and (d) of this Section 8.
(e) You shall have received on the Closing Date
an opinion (satisfactory to you and counsel for the
Underwriters), dated the Closing Date, of Rogers &
Wells, New York counsel for the Company and the
Guarantor, substantially in the form set forth in
Exhibit A. The opinion shall be rendered to you at the
request of the Company and shall so state therein.
(f) You shall have received on the Closing Date
an opinion (satisfactory to you and counsel for the
Underwriters), dated the Closing Date, of Frank A.
Bellis, General Counsel for the Company and the
Guarantor, substantially in the form set forth in
Exhibit B. The opinion shall be rendered to you at the
request of the Company and shall so state therein.
(g) You shall have received on the Closing Date
an opinion (satisfactory to you and counsel for the
Underwriters), dated the Closing Date, of Lowenstein,
Sandler, Kohl, Fisher & Boylan, New Jersey counsel for
the Partnership, substantially in the form set forth in
Exhibit C. The opinion shall be rendered to you at the
request of the Company and shall so state therein.
(h) You shall have received on the Closing Date
an opinion, dated the Closing Date, of Davis Polk &
Wardwell, counsel for the Underwriters, substantially
in the form set forth in Exhibit D.
(i) You shall have received executed copies of
each of the Indenture, the Related Documents, and the
other security and ancillary documents given by the
Company, the Guarantor or the Partnership in connection
with the issuance and sale of the Securities and the
discharge of the first mortgage and other liens granted
pursuant to the Revolving Credit and Term Loan
Agreement dated as of June 15, 1989, all in form and
substance previously agreed to by or otherwise
reasonably satisfactory to the Underwriters or their
counsel.
18
<PAGE>
(j) You shall have received a letter on and as of
the Closing Date, in form and substance satisfactory to
you, from KPMG Peat Marwick, independent public
accountants, with respect to the financial statements
and certain financial information contained in the
Registration Statement and the Prospectus and
substantially in the form and substance of the letter
delivered to you by KPMG Peat Marwick on the date of
this Agreement.
(k) You shall have received evidence that such
action (including, without limitation, the filing of
appropriately completed and duly executed Uniform
Commercial Code financing statements and the recording
of the Mortgage as may be necessary or as the
Underwriters shall have requested) to perfect the Liens
created pursuant to the Related Documents shall have
been taken (or, in the case of the Mortgage, receipt by
the Underwriters of the policy (or marked commitment)
of title insurance described in clause (1) below).
(l) You shall have received a 1990 ALTA loan
policy of title insurance (or irrevocable commitment
therefor with all conditions marked satisfied), dated
the Closing Date, in form and substance satisfactory to
the Underwriters and issued by First American Title
Insurance Company (the "TIC"), insuring the validity,
perfection and priority of the Lien created under the
Mortgage in the amount of $85,000,000, subject only to
such exceptions as are acceptable to the Underwriters,
containing such endorsements and affirmative assurances
as shall be agreed to by, and be satisfactory to, the
Underwriters, and reinsured in amounts and with
reinsurers acceptable to the Underwriters under
reinsurance agreements in form and substance acceptable
to the Underwriters; and the Company shall have paid or
made arrangements satisfactory to the Underwriters to
pay to the TIC all premiums and expenses of the TIC and
any agent of TIC in connection with the issuance of
such policy.
(m) You shall have received a survey by a
surveyor satisfactory to the TIC and the Underwriters,
in form and substance satisfactory to the TIC and the
Underwriters, with respect to the real property covered
by the Mortgage. The survey together with any
affidavit required by the TIC shall permit the TIC to
remove the general exception for matters disclosed by a
current survey.
19
<PAGE>
(n) You shall have received copies of file search
reports from the Uniform Commercial Code filing officer
in each jurisdiction or an independent search firm
acceptable to the Underwriters (i) in which is located
any Collateral or (ii) in which is located a place of
business or the chief executive office of the Company,
CPPI or the Partnership, that owns or holds any right,
title or interest in any property that constitutes
Collateral.
(o) Each of the representations and warranties of
the Partnership made in or pursuant to the Mortgage or
any of the other Related Documents to which the
Partnership is a party shall be true and correct in all
material respects on and as of the Closing Date, and
you shall have received a certificate dated the Closing
Date of a general partner of the Partnership to such
effect.
(p) None of the Company, the Guarantor or the
Partnership shall have failed at or prior to the
Closing Date to perform or comply in all material
respects with any of the agreements contained or in any
of the Related Documents and required to be performed
or complied with by the Company, the Guarantor or the
Partnership at or prior to the Closing Date.
(q) You shall have received evidence,
satisfactory to you and your counsel, of the receipt of
all necessary consents from the NJCCC to the
transactions contemplated hereby and by the Indenture
and the Related Documents.
9. Effective Date of Agreement and Termination.
This Agreement shall become effective upon the later of (i)
execution of this Agreement and (ii) when notification of
the effectiveness of the Registration Statement has been
released by the Commission.
This Agreement may be terminated at any time prior
to the Closing Date by you by written notice to the Company
if any of the following has occurred: (i) since the
respective dates as of which information is given in the
Registration Statement and the Prospectus, any material
adverse change or development involving a prospective
material adverse change in the condition, financial or
otherwise, of the Company or any of its subsidiaries or the
earnings, affairs, or business prospects of the Company or
any of its subsidiaries, whether or not arising in the
ordinary course of business, which would, in your judgment,
make it impracticable to market the Securities on the terms
20
<PAGE>
and in the manner contemplated in the Prospectus, (ii) any
outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic
conditions or in the financial markets of the United States
or elsewhere that, in your reasonable judgment, is material
and adverse and would, in your judgment, make it
impracticable to market the Securities on the terms and in
the manner contemplated in the Prospectus, (iii) the
suspension or material limitation of trading in securities
on the New York Stock Exchange, the American Stock Exchange
or the NASDAQ Stock Market or limitation on prices for
securities on any such exchange or market, (iv) the
enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of any
court or other governmental authority which in your
reasonable opinion materially and adversely affects, or will
materially and adversely affect, the business or operations
of the Company or the Guarantor, (v) the declaration of a
banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal,
state or local government or agency in respect of its
monetary or fiscal affairs which in your reasonable opinion
has a material adverse effect on the financial markets in
the United States.
If on the Closing Date any one or more of the
Underwriters shall fail or refuse to purchase the Securities
which it or they have agreed to purchase hereunder on such
date and the aggregate number of Securities which such
defaulting Underwriter or Underwriters, as the case may be,
agreed but failed or refused to purchase is not more than
one-tenth of the total number of Securities to be purchased
on such date by all Underwriters, each non-defaulting
Underwriter shall be obligated severally, in the proportion
which the number of Securities set forth opposite its name
in Schedule I bears to the total number of Securities which
all the non-defaulting Underwriters, as the case may be,
have agreed to purchase, or in such other proportion as you
may specify, to purchase the Securities which such
defaulting Underwriter or Underwriters, as the case may be,
agreed but failed or refused to purchase on such date;
provided that in no event shall the number of Securities
which any Underwriter has agreed to purchase pursuant to
Section 2 hereof be increased pursuant to this Section 9 by
an amount in excess of one-ninth of such number of
Securities without the written consent of such Underwriter.
If on the Closing Date any Underwriter or Underwriters shall
fail or refuse to purchase Securities and the aggregate
number of Securities with respect to which such default
occurs is more than one-tenth of the aggregate number of
Securities to be purchased on such date by all Underwriters
21
<PAGE>
and arrangements satisfactory to you and the Company for
purchase of such Securities are not made within 48 hours
after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter and
the Company and the Guarantor. In any such case which does
not result in termination of this Agreement, either you or
the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven business days,
in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other
documents or arrangements may be effected. Any action taken
under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of any
such Underwriter under this Agreement.
10. Miscellaneous. Notices given pursuant to any
provision of this Agreement shall be addressed as follows:
(a) if to the Company or the Guarantor, to The Claridge
Hotel and Casino Corporation, Indiana Avenue and The
Boardwalk, Atlantic City, New Jersey 08401, Attention:
Raymond A. Spera and Frank A. Bellis, Jr., and (b) if to any
Underwriter or to you, to you c/o Donaldson, Lufkin &
Jenrette Securities Corporation, 140 Broadway, New York, New
York 10005, Attention: Syndicate Department, or in any case
to such other address as the person to be notified may have
requested in writing.
The respective indemnities, contribution
agreements, representations, warranties and other statements
of the Company and the Guarantor, their officers and
directors and of the several Underwriters set forth in or
made pursuant to this Agreement shall remain operative and
in full force and effect, and will survive delivery of and
payment for the Securities, regardless of (i) any
investigation, or statement as to the results thereof, made
by or on behalf of any Underwriter or by or on behalf of the
Company, the officers or directors of the Company or any
controlling person of the Company, (ii) acceptance of the
Securities and payment for them hereunder and (iii)
termination of this Agreement.
If this Agreement shall be terminated by the
Underwriters because of any failure or refusal on the part
of the Company or the Guarantor to comply with the terms or
to fulfill any of the conditions of this Agreement, the
Company and the Guarantor agree to reimburse the several
Underwriters for all out-of-pocket expenses (including the
fees and disbursements of counsel) reasonably incurred by
them in connection with any investigation or preparation
made by them in respect of the sale of the Securities or in
22
<PAGE>
contemplation of the performance by them of their
obligations hereunder.
Except as otherwise provided, this Agreement has
been and is made solely for the benefit of and shall be
binding upon the Company, the Guarantor, the Underwriters,
any controlling persons referred to herein and their
respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall
acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not
include a purchaser of any of the Securities from any of the
several Underwriters merely because of such purchase.
This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
This Agreement may be signed in various
counterparts which together shall constitute one and the
same instrument.
23
<PAGE>
Please confirm that the foregoing correctly sets
forth the agreement among the Company, the Guarantor and the
several Underwriters.
Very truly yours,
THE CLARIDGE HOTEL AND CASINO
CORPORATION
By: ____________________________
Title:
THE CLARIDGE AT PARK PLACE,
INCORPORATED
By: ____________________________
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
OPPENHEIMER & CO., INC.
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION for
itself and on behalf of the
several Underwriters
By__________________________
24
<PAGE>
SCHEDULE I
Principal Amount
of Securities
Underwriters to be Purchased
------------ -----------------
Donaldson, Lufkin & Jenrette
Securities Corporation
Oppenheimer & Co., Inc.
___________
Total: $85,000,000
25
<PAGE>
EXHIBIT A
OPINION OF COUNSEL TO THE COMPANY
The opinion of Rogers & Wells, counsel to the
Company, pursuant to The Claridge Hotel and Casino
Corporation Underwriting Agreement shall be to the effect
of:
1. The Company has been duly incorporated, is
validly existing as a corporation in good standing
under the laws of the State of New York and has the
corporate power and authority to carry on its business
as it is currently being conducted and to own, lease
and operate its properties, and is duly qualified and
is in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property
requires such qualification, except where the failure
to be so qualified would not have a material adverse
effect on the Company and its subsidiary, taken as a
whole.
2. The Securities have been duly authorized and,
when executed and authenticated in accordance with the
provisions of the Indenture and delivered to the
Underwriters against payment therefor as provided by
the Underwriting Agreement, will be entitled to the
benefits of the Indenture, and will be valid and
binding obligations of the Company, enforceable in
accordance with their terms except as the
enforceability thereof may be limited by bankruptcy,
reorganization, moratorium, insolvency or similar laws
affecting creditors' rights generally, including,
without limitation, applicable fraudulent transfer
laws, general principles of equity, including, without
limitation, concepts of materiality, reasonableness,
good faith and fair dealing (regardless of whether the
enforceability of such rights or the availability of
such remedies is considered in a proceeding in equity
or at law).
3. Assuming the Guarantor has the requisite
corporate power and authority and has duly authorized,
executed and delivered the Indenture and the Guarantee,
when the Securities are delivered to the Underwriters
against payment therefor as provided in the
A-1
<PAGE>
Underwriting Agreement, the Guarantee will be a valid
and binding obligation of the Guarantor enforceable in
accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, reorganization,
moratorium, insolvency or similar laws affecting
creditors' rights generally including, without
limitation, applicable fraudulent transfer laws,
general principles of equity, including, without
limitation, concepts of materiality, reasonableness,
good faith and fair dealing (regardless of whether the
enforceability of such rights or the availability of
such remedies is considered in a proceeding in equity
or at law).
4. The Underwriting Agreement has been duly
authorized, executed and delivered by the Company.
5. The Indenture has been duly qualified under
the Trust Indenture Act of 1939, as amended, and has
been duly authorized, executed and delivered by the
Company and, assuming the Guarantor has the requisite
corporate power and authority and has duly authorized,
executed and delivered the Indenture, the Indenture is
a valid and binding agreement of the Company and the
Guarantor, enforceable in accordance with its terms
except as the enforceability thereof may be limited by
bankruptcy, reorganization, moratorium insolvency or
similar laws affecting creditors' rights generally,
including, without limitation, applicable fraudulent
transfer laws, general principles of equity, including,
without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless
of whether the enforceability of such rights or the
availability of such remedies is considered in a
proceeding in equity or at law).
6. Each of the Collateral Trust Agreement and
the Company Pledge Agreement (the "Company Related
Documents") has been duly authorized, executed and
delivered by the Company and is a valid and binding
agreement of the Company, enforceable in accordance
with its terms except as the enforceability thereof may
be limited by bankruptcy, reorganization, moratorium
insolvency or similar laws affecting creditors' rights
generally, including, without limitation, applicable
fraudulent transfer laws, general principles of equity,
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless
of whether the enforceability of such rights or the
availability of such remedies is considered in a
proceeding in equity or at law). [In addition, certain
A-2
<PAGE>
provisions of the Obligor Related Documents are or may
be unenforceable in whole or in part under the laws of
the State of New York, but the inclusion of such
provisions does not affect the validity of such
agreements, each as a whole, and there exist legally
adequate remedies for the practical realization of the
principal benefits afforded hereby].
7. Assuming the Guarantor has the requisite
corporate power and authority and has duly authorized,
executed and delivered the Collateral Trust Agreement,
the CPPI Pledge Agreement, the CPPI Cash Collateral
Pledge Agreement, the CPPI Security Agreement, and the
CPPI Trademark Security Agreement (the "CPPI Related
Documents" and together with the Company Related
Documents, collectively "Obligor Related Documents"),
then each constitutes a valid and binding agreement of
CPPI, enforceable in accordance with its terms except
as the enforceability thereof may be limited by
bankruptcy, reorganization, moratorium insolvency or
similar laws affecting creditors' rights generally,
including, without limitation, applicable fraudulent
transfer laws, general principles of equity, including,
without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless
of whether the enforceability of such rights or the
availability of such remedies is considered in a
proceeding in equity or at law). [In addition, certain
provisions of the Obligor Related Documents are or may
be unenforceable in whole or in part under the laws of
the State of New York, but the inclusion of such
provisions does not affect the validity of such
agreements, each as a whole, and there exist legally
adequate remedies for the practical realization of the
principal benefits afforded hereby].
8. Such counsel has been advised by the staff of
the Commission that the Registration Statement has
become effective under the Act, no stop order
suspending its effectiveness has been issued and no
proceedings for that purpose are, to the knowledge of
such counsel, pending before the Commission.
[9. The issuance and sale of the Notes and the
consummation of the other transactions contemplated by
the Related Documents will not cause the Contingent
Payment to become due.]
10. The Securities and the Guarantee conform as
to legal matters to the descriptions thereof contained
in the Prospectus.
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11. Neither the Company nor its subsidiary is in
violation of its respective charter or by-laws or in
default in the performance of any material obligation,
agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness
or in any other agreement, indenture or instrument
material to the conduct of the business of the Company
and its subsidiary, taken as a whole, to which the
Company or its subsidiary is a party or by which it or
its subsidiaries or their respective property is bound.
12. The execution and delivery and performance of
the Underwriting Agreement, the Indenture, the Obligor
Related Documents and the Securities and compliance by
the Company and each of its subsidiaries with all the
provisions hereof and thereof, and the consummation of
the transactions contemplated hereby and thereby, (i)
will not require any consent, approval, authorization
or other order of any court, regulatory body,
administrative agency or other governmental body
(except as such may be required under the Act, the
Trust Indenture Act of 1939, as amended, or the
securities or Blue Sky laws of the various states and
except for consents from the New Jersey Casino Control
Commission ("NJCCC")), (ii) will not conflict with or
violate the charter or by-laws of the Company and (iii)
will not conflict with or constitute a breach of any of
the terms or provisions of, or a default under, any
material agreement, indenture or other instrument to
which the Company and its subsidiaries is a party or by
which the Company and its subsidiaries or their
respective property is bound, or violate or conflict
with any laws, administrative regulations or rulings or
court decrees applicable to the Company and its
subsidiaries or their respective property, except for
such breaches, defaults or violations that would not,
individually or in the aggregate, (A) affect the
validity or enforceability of the Underwriting
Agreement, the Indenture, the Obligor Related Documents
or the Securities, (B) impair the ability of the
Company or its subsidiary to perform in any material
respect the obligations which it has under the
Underwriting Agreement, the Indenture, the Obligor
Related Documents or the Securities, (C) materially
impair the value of the Collateral pledged pursuant to
the Obligor Related Documents or (D) have a material
adverse effect on the Company and its subsidiaries
taken as a whole.
13. After due inquiry, such counsel does not know
of any legal or governmental proceeding pending or
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<PAGE>
threatened to which the Company or any of its
subsidiaries is a party or to which any of their
respective property is subject which is required to be
described in the Registration Statement or the
Prospectus and is not so described, or of any contract
or other document which is required to be described in
the Registration Statement or the Prospectus or is
required to be filed as an exhibit to the Registration
Statement which is not described or filed as required.
14. (1) The Registration Statement and the
Prospectus and each supplement or amendment thereto
(except for financial and statistical information
contained therein as to which no opinion need be
expressed), as of the effective date of the
Registration Statement, complied as to form in all
material respects with the Act.
15. Upon delivery of the Securities against
payment therefor, each of the Company Pledge Agreement,
the CPPI Pledge Agreement, the CPPI Security Agreement
and the CPPI Cash Collateral Pledge Agreement (the
"Security Documents") will create a valid security
interest in favor of the Collateral Trustee, for the
benefit of the Secured Parties to secure the Secured
Obligations (as each such term is defined in the
Collateral Trust Agreement), in all of the right title
and interest of the Company or CPPI, as the case may
be, in and to the Collateral referred to therein to the
extent that a security interest in such Collateral may
be created under Article 9 of the Uniform Commercial
Code of the State of New York (the "NY-UCC").
16. Assuming that (i) the Collateral Trustee has,
at the date hereof, possession in the State of New York
of the certificates representing the CPPI Shares (as
defined in the Company Pledge Agreement) and of the
Pledged Instruments (as defined in the CPPI Pledge
Agreement, and together with the Company Pledge
Agreement, collectively known as the "Pledge
Agreements") specified in the Schedules to the
respective Pledge Agreements and maintains continuous
possession of such certificates and Pledged
Instruments, and (ii) the Trustee and the Collateral
Trustee have entered into the Indenture and the Pledge
Agreements in good faith without notice of any adverse
claim to such CPPI Shares or Pledged Instruments, and
after giving effect to the issuance and sale against
payment therefor of the Securities on the date hereof,
the Collateral Trustee will have a perfected security
interest, for the benefit of the Secured Parties to
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<PAGE>
secure the Secured Obligations, in such CPPI Shares and
Pledged Instruments, which security interest has
priority over any other security interest in such CPPI
Shares or Pledged Instruments which can be perfected
under the NY-UCC.
17. Except for (i) filings or consents which have
been made (ii) filings which are necessary to perfect
the security interests granted under the Obligor
Related Documents, no authorizations or approvals of,
and no filings with, any governmental or regulatory
authority or agency, are necessary for the execution,
delivery or performance by the Company and any of its
subsidiaries of the Obligor Related Documents and the
perfection of the security interests purported to be
granted thereunder.
Such counsel shall also state that it has no
reason to believe that (except for financial statements and
schedules and except for that part of the Registration
Statement that constitutes the Form T-1) the Registration
Statement and the prospectus included therein at the time
the Registration Statement became effective contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the
Prospectus, as amended or supplemented, if applicable
(except as aforesaid) contains any untrue statement of a
material fact or omits to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may
rely, as to matters of fact, on certificates of responsible
officers of the Company. With respect to the opinions set
forth in numbered paragraphs 11, 12 and 13 above, such
counsel may limit its opinion to those material agreements,
indentures or instruments, and those rulings or court
decrees, as are identified to such counsel by responsible
officers of the Company. With respect to the statement
contemplated by the immediately preceding paragraph, such
counsel may state that its opinion and belief is based upon
its participation in the preparation of the Registration
Statement and Prospectus and any amendments or supplements
thereto and review and discussion of the contents thereof,
but are without independent check or verification except as
specified. Such counsel may further state that its opinion
is limited to matters under New York and federal law and
specifically does not address any of the provisions of the
New Jersey Casino Control Act or regulations adopted
pursuant thereto.
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The opinions set forth in numbered paragraphs 15 and 16
above will be subject to the following qualifications:
(i) counsel need express no opinion as to the
Company's or the Guarantor's rights in or title to
any Collateral; and
(ii) counsel may assume for the purposes of such
opinions that neither the Company nor the
Guarantor has granted, nor does there otherwise
exist, any execution or attachment on any of the
Collateral or any other lien that does not
require, in order to be enforceable against third
parties, steps for perfection under the Uniform
Commercial Code of any jurisdiction or other
applicable law relating to filing, recordation or
registration; nor has the Company or the Guarantor
assigned any of the Collateral other than pursuant
to the Obligor Related Documents.
The opinions set forth in numbered paragraph 15 are
subject to the following further qualifications:
(i) counsel need express no opinion as to the
validity of any security interest in any interest
in or claim in or under any policy of insurance,
any lease of real property or any Collateral that
consists or will consist of consumer goods, farm
products, crops, timber, minerals and the like
(including oil and gas) or accounts resulting from
the sale thereof, beneficial interests in a trust
or a decedent's estate, letters of credit or items
that are subject to (i) a statute or treaty of the
United States that provides for a national or
international registration or a national of
international certificate of title for the
perfection of a security interest therein or that
specifies a place of filing different from that
specified in the Uniform Commercial Code of any
jurisdiction for filing to perfect such security
interest or (ii) a certificate of title statute;
and
(ii) counsel may assume that no account (as
defined in the NY-UCC) is or will be due from the
United States of any State of the United States or
any agency or department of the United States of
any State.
The opinions in numbered paragraph 16 above are subject
to the following further qualifications:
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<PAGE>
(i) in the case of the issuance or other
distribution in respect of the CPPI Shares or
Pledged Instruments of additional instruments (as
such term is defined in Article 9 of the NY-UCC),
the security interest of the Collateral Trustee
therein will be perfected only if exclusive
possession thereof in New York State is obtained;
(ii) in the case of the issuance or other
distribution in respect of the CPPI Shares or
Pledged Instruments of additional securities (as
such term is defined in Article 8 of the NY-UCC),
the security interest of the Collateral Trustee
therein will be perfected only if exclusive
possession thereof in New York State is obtained
or the transfer otherwise occurs in a manner
provided for in Section 8-313(1) of the NY-UCC;
(iii) in the case of proceeds, continuation of
perfection of the Collateral Trustee's security
interest therein is limited to the extent set
forth in Section 9-306 of the NY-UCC;
(iv) in the case of property that becomes
collateral after the date hereof, Section 552 of
the United States Bankruptcy Code limits the
extent to which property acquired by a debtor
after the commencement of a case under the Federal
Bankruptcy Code may be subject to a security
interest arising from a security agreement entered
into by the debtor before the commencement of such
case;
(v) such counsel need not express any opinion as
to the priority of the security interest in the
CPPI Shares and the Pledged Instruments as against
any claim or lien in favor of the United States or
any agency or instrumentality thereof (including,
without limitation, federal tax liens and liens
under ERISA); and
(vi) such counsel need not express any opinion as
to the priority of any security interest of the
Collateral Trustee in any Collateral referred to
in subparagraphs (i), (ii), (iii) and (iv) above.
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<PAGE>
EXHIBIT B
OPINION OF GENERAL COUNSEL
TO THE COMPANY AND THE GUARANTOR
The opinion of Frank A. Bellis, Jr., general
counsel to the Company and the Guarantor, pursuant to The
Claridge Hotel and Casino Corporation Underwriting Agreement
shall be to the effect of:
1. The Guarantor has been duly incorporated, is
validly existing as a corporation in good standing
under the laws of the State of New Jersey and has the
corporate power and authority to carry on its business
as it is currently being conducted and to own, lease
and operate its properties, and is duly qualified and
is in good standing as a foreign corporation authorized
to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property
requires such qualification, except where to failure to
be so qualified would not have a material adverse
effect on the Guarantor.
2. All of the outstanding shares of capital
stock of, or other ownership interests in, each of the
Company's subsidiaries have been duly authorized and
validly issued and are fully paid and non-assessable,
and are owned by the Company, free and clear of any
security interest, claim, lien, encumbrance or adverse
interest of any nature except for liens granted
pursuant to the Financing Documents.
3. The Guarantee has been duly authorized,
executed and delivered by all necessary action on the
part of the Guarantor.
4. The Indenture has been duly authorized,
executed and delivered by the Guarantor.
5. Each of the Collateral Trust Agreement, the
CPPI Pledge Agreement, the CPPI Cash Collateral Pledge
Agreement, the CPPI Security Agreement, the CPPI
Trademark Security Agreement, the Subordination
Agreement, the CPPI Collateral Assignment of the
Wraparound Mortgage and the CPPI Assignment of Leases,
Rents and other Contracts (the "CPPI Related
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<PAGE>
Documents") has been duly authorized, executed and
delivered by the Guarantor.
6. Neither the Company nor any of its
subsidiaries is in violation of its respective charter
or by-laws or in default in the performance of any
obligation, agreement or condition contained in any
bond, lease, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or
instrument material to the conduct of the business of
the Company and it subsidiaries, taken as a whole, to
which the Company or its subsidiaries is a party or by
which it or its subsidiaries or their respective
property is bound.
7. The execution and delivery and performance of
the Indenture, the Guarantee and the CPPI Related
Documents and compliance by the Company and the
Guarantor with all the provisions hereof and thereof,
and the consummation of the transactions contemplated
hereby and thereby will not conflict with or violate or
require any consent under the charter or by-laws of the
Guarantor or any agreement or other instrument binding
upon the Company or any of its subsidiaries or any of
their respective properties.
8. The Company and the Guarantor and, to the
best of such counsel's knowledge the Partnership, have
such permits, licenses, franchises, authorizations and
consents ("permits") of governmental and regulatory
authorities, including without limitation, under the
NJCCC, as are necessary to own, lease and operate its
respective properties and to conduct is business in the
manner described in the Prospectus; the Company, and
the Guarantor and, to the best of such counsel's
knowledge the Partnership, have fulfilled and performed
all of their material obligations with respect to such
permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation
or termination thereof or results in any other material
impairment of the rights of the holder of any such
permit; and, except as described in the Prospectus,
such permits contain no restrictions that are
materially burdensome to the Company or any of its
subsidiaries.
9. The CPPI Collateral Assignment of the
Wraparound Mortgage and the CPPI Assignment of Leases,
Rents and Other Contracts are valid and binding
agreements of CPPI, enforceable in accordance with
their respective terms.
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<PAGE>
10. Upon delivery to the Collateral Trustee of
the notes secured by the Wraparound Mortgage and
recordation of the CPPI Collateral Assignment of the
Wraparound Mortgage in the recording office listed on a
schedule to the opinion, and the filing of the
Financing Statements (as defined below), the Collateral
Trustee will have a valid and perfected lien and
security interest in the Wraparound Mortgage for the
benefit of the Secured Parties to secure the Secured
Obligations (as each such term is defined in the
Collateral Trust Agreement).
11. Except for (i) filings or consents which have
been made and (ii) filings which are necessary to
perfect the security interests granted under the CPPI
Related Documents, no authorizations or approvals of,
and no filings with, any governmental or regulatory
authority or agency, are necessary for the execution,
delivery or performance by the Guarantor of the CPPI
Related Documents and the perfection of the security
interests purported to be granted thereunder.
12. The statements under the captions "Risk
Factors-Regulatory Matters", "Business-Gaming
Regulation and Licensing", "Management-Employment
Agreements", and "Management-Compensation Plans" in the
Prospectus, as amended or supplemented, insofar as such
statements constitute a summary of legal matters,
documents or proceedings referred to therein, fairly
present the information called for with respect to such
legal matters, documents and proceedings.
13. To the best of such counsel's knowledge,
after due inquiry, all leases to which the Company or
any of its subsidiaries is a party are valid and
binding and no default has occurred or is continuing
thereunder, which might result in any material adverse
change in the business, prospects, financial condition
or results of operation of the Company and its
subsidiaries taken as a whole, and the Company and its
subsidiaries enjoy peaceful and undisturbed possession
under all such leases to which any of them is a party
as lessee with such exceptions as do not materially
interfere with the use made by the Company or such
subsidiary.
14. To the best of such counsel's knowledge,
after due inquiry, neither the Company nor any of its
subsidiaries has violated any Environmental Laws, nor
any federal or state law relating to discrimination in
the hiring, promotion or pay of employees not any
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<PAGE>
applicable federal or state wages and hours laws, no
any provisions of the Employee Retirement Income
Security Act or the rules and regulations promulgated
thereunder, which in each case might result in any
material adverse change in the business, prospects,
financial condition or results of operation of the
Company and its subsidiaries, taken as a whole.
15. After due inquiry, such counsel does not know
of any legal or governmental proceeding pending or
threatened to which the Company or any of its
subsidiaries is a party or to which any of their
respective property is subject which is required to be
described in the Registration Statement or the
Prospectus and is not so described, or of any contract
or other document which is required to be described in
the Registration Statement or the Prospectus or is
required to be filed as an exhibit to the Registration
Statement which is not described or filed as required.
16. The choice of New York law to govern the CPPI
Related Documents in which such choice is stipulated is
a valid and effective choice of law under the laws of
the State of New Jersey and adherence to existing
judicial precedents would require a court sitting in
the State of New Jersey to abide by such choice of law.
17. The filing of the Financing Statements in the
offices designated in Schedule II hereto (the
"Financing Statements") are the only filings,
recordings and registrations necessary to perfect the
security interest in the Collateral covered by the UCC
(the "UCC Collateral") created by the Related
Documents.
18. No taxes or other charges, including, without
limitation, intangible or documentary stamp taxes,
mortgage or recording taxes, transfer taxes or similar
charges, are payable by the Company, CPPI, the Trustee,
the Collateral Trustee or any of the Noteholders to the
State of New Jersey or to any jurisdiction therein on
account of the execution or delivery of the Related
Documents to which the Company or CPPI is a party, the
creation of the indebtedness evidenced or secured
thereby the creation of the liens and security
interests thereunder, except for nominal filing or
recording fees.
19. All consents and approvals under the Casino
Control Act necessary for the issuance and sale of the
Securities and the execution, delivery and performance
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<PAGE>
of the Financing Documents and the transactions
contemplated thereby (including without limitation
those applicable to the Partnership) have been
obtained.
Such counsel also shall state that he believes
that (except for financial statements and schedules and
except for that part of the Registration Statement that
constitutes the Form T-1) the Registration Statement and the
prospectus included therein at that time that Registration
Statement became effective did not contain any untrue
statement to a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, and that the Prospectus,
as amended or supplemented, if applicable (except as
aforesaid) does not contain any untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
B-5
<PAGE>
EXHIBIT C
OPINION OF COUNSEL FOR THE PARTNERSHIP
The opinion of Lowenstein, Sandler, Kohl, Fisher &
Boylan, to be delivered pursuant to The Claridge Hotel and
Casino Underwriting Agreement shall be to the effect that:
1. Atlantic City Boardwalk Associates, L.P. has
been duly formed, is validly existing as a limited
partnership under the laws of the State of New Jersey
and has the partnership power and authority to own,
lease, mortgage and operate its properties.
2. To our knowledge, the Partnership is not in
violation of its Partnership Agreement or in default in
the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any
other evidence of indebtedness or in any other
agreement, indenture or instrument material to the
conduct of the business of the Partnership.
3. The execution, delivery and performance by
the Partnership of the Partnership Documents and
compliance by the Partnership with all the provisions
thereof, (i) will not require any consent, approval,
authorization or other order of any court, regulatory
body, administrative agency or other governmental body
(except as such may be required under the Act, the
Trust Indenture Act of 1939, as amended, or the
securities or Blue Sky laws of the various states, and
except for consents from the New Jersey Casino Control
Commission ("NJCCC"), (ii) will not conflict with or
violate or require any consent of the limited partners
under the partnership agreement of the Partnership and
(iii) will not conflict with or constitute a breach of
any of the terms or provisions of, or a default or
require any consent (except consent of the Company and
CPPI which have been obtained) under, any agreement,
indenture or other instrument to which the Partnership
is a party or by which its property is bound, or
violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to
the Partnership or its property, except for such
breaches, defaults or violations that would not,
individually or in the aggregate, (A) affect the
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validity or enforceability of the Mortgage or any of
the other Partnership Documents, (B) impair the ability
of the Partnership to perform in any material respect
the obligations which it has under the Mortgage or any
of the other Partnership Documents, (C) impair the
value of the Collateral pledged pursuant to the
Mortgage or any of the other Partnership Documents or
(D) have a material adverse effect on the Partnership.
4. The Operating Leases between the Partnership
and CPPI are valid and binding and to our knowledge, no
default has occurred or is continuing thereunder, which
might result in any material adverse change in the
business, prospects, financial condition or results of
operation of the Partnership.
5. Each of the Partnership Documents has been
duly authorized, executed and delivered by the
Partnership and, assuming the due authorization,
execution and delivery by the Company and CPPI of each
of such documents to which it is a party, then (i) each
of the Partnership Documents (other than the Collateral
Trust Agreement) is a valid and binding agreement of
each of the Partnership, the Company and CPPI,
enforceable in accordance with its terms and (ii) if
the Collateral Trust Agreement stated by its terms that
it was governed by the laws of the State of New Jersey,
then the Collateral Trust Agreement would be a valid
and binding agreement of the Partnership, enforceable
in accordance with its terms.
6. The Partnership Documents create a valid
security interest in favor of the Collateral Trustee,
for the benefit of the Secured Parties to secure the
Secured Obligations (as each such term is defined in
the Collateral Trust Agreement), in all of the right
title and interest of the Partnership in and to the
Collateral referred to in such Partnership Documents
which is owned by the Partnership, to the extent that a
security interest therein may be created under Article
9 of the Uniform Commercial Code of the State of New
Jersey (the "NJ-UCC").
7. Except for (i) filings or consents which have
been made, (ii) consents of the Company and CPPI (which
have been obtained), (iii) filings with and consents of
the NJCCC, and (iv) filings which are necessary to
perfect the security interests granted under the
Partnership Documents as discussed below, no
authorizations or approvals of, and no filings with,
any governmental or regulatory authority or agency are
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<PAGE>
necessary for the execution, delivery or performance by
the Partnership of the Mortgage or any of the other
Partnership Documents and the perfection of the
security interests purported to be granted thereunder.
8. [None of the Collateral Trustee or the Secured
Parties is required to pay any tax or be qualified to
do business or file any designation for service of
process or file any reports in the State of New Jersey
or comply with any statutory or regulatory rule or
requirement applicable only to financial institutions
chartered or qualified to do business in the State of
New Jersey solely by reason of its execution and
delivery or acceptance of the Mortgage or the other
Partnership Documents or by reason of its participation
in any of the transactions under or contemplated by the
Mortgage or the other Partnership Documents, including,
without limitation, the making and receipt of payments
pursuant thereto and the exercise of any right or
remedy under or with respect to the Mortgage and the
other Partnership Documents, and the validity and
enforceability of the Mortgage and the other
Partnership Documents will not be affected by any
failure to so qualify or file.]
9. The Mortgage creates a valid mortgage lien
upon such of the Mortgaged Property (as defined in the
Mortgage) described therein (the "Real Property") as
constitutes real property under the law of the State of
New Jersey in favor of the Collateral Trustee for the
ratable benefit of the Secured Parties and securing the
Secured Obligations. The Mortgage and the financing
statements on Form UCC-1 relating to fixtures on the
Real Property (the "Fixture Financing Statements")
conform to all requirements of the laws of the State of
New Jersey. The recording of the Mortgage and the
filing of the Fixture Financing Statements in the
offices designated in Schedule I hereto are the only
filings, recordings and registrations necessary to
perfect, publish notice of and preserve the lien of and
security interest in the Real Property created by the
Mortgage.
10. The filing of the Financing Statements in the
offices designated in Schedule II hereto (the
"Financing Statements") are the only filings,
recordings and registrations necessary to perfect the
security interest in the Collateral covered by the UCC
(the "UCC Collateral") created by the Partnership
Documents.
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<PAGE>
11. No taxes or other charges, including, without
limitation, intangible or documentary stamp taxes,
mortgage or recording taxes, transfer taxes or similar
charges, are payable to the State of New Jersey or to
any jurisdiction therein on account of the execution or
delivery of the Mortgage or the other Partnership
Documents, the creation of the indebtedness evidenced
or secured thereby, the creation of the liens and
security interests thereunder, or the filing, recording
or registration of the Mortgage or the Financing
Statements or the Fixture Financing Statements, except
for nominal filing or recording fees.
The opinions expressed above are subject to the
following qualifications and assumptions:
(a) The enforceability of each of the
Partnership Documents is subject to (i) the effect of
any applicable bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium or similar laws
affecting creditors' rights and remedies generally;
(ii) general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity
or at law); (iii) limitations on the enforceability of
rights to indemnification thereunder by federal or
state securities laws or by public policy, including
but not limited to limitations on indemnification for a
party's own negligence; and (iv) the requirement that
the Collateral Trustee and the Trustee act in good
faith.
(b) We express no opinion as to the validity of
any provision of the Partnership Documents which
purports to waive the right to a trial by jury. We
also express no opinion as to the validity of any
provision which purports to waive any other right or
remedy which under the laws of the State of New Jersey
may not be waived; provided, however, that the
qualifications expressed in this paragraph will not
make the remedies available inadequate for the
practical realization of the rights and benefits
afforded under the Partnership Documents. We express
no opinion as to the present or future economic value
of any collateral.
(c) We offer no opinion and do not purport to
opine as to the enforceability of (i) self-help
provisions, including but not limited to provisions
permitting realization upon collateral without judicial
process, (ii) provisions which purport to establish
evidentiary standards, (iii) provisions relating to
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waiver of legal rights or remedies (or the delay or
omission of enforcement thereof), (iv) provisions
relating to disclaimers, liability limitations with
respect to third parties, releases of legal or
equitable rights or discharges or defenses and
remedies, (v) provisions permitting remedies to be
exercised without notice to the Partnership or (vi) the
choice of law provisions in any Financing Document
which by its terms is not governed by New Jersey law.
(d) We understand you are relying upon a title
insurance policy as to all matters relating to the
quality and priority of the title insured thereby and
upon a UCC search as to the priority of liens perfected
under the UCC. In giving this opinion we do not
purport to render any opinion with respect to any
matters of title except as to the effectiveness of
certain grants as to which we specifically offer our
opinion.
(e) We offer no opinion and do not purport to
opine on the possible application of various building
codes, zoning ordinances, environmental laws and other
similar statutes, laws, ordinances, codes and
regulations affecting the possible use and occupancy of
the Property.
(f) Where to phrase "to our knowledge" appears,
we have no actual knowledge which would cause us to
question the opinion so qualified, but we have made no
independent investigation whatsoever with respect
thereto.
(g) We have assumed without investigation that
all obligations due to First Fidelity Bank, National
Association, New Jersey ("First Fidelity") have been
satisfied in full and all liens on the Property in
favor of First Fidelity (or which otherwise appear on
the title search of Trans-Country Title but which are
not "Permitted Encumbrances") have been or
simultaneously are being released.
(h) With respect to all Financing Statements (i)
continuing statements relating to said Financing
Statements must be filed within five years of the
original filing and (ii) additional filings may be
necessary with respect to the UCC Collateral if the
Partnership changes its name, identity, structure, the
jurisdiction of its place of business in the State of
New Jersey or the location of the UCC Collateral.
C-5
<PAGE>
(i) We have assumed with your permission and
without investigation that the Collateral Trustee is
duly qualified to do business in New Jersey.
(j) [We offer no opinion and do not purport to
opine (i) on the possible application of any state
(including New jersey) or federal securities laws and
regulations, or (ii) on the application of federal tax
law or the tax laws of any state (including New
Jersey), or (iii) the laws of the State of New Jersey
involving the regulation of casinos and those who do
business with casinos, including but not limited to
rules regulations of the NJCCC. Approval of the NJCCC
may be required for the exercise of certain remedies
under the Partnership Documents.]
(m) We draw your attention to the fact that all
foreclosures of mortgaged property under New Jersey law
may only be undertaken through judicial proceedings and
that the recovery of attorney's fees and costs therein
is governed by the New Jersey Rules of Court. We
express no opinion whether recovery of such fees and
costs in an action to collect a deficiency also would
be governed by such limits.
We are admitted to practice only in the State of
New Jersey. We offer no opinion as to the possible
application of the laws of any other jurisdictions.
This opinion is given as of the date hereof and
you understand that we have no obligation to update our
opinion.
This opinion has been issued solely for the
benefit of the addresses and may be relied upon only by
same. Without our prior written consent, this opinion may
not be used, circulated, quoted in whole or in part, or
otherwise referred to in connection with any transaction
other than the above-described transaction.
Very truly yours,
C-6
<PAGE>
SCHEDULE A
Mortgage, Assignment of Leases and Rents, Security
Agreement and Financing Statement
Partnership Security Agreement
Partnership Cash Collateral Pledge Agreement
Collateral Assignment of Lessor's Interest in
Operating Leases
Collateral Trust Agreement
Subordination Agreement
C-7
<PAGE>
SCHEDULE I
Clerk of Atlantic County
Secretary of State of New Jersey
C-8
<PAGE>
SCHEDULE II
Clerk of Atlantic County
Secretary of State of New Jersey
C-9
<PAGE>
EXHIBIT D
OPINION OF COUNSEL TO THE UNDERWRITERS
This opinion of Davis Polk & Wardwell, counsel to
the Underwriters, pursuant to the Claridge Hotel and Casino
Corporation Underwriting Agreement dated ________, 1994,
shall be to the effect of:
1. The Company has been duly incorporated, is
validly existing as a corporation in good standing
under the laws of the State of New York and has the
corporate power and authority to carry on its business
and to own, lease and operate its properties, and is
duly qualified and is in good standing as a foreign
corporation authorized to do business in each
jurisdiction in which the nature of its business or its
ownership or leasing of property requires such
qualification, except where the failure to be so
qualified would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
2. The Securities have been duly authorized by
the Company and, when executed and authenticated in
accordance with the provisions of the Indenture and
delivered to the Underwriters against payment therefor
as provided by the Underwriting Agreement, will be
entitled to the benefits of the Indenture, and will be
valid and binding obligations of the Company,
enforceable in accordance with their terms except as
(i) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent transfer or similar
laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable
principles of general applicability.
3. The Underwriting Agreement has been duly
authorized, executed and delivered by the Company.
4. The Indenture has been duly qualified under
the Trust Indenture Act of 1939, as amended, and has
been duly authorized, executed and delivered by the
Company and, assuming the due authorization, execution
and delivery of the Indenture by the Guarantor, the
Indenture is a valid and binding agreement of the
D-1
<PAGE>
Company and the Guarantor, enforceable in accordance
with its terms except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency, fraudulent
transfer or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by
equitable principles of general applicability.
5. The statements under the captions
"Description of Notes" and "Underwriting" in the
Prospectus, as amended or supplemented, insofar as such
statements constitute a summary of legal matters or
documents or referred to therein, fairly present the
information called for with respect to such legal
matters and documents.
6. (1) The Registration Statement and the
Prospectus and any supplement or amendment thereto
(except for financial statements and schedules and
financial and statistical information and that part of
the Registration Statement constituting the Form T-1 of
the Trustee as to which no opinion need be expressed)
comply as to form in all material respects with the
Act, and (2) such counsel believes that (except as
aforesaid) the Registration Statement and the
prospectus included therein at the time the
Registration Statement became effective did not contain
any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not
misleading, and that the Prospectus, as amended or
supplemented, if applicable (except as aforesaid) does
not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to
make the statements therein, in the light of the
circumstances under which they were made, not
misleading. The opinions expressed in this clause (6)
are based upon such counsel's participation in the
preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but
are without independent check or verification except as
specified.
7. Each of the Related Documents that purports
by its terms to be governed by the laws of the State of
New York is in substantially acceptable legal form
under the laws of the State of New York.
D-2
<PAGE>
<PAGE>
THE CLARIDGE HOTEL AND CASINO CORPORATION
Issuer
THE CLARIDGE AT PARK PLACE, INCORPORATED
Guarantor
_______________________
___% First Mortgage Notes Due 2002
_______________________
INDENTURE
Dated as of _____________, 1994
_______________________
IBJ SCHRODER BANK & TRUST COMPANY
as Trustee
<PAGE>
CROSS-REFERENCE TABLE
Trust Indenture Indenture
Act Section Section
310(a)(1) . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . 7.10; 12.10
(a)(3) . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(c) . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . 12.03
(c) . . . . . . . . . . . . . . . . . . . 12.03
313(a) . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . 7.06
(b)(2) . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . 7.06; 12.02
(d) . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . 4.02
(b) . . . . . . . . . . . . . . . . . . . 10.02
(c)(1) . . . . . . . . . . . . . . . . . . 12.04
(c)(2) . . . . . . . . . . . . . . . . . . 12.04
(c)(3) . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . 10.04
(e) . . . . . . . . . . . . . . . . . . . 12.05
(f) . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . 7.01(b)
(b) . . . . . . . . . . . . . . . . . . . 7.05; 12.02
(c) . . . . . . . . . . . . . . . . . . . 7.01(a)
(d) . . . . . . . . . . . . . . . . . . . 7.01(c)
(e) . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . 6.07
317(a)(1) . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . 12.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the
Indenture.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND
INCORPORATION BY REFERENCE
Section 1.01 Definitions . . . . . . . . . . . . . . . .
1.02 Incorporation by Reference of Trust
Indenture Act . . . . . . . . . . . . . . .
1.03 Rules of Construction . . . . . . . . . . .
ARTICLE II
THE NOTES
Section 2.01 Form and Dating . . . . . . . . . . . . . .
2.02 Execution and Authentication . . . . . . . .
2.03 Registrar and Paying Agent . . . . . . . . .
2.04 Paying Agent to Hold Money in Trust . . . .
2.05 Noteholder Lists . . . . . . . . . . . . . .
2.06 Transfer and Exchange . . . . . . . . . . .
2.07 Replacement Notes . . . . . . . . . . . . .
2.08 Outstanding Notes . . . . . . . . . . . . .
2.09 Treasury Notes . . . . . . . . . . . . . . .
2.10 Temporary Notes . . . . . . . . . . . . . .
2.11 Cancellation . . . . . . . . . . . . . . . .
2.12 Defaulted Interest . . . . . . . . . . . . .
ARTICLE III
REDEMPTIONS AND OFFERS TO REPURCHASE
Section 3.01 Notices to Trustee . . . . . . . . . . . . .
3.02 Selection of Notes to be Redeemed . . . . .
3.03 Notice of Redemption . . . . . . . . . . . .
3.04 Effect of Notice of Redemption . . . . . . .
3.05 Deposit of Redemption Price . . . . . . . .
3.06 Notes Redeemed in Part . . . . . . . . . . .
3.07 Optional Redemption . . . . . . . . . . . .
3.08 Redemption Pursuant to Casino Control Act .
3.09 Mandatory Redemption . . . . . . . . . . . .
3.10 Annual Excess Cash Tender . . . . . . . . .
3.11 Purchase Offer . . . . . . . . . . . . . . .
i
<PAGE>
Page
ARTICLE IV
COVENANTS
Section 4.01 Payment of Notes . . . . . . . . . . . . . .
4.02 SEC Reports, Financial Reports . . . . . . .
4.03 Compliance Certificate . . . . . . . . . . .
4.04 Stay, Extension and Usury Laws . . . . . . .
4.05 Corporate Existence; Compliance
With Laws . . . . . . . . . . . . . . . .
4.06 Use of Proceeds . . . . . . . . . . . . . .
4.07 Limitations on Liens . . . . . . . . . . . .
4.08 Limitation on Indebtedness . . . . . . . . .
4.09 Limitation on Restricted Payments . . . . .
4.10 Asset Sales . . . . . . . . . . . . . . . .
4.11 Limitation on Transactions with Affiliates .
4.12 Transactions with the Partnership;
Unification Transaction . . . . . . . . . .
4.13 Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries . . . . . . . . . . . . . . . .
4.14 Change of Control . . . . . . . . . . . . .
4.15 Additional Subsidiary Guaranties . . . . . .
4.16 Limitation on Business Activities of the
Company and the Subsidiaries . . . . . . . .
4.17 Insurance . . . . . . . . . . . . . . . . .
4.18 Investment Company Act . . . . . . . . . . .
4.19 Related Documents . . . . . . . . . . . . .
4.20 Further Assurances . . . . . . . . . . . . .
4.21 Redesignation of Non-Recourse Subsidiary . .
4.22 Duty of Cooperation . . . . . . . . . . . .
4.23 Further Property . . . . . . . . . . . . . .
ARTICLE V
SUCCESSORS
Section 5.01 Consolidation, Merger or Sale of Assets . .
5.02 Successor Corporation Substituted . . . . .
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01 Events of Default . . . . . . . . . . . . .
6.02 Acceleration . . . . . . . . . . . . . . . .
6.03 Other Remedies . . . . . . . . . . . . . . .
6.04 Waiver of Defaults . . . . . . . . . . . . .
6.05 Control by Majority . . . . . . . . . . . .
ii
<PAGE>
Page
6.06 Limitation on Suits . . . . . . . . . . . .
6.07 Rights of Noteholders to Receive Payment . .
6.08 Collection Suit by Trustee . . . . . . . . .
6.09 Trustee May File Proofs of Claim . . . . . .
6.10 Priorities . . . . . . . . . . . . . . . . .
6.11 Undertaking for Costs . . . . . . . . . . .
6.12 Management of the Existing Hotel Casino . .
ARTICLE VII
TRUSTEE
Section 7.01 Duties of Trustee . . . . . . . . . . . . .
7.02 Rights of Trustee . . . . . . . . . . . . .
7.03 Individual Rights of Trustee . . . . . . . .
7.04 Trustee's Disclaimer . . . . . . . . . . . .
7.05 Notice of Acceleration . . . . . . . . . . .
7.06 Reports by Trustee . . . . . . . . . . . . .
7.07 Compensation and Indemnity . . . . . . . . .
7.08 Replacement of Trustee . . . . . . . . . . .
7.09 Successor Trustee by Merger, etc. . . . . .
7.10 Eligibility, Disqualification . . . . . . .
7.11 Preferential Collection of Claims
Against the Company . . . . . . . . . . . .
7.12 Co-Trustee . . . . . . . . . . . . . . . . .
ARTICLE VIII
DISCHARGE OF INDENTURE
Section 8.01 Defeasance and Discharge of this
Indenture and the Notes . . . . . . . . . .
8.02 Conditions to Defeasance . . . . . . . . . .
8.03 Application of Trust Money . . . . . . . . .
8.04 Repayment to Company . . . . . . . . . . . .
8.05 Indemnity for Government Obligations . . . .
8.06 Reinstatement . . . . . . . . . . . . . . .
ARTICLE IX
AMENDMENTS
Section 9.01 Without the Consent of Noteholders . . . . .
9.02 With Consent of Noteholders . . . . . . . .
9.03 Consideration for Consent . . . . . . . . .
9.04 Compliance with Trust Indenture Act . . . .
9.05 Revocation and Effect of Consents . . . . .
9.06 Notation on or Exchange of Notes . . . . . .
iii
<PAGE>
Page
9.07 Trustee Protected . . . . . . . . . . . . .
ARTICLE X
SECURITY
Section 10.01 Security . . . . . . . . . . . . . . . . . .
10.02 Recording, etc. . . . . . . . . . . . . . .
10.03 Protection of the Trust Estate . . . . . . .
10.04 Release of Lien . . . . . . . . . . . . . .
ARTICLE XI
SUBSIDIARY GUARANTIES
Section 11.01 Subsidiary Guaranties . . . . . . . . . . .
11.02 Discharge Only Upon Payment In
Full; Reinstatement In Certain
Circumstances . . . . . . . . . . . . . . .
11.03 Waiver by the Guarantors . . . . . . . . . .
11.04 Subrogation; Contribution . . . . . . . . .
11.05 Stay of Acceleration . . . . . . . . . . . .
ARTICLE XII
MISCELLANEOUS
Section 12.01 Trust Indenture Act Controls . . . . . . . .
12.02 Notices . . . . . . . . . . . . . . . . . .
12.03 Communication by Noteholders with Other
Noteholders . . . . . . . . . . . . . . . .
12.04 Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . .
12.05 Statements Required in Certificate or
Opinion . . . . . . . . . . . . . . . . . .
12.06 Rules by Trustee, the Registrar and
Paying Agents . . . . . . . . . . . . . . .
12.07 Legal Holidays . . . . . . . . . . . . . . .
12.08 No Recourse Against Others . . . . . . . . .
12.09 Counterparts . . . . . . . . . . . . . . . .
12.10 Variable Provisions . . . . . . . . . . . .
12.11 Governing Law . . . . . . . . . . . . . . .
12.12 No Adverse Interpretation of Other
Agreements . . . . . . . . . . . . . . . . .
12.13 Successors . . . . . . . . . . . . . . . . .
12.14 Severability . . . . . . . . . . . . . . . .
12.15 Table of Contents, Headings, Etc. . . . . .
12.16 Benefits of Indenture . . . . . . . . . . .
iv
<PAGE>
Page
12.17 Amendment to Related Documents . . . . . . .
12.18 Casino Control Act . . . . . . . . . . . . .
v
<PAGE>
Page
EXHIBITS
EXHIBIT A -- Form of Note . . . . . . . . . . . . . . . . A-1
EXHIBIT B -- Collateral Trust Agreement . . . . . . . . . B-1
vi
<PAGE>
INDENTURE dated as of ________________, 1994 by
and among THE CLARIDGE HOTEL AND CASINO CORPORATION, a New
York corporation, as issuer (the "Company"), THE CLARIDGE AT
PARK PLACE, INCORPORATED, a New Jersey corporation, as
guarantor (the "Guarantor"), and IBJ SCHRODER BANK & TRUST
COMPANY, a banking corporation organized and existing under
the laws of the State of New York, as trustee (the
"Trustee").
W I T N E S S E T H :
Each party agrees as follows for the benefit of
the other parties and for the equal and ratable benefit of
the Holders of the Company's ___% First Mortgage Notes due
2002 (the "Notes"):
ARTICLE I
DEFINITIONS AND
INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Adjusted EBITDA" means, with respect to the
Company at any date, the amount which is equal to (a) the
Consolidated Net Income of the Company plus (b) an amount
equal to any extraordinary loss plus any net loss realized
in connection with an Asset Sale (to the extent such losses
were deducted in computing Consolidated Net Income), plus
(c) provision for taxes based on income or profits to the
extent such provision for taxes was included in computing
Consolidated Net Income, plus (d) consolidated interest
expense for such period, whether paid or accrued (including
amortization of original issue discount, non-cash interest
payments, amortization of deferred financing charges and the
interest component of capital lease obligations), to the
extent such expense was deducted in computing Consolidated
Net Income, plus (e) depreciation, amortization (including
amortization of goodwill and other intangibles) and other
non-cash charges (excluding any such non-cash charge that
requires an accrual of or reserve for cash charges for any
future period and excluding any such non-cash charge that is
included in consolidated interest expense or consolidated
tax expense) of such person to the extent such depreciation,
amortization and other non-cash charges were deducted in
computing Consolidated Net Income, plus (f) Rent Expense to
<PAGE>
the Partnership, plus (g) Reinvestment Obligation Expenses,
less (h) Interest from the Partnership, in the case of each
of (a) through (h) for the Reference Period, less (i) Net
Partnership Payments for the Adjustment Period, in each
case, on a consolidated basis and determined in accordance
with GAAP.
"Adjusted Fixed Charges" means, with respect to
the Company at any date, the sum of (a) consolidated
interest expense of the Company for the Reference Period,
whether paid or accrued, to the extent such expense was
deducted in computing Consolidated Net Income (including
amortization of original issue discount, non-cash interest
payments and the interest component of capital leases but
excluding amortization of deferred financing fees and
excluding capitalized interest and interest on the Loan from
the Partnership), plus (b) the product of (i) all cash
dividend payments (and non-cash dividend payments in the
case of a Subsidiary) on any series of preferred stock,
times (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined
federal, state and local statutory tax rate of the Company,
expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP.
"Adjusted Fixed Charge Coverage Ratio" means, with
respect to the Company and its Restricted Subsidiaries at
any date, the ratio of (A) Adjusted EBITDA of the Company
and its Restricted Subsidiaries at such date to (B) Adjusted
Fixed Charges of the Company and its Restricted Subsidiaries
for the Reference Period, provided that (a) in the event
that the Company or any of its Subsidiaries (other than any
Non-Recourse Subsidiary) incurs, assumes, guaranties or
redeems any Indebtedness (other than revolving credit
borrowings) or issues preferred stock subsequent to the
commencement of the Reference Period but prior to the event
for which the calculation of the Adjusted Fixed Charge
Coverage Ratio is made, then the Adjusted Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, guaranty or redemption of
Indebtedness, or such issuance or redemption of preferred
stock, as if the same had occurred at the beginning of the
applicable period, (b) in making such computation, the Fixed
Charges attributable to interest on any Indebtedness bearing
a floating interest rate shall be computed on a pro forma
basis as if the rate in effect on the date of computation
had been the applicable rate for the entire period, (c) in
making such computation, the Fixed Charges attributable to
interest on any Indebtedness under a revolving credit
facility shall be computed on a pro forma basis based upon
the average daily balance of such Indebtedness outstanding
2
<PAGE>
during the applicable period, (d) in the event that the
Company or any of its Restricted Subsidiaries consummates a
material acquisition or an Asset Sale subsequent to the
commencement of the Reference Period, then the Adjusted
Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect to such material acquisition or Asset Sale
(including the incurrence of any Indebtedness in connection
therewith), as if the same had occurred at the beginning of
the applicable period, and (e) in the event that the Company
or any of its Restricted Subsidiaries purchases any assets
or property which was previously leased by the Company or
any of its Restricted Subsidiaries subsequent to the
commencement of the Reference Period but prior to the event
for which the calculation of the Adjusted Fixed Charge
Coverage Ratio is made, then the Adjusted Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect
to such purchase as if the same had occurred at the
beginning of the applicable period.
"Adjusted Indebtedness" means, with respect to the
Company and its Restricted Subsidiaries as any date, (i) the
amount of Indebtedness outstanding, less (ii) cash, cash
equivalents and Marketable Securities, as would be shown on
a consolidated balance sheet of the Company and its
Restricted Subsidiaries at such date prepared in accordance
with GAAP.
"Adjustment Period" means the Reference Period
unless Net Partnership Payments for the Subsequent Period
are greater than Net Partnership Payments for the Reference
Period, in which case it means the Subsequent Period.
"Affiliate" of any specified person means any
other individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture,
joint stock company, government or other entity of any kind
directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified
person. For purposes of this definition, "control"
(including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control
with"), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such
person, whether through the ownership of voting securities,
by agreement or otherwise; provided, however, that
beneficial ownership of 10% or more of the voting securities
of a person shall be deemed to be control.
"Affiliate Transaction" shall have the meaning
provided in Section 4.11 hereof.
3
<PAGE>
"Agent" means each Registrar, Paying Agent or
Authenticating Agent.
"Applicable Premium" means, with respect to any
Note called for redemption by the Company pursuant to
Section 3.09 or in respect of which a Notice of Acceleration
has been given as contemplated by Section 6.01, the greater
of (i) 100% of the then outstanding principal amount of such
Note, and (ii) the difference of (A) the present value of
all required interest and principal payments due on such
Note, computed using a discount rate equal to the Treasury
Rate plus 75 basis points, minus (B) the then outstanding
principal amount of such Note, minus (C) any accrued and
unpaid interest paid on each Note on the redemption date.
"Asset Sale" means (i) any sale, lease, transfer,
conveyance or other disposition of any assets (including by
way of sale-and-leaseback) other than the sale or transfer
of inventory or goods held for sale in the ordinary course
of business and other than any sale, lease, transfer,
conveyance or other disposition of assets, goods, inventory
or equipment that have become obsolete (provided that the
term "Asset Sale" shall not include any transaction which is
governed by the provisions of Section 4.14 or 5.01 hereof);
(ii) any issuance, sale, lease, transfer, conveyance or
other disposition of any equity securities of any of its
Subsidiaries (other than a Non-Recourse Subsidiary) to any
person other than the Company or any wholly owned Subsidiary
(other than a Non-Recourse Subsidiary); or (iii) any Event
of Loss, in each case, whether in a single transaction or a
series of related transactions, that in the case of each of
clauses (i), (ii) and (iii), (a) involves assets having a
fair market value in excess of $3 million or (b) results in
Net Proceeds in excess of $3 million.
"Asset Sale Offer" shall have the meaning provided
in Section 4.10 hereof.
"Assignment of Leases and Rents and Other Contract
Rights" means that certain Assignment of Leases, Rents and
Other Contract Rights from CPPI in favor of the Collateral
Trustee (for the benefit of the Noteholders), dated as of
the date hereof, substantially in the form of Exhibit M to
the Collateral Trust Agreement, as amended, supplemented or
modified from time to time as permitted by this Indenture.
"Authenticating Agent" shall have the meaning
provided in Section 2.02 hereof.
"Board of Directors" means the Board of Directors
of the Company, the Guarantor, or any subsidiary thereof, as
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the context may require, or any duly appointed committee of
such Board.
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company, the Guarantor, or any Subsidiary thereof, as the
context may require, to have been duly adopted by the Board
of Directors and to be in full force and effect on the date
of such Certification.
"Business Day" means any day that is not a Legal
Holiday.
"Capital Expenditures" means the Company's
expenditures for gaming equipment and all FF&E Loans.
"Capital Stock" means any and all shares,
interests, participations, rights or other equivalents
(however designated) of corporate stock, including, without
limitation, partnership interests.
"Cash Offer Amount" shall have the meaning
provided in Section 3.10 hereof.
"Casino Assets" means the casino license and
gaming equipment of the Existing Hotel Casino, which as of
the date hereof are owned by CPPI.
"Casino Control Act" means the New Jersey Casino
Control Act, as amended from time to time, or any successor
provision of law, and the regulations promulgated
thereunder.
"Casino Control Commission" means the New Jersey
Casino Control Commission or successor agency or authority
under the Casino Control Act.
"Change of Control" means the occurrence of any of
the following events: (i) the sale, lease, transfer,
conveyance or other disposition of all or substantially all
of the assets of (x) the Company and its Subsidiaries or (y)
the Partnership; (ii) the liquidation or dissolution of the
Company or CPPI; (iii) the Company becomes aware of (by way
of a report or any other filing pursuant to Section 13(d) of
the Exchange Act, proxy vote, written notice or otherwise)
the acquisition by any "person" or related group (within the
meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, or any successor provisions to either of the
foregoing, including any "group" acting for the purpose of
acquiring, holding or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act), other
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than the Company's Existing Management, in a single
transaction or in a related series of transactions, by way
of merger, consolidation or other business combination or
purchase of beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act, or any successor provision) of
50% or more of the total voting power entitled to vote in
the election of the Board of Directors of the Company or
such person surviving the transaction; (iv) during any
period of two consecutive years, individuals who at the
beginning of such period constituted the Company's Board of
Directors (together with any new directors whose election or
appointment by such board or whose nomination for election
by the shareholders of the Company was approved by a vote of
a majority of the directors then still in office who were
either directors at the beginning of such period or whose
election or nomination for election was previously so
approved) cease for any reason to constitute a majority of
the Company's Board of Directors then in office; (v) and the
Company fails to own, directly or indirectly, 100% of the
capital stock of CPPI or 100% of the capital stock of any
other person holding a gaming license to operate the
Existing Hotel Casino; or (vi) the ownership of the Existing
Hotel Casino by any entity other than the Partnership, the
Company, CPPI or any successor entity or Subsidiary or
Affiliate of any of them; provided, however, that a
Unification Transaction effected in accordance with the
provisions of Section 4.12 hereof shall not constitute a
Change of Control.
"Change of Control Offer" shall have the meaning
provided in Section 4.14 hereof.
"Change of Control Price" shall have the meaning
provided in Section 4.14 hereof.
"Claridge Lease" means, collectively, the
Operating Lease dated October 31, 1983 between the
Partnership and CPPI, as amended, and the Expansion
Operating Lease dated March 17, 1986 between the Partnership
and CPPI, as amended, and any replacements, extensions or
renewals thereof on terms no less favorable in the aggregate
to CPPI.
"Claridge Lease Payments" means, with respect to
the Company and its Restricted Subsidiaries for any period,
payments made or, if not yet made, scheduled to be made or
reasonably projected in good faith by the Board of Directors
of the Company to be made as evidenced by an Officer's
Certificate, in such period by the Company and its
Restricted Subsidiaries to the Partnership in respect of the
Claridge Lease.
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"Collateral" means any property or assets of the
Company, the Guarantor, the Partnership or any of their
Subsidiaries in respect of which a Lien is purported to be
granted pursuant to any of the Related Documents.
"Collateral Trust Agreement" means that certain
Collateral Trust Agreement by and among the Company, CPPI,
the Partnership and the Collateral Trustee, dated as of the
date hereof, substantially in the form of Exhibit B hereto,
as amended, supplemented or modified from time to time as
permitted thereby and by this Indenture.
"Collateral Trustee" means (i) IBJ Schroder Bank &
Trust Company in its capacity as collateral trustee under
the Collateral Trust Agreement, and any co-trustee appointed
pursuant to Article VI thereunder, in its capacity as such,
together with their respective successors in such
capacities, or (ii) in respect of any Collateral as to which
any separate trustee for the Secured Parties shall be
appointed pursuant to Article VI thereunder, such separate
trustee in its capacity as such, and any successor in such
capacity.
"Commencement Date" means the date on which an
Excess Cash Offer, Asset Sale Offer or Change in Control
Offer is required to be commenced under the applicable
provisions of Section 3.10, 4.10 or 4.13 hereof, as the case
may be.
"Company Pledge Agreement" means that certain
Pledge Agreement, by the Company in favor of the Collateral
Trustee for the benefit of the Noteholders, dated as of the
date hereof, substantially in the form of Exhibit B to the
Collateral Trust Agreement, as amended, supplemented or
modified from time to time as permitted thereby and by this
Indenture.
"Consolidated Net Income" means, with respect to
any person for any period, the aggregate of the Net Income
of such person and its Subsidiaries for such period, on a
consolidated basis, determined in accordance with GAAP;
provided, that (i) the Net Income of any person that is not
a Subsidiary or that is accounted for by the equity method
of accounting shall be included only to the extent of the
amount of dividends or distributions paid to the referent
person or a wholly owned Subsidiary; (ii) the Net Income of
any person that is a Subsidiary (other than a Restricted
Subsidiary of which at least 80% of the Capital Stock having
ordinary voting power for the election of directors or other
governing body of such Subsidiary is owned by the referent
person directly or indirectly through one or more
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Subsidiaries) shall be included only to the extent of the
amount of dividends or distributions paid to the referent
person; (iii) the Net Income of any person acquired in a
pooling of interests transaction for any person on the date
of such acquisition shall be excluded; and (iv) the
cumulative effect of a change in accounting principles shall
be excluded.
"Consolidated Net Worth" means, with respect to
any person, the sum of (i) the consolidated equity of the
common stockholders of such person and its consolidated
Subsidiaries plus (ii) the respective amounts reported on
such person's most recent balance sheet with respect to any
series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid
only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash
received by such person upon issuance of such preferred
stock, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups
of tangible assets of a going concern business made within
12 months after the acquisition of such business) subsequent
to the date of Indenture in the book value of any asset
owned by such person or a consolidated Subsidiary of such
person, (y) all investments in unconsolidated Subsidiaries
and in persons that are not Subsidiaries (except, in each
case, Permitted Investments), and (z) all unamortized debt
discount and expense and unamortized deferred charges, all
of the foregoing determined in accordance with GAAP.
"Contemplated Expansion" means the expansion to
the Existing Hotel Casino contemplated as of the date of the
final prospectus relating to the Notes, consisting of the
addition of (i) approximately 6,000 square feet of casino
space for up to 550 new slot machines, (ii) a 6,600 square
foot poker and simulcast area for pari-mutuel wagering and
(iii) a self-parking garage, or any replacement expansion of
or addition to any of the foregoing.
"Contingent Payment" means the rights originally
granted to Del Webb Corporation under Section 6 of the
Restructuring Agreement dated October 27, 1988 among the
Company, CPPI, the Partnership, Del Webb Corporation, First
Fidelity Bank, N.A. and others to receive certain amounts
upon, among other things, a sale or refinancing of the
Existing Hotel Casino.
"CPPI" means The Claridge at Park Place,
Incorporated, a New Jersey corporation, and its successors.
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"CPPI Cash Collateral Pledge Agreement" means that
certain Cash Collateral Pledge Agreement dated as of the
date hereof by CPPI in favor of the Collateral Trustee (for
the benefit of the Noteholders), substantially in the form
of Exhibit D to the Collateral Trust Agreement, as amended,
supplemented or modified from time to time as permitted
thereby and by this Indenture.
"CPPI Collateral Assignment" means that certain
Collateral Assignment of the Expandable Wraparound Mortgage
and Security Agreement from CPPI in favor of the Collateral
Trustee (for the benefit of the Noteholders), dated as of
the date hereof, substantially in the form of Exhibit G to
the Collateral Trust Agreement, as amended, supplemented or
modified from time to time as permitted by this Indenture.
"CPPI Pledge Agreement" means that certain Pledge
Agreement dated as of the date hereof by CPPI in favor of
the Collateral Trustee (for the benefit of the Noteholders),
substantially in the form of Exhibit C to the Collateral
Trust Agreement, as amended, supplemented or modified from
time to time as permitted thereby and by this Indenture.
"CPPI Security Agreement" means that certain
Security Agreement dated as of the date hereof by CPPI in
favor of the Collateral Trustee (for the benefit of the
Noteholders), substantially in the form of Exhibit E to the
Collateral Trust Agreement, as amended, supplemented or
modified from time to time as permitted thereby and by this
Indenture.
"CPPI Trademark Security Agreement" means that
certain Trademark Security Agreement dated as of the date
hereof by CPPI in favor of the Collateral Trustee (for the
benefit of the Noteholders), substantially in the form of
Exhibit F to the Collateral Trust Agreement, as amended,
supplemented or modified from time to time as permitted
thereby and by this Indenture.
"Custodian" shall have the meaning provided in
Section 6.01 hereof.
"Default" means any event that is or with the
passage of time or the giving of notice or both would be an
Event of Default.
"Disqualified Holder" shall have the meaning
provided in Section 3.08 hereof.
"Disqualified Stock" means any Capital Stock
which, by its terms (or by the terms of any security into
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<PAGE>
which it is convertible or for which it is exchangeable), or
upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the final
maturity date of the Notes.
"Division of Gaming Enforcement" means the
Division of Gaming Enforcement of the Casino Control
Commission or successor agency or authority under the Casino
Control Act.
"Equity Interests" means Capital Stock and all
warrants, options or other rights to acquire Capital Stock
(but excluding any debt security that its convertible into,
or exchangeable for Capital Stock), and the Contingent
Payment or any portion thereof.
"Event of Default" shall have the meaning provided
in Section 6.01 hereof.
"Event of Loss" means, with respect to any
property or asset (tangible or intangible, real or
personal), any of the following: (i) any loss, destruction
or damage of such property or asset; (ii) any institution of
any proceedings for the condemnation or seizure of such
property or asset or for the exercise of any right of
eminent domain or navigational servitude; or (iii) any
actual condemnation, seizure or taking, by exercise of the
power of eminent domain or otherwise, of such property or
asset, or confiscation of such property or asset or the
requisition of the use of such property or assets.
"Excess Cash" means, with respect to any year, the
Company's Adjusted EBITDA for that year, less the aggregate
of the following items, to the extent paid or during that
year: (i) federal and state income taxes; (ii) cash
interest; (iii) Capital Expenditures; and (iv) Reinvestment
Obligation Payments, plus (or minus) the net amount of any
increase (or decrease) during that year in the amount of the
Company's working capital, all as would be shown on the
Company's financial statements.
"Excess Cash Offer" shall have the meaning
provided in Section 3.10 hereof.
"Excess Non-Recourse Subsidiary Cash Proceeds"
means 50% of the sum of (x) all cash received by the Company
or any wholly owned Subsidiary (other than a Non-Recourse
Subsidiary) from any Non-Recourse Subsidiary, less (y) such
cash that is or may be required to be returned or repaid to
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<PAGE>
such Non-Recourse Subsidiary or is otherwise reinvested (or
set aside for reinvestment) in any Non-Recourse Subsidiary,
less (z) $10.0 million.
"Excess Proceeds" shall have the meaning provided
in Section 4.10 hereof.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the regulations promulgated
thereunder.
"Existing Hotel Casino" means The Claridge Hotel
and Casino located in Atlantic City, New Jersey.
"Existing Indebtedness" means Indebtedness of the
Company or its Subsidiaries in existence on the date of this
Indenture, other than Indebtedness being repaid with the net
proceeds from the sale of the Notes, until such amounts are
repaid.
"Existing Management" means the persons who at the
Issue Date are directors or executive officers of the
Company.
"Financing Documents" means, collectively, the
Related Documents and this Indenture.
"FF&E Loans" means loans made by CPPI to the
Partnership under the Wraparound Mortgage to fund the
purchase of capital items.
"GAAP" means generally accepted accounting
principles set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board
or in such other statements by such other entity as approved
by a significant segment of the accounting profession, which
are in effect from time to time.
"Gaming Authority" means any agency, authority,
board, bureau, commission, department, office or
instrumentality of any nature whatsoever of the United
States federal or foreign government, any sate, province or
any city or other political subdivision or otherwise and
whether now or hereafter in existence, or any officer or
official thereof, including, without limitation, the New
Jersey Casino Control Commission, with authority to regulate
any gaming operation (or proposed gaming operation) owned,
managed or operated by the Company or any of its
Subsidiaries.
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"Gaming Business Purchase Money Obligations" means
Indebtedness incurred in respect of the purchase or
construction of property, plant or equipment in the Gaming
Related Business.
"Gaming Permits" means every license, franchise,
permit or other authorization on the date of this Indenture
or thereafter required to own, lease, operate or otherwise
conduct casino gaming at any casino property including,
without limitation, all such licenses granted under the
Casino Control Act with respect to the Existing Hotel
Casino, the regulations of the Gaming Authority and other
applicable laws.
"Gaming Related Business" means any enterprise or
activity the principal purpose of which is to engage in the
gaming business or any other business necessary for,
incident to, connected with or arising out of the gaming
business (including developing and operating lodging
facilities, sports or entertainment facilities,
transportation services or other related activities or
enterprises and any additions or improvements thereto).
"Guarantor" means CPPI and any other Subsidiary
that executes a Subsidiary Guaranty in accordance with the
provisions of the Indenture, and their respective successors
and assigns.
"Hedging Obligations" means, with respect to any
person, the obligations of such person under (i) interest
rate swap agreements, interest rate cap agreements and
interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such person against
fluctuations in interest rates.
"Holder" or "Noteholder" means a Person in whose
name a Note is registered.
"Hotel Assets" means the buildings, parking
facility and non-gaming, depreciable, tangible personal
property, and the underlying land of the Existing Hotel
Casino which are owned by the Partnership and leased to
CPPI.
"Indebtedness" of any person means, without
duplication, (i) the principal of and premium (if any) in
respect of (A) indebtedness of such person for money
borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the
payment of which such person is responsible or liable;
(ii) all capitalized lease obligations of such person;
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<PAGE>
(iii) all obligations of such person issued or assumed as
the deferred purchase price of property, all conditional
sale obligations of such person and all obligations of such
person under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of
business); (iv) all obligations of such person for the
reimbursement of any obligor on any letter of credit
banker's acceptance or similar credit transaction (other
than obligations with respect to letters of credit securing
obligations (other than obligations described in clauses
(i), (ii) and (iii) above) entered into in the ordinary
course of business of such person to the extent such letters
of credit are not drawn upon or, if and to the extent drawn
upon, such drawing is reimbursed no later than the third
Business Day following receipt by such person of a demand
for reimbursement following payment on the letter of
credit); (v) the amount of all obligations of such person
with respect to the redemption, repayment or other repur-
chase of any Disqualified Stock (but excluding any accrued
distributions or dividends); (vi) all obligations existing
at the time under Hedging Obligations, foreign currency
hedges and similar agreements; (vii) all obligations of the
type referred to in clauses (i) through (vi) of other
persons and all dividends and distributions of other persons
for the payment of which, in either case, such person is
responsible or liable as obligor, guarantor or otherwise or
in respect of which such person has issued an Investment
Guaranty; and (viii) all obligations of the type referred to
in clause (i) through (vi) of other persons secured by any
Lien on any property or asset of such person (whether or not
such obligation is assumed by such person), the amount of
such obligation being deemed to be the lesser of the value
of such property or assets or the amount of the obligations
so secured.
"Indenture" means this Indenture as amended,
supplemented or modified from time to time as permitted
hereby.
"Intercreditor Agreements" means the various
Intercreditor Agreements, forms of which are attached as
exhibits K-1 and K-2 to the Collateral Trust Agreement.
"Interest from the Partnership" means, for any
period, Wraparound Mortgage Payments to the extent such
Wraparound Mortgage Payments are, were or would be included
in computing Consolidated Net Income for such period.
"Investment Guaranty" means, with respect to any
person, any direct or indirect liability, contingent or
otherwise, of such person with respect to any Indebtedness
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<PAGE>
of another person, including, without limitation, any
Indebtedness directly or indirectly guarantied, endorsed
(otherwise than for collection or deposit in the ordinary
course of business) or discounted or sold with recourse by
such person, or in respect of which such person is otherwise
directly or indirectly liable, or any other obligation under
which any contract which, in economic effect, is
substantially equivalent to a guaranty, including, without
limitation, any Indebtedness of a partnership in which such
person is a general partner or of a joint venture in which
such person is a joint venturer (other than Indebtedness in
respect of which there is no recourse to such person), and
any Indebtedness in effect guaranteed by such person through
any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such Indebtedness or any
security therefor, or to provide funds for the payment or
discharge of such Indebtedness (whether in the form of
loans, advances, stock purchases, capital contributions or
otherwise) or to maintain the solvency or any balance sheet
or other financial condition of the obligor of such
Indebtedness, or to make payment for any products, materials
or supplies or for any transportation or services regardless
of the non-delivery or nonfurnishing thereof, in any such
case if the purpose or intent of such agreement is to
provide assurance that such Indebtedness will be paid or
discharged, or that any agreements relating thereto will be
complied with, or that the holders of such Indebtedness will
be protected against loss in respect thereof.
"Investments" means, with respect to any person,
all investments by such person in other persons (including
Affiliates) in the forms of loans, Investment Guaranties,
advances or capital contributions (excluding commission,
travel and similar advances to officers and employees made
in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity
Interests or other securities and all other items that are
or would be classified as investments on a balance sheet
prepared in accordance with GAAP.
"Issue Date" means the date on which the Notes are
first authenticated and issued.
"Legal Holiday" shall have the meaning provided in
Section 12.07 hereof.
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset, whether or
not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention
14
<PAGE>
agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and
any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Loan from the Partnership" means the loan in the
original principal amount of $3.6 million made by the
Partnership to CPPI in June 1989.
"Marketable Securities" means (1) U.S. Government
Obligations; (2) any certificate of deposit, maturing not
more than 90 days after the date of acquisition, issued by,
or time deposit of, a commercial banking institution that
has combined capital and surplus of not less than
$100,000,000 or its equivalent in foreign currency, whose
debt is rated at the time as of which any investment is
made, of "A" (or higher) according to Standard & Poor's
Rating Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"), or if none of S&P or Moody's shall then exist,
the equivalent of such rating by any other nationally
recognized securities rating agency; (3) commercial paper,
maturing not more than 90 days after the date of
acquisition, issued by a corporation (other than an
Affiliate or Subsidiary of the Guarantor) with a rating, at
the time as of which any investment therein is made, of "A-
1" (indicating that the degree of timely payment is strong)
(or higher) according to S&P or "P-1" (having a superior
capacity for punctual repayment of short-term promissory
obligations) (or higher) according to Moody's, or if neither
of S&P and Moody's shall then exist, the equivalent of such
rating by any other nationally recognized securities rating
agency; and (4) any bankers acceptances or any money market
deposit accounts, in each case, issued or offered by any
commercial bank having capital and surplus in excess of
$100,000,000 or its equivalent in foreign currency, whose
debt is rated at the time as of which any investment there
is made of "A" (an upper medium grade bond obligation) (or
higher) according to S&P or Moody's, or if none of S&P or
Moody's shall then exist, the equivalent of such rating by
any other nationally recognized securities rating agency.
"Mortgage" means that certain Mortgage, Assignment
of Leases and Rents, Security Agreement and Financing
Statement by the Partnership in favor of the Collateral
Trustee, dated as of the date hereof, substantially in the
form of Exhibit A to the Collateral Trust Agreement, as
amended, supplemented or modified from time to time as
permitted thereby and by this Indenture.
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"Net Income" means, with respect to any person,
the net income (loss) of such person, determined in
accordance with GAAP, excluding, however, (i) any gain (but
not loss), together with any related provision for taxes on
such gain (but not loss), realized in connection with any
Asset Sale (including, without limitation, dispositions
pursuant to sale and leaseback transactions) and (ii) any
extraordinary gain (but not loss), together with any related
provision for taxes on such extraordinary gain (but not
loss).
"Net Partnership Payments" for any period means
the sum (which may be a negative number) of (i) Claridge
Lease Payments for such period, less (ii) Wraparound
Mortgage Payments and facilities and maintenance fees paid
or payable by the Partnership to CPPI for such period.
"Net Proceeds" means the aggregate cash proceeds
received by the Company or any of its Subsidiaries in
respect of any Asset Sale (including insurance proceeds),
net of the direct costs relating to such Asset Sale
(including, without limitation, reasonable legal, accounting
and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid
or payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the
repayment of Indebtedness (other than the Notes) secured by
a Lien on the asset or assets which are the subject of such
Asset Sale and any reserve for adjustment in respect of the
sale price of such asset or assets.
"New Operator" shall have the meaning provided in
Section 4.15 hereof.
"New Project" means (i) any assets acquired or
leased after the Issue Date by the Company or any of its
Subsidiaries in a jurisdiction other than Atlantic City, New
Jersey, or (ii) any Gaming Related Business established or
entered into after the Issue Date by the Company or any of
its Subsidiaries in a jurisdiction other than Atlantic City,
New Jersey.
"Non-Recourse Debt" means Indebtedness or that
portion of Indebtedness (a) as to which none of the Company,
the Guarantors and any of their respective Subsidiaries
(other than a Non-Recourse Subsidiary): (i) provides credit
support (including any undertaking, agreement or instrument
which would constitute Indebtedness); or (ii) is directly or
indirectly liable; and (b) no default with respect to which
(including any rights which the holders thereof may have to
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take enforcement action against a Non-Recourse Subsidiary)
would permit (upon notice, lapse of time or both) any holder
of any other Indebtedness of the Company, the Guarantors or
any of their respective Subsidiaries (other than a
Non-Recourse Subsidiary) to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated
or payable prior to its stated maturity.
"Non-Recourse Subsidiary" means (i) a Subsidiary
(other than any Guarantor) or (ii) any entity in which the
Company or any of its Subsidiaries has an equity investment
and pursuant to a contract or otherwise has the right to
direct the day-to-day operation of such entity, designated
by the Company and that, in each case, (a) at the time of
its designation as a Non-Recourse Subsidiary has not
acquired any assets (other than as specifically permitted by
the "Restricted Payments" covenant), at any previous time,
directly or indirectly from the Company, or any of its
respective Subsidiaries, (b) does not own, operate or manage
the Existing Hotel Casino or any part thereof, and (c) has
no Indebtedness other than Non-Recourse Debt, provided that
at the time of such designation, after giving pro forma
effect to such designation as if it occurred at the
beginning of the applicable four-quarter period, (x) the
Company could incur $1 of additional Indebtedness pursuant
to the Adjusted Fixed Charge Coverage Ratio test set forth
in Section 4.08, and (y) the Company's Adjusted Fixed Charge
Coverage Ratio is not less than 70% of the Company's
Adjusted Fixed Charge Coverage Ratio immediately prior to
such designation.
"Notice of Default" shall have the meaning
provided in Section 6.01 hereof.
"Notice of Acceleration" shall have the meaning
provided in Section 7.05 hereof.
"Offer Amount" shall have the meaning provided in
Section 4.10 hereof.
"Officer" means the Chairman of the Board, the
Vice Chairman of the Board of Directors, the Chief Executive
Officer, the Chief Operating Officer, any Vice President,
the Chief Financial Officer, the Treasurer, the Secretary,
the Assistant Secretary or the Controller of the Company,
the Guarantor or any Subsidiary thereof, as the context may
require.
"Officers' Certificate" means a certificate signed
by two Officers, one of whom must be the Chairman of the
Board, the Chief Executive Officer, the Chief Operating
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Officer, the Chief Financial Officer, the Treasurer or a
Vice-President of the Company, the Guarantor or any
Subsidiary thereof, as the context may require and
containing, if appropriate, the statements provided for in
TIA Section 314(e).
"Opinion of Counsel" means a written opinion from
legal counsel which opinion, as a matter of substantive law,
is reasonably acceptable to the Trustee. Each such opinion
shall, if applicable, include the statements provided for in
TIA Section 314(c). The counsel may be an employee of or
counsel to the Company, the Guarantor, any Subsidiary
thereof or the Trustee.
"Ordinary Course Sale" means any sale or other
disposition of personal property in the ordinary course of
business, including any such sale or other disposition of
personal property which may have become obsolete or unfit
for use.
"Pari Passu Indebtedness" means senior secured
Indebtedness of the Company or its Subsidiaries secured by
the Collateral other than Indebtedness permitted by Section
4.08(b)(iii) of this Indenture.
"Partnership" means Atlantic City Boardwalk
Associates, L.P., a New Jersey limited partnership.
"Partnership Cash Collateral Pledge Agreement"
means that certain Cash Collateral Pledge Agreement by the
Partnership in favor of the Collateral Trustee (for the
benefit of the Noteholders), dated as of the date hereof,
substantially in the form of Exhibit I to the Collateral
Trust Agreement, as amended, supplemented or modified from
time to time as permitted thereby and by this Indenture.
"Partnership Assignment" means that certain
Collateral Assignment of Lessor's Interest in the Operating
Leases by the Partnership in favor of the Collateral Trustee
(for the benefit of the Noteholders), dated as of the date
hereof, substantially in the form of Exhibit J to the
Collateral Trust Agreement, as amended, supplemented or
modified from time to time as permitted thereby and by this
Indenture.
"Partnership Security Agreement" means that
certain Security Agreement by the Partnership in favor of
the Collateral Trustee (for the benefit of the Noteholders),
dated as of the date hereof, substantially in the form of
Exhibit H to the Collateral Trust Agreement, as amended,
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supplemented or modified from time to time as permitted
thereby and by this Indenture.
"Paying Agent" shall have the meaning provided in
Section 2.03 hereof.
"Payment Default" shall have the meaning provided
in Section 6.01 hereof.
"Permitted Investments" means (a) any Investments
in the Company or in a wholly owned Restricted Subsidiary of
the Company; (b) any Investments in Marketable Securities;
and (c) Investments by the Company or any Subsidiary of the
Company in a person, if as a result of such Investment (i)
such person becomes a wholly owned Subsidiary of the Company
(other than a Non-Recourse Subsidiary) or (ii) such person
is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or
is liquidated into, the Company or a wholly owned Subsidiary
of the Company (other than a Non-Recourse Subsidiary).
"Permitted Liens" mean (a) Liens in favor of the
Company; (b) Liens on property of a person existing at the
time such person is merged into or consolidated with the
Company or any Subsidiary of the Company; provided that such
Liens (x) are not created, incurred or assumed in connection
with, or in contemplation of, such merger or consolidation
and (y) do not extend to any other Property of the Company
or any of its Subsidiaries; (c) Liens on property existing
at the time of acquisition thereof by the Company or any
Subsidiary of the Company; provided that such Liens (x) are
not created, incurred or assumed in connection with, or in
contemplation of, such assets being acquired by the Company
or any of its subsidiaries and (y) do not extend to any
other Property of the Company or any of its Subsidiaries;
(d) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or
other obligations of a like nature incurred in the ordinary
course of business; (e) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent
or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded;
provided that any reserve or other appropriate provision as
shall be required in conformity with GAAP shall have been
made therefor; (f) ground leases in respect of the real
property on which facilities owned or leased by the Company
or any of its Subsidiaries are located; (g) Liens arising
from UCC financing statements regarding property leased by
the Company or any of its Subsidiaries; and (h) easements,
rights-of-way, navigational servitudes, restrictions, minor
defects or irregularities in title and other similar charges
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or encumbrances which do not interfere in any material
respect with the ordinary conduct of business of the Company
and its Subsidiaries.
"Project Costs" means, with respect to a Project
Expansion, the aggregate costs required to complete such
Project Expansion, including direct costs related thereto
including, but not limited to, construction management,
architectural, engineering, interior design, legal and other
professional fees, site work, utility installation, permits,
certificates and bonds, but excluding principal or interest
payments on any Indebtedness, operation expenses (including,
but not limited to non-construction supplies and pre-opening
payroll) and any allocation to corporate overhead or
administrative expenses of the Company, and Guarantor, or
any Subsidiary.
"Project Expansion" means any addition,
improvement, extension or capital repair to the Existing
Hotel Casino or any contiguous or adjacent property,
including, without limitation, the purchases of real estate
or improvements thereon; but excluding separable furniture
and excluding the Contemplated Expansion.
"Purchase Price" shall have the meaning provided
in Section 4.10 hereof.
"Qualified Issuer" means any governmental,
corporate or other issuer whose securities would constitute
Marketable Securities.
"Reference Period" means, with respect to the
Company at any date, the Company's most recently ended four
full fiscal quarters for which internal financial statements
are available immediately preceding such date.
"Refinancing Indebtedness" shall have the meaning
provided in Section 4.08 hereof.
"Registrar" shall have the meaning provided in
Section 2.03 hereof.
"Reinvestment Obligation Expenses" means, with
respect to the Company for any period, expenses relating to
investments in or approved by the Casino Reinvestment
Development Authority under the authority of the Casino
Control Act, as would be shown on an income statement of the
Company for such period prepared in accordance with GAAP.
"Reinvestment Obligation Payments" means, with
respect to the Company for any period, payments to the
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Casino Reinvestment Development Authority under the
authority of the Casino Control Act.
"Related Documents" means, collectively, the
Security Documents and the Collateral Trust Agreement.
"Rent Expense" means, for any period, Claridge
Lease Payments to the extent such amounts are, were or would
be deducted in computing Consolidated Net Income for such
period.
"Restricted Investment" means an Investment other
than a Permitted Investment.
"Restricted Payments" shall have the meaning
provided in Section 4.09 hereof.
"Restricted Subsidiary" means (i) each direct or
indirect subsidiary of the Company existing on the date of
the Indenture and (ii) any other direct or indirect
subsidiary of the Company formed, acquired or existing after
the date of the Indenture which is not designated as a
Non-Recourse Subsidiary.
"SEC" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933,
as amended, and the regulations promulgated thereunder.
"Security Documents" means, collectively, the
Mortgage, the Company Pledge Agreement, the CPPI Pledge
Agreement, the CPPI Cash Collateral Pledge Agreement, the
CPPI Security Agreement, the CPPI Trademark Security
Agreement, the CPPI Collateral Assignment, the Partnership
Security Agreement, the Partnership Cash Collateral Pledge
Agreement, the Partnership Assignment, the Partnership
Security Agreement, the Assignment of Leases and Rents and
Other Contracts, and the Subordination Agreement and any and
all pledges, security agreements, guaranties, financing
statements, filings, instruments or other agreements or
assignments executed by the Company, the Partnership or the
Guarantor in order to evidence, secure, perfect, notice or
guaranty the Notes or any guaranty of the foregoing
obligations.
"Stated Maturity" means, with respect to any
security, the date specified in such security as the fixed
date on which the principal of such security is due and
payable, including pursuant to any mandatory redemption
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provision (but excluding any provision providing for the
repurchase of such security of the holder thereof).
"Subordination Agreement" means that certain
Subordination Agreement by the Partnership in favor of the
Collateral Trustee dated as of the date hereof,
substantially in the form of Exhibit L to the Collateral
Trust Agreement, as amended, supplemented or modified from
time to time as permitted thereby and by this Indenture.
"Subordinated Indebtedness" means all Indebtedness
of the Company if it is provided in the instrument creating
or evidencing the same or pursuant to which the same is
outstanding that such Indebtedness is subordinated in right
of payment to the Notes.
"Subsequent Period" means, with respect to the
Company at any date, the four consecutive fiscal quarters
commencing with the first day of the fiscal quarter in which
such date falls and ending on the day immediately preceding
the anniversary of such first day.
"Subsidiary" means (i) any corporation,
association or other business entity of which more than 50%
of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled,
directly or indirectly, by any person or one or more of the
other Subsidiaries of that person or a combination thereof
and (ii) any Non-Recourse Subsidiary.
"Subsidiary Guaranties" means collectively, the
guaranty given by CPPI hereunder and any other guaranties
issued pursuant to Article II and Section 4.15 hereof with
respect to the Company's obligations under this Indenture
and the Notes.
"Surviving Entity" shall have the meaning provided
in Section 5.01 hereof.
"Tender Period" shall have the meaning provided in
Section 3.11 hereof.
"Trust Indenture Act" or "TIA" means the Trust
Indenture Act of 1939, as amended.
"Treasury Rate" means the yield to maturity at the
time of computation of United States Treasury securities
with a constant maturity (as compiled by, and published in,
the most recent Federal Reserve Statistical Release H.15
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(519) which has become publicly available at least two
business days prior to the date fixed for redemption of the
Notes following a Change of Control (or, if such Statistical
Release is no longer published, any publicly available
source of similar market data)) most nearly equal to the
then remaining Weighted Average Life to Maturity of the
Notes; provided, however, that if the Weighted Average Life
to Maturity of the Notes is not equal to the constant
maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest
one-twelfth of a year) from the weekly average yields of
United States Treasury securities for which such yields are
given, except that if the Weighted Average Life to Maturity
of the Notes is less than one year, the weekly average yield
on actually traded United States Treasury securities
adjusted to a constant maturity of one year shall be used.
"Trustee" means the party named as such above
until a successor replaces it in accordance with the
applicable provisions of this Indenture and thereafter means
the successor.
"Trust Officer" means the Chairman of the Board,
the President or any other officer or assistant officer of
the Trustee assigned by the Trustee to administer its
corporate trust matters.
"Unification Transaction" means a transaction or
series of transactions among the Company and its
Subsidiaries and the Partnership which results in the
ownership of the Hotel Assets and/or the Casino Assets being
transferred to the Company, CPPI or a successor entity or
Restricted Subsidiary of the Company.
"Unification Transaction Payments" means, in
connection with a Unification Transaction, the sum of (i)
all payments made by the Company or any of its Subsidiaries
(other than Non-Recourse Subsidiaries) to the Partnership
(including defined ___ under to Claridge Lease) or any of
its partners (but excluding payments in the form of Equity
Interests of the Company other than Disqualified Stock);
(ii) all federal and state income taxes payable by the
Company or any of its Subsidiaries (other than Non-Recourse
Subsidiaries) by reason of taxable income or gain realized
upon the consummation of the Unification Transaction; and
(iii) the costs and expenses to the Company or any of its
Subsidiaries (other than Non-Recourse Subsidiaries) incurred
in connection with a Unification Transaction.
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"U.S. Government Obligations" means securities
that are (a) direct obligations of the United States of
America for the timely payment of which its full faith and
credit is pledged or (b) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality
of the United States of America the timely payment of which
is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the
issuer thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933,as amended), as custodian with
respect to any such U.S. Government Obligation or a specific
payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account
of the holder of such depository receipt; provided that
(except as required by law) such custodian is not authorized
to make any deduction from the amount payable to the holder
of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or
the specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository receipt.
"Weighted Average Life to Maturity" means, when
applied to any Indebtedness at any date, the number of years
obtained by dividing (i) the then outstanding aggregate
principal amount of such Indebtedness into (ii) the sum of
the products obtained by multiplying (a) the amount of each
then remaining installment, sinking fund, serial maturity or
other required payment of principal, including payment at
final maturity, in respect thereof (other than payments
required upon a change of control or with the net proceeds
of asset sales), by (b) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date
and the making of such payment.
"Working Capital Credit Agreement" means an
agreement providing for a working capital credit facility
for the Company or any of its subsidiaries, as amended,
including any notes and other ancillary documents.
"Wraparound Mortgage" means the Expandable
Wraparound Mortgage and Security Agreement dated October 31,
1983 between the Partnership and CPPI, as amended or
extended to the Issue Date or as otherwise permitted under
this Indenture, including the notes thereunder, the loan
agreement secured thereby and all additional documents given
as security therefor.
"Wraparound Mortgage Payments" means, with respect
to the Company and its Restricted Subsidiaries for any
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period, payments made or reasonably projected to be made in
such period by the Partnership to the Company and its
Restricted Subsidiaries in respect of the Wraparound
Mortgage.
Section 1.02. Incorporation by Reference of Trust
Indenture Act. Whenever this Indenture refers to a
Provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture.
The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Notes;
"indenture security holder" means a Noteholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee"
means the Trustee; and
"obligor" on the Notes means the Company, the
Guarantor and each other obligor on the Notes.
All other terms used in this Indenture that are
defined by the TIA, defined by TIA by reference to another
statute or defined by SEC rule under the TIA have the
meanings so assigned by them.
Section 1.03. Rules of Construction. Unless the
context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
in the plural include the singular; and
(5) provisions apply to successive events and
transactions.
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ARTICLE II
THE NOTES
Section 2.01. Form and Dating. The Notes shall
be substantially in the form of Exhibit A which Exhibit is
part of this Indenture. The notation on each of the Notes
relating to the Subsidiary Guaranties shall be substantially
in the form set forth on Exhibit A, as the case may be,
which is a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock
exchange rule or usage. The Company shall deliver any such
legend or endorsement in writing to the Trustee. Each Note
shall be dated the date of its authentication.
The terms and provisions contained in the Notes
shall constitute, and are hereby expressly made, a part of
this Indenture and to the extent applicable, the Company,
the Guarantor and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Section 2.02. Execution and Authentication. One
Officer of the Company shall sign the Notes for the Company
by manual or facsimile signature. The Company's seal shall
be reproduced on the Notes. One Officer of CPPI shall sign
the Subsidiary Guaranty for CPPI by manual or facsimile
signature.
If an Officer whose signature is on a Note no
longer holds that office at the time the Note is
authenticated, the Note shall nevertheless be valid.
A Note shall not be entitled to the benefits of
this Indenture and shall not be valid for any purpose until
authenticated by the manual signature of the Trustee's
authorized signatory. The signature shall be conclusive
evidence, and the only evidence, that the Note has been
authenticated and delivered under this Indenture.
Upon a written order of the Company signed by two
Officers and an Officer's Certificate stating that no Event
of Default with respect to any of the Notes shall have
occurred and be continuing, the Trustee shall authenticate
Notes with the Subsidiary Guaranty of CPPI endorsed thereon
for original issue in the aggregate principal amount of
$85,000,000. Upon authentication, the Trustee shall deliver
such Notes to the Company or as otherwise directed by a
written order signed by one Officer without further action
by the Company.
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Except as provided in Section 2.07 hereof, the
aggregate principal amount of Notes outstanding under this
Indenture at any time may not exceed $85,000,000.
The Trustee may appoint an authenticating agent
acceptable to the Company (an "Authenticating Agent") to
authenticate the Notes. An Authenticating Agent may
authenticate the Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee
includes authentication by such Authenticating Agent.
The Notes shall be issuable only in registered
form without coupons and only in denominations of $1,000 and
integral multiples thereof.
Section 2.03. Registrar and Paying Agent. The
Company shall maintain in the State of New Jersey (if
required by the Casino Control Act), and in the Borough of
Manhattan, City of New York, State of New York, and in such
other locations as it shall determine: (i) an office or
agency where Notes may be presented for registration of
transfer or for exchange ("Registrar"), and (ii) an entity
at whose office or agency the Notes may be presented for
payment ("Paying Agent") and notices and demands to or upon
the Company in respect of Notes and this Indenture may be
served. The Registrar shall keep a register of the Notes
and of their transfer and exchange, which register shall be
open for inspection by the Trustee at all reasonable times.
The Company may appoint one or more co-registrars and one or
more additional paying agents. The term "Paying Agent"
includes any additional paying agent. The term "Registrar"
includes any co-registrar, where applicable. The Company
may change any Paying Agent or Registrar upon thirty (30)
days notice to the Trustee without prior notice to any
Noteholder.
The Company shall enter into an appropriate agency
agreement with any Registrar or Paying Agent not a party to
this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Registrar
or Paying Agent. The Company shall promptly notify the
Trustee in writing of the name and address of any Registrar
or Paying Agent not a party to this Indenture. As of the
Issue Date and thereafter if the Company fails to appoint or
maintain an entity as Registrar or Paying Agent, the Trustee
shall act as such. The Company may act as Paying Agent or
Registrar.
Whenever, pursuant to this Indenture, the Trustee
is obligated, empowered or authorized to perform any act
with respect to the authentication and issuance of the
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Notes, or their transfer, other than the authentication and
issuance of Notes upon original issue or in cases of Notes
mutilated, destroyed, lost or stolen, such act may be
performed by the Authenticating Agent and Registrar,
notwithstanding anything in this Indenture to the contrary.
Whenever, pursuant to this Indenture, the Trustee is
obligated, empowered or authorized to perform any act with
respect to payment of the principal of, premium (if any) or
interest on the Notes, such acts may be performed by the
Paying Agent, notwithstanding anything in this Indenture to
the contrary.
The Company covenants that whenever necessary to
avoid or fill a vacancy in the office of Registrar or Paying
Agent, the Company will appoint a successor Registrar or
Paying Agent so that there shall, at all times be one or
more offices or agencies in the Borough of Manhattan, City
of New York, State of New York where Notes may be presented
or surrendered for payment and where Notes may be
surrendered for registration or transfer or exchange.
In case, at the time of the appointment of a
successor to the Authenticating Agent, any of the Notes
shall have been authenticated but not delivered, any such
successor Authenticating Agent may adopt the certificate of
authentication of the original Authenticating Agent or of
any successor to it as authenticating agent hereunder, and
deliver such Notes so authenticated; and in case at any time
any of the Notes shall not have been authenticated, any
successor to the Authenticating Agent by merger or
consolidation may authenticate such Notes either in the name
of its predecessor hereunder or in the name of the successor
Authenticating Agent; and in all such cases such certificate
shall have the full force that the Notes or this Indenture
provide that the certificate of authentication shall have.
Section 2.04. Paying Agent to Hold Money in
Trust. The Company (or any other obligor on the Notes,
including the Guarantors) shall require each Paying Agent
other than the Trustee to agree in writing that the Paying
Agent will hold in trust for the benefit of Noteholders and
the Trustee all money held by the Paying Agent for the
payment of principal of, premium (if any) or interest on the
Notes (whether such money has been paid to it by the Company
or any other obligor on the Notes, including the
Guarantors), and will notify the Trustee of any default by
the Company (or any other obligor on the Notes, including
the Guarantors) in making any such payments. While any
such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The
Company may at any time require a Paying Agent to pay all
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money held by it to the Trustee. Upon payment over to the
Trustee, the Paying Agent (if other than the Company) shall
have no further liability for the money. If the Company
acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Noteholders and
the Trustee all money held by it as a Paying Agent and shall
promptly notify the Trustee of its actions or failure to act
as Paying Agent.
Section 2.05. Noteholder Lists. The Trustee
shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the
names and addresses of Noteholders and shall otherwise
comply with TIA section 312(a). If the Trustee is not the
Registrar, the Company (or any other obligor upon the Notes,
including the Guarantors) shall furnish to the Trustee on or
before the record date and at such other times as the
Trustee may request in writing a list in such form and as of
such date as the Trustee may reasonably require of the names
and addresses of Noteholders.
If the Company is served with notice of the
disqualification of any Holder under Section 105(d) of the
Casino Control Act by the Casino Control Commission, such
Holder will be prohibited under Section 105(e) of the Casino
Control Act from (a) receiving interest on the Notes held by
such Holder, (b) exercising, directly or through any trustee
or nominee, any right conferred on such Notes, and (c)
receiving any remuneration in any form from any Person
licensed by the Casino Control Commission (including the
Company, the Guarantors and the Trustee) for services
rendered or otherwise. Notwithstanding the foregoing, the
Trustee shall be entitled to exercise all rights with
respect to the Notes held by such Holder including, but not
limited to, accelerating the Notes (any monies or securities
received by the Trustee on behalf of such Holder to be held
in trust for such Holder). If the Trustee exercises voting
rights with respect to such Notes, such votes shall be cast
in the same proportion as the votes of the other outstanding
Notes are cast on such issue. A copy of any notice served
upon the Company as described above shall be promptly
delivered by the Company to the Trustee. Any such notice to
the Trustee shall be effective against the Trustee on the
second Business Day after receipt thereof.
Section 2.06. Transfer and Exchange. Where Notes
are presented to the Registrar with a request to register a
transfer or to exchange them for an equal principal amount
of Notes of other denominations, the Registrar shall
register the transfer or make the exchange if its
requirements for such transactions are met. To permit
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registrations of transfers and exchanges, the Company shall
issue and the Trustee shall authenticate Notes (accompanied
by a notation of the Subsidiary Guaranty of CPPI endorsed by
CPPI as Guarantor) at the Registrar's request. No service
charge shall be made for any registration of transfer or
exchange (except as otherwise expressly permitted herein),
but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such
transfer tax or similar governmental charge payable upon
exchanges pursuant to Section 2.10, 3.06 or 9.05 hereof).
The Company shall not be required (i) to issue,
register the transfer of or exchange Notes during a period
beginning at the opening of business 15 days before the day
of any selection of Notes for redemption under Section 3.02
hereof and ending at the close of business on the date of
selection (ii) to register the transfer or exchange of any
Notes so selected for redemption in whole or in part, except
the unredeemed portion of any Note being redeemed in part or
(iii) to register the transfer or exchange of a Note between
the record date and the next succeeding interest payment
date.
Section 2.07. Replacement Notes. If a mutilated
Note is surrendered to the Trustee or if the Holder of a
Note claims that such Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee,
upon the written order of the Company signed by two
Officers, shall authenticate a replacement note (accompanied
by a notation of the Subsidiary Guaranty of CPPI endorsed by
CPPI as Guarantor) if the Trustee's requirements are met.
If required by the Trustee, the Company or the Guarantors,
an indemnity note must be furnished by and at the sole cost
of such Noteholder in an amount sufficient in the judgment
of the Trustee, the Company and the Guarantors to protect
the Trustee, the Company, the Guarantors, any Paying Agent
or any Authenticating Agent from any loss which any of them
may suffer if a Note is replaced. The Company may charge
the Noteholder for its reasonable expenses in replacing a
Note.
Every replacement note and replacement Subsidiary
Guaranty constitutes an additional obligation of the Company
and the Guarantors, respectively, and shall be entitled to
the benefits of this Indenture.
Section 2.08. Outstanding Notes. The Notes
outstanding at any time are all the Notes authenticated by
the Trustee or any Authenticating Agent, except for those
canceled by the Trustee, those delivered to the Trustee for
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cancellation, and those described in this Section 2.08 as
not outstanding.
If a Note is replaced pursuant to Section 2.07
hereof (other than a mutilated Note surrendered for
replacement), it ceases to be outstanding unless the Trustee
receives proof satisfactory to it that the replaced Note is
held by a bona fide purchaser. A mutilated Note ceases to
be outstanding upon surrender of such Note and replacement
thereof pursuant to Section 2.07 hereof.
If the principal amount of any Note is considered
paid under Section 4.01, it ceases to be outstanding and
interest on it ceases to accrue.
Subject to Section 2.09 hereof, a Note does not
cease to be outstanding because any of the Guarantors or
Subsidiaries or Affiliates thereof holds the Note.
Section 2.09. Treasury Notes. (a) In determining
whether the Noteholders of the required principal amount of
Notes have concurred in any direction, waiver or consent,
Notes owned by the Company, the Guarantors, any Subsidiary
thereof, the Partnership or any Affiliate thereof shall be
considered as though they are not outstanding (including for
purposes of determining the outstanding principal amount of
Notes), except that for the purposes of determining whether
the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes which the Trustee
knows are so owned shall be so disregarded.
(b) With respect to any Notes beneficially owned
by the Company or any of its wholly owned Subsidiaries
(other than any Non-Recourse Subsidiary), any accrued
interest due and payable on such Notes shall be deemed to
have been paid by the Company to itself or to its wholly
owned Subsidiary (other than any Non-Recourse Subsidiary) on
the date on which such interest payment is due and the
Company may deduct from the interest Payment payable to the
other Holders all accrued interest payments on such Notes;
provided that (i) such Notes are registered in the name of
the Company or such wholly owned Subsidiary at the close of
business on the applicable record date and (ii) at least ten
Business Days prior to the date on which such interest
payment is to be made, the Company delivers to the Trustee
an Officer's Certificate certifying that such Notes were
registered in the name of the Company or such wholly owned
Subsidiary at the close of business on the applicable record
date.
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Section 2.10. Temporary Notes. Until definitive
Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes (accompanied
by a notation of the Subsidiary Guaranty of CPPI endorsed by
CPPI as Guarantor). Temporary Notes shall be substantially
in the form of definitive Notes but may have variations that
the Company, with the concurrence of the Trustee, considers
appropriate for temporary Notes. Without unreasonable
delay, the Company shall prepare and the Trustee or any
Authenticating Agent, upon receipt of the written order of
the Company signed by two Officers, shall authenticate
definitive Notes (accompanied by a notation of the
Subsidiary Guaranty of CPPI endorsed by CPPI as Guarantor)
in exchange for temporary Notes without charge to the
Noteholder. Until such exchange, such temporary Notes shall
be entitled to the same rights, benefits and privileges as
the definitive Notes.
Section 2.11. Cancellation. The Company may at
any time deliver Notes to the Trustee for cancellation. The
Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer,
exchange or payment. The Trustee shall cancel all Notes
surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall dispose of canceled
Notes as the Company directs. The Company may not issue new
Notes to replace Notes that it has paid or that have been
delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest. If the Company
or the Guarantors fail to make a payment of interest on the
Notes, the Company or the Guarantors shall pay such
defaulted interest, plus, to the extent lawful, any interest
payable on the defaulted interest, to the Persons who are
Noteholders on a subsequent special record date in each case
at the rate provided in the Notes and in Section 4.01
hereof. The Company shall fix any such special record date
and payment date. At least 15 days before any such record
date, the Company (or the Trustee, in the name of and at the
expense of the Company) shall mail to Noteholders a notice
that states the record date, payment date, and amount of
such interest to be paid.
ARTICLE III
REDEMPTIONS AND OFFERS TO REPURCHASE
Section 3.01. Notices to Trustee. If the Company
elects or is required to redeem Notes pursuant to the
optional redemption, mandatory redemption or repurchase or
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annual excess cash tender provisions of any of the Notes, it
shall notify the Trustee by delivery of an Officers'
Certificate at least 45 days but not more than 75 days
(unless a shorter notice period shall be agreed to by the
Trustee) before a redemption date, of the applicable
paragraph of the applicable Notes pursuant to which the
redemption shall occur, the principal amount of Notes to be
redeemed, the redemption date and the redemption price.
Section 3.02. Selection of Notes to be Redeemed.
If less than all of the Notes are to be redeemed at any
time, selection of Notes for redemption will be made by the
Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are
listed, or, if the Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem
fair and appropriate, provided that no Notes of $1,000 or
less shall be redeemed in part. On and after the redemption
date, interest ceases to accrue on Notes or portions of them
called for redemption.
Section 3.03. Notice of Redemption. At least 30
days but not more than 60 days before a redemption date, the
Company shall mail, by first class mail, a notice of
redemption to each Noteholder whose Notes are to be redeemed
at its registered address.
The notice shall identify the Notes to be redeemed
and shall state:
(1) the redemption date;
(2) the redemption price;
(3) if any Note is being redeemed in part, the
portion of the principal amount of such Notes to be
redeemed and that, after the redemption date, upon
surrender of such Notes, a new Note or Notes in
principal amount equal to the unredeemed portion will
be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be
surrendered to the Paying Agent to collect the
redemption price plus accrued interest;
(6) that, unless the Company defaults in making
the redemption payment, interest on Notes called for
redemption ceases to accrue on and after the redemption
date;
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(7) if less than all the Notes are to be
redeemed, the identification of the particular Notes
(or portion thereof) to be redeemed, as well as the
aggregate principal amount of Notes to be redeemed and
the aggregate principal amount of Notes estimated to be
outstanding after such partial redemption; and
(8) the paragraph of the Notes pursuant to which
the Notes called for redemption are being redeemed.
At the Company's request, the Trustee shall give
the notice of redemption in writing for each redemption in
the Company's name and at the Company's expense; provided,
however that the Company shall deliver to the Trustee, at
least 45 days prior to the redemption date, an Officers'
Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as
provided in the preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Notes called for
redemption become due and payable on the redemption date at
the price set forth in applicable Note. If the redemption
date is on or after an interest payment record date and on
or before the related interest payment date, any accrued
interest will be paid to the person in whose name a Note is
registered at the close of business on such record date.
Section 3.05. Deposit of Redemption Price. At
least one Business Day prior to the redemption date, the
Company shall deposit with the Trustee or with the Paying
Agent money in immediately available funds sufficient to pay
the redemption price of and accrued interest on all Notes to
be redeemed on that date. The Trustee or the Paying Agent
shall return to the Company any money not required for that
purpose.
Section 3.06. Notes Redeemed in Part. Upon
surrender of a Note that is redeemed in part, the Company
shall issue and the Trustee (or an Authenticating Agent)
shall authenticate for the Noteholder at the expense of the
Company a new Note (accompanied by a notation of the
Subsidiary Guaranties duly endorsed by the Guarantors) equal
in principal amount to the unredeemed portion of the Note
surrendered.
Section 3.07. Optional Redemption. The Company
may redeem all or any portion of the Notes at any time after
_____________, 1998, upon the terms and at the redemption
prices set forth in the Notes. Any redemption pursuant to
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this Section 3.07 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
Section 3.08. Redemption Pursuant to Casino
Control Act. (a) If required to qualify by the Casino
Control Commission, all Holders, whether initial Holders or
subsequent transferee, shall be subject to the qualification
provisions of the Casino Control Act relating to financial
sources and/or security holders. In the event that the
Casino Control Commission determines that a Holder is not
qualified under the qualification as required by the Casino
Control Commission in its sole discretion, the Company shall
have the absolute right and obligation to purchase from such
Holder (the "Disqualified Holder") the Note(s) the
Disqualified Holder may then possess, either directly,
indirectly or beneficially, no later than 45 days after the
date the Company serves notice on any Disqualified Holder of
such determination. Immediately upon such determination,
the Disqualified Holder shall have no further right (i) to
exercise, directly or indirectly, through any trustee or
nominee or any other person or entity, any right conferred
by any Note(s) or (ii) to receive any interest or any other
distribution or payment with respect to any such Note(s) or
any remuneration in any form from the Company or the
Trustee; provided, however, that after such
disqualification, interest on any such Note(s) shall
continue to accrue for the benefit of any subsequent Holder
thereof.
(b) Upon receipt of the notice referred to in
clause (a) above, the Disqualified Holder may sell its
Note(s) either directly to any Person then qualified or
previously qualified (and not subsequently disqualified) or
through a bona fide brokerage transaction, conducted at
arms-length, to a Person not an Affiliate of the
Disqualified Holder. In the event the Disqualified Holder
fails to so sell its Note(s) within 30 days after the
determination by the Casino Control Commission, the Company
shall purchase such Note(s) within 15 days after the end of
such 30-day time period, at a time and place as designated
by the Company, at the lowest of (i) the principal amount
thereof, (ii) the amount which the Disqualified Holder or
beneficial owner paid for the Note(s), together with accrued
interest up to the date of the determination of
disqualification, or (iii) the market value of such Note(s).
The right of the Company to purchase such Note may be
assigned by the Company to any Person approved by the Casino
Control Commission.
Section 3.09. Mandatory Redemption. (a) At all
times while the Notes are outstanding, the Company will
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monitor the outstanding principal balance of indebtedness
secured by the Wraparound Mortgage. If at any time the
Company determines that principal payments scheduled to be
made on the Wraparound Mortgage (other than principal
payments scheduled to be made at the final maturity of the
Wraparound Mortgage) during the 180-day period immediately
following that determination will cause the aggregate
principal amount of the indebtedness secured by the
Wraparound Mortgage to be less than the aggregate principal
amount of the Notes, then the Company promptly will call for
redemption a portion of the Notes which, after giving effect
to the redemption and the principal payments (other than
principal payments scheduled to be made at the final
maturity of the Wraparound Mortgage) scheduled to be made
during the 180-day period on the indebtedness secured by the
Wraparound Mortgage, will cause the aggregate principal
amount of the Notes to be less than the aggregate principal
amount of indebtedness secured by the Wraparound Mortgage.
Any Notes redeemed in this way will be selected by lot. The
redemption price will be 100% of principal amount, plus
accrued and unpaid interest to the date of redemption, plus
(i) if so redeemed prior to ________, 1998, the Applicable
Premium or (ii) if so redeemed on or after _______, 1998 the
premium, if any, that would otherwise be payable in the case
of an optional redemption by the Company on such date. The
maximum aggregate principal amount of Notes that may be
redeemed pursuant to this provision is $10 million.
(b) Any redemption pursuant to this Section
3.09 shall be made pursuant to the provisions of Section
3.01 through 3.06 hereof.
Section 3.10. Annual Excess Cash Tender.
Beginning in 1995 and annually thereafter, the Company will
make an offer (an "Excess Cash Offer") to all holders of
Notes to purchase the maximum principal amount of Notes that
may be purchased out of an amount equal to 50% of the
Company's Excess Cash from the immediately preceding fiscal
year (the "Available Excess Funds"), at an offer price in
cash in an amount equal to 100% of the outstanding principal
amount thereof (the "Cash Offer Amount"). The Commencement
Date for any Excess Cash Offer shall be the date specified
in a notice given by the Company to the Trustee in
accordance with Section 3.11(d) hereof and shall be not
later than 30 days after the publication of the Company's
audited financial statements for the immediately preceding
fiscal year. To the extent that the aggregate amount of
Notes tendered pursuant to an Excess Cash Offer is less than
the Available Excess Funds, the Company may use the
remaining amount for general corporate purposes. If the
aggregate principal amount of Notes tendered by holders in
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response to an Excess Cash Offer exceeds the amount of
Available Excess Funds, the Trustee will select the Notes to
be purchased on a pro rata basis. No Excess Cash Offer
shall be required to be made to the extent the Excess Cash
for the immediately preceding fiscal year is less than $10
million. Excess Cash from any fiscal year shall not be
carried forward or be used to compute Excess Cash in any
subsequent fiscal year.
Section 3.11. Purchase Offer. (a) In the event
that, pursuant to Sections 3.10, 4.10, or 4.14 hereof, the
Company shall commence an Excess Cash Offer, an Asset Sale
Offer or a Change of Control Offer, as the case may be, the
Company shall follow the procedures in this Section 3.11.
(b) The Excess Cash Offer, Asset Sale Offer or
Change of Control Offer, as the case may be, shall remain
open for a period specified by the Company which shall be no
less than 30 calendar days and nor more than 40 calendar
days after the applicable Commencement Date and no longer,
except to the extent that a longer period is required by
applicable law (the "Tender Period"). Upon a date (the
"Purchase Date") selected by the Company which is not more
than five Business Days after the expiration of the Tender
Period, the Company shall purchase at the Cash Offer Amount,
the Purchase Price or the Change of Control Price the amount
of Notes required to be purchased in accordance with
Sections 3.10, 4.10 or 4.14 hereof, as the case may be.
(c) If the expiration date of the tender is on or
after an interest payment record date and on or before the
related interest payment date, any accrued interest will be
paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional
interest will be payable to Noteholders who tender Notes
pursuant to any Excess Cash Offer, Asset Sale Offer or
Change of Control Offer, as the case may be.
(d) The Company shall provide the Trustee with
notice of any Excess Cash Offer, Asset Sale Offer, or Change
of Control Offer, as the case may be, at least 10 days
before the applicable Commencement Date.
(e) On or before the applicable Commencement
Date, the Company or the Trustee (at the written request and
at the expense of the Company) shall send, by first class
mail, a notice to each of the Noteholders, which shall
state:
(i) that the Excess Cash Offer, the Asset Sale
Offer or Change of Control Offer is being made pursuant
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to this Section 3.11 and, as applicable, Sections 3.10,
4.10 or 4.14 hereof and the length of time such Offer
will remain open;
(ii) the Cash Offer Amount, the Offer Amount, the
Purchase Price, or the Change of Control Price, as
applicable and the approximate date on which it is
expected that tendered Notes will be purchased and paid
for, and in the case of a Change of Control Offer made
pursuant to Section 4.14 hereof, that all Notes
tendered will be accepted for payment;
(iii) that any Note not tendered or accepted for
payment will continue to accrue interest;
(iv) that, unless the Company defaults in the
payment of the applicable purchase price, any Note
accepted for payment pursuant to the tender offer shall
cease to accrue interest as described in Section
3.11(c) hereof;
(v) that any Noteholder electing to have a Note
purchased pursuant to any Excess Cash Offer, Asset Sale
Offer or Change of Control Offer will be required to
surrender the Note, with the form entitled "Option of
Noteholder to Elect Purchase" on the reverse of the
Note completed, to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the
address specified in the notice prior to the close of
business on the expiration date of the applicable
Offer;
(vi) that Noteholders will be entitled to withdraw
their election if the Paying Agent receives, not later
than the close of business on the expiration date of
the applicable Offer a letter, a telegram, telex or
facsimile transmission (receipt of which is confirmed
and promptly followed by a letter) setting forth the
name of the Noteholder, the principal amount of the
Notes delivered for purchase and a statement that such
Noteholder is withdrawing his election to have such
Notes purchased; and
(vii) that Noteholders whose Notes were purchased
only in part will be issued new Notes equal in
principal amount to the unpurchased portion of the
Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral
multiple thereof.
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In addition, the notice shall, to the extent
permitted by applicable law, be accompanied by a copy of the
information regarding the Company and its Subsidiaries which
is required to be contained in the Quarterly Report on Form
10-Q or Annual Report on Form 10-K most recently filed by
the Company with the SEC (including any financial statements
or other information required to be included or incorporated
by reference therein) and any Reports on Form 8-K filed by
the Company with the SEC since the date of such Quarterly
Report or Annual Report, as the case may be. The notice
shall contain all instructions and materials necessary to
enable such Noteholders to tender Notes pursuant to the
Excess Cash Offer, the Asset Sale Offer or the Change of
Control Offer, as the case may be.
(f) Promptly after the expiration of any Excess
Cash Offer, Asset Sale Offer or Change of Control Offer, the
Company shall irrevocably deposit with the Trustee or
Paying Agent in immediately available funds an amount equal
to the aggregate purchase price of all Notes properly
tendered in response to the Offer to be held for payment in
accordance with the terms of this Section. The Company
shall, to the extent lawful, (i) deliver or cause the
depositary or Paying Agent to deliver to the Trustee all
Notes accepted for payment pursuant to the Offer and (ii)
deliver to the Trustee an Officers' Certificate stating such
Notes or portions thereof have been accepted for payment by
the Company in accordance with the terms of this Section
3.11. The Paying Agent shall promptly (but in any case not
later than ten (10) calendar days after the Purchase Date)
mail or deliver to each tendering Noteholder an amount equal
to the applicable purchase price of the Notes tendered by
such Noteholder and accepted by the Company for purchase,
and the Trustee shall promptly authenticate and mail or
deliver to such Noteholders a new Note (accompanied by a
notation of the Subsidiary Guaranties duly endorsed by the
Guarantors) equal in principal amount to any unpurchased
portion of the Note surrendered. Any Notes not so accepted
shall be promptly mailed or delivered by or on behalf of the
Company to the Holder thereof. The Company will publicly
announce in a newspaper of general circulation the results
of the Excess Cash Offer, the Asset Sale Offer or the Change
of Control Offer on or as soon as practicable after the
completion hereof.
(g) Any Excess Cash Offer, Asset Sale Offer or
Change of Control Offer shall be made by the Company in
compliance with all applicable provisions of the Exchange
Act, and all applicable tender offer rules promulgated
thereunder, and shall include all instructions and materials
necessary to enable such Noteholders to tender their Notes.
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ARTICLE IV
COVENANTS
Section 4.01. Payment of Notes. The Company
shall pay the principal of, premium (if any) and interest on
the Notes on the dates and in the manner provided in the
Notes. An installment of principal, premium and interest
shall be considered paid on the date due if a Paying Agent
(other than the Company or any Affiliate) holds on that date
money designated for and sufficient to pay all principal,
premium and interest then due. To the extent lawful, the
Company shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on:
(i) overdue principal, at the rate borne by the
Notes, compounded semi-annually; and
(ii) overdue installments of interest (without
regard to any applicable grace period) at the same rate
per annum, compounded semi-annually.
Section 4.02. SEC Reports, Financial Reports.
(a) Whether or not the Company is required to be subject to
Section 13(a) or 15(d) of the Exchange Act, so long as any
Notes are outstanding, the Company will file with the
Securities and Exchange Commission (the "Commission") all
quarterly and annual reports and other documents required
pursuant to such Sections at the same times and to the same
extent as if the Company were so required and, within 15
days of the date such reports and other documents are so
required to be filed with the Commission, to mail to all
holders of the Notes and the Trustee copies of such reports
in the manner and to the extent provided in TIA Section
313(c).
The Company shall promptly notify the Trustee, but
in no case later than 15 days, after any announced change in
fiscal reporting periods for any of the Company, the
Guarantors, or their respective Subsidiaries.
The Company, the Guarantors and their respective
Subsidiaries also shall comply with the other provisions of
TIA section 314(a). The Company, the Guarantors and their
respective Subsidiaries shall timely comply with their
reporting and filing obligations under the applicable
federal securities law.
Each of the Company and the Guarantors agrees to
provide written notice to the Trustee and the Collateral
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Trustee immediately upon its becoming aware of a Default
hereunder and to provide such further information relating
to such Default as the Trustee or the Collateral Trustee may
reasonably request.
(b) The Trustee shall transmit by mail to the
Casino Control Commission and the Division of Gaming
Enforcement (i) an initial list of the beneficial Holders of
the Note(s) within 7 days after the issuance of the Notes,
(ii) current lists of the Holders appearing in the Note
Register on a twice-per-year basis, no later than March 1
and September 1 of each year, and (iii) upon request by the
Casino Control Commission or the Division of Gaming
Enforcement, such additional information with respect to the
identity of the beneficial Holders of the Notes as the
Trustee may obtain through its good faith efforts.
(c) The Trustee shall notify the Casino Control
Commission and the Division of Gaming Enforcement of (i) the
amount of the proceeds from the sale of the Notes, (ii) the
interest rate applicable to the Notes, and (iii) within 7
days after any change thereto, notice of any change(s) to
the foregoing.
(d) The Trustee shall notify the Casino Control
Commission and the Division of Gaming Enforcement,
simultaneously with any notice given by it to the Holders,
of any default or acceleration under the Notes, this
Indenture, the Collateral Documents, or any other documents,
instrument, agreement, covenant, or condition related to the
issuance of the Notes, whether declared or effectuated by
the Trustee or any actions of which the Trustee is aware
taken by the Holders. The Trustee shall notify the Casino
Control Commission and the Division of Gaming Enforcement on
a continuing basis and in writing, of any actions taken by
the Trustee or the Holders with regard to such default,
acceleration or similar matters related thereto.
(e) The Trustee shall notify the Casino Control
Commission and the Division of Gaming Enforcement of the
removal or resignation of the Trustee within 7 days after
such removal or resignation.
(f) The Trustee shall notify the Casino Control
Commission and the Division of Gaming Enforcement of any
transfer or assignment of any rights known to the Trustee
under this Indenture, the Collateral Documents, or any other
documents, instrument, agreement, covenant or condition
related to the issuance of the Notes by the Company or the
Trustee within 7 days after such transfer or assignment.
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(g) The Trustee shall provide to the Casino
Control Commission and the Division of Gaming Enforcement,
within 7 days after the execution and delivery of the same
to the Trustee, copies of any and all amendments or
modifications to this Indenture, the Notes, the Collateral
Documents, or any other documents, instrument, agreement,
covenant or condition related to the issuance of the Notes.
Section 4.03. Compliance Certificate. (a) Each
of the Company and the Guarantors shall deliver to the
Trustee, within 120 days after the end of each fiscal years
of the Company, the Guarantors and their respective
Subsidiaries, an Officers' Certificate (signed by at least
one of the following: the President or Chief Financial
Officer) stating that a review of the activities of the
Company, the Guarantors, and their respective Subsidiaries,
as the case may be, during the preceding fiscal year has
been made under the supervision of the signing Officers with
a view to determine whether each of the Company, the
Guarantors or any Subsidiary, as the case may be, has kept,
observed, performed and fulfilled in all material respects
its obligations under this Indenture and the Related
Documents, and further stating, as to each such Officer
signing such certificate, that each of the Company, the
Guarantors and their respective Subsidiaries, as the case
may be, has kept, observed, performed and fulfilled in all
material respects each and every covenant contained in this
Indenture and the Related Documents and is not in default in
the performance or observance of any of the terms,
provisions and conditions hereof or thereof (or, if a
Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default and what action the
Company, the Guarantors, or their respective Subsidiaries,
as the case may be, are taking or propose to take with
respect thereof), that no event has occurred and is
continuing which is, or after notice or lapse of time or
both would become, an Event of Default (or, if such an event
has occurred and is continuing, specifying each such event
and the nature and status thereof) and that no event has
occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any,
on the Notes are prohibited (or if such event has occurred,
a description of the event and what action is proposed to be
taken with respect thereto).
(b) The Company and its Subsidiaries shall
deliver to the Trustee, within 45 days after the end of each
fiscal quarter of the Company and its Subsidiaries, an
Officers' Certificate stating that any Restricted Payment
made during such fiscal quarter was permitted and setting
forth the basis upon which the calculations required by
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Section 4.09 were computed, which calculations may be based
upon the Company's latest available financial statements.
(c) So long as not contrary to the then current
recommendations of the American Institute of Certified
Public Accountants or to a written policy adopted by the
Company's, the Guarantors' or any Subsidiaries' independent
public accountants which has been previously applied (a copy
of which shall be delivered to the Trustee), the audited
financial statements delivered pursuant to Section 4.02
hereof shall be accompanied by a written statement of the
Company's, the Guarantors' or any Subsidiary's independent
public accountants, as the case may be, (each of which shall
be a firm of established national reputation) that in making
the examination necessary for certification of such
financial statements nothing has come to their attention
which would lead them to believe that the Company, any
Guarantors or any Subsidiary thereof, as the case may be,
has violated any provisions of Article 4 (other than
Sections 4.04, 4.05, 4.13, 4.16, 4.17, 4.18, 4.19 and 4.20)
or Article 5 hereof or that any Event of Default has
occurred under Section 6.01 hereof (other than 6.01(c),
6.01(d) (with respect to a Default under Section 4.13) or
6.01(h)), or if any such violation or Event of Default has
occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not
be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
Section 4.04. Stay, Extension and Usury Laws.
Each of the Company, the Guarantors and their respective
Subsidiaries covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law or
other law which would prohibit or forgive the Company or the
Guarantors in respect of the Subsidiary Guaranties, from
paying all or any portion of the principal of, premium (if
any) or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or
which may materially affect the covenants or the performance
of this Indenture or the Related Documents in a manner
inconsistent with the provisions of this Indenture or the
Related Documents and (to the extent that it may lawfully do
so) each of the Company and the Guarantors in respect of the
Subsidiary Guaranties, hereby expressly waives all benefit
or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been
enacted.
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Section 4.05. Corporate Existence; Compliance
With Laws. (a) Subject to Article 5 hereof, the Company and
the Guarantors will do or cause to be done all things
necessary to preserve and keep in full force and effect its
corporate existence, and the corporate, partnership or other
existence of each of their respective Subsidiaries, in
accordance with the respective organizational documents of
each Subsidiary and the rights (charter and statutory),
licenses and franchises of each of the Company, the
Guarantors and their respective Subsidiaries; provided,
however, that neither the Company nor the Guarantors shall
be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence
of any Subsidiary, if the Board of Directors of the Company
or the Guarantors, as the case may be, shall determine that
the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries
on a combined basis or the Guarantors and its Subsidiaries
taken as a whole and that the loss thereof is not adverse in
any material respect to the Noteholders.
(b) The Company and the Guarantors will remain at
all times in compliance with all laws (including
environmental laws), statutes or other rules or regulations
and judicial decisions of any governmental authority
applicable to or binding upon each of them and any property
owned or leased by each of them, non-compliance with which
could reasonably be expected to have a material adverse
effect on the business, operations, properties of the
Company and its Subsidiaries or the Guarantors or the
ability of the Company or the Guarantors to perform their
obligations under this Indenture, the Notes or the Related
Documents.
Section 4.06. Use of Proceeds. (a) The Company
will apply the net proceeds from the sale of the Notes
immediately as a contribution to the equity capital of CPPI.
(b) CPPI will use not less than $8 million from
the net proceeds of the sale of the Notes to finance
internal improvements to the Existing Hotel Casino which
will be funded through FF&E Loans.
Section 4.07. Limitations on Liens. Neither the
Company nor any of its Subsidiaries may directly or
indirectly create, incur, assume or suffer to exist any Lien
on any asset now owned or hereafter acquired, or any income
or profits therefrom or assign or convey any right to
receive income therefrom, except:
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(a) Liens existing on the Issue Date (other than
Liens securing Indebtedness to be repaid on the Issue
Date);
(b) Liens on the assets acquired or leased with
the proceeds of Gaming Business Purchase Money
Obligations permitted to be incurred under Section
4.08(b)(iii); provided that such Lien does not extend
to any property or asset other than the assets so
acquired or leased;
(c) Permitted Liens;
(d) Liens securing Refinancing Indebtedness
incurred pursuant to Section 4.08(b)(vi); provided that
the Refinancing Indebtedness so issued and secured by
such Lien shall not be secured by any property or
assets of the Company or any of its Subsidiaries other
than the property or assets subject to the Liens
securing such Indebtedness being refinanced; and
provided further that if such Refinancing Indebtedness
is Pari Passu Indebtedness, the holders of such
Indebtedness or any trustee or other representative
thereof become a party to an Intercreditor Agreement, a
form of which is attached to the Collateral Trust
Agreement as Exhibit ___ and exercise rights and
remedies in accordance with the provisions thereof;
(e) Liens on the assets of any Non-Recourse
Subsidiary to secure Non-Recourse Debt of such Non-
Recourse Subsidiary;
(f) Liens created pursuant to the Related
Documents to secure the obligations under the Notes,
any Guaranty of the Notes and the Indenture;
(g) Liens on the Casino Assets securing
Indebtedness and related obligations under any Working
Capital Credit Agreement to the extent such
Indebtedness and related obligations are permitted
under Section 4.08(b)(i); provided that if such
indebtedness is Pari Passu Indebtedness, the holders of
such Indebtedness or any trustee or other
representative thereof become a party to an
Intercreditor Agreement, a form of which is attached to
the Collateral Trust Agreement as Exhibit ___ and
exercise rights and remedies in accordance with the
provisions thereof;
(h) Liens on a Project Expansion securing any
Indebtedness permitted to be incurred under Section
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4.08 hereof which is used to finance the Project Costs
of a Project Expansion; provided that (A) such Lien is
junior to or pari passu with the Lien securing the
Notes, (B) the aggregate principal amount of such
Indebtedness does not exceed 70% of the aggregate
Project Costs of such Project Expansion, and (C) the
Notes are secured by such Project Expansion on a senior
or pari passu basis with respect to such Lien; and
provided further the holder of such Indebtedness or any
trustee or other representative thereof become a party
to an Intercreditor Agreement, a form of which is
attached to the Collateral Trust Agreement as Exhibit
___ and exercise rights and remedies in accordance with
the provisions thereof; and
(i) Liens on a New Project to secure Indebtedness
incurred pursuant to Section 4.08(a) to finance the
costs of such New Project.
Section 4.08. Limitation on Indebtedness.
(a) The Company will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guaranty or otherwise become directly or
indirectly liable with respect to or become responsible for
(collectively, "incur") any Indebtedness and the Company
will not issue any Disqualified Stock and will not permit
any of its Subsidiaries to issue any shares of preferred
stock; provided, however that the Company or any Subsidiary
may incur Indebtedness if (i) the Adjusted Fixed Charge
Coverage Ratio on the date immediately preceding the date on
which such additional Indebtedness is incurred is greater
than the appropriate ratio set forth below, determined on a
pro forma basis (including a pro forma application of the
net proceeds therefrom, including without limitation, the
earnings of any business or asset acquired with the proceeds
of such Indebtedness) as if the additional Indebtedness had
been incurred at the beginning of such four-quarter period;
(ii) no Default or Event of Default shall have occurred and
be continuing or would occur as a consequence thereof; and
(iii) the Indebtedness to be incurred has a Weighted Average
Life to Maturity that exceeds the Weighted Average Life to
Maturity of the Notes.
For Indebtedness
Incurred In Ratio
---------------- -----
1994 2.25 to 1
1995 2.50 to 1
1996 2.75 to 1
1997 and thereafter 3.00 to 1
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(b) The foregoing limitations in Section 4.08(a)
above will not apply to:
(i) the incurrence by the Company or any
Subsidiary of Indebtedness for working capital purposes
in an aggregate principal amount not to exceed $7.5
million outstanding at any one time; provided that
there shall be no such Indebtedness outstanding for a
period of 14 consecutive days in each calendar year
(other than in respect of standby letters of credit);
(ii) the incurrence by the Company and its
Subsidiaries of the Existing Indebtedness;
(iii) Gaming Business Purchase Money Obligations
not to exceed $10 million outstanding at any one time;
(iv) the incurrence by the Company and its
Subsidiaries of Indebtedness represented by the Notes
and by any Guaranty of the Notes;
(v) Indebtedness incurred in connection with
Hedging Obligations entered into with counterparties
that are Qualified Issuers with respect to floating
rate Indebtedness otherwise permitted under this
Section 4.08(b);
(vi) the incurrence by the Company and its
Subsidiaries of Indebtedness issued in exchange for, or
the proceeds of which are used to extend, refinance,
renew, replace, or refund Indebtedness referred to in
clauses (i) through (v) above ("Refinancing
Indebtedness"); provided, however that (A) the
principal amount of such Refinancing Indebtedness shall
not exceed the principal amount of Indebtedness so
extended, refinanced, renewed, replaced, substituted or
refunded (plus the amount of reasonable expenses
incurred in connection therewith); (B) the Refinancing
Indebtedness shall have a Weighted Average Life to
Maturity equal to or greater than the Weighted Average
Life to Maturity of the Indebtedness being extended,
refinanced, renewed, replaced or refunded; (C) the
Refinancing Indebtedness shall be subordinated in right
of payment to the Notes on terms at least as favorable
to the Holders of Notes as those contained in the
documentation governing the Indebtedness being
extended, refinanced, renewed, replaced or refunded;
and (D) no Default or Event of Default shall have
occurred and be continuing or would occur as a
consequence thereof;
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(vii) Non-Recourse Debt incurred by a Non-Recourse
Subsidiary; and
(viii) Indebtedness between the Company and any
wholly owned Restricted Subsidiary, provided, however
that if any such wholly owned Restricted Subsidiary
ceases to be a wholly owned Restricted Subsidiary or
transfers such Indebtedness (other than to the Company
or a wholly owned Restricted Subsidiary), such events
shall be deemed, in each case, to constitute the
incurrence of such Indebtedness by the Company or by
such Restricted Subsidiary, as the case may be, at the
time of such event.
Section 4.09. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any
distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (other than
dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or such
Restricted Subsidiary, dividends or distributions
payable to the Company or any wholly owned Restricted
Subsidiary of the Company, or dividends by a Subsidiary
on its common stock if such dividends are paid pro rata
to all holders of such common stock);
(ii) purchase, redeem or otherwise acquire or
retire for value any Equity Interests of the Company or
any Restricted Subsidiary or other Affiliate of the
Company (other than any such Equity Interests owned by
the Company or any wholly owned Restricted Subsidiary
(other than a Non-Recourse Subsidiary) of the Company);
(iii) voluntarily purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness
that is pari passu with or subordinated to the Notes
(other than Indebtedness incurred under clauses (i),
(ii), (iii), (v) and (viii) of the exceptions under
Section 4.08(b) hereof); or
(iv) make any Restricted Investment
(all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as
"Restricted Payments"), unless, at the time of such
Restricted Payment:
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(1) no Default or Event of Default shall have
occurred and be continuing or would occur as a
consequence thereof; and
(2) the Company would, at the time of such
Restricted Payment and after giving pro forma effect
thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period,
have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Adjusted Fixed
Charge Coverage Ratio test set forth in Section
4.08(a); and
(3) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by the
Company and its Subsidiaries after the date of this
Indenture (including Restricted payments permitted by
clauses (i) and (ii) of Section 4.09(b) but excluding
any Restricted Payments permitted by clauses (iii)-(ix)
of Section 4.09(b)), is less than the amount which is
equal to (w) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period)
from January 1, 1994 to the end of the Company's most
recently ended fiscal quarter for which internal
financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, 100% of such deficit),
plus (x) 100% of the aggregate net cash proceeds
received by the Company from the issuance or sale of
Equity Interests of the Company (other than Equity
Interests sold to a Subsidiary of the Company and other
than Disqualified Stock) since the Issue Date, plus
(y) Excess Non-Recourse Subsidiary Cash Proceeds
received after the Issue Date, less (z) Unification
Transaction Payments. For purposes of this paragraph
(3), Consolidated Net Income shall exclude any
extraordinary gain (but not extraordinary loss),
together with any related provisions for taxes on such
extraordinary gain (but not extraordinary loss),
realized in connection with any Asset Sale (including,
without limitation, dispositions pursuant to sale and
leaseback transactions).
(b) The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days
after the date of declaration thereof, if at said date
of declaration such payment would have complied with
the provisions of this Indenture;
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(ii) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the
Company in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a
Subsidiary of the Company) of other Equity Interests of
the Company (other than any Disqualified Stock);
(iii) Investment by the Company or any Subsidiary
in an amount not to exceed $10 million in the aggregate
(measured as of the date such Investments were made) in
any Non-Recourse Subsidiaries engaged in a Gaming
Related Business;
(iv) Investments by the Company or any Subsidiary
in any Non-Recourse Subsidiary engaged in a Gaming
Related Business in an amount (measured as of the date
such Investments were made) not to exceed in the
aggregate 100% of all cash received by the Company or
any wholly owned Subsidiary (other than a Non-Recourse
Subsidiary) from any Non-Recourse Subsidiary (other
than cash which is or may be required to be repaid or
returned to such Non-Recourse Subsidiary) up to $10
million in the aggregate and thereafter 50% of all cash
received by the Company or any wholly owned Subsidiary
(other than a Non-Recourse Subsidiary) from any Non-
Recourse Subsidiary (other than cash which is or may be
required to be repaid or returned to such Non-Recourse
Subsidiary);
(v) the purchase, redemption, defeasance, or
other acquisition or retirement for value of any Pari
Passu Indebtedness with the substantially concurrent
purchase, redemption, defeasance, or other acquisition
or retirement for value of the Notes (on a pro rata
basis in relation to the outstanding aggregate
principal amount of such Indebtedness and the aggregate
principal amount of the outstanding Notes);
(vi) any voluntary purchase, redemption,
defeasance or other acquisition or retirement for value
of any Pari Passu Indebtedness with the proceeds of the
substantially concurrent issuance of Refinancing
Indebtedness relating to such Pari Passu Indebtedness
in accordance with Section 4.08(b)(vi) hereof;
(vii) any purchase, redemption, defeasance or other
acquisition or retirement for value of any Pari Passu
Indebtedness (other than pursuant to clause (v) or (vi)
above) up to $10 million in aggregate principal amount.
50
<PAGE>
(viii) any Unification Transaction permitted under
Section 4.12; and
(ix) the purchase of the Contingent Payment for
aggregate consideration (excluding consideration in the
form of Equity Interests of the Company other than
Disqualified Stock) not to exceed $10 million.
provided that, (A) with respect to clauses (iii)-(ix) above,
immediately after giving effect to the transaction
contemplated therein, no Default or Event of Default shall
have occurred and be continuing or would occur as a
consequence thereof and (B) with respect to clauses
(iv)-(vii) above, at the time of such transaction and after
giving pro forma effect thereto as if such transaction had
been entered into by the Company at the beginning of the
applicable four-quarter period, the Company would have been
permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio set forth in
Section 4.08(a).
(c) Any Investment in a Subsidiary that becomes a
Non-Recourse Subsidiary or any Investment in a wholly owned
Subsidiary that becomes a non-wholly owned Subsidiary shall
become a Restricted Payment on such date in the amount of
the greater of (x) the book value of such Subsidiary on such
date and (y) the fair market value of such Subsidiary on
such date as determined in good faith by the Board of
Directors of the Company.
(d) Any Guaranty that is an Investment in a Non-
Recourse Subsidiary shall cease to be deemed an Investment
(and shall be deemed to have not been made) if and to the
extent that the Guaranty is unconditionally released without
payment on the obligations so guarantied by the Company or
any Subsidiary (other than a Non-Recourse Subsidiary).
Section 4.10. Asset Sales. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries
to, cause, make or suffer to exist any Asset Sale (other
than to the Company or any wholly owned Restricted
Subsidiary) unless:
(i) no Default exists or is continuing
immediately prior to and after giving effect to such
Asset Sale;
(ii) the Company (or the Subsidiary, as the case
may be) receives consideration at the time of each such
Asset Sale at least equal to the fair market value
(evidenced by a resolution of the Board of Directors
51
<PAGE>
set forth in an Officers' Certificate delivered to the
Trustee) of the assets or equity securities sold or
otherwise disposed of; and
(iii) at least 90% of the consideration therefor
received by the Company or such Subsidiary is in the
form of cash; provided, however, that the amount of (x)
any liabilities (as shown on the Company's or such
Subsidiary's most recent balance sheet or in the notes
thereto) of the Company or any Subsidiary (other than
liabilities that are by their terms subordinated to the
Notes or any Guaranty thereof) that are assumed by the
transferee of any such assets and (y) any notes or
other obligations received by the Company or any such
Subsidiary from such transferee that are immediately
converted by the Company or such Subsidiary into cash,
shall be deemed to be cash (to the extent of the cash
received) for purposes of this provision.
(b) Within 360 days after any Asset Sale, the
Company (or the Subsidiary, as the case may be) may reinvest
or cause to be reinvested the Net Proceeds from such Asset
Sale in another asset or business in a Gaming Related
Business; provided that if there is an Asset Sale with
respect to any Collateral and the Net Proceeds from such
Asset Sale (either individually or when combined with the
Excess Proceeds from Asset Sales of Collateral during such
360-day period) exceeds $3 million, then such Net Proceeds
shall be held in a segregated account (a "Cash Collateral
Account") (which may, at the Company's option, be invested
in Marketable Securities) which will be pledged to the
Collateral Trustee to secure the Company's obligations under
the Notes or the Indenture or the obligations of the
Guarantors under each of their respective Subsidiary
Guaranties or the Indenture until such Net Proceeds are
either reinvested or applied to redeem the Notes as
described below; provided further that if there is an Asset
Sale with respect to any Collateral and the Net Proceeds
from such Asset Sale are reinvested, such Net Proceeds shall
only be reinvested in assets defined as Collateral under the
Related Documents and the assets acquired by such
reinvestment will be pledged to the Collateral Trustee to
secure the Company's obligations under the Notes or the
Indenture or the obligations of the Guarantors under each of
their respective Subsidiary Guaranties or the Indenture.
Any Net Proceeds from any Asset Sale that are not reinvested
as provided in the preceding sentence constitute "Excess
Proceeds."
(c) When the aggregate amount of Excess Proceeds
exceeds $10 million (the amount of such Excess Proceeds
52
<PAGE>
being the "Offer Amount"), the Company will make an offer
(an "Asset Sale Offer") (i) to all Holders of Notes to
purchase the maximum principal amount of Notes that may be
purchased out of the Offer Amount or (ii) at the Company's
option, to redeem outstanding Notes and Pari Passu
Indebtedness on a pro rata basis in relation to the
outstanding aggregate principal amount of such Indebtedness
and the aggregate principal amount of the Notes then
outstanding, in each case at an offer price (the "Purchase
Price") in cash in an amount equal to 100% of the
outstanding principal amount thereof plus accrued and unpaid
interest, if any, to the date fixed for the closing of such
offer, in accordance with Section 3.11. To the extent that
the aggregate amount of Notes tendered pursuant to an Asset
Sale Offer is less than the Offer Amount, the Company may
use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders
thereof exceeds the Offer Amount, the Trustee will select
the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of Excess
Proceeds will be reset to zero.
(d) Notwithstanding the permitted reinvestment
referred to in the first sentence of Section 4.10(b), in the
case of an Asset Sale involving an Event of Loss with
respect to the Existing Hotel Casino in excess of $10
million, the Company shall make an Asset Sale Offer to all
Holders of Notes to purchase the maximum principal amount of
Notes that may be purchased out of the Net Proceeds from
such Asset Sale at the Purchase Price in accordance with
Section 3.11, provided, however, that the Company may
reinvest the Net Proceeds from such Asset Sale in a Gaming
Related Business in Atlantic City, New Jersey so long as the
Company delivers or causes to be delivered to the Trustee a
written opinion from a reputable architect and an Officers'
Certificate to the effect that an operating casino
containing at least 80% of the slot machines and 80% of the
table games which existed immediately prior to the Event of
Loss could be operational through the reinvestment of the
Net Proceeds from such Event of Loss and such reinvestment
will be completed within two years of such Asset Sale.
(e) If an Asset Sale Offer is required under this
Section 4.10, the Company shall, no later than 360 days
after the closing of the Asset Sale, notify the Trustee in
accordance with Section 3.11(d) hereof and commence or cause
to be commenced the Asset Sale Offer on a date no later than
10 Business Days after the date of such notice.
Section 4.11. Limitation on Transactions with
Affiliates. (a) The Company will not, and will not permit
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any of its Subsidiaries to, sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or
maintain any contract, agreement, understanding, loan,
advance or guaranty with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless:
(i) such Affiliate Transaction is on terms that
are no less favorable to the Company or the relevant
Subsidiary than those that would have been obtained in
a comparable transaction by the Company or such
Subsidiary with an unrelated Person;
(ii) such Affiliate Transaction is approved by a
majority of disinterested members of the Company's
Board of Directors; and
(iii) the Company delivers to the Trustee:
(1) with respect to any Affiliate
Transaction involving payments in excess of $1
million, an Officers' Certificate certifying that
any such Affiliate Transaction complies with this
clause (a) and such Affiliate Transaction is
approved by a majority of the Board of Directors
as evidenced by a Board Resolution; and
(2) with respect to any Affiliate
Transaction involving aggregate payments in excess
of $5 million, an opinion as to the fairness to
the Company or such Subsidiary from a financial
point of view issued by an investment banking firm
of national standing.
(b) Notwithstanding the foregoing, the following
shall not be deemed Affiliate Transactions:
(i) any employment agreement entered into by the
Company or any of its Subsidiaries in the ordinary
course of business and consistent with the past
practice of the Company or such Subsidiary;
(ii) any consulting or similar arrangements
entered into by the Company or any of its subsidiaries
under which payments do not exceed $200,000 with
respect to any individual, and do not exceed $500,000
in the aggregate, in any calendar year;
(iii) transactions between or among the Company
and/or its wholly owned Restricted Subsidiaries;
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<PAGE>
(iv) transactions permitted by Section 4.09;
(v) payments made by the Company pursuant to the
indemnification agreement with its directors and
officers in such director's or officer's capacity as a
director or officer of the Company or a wholly owned
Restricted Subsidiary;
(vi) loans to employees of the Company or any
wholly owned Restricted Subsidiary, in an amount
approved by a majority of disinterested members of the
Board of Directors of the Company and any wholly owned
Restricted Subsidiary in an amount not to exceed
$500,000 in aggregate principal outstanding at any one
time;
(vii) the Claridge Lease and the Wraparound
Mortgage, each as in effect on the Issue Date, with
such changes as may be permitted under the covenant
"Transactions with the Partnership";
(viii) any Unification Transaction; and
(ix) any other transaction with the Partnership
permitted under Section 4.12.
Section 4.12. Transactions with the Partnership;
Unification Transaction. (a) The Company and its
Subsidiaries will not agree to any amendment or waiver of
the terms of or take any action (or omit to take any action)
the result of which would be to abrogate, terminate, reduce
or otherwise adversely affect any of its or their rights
under the Claridge Lease or the Wraparound Mortgage (in each
case as in effect on the Issue Date); provided, however,
that (i) the Company and its Restricted Subsidiaries may
enter into an amendment of the Claridge Lease that provides
solely for a deferral, reduction or abatement of rent
thereunder, provided that the Trustee shall have been
provided with an opinion of independent counsel recognized
as experts in federal income tax matters (a "Tax Opinion")
to the effect that any such amendment would not result in
material adverse federal income tax consequences to the
Company and its Restricted Subsidiaries or the Noteholders;
(ii) the Company and its Restricted Subsidiaries may enter
into any amendment to, or termination of, the Claridge Lease
or the Wraparound Mortgage to the extent necessary or
appropriate to effect a Unification Transaction permitted
hereunder; (iii) the Company and its Subsidiaries may
consummate a Unification Transaction, provided, however,
that (A) on a pro forma basis after giving effect to the
Unification Transaction and the payment of Unification
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<PAGE>
Transaction Payments, the ratio of Adjusted Indebtedness to
Adjusted EBITDA at such date is less than 3.0 to 1, as
certified by an Officers' Certificate; (B) the Trustee shall
have obtained from a nationally recognized investment
banking firm an opinion as to the fairness of the
Unification Transaction to the Company from a financial
point of view; (C) the Company or CPPI or such successor
entity of either of them which owns the Hotel Assets
expressly assumes all of the obligations of the mortgagor
under the Mortgage and of the pledgor under the other
applicable Related Documents and delivers appropriate
documents and other instruments to the Trustee or the
Collateral Trustee, as the case may be; and (D) after giving
effect to such Unification Transaction, no Default or Event
of Default shall have occurred and be continuing or would
occur as a result thereof; and (iv) the Company and its
Restricted Subsidiaries shall, if so requested by the
Trustee or the Collateral Trustee, enter into any amendment
to and grant any consent or waiver under the Claridge Lease
or the Wraparound Mortgage to permit the Trustee or the
Collateral Trustee, as the case may be, to more effectively
enforce the Liens over the Collateral and exercise the
rights granted to the Collateral Trustee under any of the
Related Documents; and (v) the Company and its Restricted
Subsidiaries may enter into any amendment to the Wraparound
Mortgage and the Claridge Lease to the extent necessary or
appropriate to effect any future acquisition of land or
facility construction by the Partnership used or to be used
in the business of the Existing Hotel Casino on terms no
less favorable to the Company and its Restricted
Subsidiaries than the arrangements existing on the Issue
Date. Subject to the foregoing, the Company shall renew the
term of the Claridge Lease in accordance with its terms.
Section 4.13. Limitation on Dividends and Other
Payment Restrictions Affecting Subsidiaries. The Company
will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction
on the ability of any Subsidiary to:
(i) pay dividends or make any other distributions
to the Company or any of its Subsidiaries (x) on its
Capital Stock or (y) with respect to any other interest
or participation in, or measured by, its profits,
(ii) pay any Indebtedness owed to the Company or
any of its Subsidiaries;
(iii) make loans or advances to the Company or any
of its Subsidiaries; or
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(iv) transfer any of its properties or assets to
the Company or any of its Subsidiaries,
except for such encumbrances or restrictions existing under
or by reasons of (1) Existing Indebtedness as in effect on
the Issue Date, (2) this Indenture and the Notes, (3)
applicable law, (4) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company or any of
its Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was
incurred in connection or in contemplation of such
acquisition), which encumbrance or restriction is not
applicable to any person, or the properties or assets of any
person, other than the person, or the property or assets of
the person, so acquired, provided that the Adjusted
Consolidated Cash Flow of such Person is not taken into
account in determining whether such acquisition was
permitted by the terms of this Indenture, (5) by reason of
customary non-assignment provisions in leases entered into
in the ordinary course of business and consistent with past
practices, (6) with respect to clause (iii) above, purchase
money obligations for property acquired in the ordinary
course of business, (7) permitted Refinancing Indebtedness,
provided that the restrictions contained in the agreements
governing such Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing
the Indebtedness being refinanced, or (8) restrictions
imposed on any Non-Recourse Subsidiary by any Non-Recourse
Debt.
Section 4.14. Change of Control. (a) Upon the
occurrence of a Change of Control, each Holder of Notes
shall have the right, in accordance with this Section 4.14
and Section 3.11 hereof, to require that the Company repur-
chase all or any part (equal to $1,000 or an integral multi-
ple thereof) of such Holder's Notes at a purchase price in
cash equal to 101% of the principal amount thereof, plus
accrued interest to the Purchase Date (the "Change of
Control Price").
(b) No later than 30 days after a Change of
Control, the Company shall notify the Trustee in writing of
such Change of Control and commence or cause to be commenced
an offer to all Noteholders to purchase all outstanding
Notes at the Change of Control Price pursuant to the
procedures set forth in Section 3.11 hereof (the "Change of
Control Offer"). The Commencement Date for any Change of
Control Offer shall be the date specified by notice given by
the Company to the Trustee in accordance with Section
3.11(d) and shall be no later than 30 days after such Change
in Control.
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Section 4.15. Additional Subsidiary Guaranties.
(a) If, at any time after the Issue Date, the Company or
any of its Restricted Subsidiaries shall transfer or cause
to be transferred, in one or a series of related transac-
tions, any Collateral or shall otherwise make an Investment
having a book value in excess of $5 million to or in any
Subsidiary (other than a Non-Recourse Subsidiary) that is
not a Guarantor, or if the Company establishes a Subsidiary
other than CPPI that operates the Existing Hotel Casino (a
"New Operator") then such transferee or acquired Subsidiary
or New Operator shall become a Guarantor of the Notes to the
same extent as CPPI, and the Company shall cause such
Subsidiary to execute such instruments and to take such
other actions as the Trustee may require in order to
evidence the Guarantee by such Restricted Subsidiary under
Article XI of this Indenture, the agreement by such
Restricted Subsidiary to be bound by the other terms of this
Indenture and the agreement by such Restricted Subsidiary to
secure its obligations in respect of the Notes by granting
to the Collateral Trustee a security interest in collateral
of the type pledged by the other Guarantors pursuant to the
Related Documents.
(b) In the event that the capital stock of any
such transferee or acquired Subsidiary which theretofore
became a Guarantor pursuant to Section 4.15(a) is thereafter
disposed of in its entirety by the Company and its
Restricted Subsidiaries, such Guarantor shall be released
and discharged from any obligation under this Indenture and
the Related Documents; provided that no such disposition
shall be made unless, immediately after such disposition and
after giving effect thereto, (i) no Event of Default shall
have occurred and be continuing and (ii) no Change of
Control shall result therefrom.
Section 4.16. Limitation on Business Activities
of the Company and the Subsidiaries. The Company will not,
and will not permit any Subsidiary to, engage in any
business other than those necessary for, incident to,
connected with or arising out of the gaming business
(including developing and operating hotel casinos, sports or
entertainment facilities, transportation services or other
related activities or enterprises and any additions or
improvements thereto). The Company or its Subsidiaries may
not enter into any gaming jurisdictions in which the Company
or its Subsidiaries is not presently licensed if all of the
Holders of Notes will be required to be licensed, provided
that this sentence shall not prohibit the Company or its
Subsidiaries from entering any jurisdiction that does not
require the licensing or qualification of all of the Holders
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of the Notes, but reserves the discretionary right to
license or qualify any Holder of Notes.
Section 4.17. Insurance. Until the Notes have
been paid in full, the Company will, and will cause its
Subsidiaries, to maintain insurance with responsible
carriers against such risks and in such amounts as is
customarily carried by similar businesses with such
deductibles, retentions, self insured amounts and
coinsurance provisions as are customarily carried by similar
businesses of similar size, including, without limitation,
property and casualty loss, workers' compensation and
interruption of business insurance, and shall provide
satisfactory evidence of such insurance to the Trustee in
the form of a certificate of insurance and an Officers'
Certificate at least 30 days prior to the anniversary or
renewal date of each such policy, which Officers'
Certificate shall expressly state such expiration date for
each policy listed and that such insurance is complete and
in compliance with the requirements of this Section 4.17.
Notwithstanding the foregoing, customary insurance coverage
for the purposes of this Indenture shall include the
following: (i) workers' compensation insurance in full
compliance with all applicable state and federal laws and
regulations, (ii) property insurance protecting property,
including, without limitation, the Hotel Assets, against
loss or damage by fire, lightning, windstorm, tornado, water
damage, vandalism, riot, earthquake, civil commotion,
malicious mischief, hurricane, and such other risks and
hazards as are from time to time covered by an "all-risk"
policy or a property policy covering "special" causes of
loss. Such insurance shall provide coverage in not less
than 100% of actual replacement value and with a deductible
no greater than $1,000,000 (as determined at each policy
renewal based on the F.W. Dodge Building Index or some other
nationally recognized means) of any improvements, and (iii)
business interruption insurance for a period not less than
one year, and in an amount based upon 100% of estimated
continuing expenses and lost cash flow for the fiscal year
with respect to which the insurance coverage is in effect
less non-continuing expenses.
All insurance under this provision shall name the
Trustee or the Collateral Trustee as an additional insured
or loss payee, as applicable. All such insurance shall be
issued by carriers having an A.M. Best & Company, Inc.
rating of A- or higher and a financial size category of not
less than XI, or if such carrier is not rated by A.M. Best &
Company, Inc., having the financial stability and size
deemed appropriate by the Company after consultation with a
reputable insurance broker.
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Section 4.18. Investment Company Act. None of
the Company, the Guarantors and their respective
Subsidiaries shall become an investment company subject to
registration under the Investment Company Act of 1940, as
amended.
Section 4.19. Related Documents. None of the
Company, the Guarantors and their respective Subsidiaries
will amend, waive or modify, or take or refrain from taking
any action which has the effect of amending, waiving or
modifying, any provision of the Related Documents to the
extent that such amendment, waiver, modification or action
would have any material adverse effect on the rights of the
Trustee or the Noteholders (as provided herein or in the
Related Documents), provided that:
(1) Collateral may be released or modified as
expressly provided herein and in the Related Documents;
(2) guaranties, Liens, and pledges may be
released as expressly provided herein and in the
Related Documents; and
(3) this Indenture and any of the Related
Documents may be otherwise amended, waived or modified
pursuant to Article 9 hereof.
Section 4.20. Further Assurances. The Company
and the Guarantors shall (and shall cause any of their
Subsidiaries to) do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register, any and
all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel certificates,
financing statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates,
assurances and other instruments as may be required from
time to time in order (i) to carry out more effectively the
purposes of the Related Documents and this Indenture, (ii)
to subject the Liens created by any of the Related Documents
or any of the properties, rights or interests covered by any
of the Related Documents, (iii) to perfect and maintain the
validity, effectiveness and priority of any of the Related
documents and the Liens intended to be created thereby and
hereby, and (iv) to better assure, convey, grant, assign,
transfer, preserve, protect and confirm to the Trustee any
of the rights granted or now or hereafter intended to be
granted to the Trustee or under any other instrument
executed in connection therewith or granted to the Company
under the Related Documents and this Indenture or under any
other instrument executed in connection therewith.
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Section 4.21. Redesignation of Non-Recourse
Subsidiary. Any Non-Recourse Subsidiary may be redesignated
by the Company as a Subsidiary that is not a Non-Recourse
Subsidiary, provided, however, that at the time of such
designation, after giving pro forma effect to such
designation as if it occurred at the beginning of the
applicable four-quarter period, (i) the Company could incur
$1.00 of additional Indebtedness pursuant to the Adjusted
Fixed Charge Coverage Ratio test set forth in Section
4.08(a) and (ii) no Default or Event of Default shall have
occurred and be continuing or occur as a consequence hereof.
Section 4.22. Duty of Cooperation. The Company
and the Guarantors and each of their respective directors,
officers and Affiliates shall cooperate with the Casino
Control Commission and the Division of Gaming Enforcement
and provide such information and documentation as may from
time to time be requested by such agencies unless such
request is being contested in good faith by appropriate
proceedings.
Section 4.23. Further Property. If the Company
or any Subsidiary acquires any property after the date
hereof which is used in connection with the use or operation
of the Existing Hotel Casino, including the Contemplated
Expansion, any Project Expansion or any adjacent or
contiguous land parcel and the construction on that land of
any amenity or facility, the Company or any Subsidiary shall
promptly execute, deliver and record such mortgages and
other security documents (or a supplement or an amendment to
the Mortgage) (or shall, to the extent within its power,
cause the Partnership to do such things) as may necessary,
or as the Collateral Trustee may request, to subject such
property to a Lien in favor of the Collateral Trustee
securing the Secured Obligations, and deliver to the
Collateral Trustee title insurance substantially in the form
of the title insurance insuring the Lien of the Mortgage as
of the date hereof in an amount reasonably satisfactory to
the Collateral Trustee insuring the Lien of such mortgage or
of the Mortgage (as so supplemented and amended) or an
appropriate endorsement to the insurance issued in
connection with the Mortgage as of the date hereof, in
either case subject to such exceptions as do not materially
adversely affect the Lien of the Mortgage.
ARTICLE V
SUCCESSORS
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Section 5.01. Consolidation, Merger or Sale of
Assets. (a) The Company or the Guarantors may not
consolidate or merge with or into (whether or not the
Company or the Guarantors is the surviving corporation), or
sell, assign, transfer, lease, convey or otherwise dispose
of all or substantially all of its properties or assets in
one or more related transactions to, another corporation,
Person or entity (the "Surviving Entity") unless:
(i) the Company or the Guarantor, as the case may
be, is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or
merger (if other than the Company or any Guarantor) or
to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is
a corporation organized or existing under the laws of
the United States, any state thereof or the District of
Columbia;
(ii) the entity or Person formed by or surviving
any such consolidation or merger (if other than the
Company or any Guarantor) or the entity or Person to
which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made
assumes all the obligation of the Company or the
Guarantors pursuant to a supplemental indenture in a
form reasonably satisfactory to the Trustee, under the
Notes and this Indenture;
(iii) immediately after such transaction no Default
or Event of Default exists or would exist;
(iv) the Company or any entity or Person formed by
or surviving any such consolidation or merger, or to
which such sale, assignment, transfer, lease,
conveyance or other disposition will have been made (A)
will have Consolidated Net Worth (immediately after the
transaction but prior to any purchase accounting
adjustments resulting from the transaction) equal to or
greater than the Consolidated Net Worth of the Company
immediately preceding the transaction and (B) will, at
the time of such transaction and after giving pro forma
effect thereto as if such transaction had occurred at
the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Adjusted Fixed Charge
Coverage Ratio test set forth in Section 4.08(a);
provided that this condition (iv) need not be satisfied
in connection with any Unification Transaction.
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(v) such transaction would not require any Holder
of Notes to obtain a gaming license or be qualified
under the laws of any applicable gaming jurisdiction,
provided that such Holder would not have been required
to obtain a gaming license or be qualified under the
laws of any applicable gaming jurisdiction in the
absence of such transactions; and
(vi) such transactions would not result in the
loss of any qualification or any material license of
the Company or its Subsidiaries necessary for any
Gaming Related Business then operated by the Company or
its Subsidiaries.
(b) The Company shall deliver to the Trustee
prior to the consummation of the proposed transaction an
Officers' Certificate to the foregoing effect and an Opinion
of Counsel stating that the proposed transaction and such
supplemental indenture complies with this Indenture and the
assumptions, if any, of the Related Documents are effective.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Company in accordance
with Section 5.01 hereof or of any Guarantor or any
Subsidiary thereof, the Surviving Entity (including any
entity surviving any Guarantor or any Subsidiaries thereof)
shall succeed to, and be substituted for, and may exercise
every right and power of, the Company, any Guarantor or any
Subsidiary thereof, as the case may be, under this Indenture
with the same effect as if such successor Person has been
named herein as the Company, any Guarantor or any Subsidiary
thereof, as the case may be; provided, however, that the
Surviving Entity (including any entity surviving any
Guarantors or any Subsidiaries thereof) or acquiring
corporation shall:
(i) assume all of the obligations of the acquired
Person under this Indenture, the Notes, and, if
applicable, the Related Documents;
(ii) acquire and own and operate, directly or
through wholly owned Subsidiaries, all or substantially
all of the properties and assets then constituting the
Existing Hotel Casino;
(iii) have been issued, or have a consolidated
Subsidiary which has been issued, Gaming Permits to
operate the Existing Hotel Casino substantially in the
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manner and scope operated prior to such transaction,
which Gaming Permits are in full force and effect; and
(iv) comply fully with the provisions of Section
5.01 hereof (in the case of any Surviving Entity other
than any entity surviving any Guarantor or any
Subsidiaries thereof);
provided, further, that the Company and the Guarantors,
respectively, shall have delivered to the Trustee the
Officers' Certificate and Opinion of Counsel required by
this Section 5.01.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. Events of Default. An "Event of
Default" occurs if:
(a) The Company or any Guarantor defaults in the
payment of the principal of or premium (if any) on any
Note when the same becomes due and payable at maturity,
upon any redemption or repurchase pursuant to the
provisions under Article III, Sections 4.10 or 4.14, or
by declaration or otherwise;
(b) The Company or any Guarantor defaults in the
payment of interest or any other amount payable to
Noteholders under the Indenture on any Notes, except as
set forth in (a) above, when the same becomes due and
payable and the Default continues for a period of 30
days after the date due and payable;
(c) The Company or any Subsidiary thereof or the
Partnership fails for a period of 30 days after the
notice specified below to observe or perform in any
material respect any of the other provisions of the
Indenture or the Related Documents;
(d) The Company or any Restricted Subsidiary
thereof or the Partnership defaults under any mortgage,
indenture or instrument under which there may be issued
or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company, any
Guarantor or any Restricted Subsidiary or the payment
of which is guarantied by the Company, any Guarantor or
any Restricted Subsidiary, whether such Indebtedness or
guaranty now exists, or is created after the date of
this Indenture, which default (i) is caused by a
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failure to pay when due principal or interest on such
Indebtedness within the grace period provided in such
Indebtedness (which failure continues beyond any
applicable grace period) (a "Payment Default") or (ii)
results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the
principal amount of any such Indebtedness, together
with the principal amount of any other such
Indebtedness under which there has been a Payment
Default or the maturity of which has been so
accelerated, aggregates $2.5 million or more;
(e) A final judgment or final judgments for the
payment of money are entered by a court or courts of
competent jurisdiction against the Company, any
Guarantor or any of their respective Restricted
Subsidiaries and such remains undischarged for a period
(during which execution shall not be effectively
stayed) of 60 days, provided that the aggregate of all
such judgments exceeds $5 million;
(f) An event of default shall have occurred and
be continuing (as defined in such Related Document)
under any of the Related Documents;
(g) Except as permitted by this Indenture, any
Subsidiary Guaranty is held in any judicial proceeding
to be unenforceable or invalid or ceases for any reason
to be in full force and effect, or any Guarantor, or
any Person acting on behalf of any Guarantor, denies or
disaffirms its obligations under its Subsidiary
Guaranty;
(h) There shall have occurred any revocation,
suspension or loss of any license required to operate
the Existing Hotel Casino (other than any revocation,
suspension or loss resulting from an Event of Loss)
which results in the cessation of business at the
Existing Hotel Casino for a period of more than 90
consecutive days;
(i) The cessation of business at the Existing
Hotel Casino beyond such time period covered by
business interruption insurance;
(j) Any material default of the Partnership under
the Wraparound Mortgage, other than the failure of the
Partnership to make payments of principal when due upon
maturity so long as CPPI may exercise a right of offset
in respect thereof under the Claridge Lease, which
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default continues uncured for a period of 30 days after
the notice specified below;
(k) any material default of CPPI or the
Partnership under the Claridge Lease, which default
continues uncured for a period of 30 days after the
notice specified below; other than a default in the
payment of rent thereunder by CPPI that may arise
through the exercise by CPPI of its right of offset in
respect of defaulted payments under the Wraparound
Mortgage;
(l) failure by the Company to own, directly or
indirectly, 100% of the outstanding capital stock of
CPPI (other than by reason of a Unification
Transaction) or 100% of the capital stock of any other
person holding a gaming license to operate the Existing
Hotel Casino;
(m) the termination of the Claridge Lease other
than a termination in connection with a Unification
Transaction; and
(n) The Company, any Guarantor, or any Restricted
Subsidiary thereof or the Partnership pursuant to or
within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case in which it
is the debtor,
(iii) consents to the appointment of a Custodian of
it or for all or substantially all of its
property,
(iv) makes a general assignment for the benefit of
its creditors, or
(v) admits in writing its inability generally to
pay its debts as the same become due;
(o) A court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(i) is for relief against the Company, any
Guarantor or any Restricted Subsidiary
thereof or the Partnership in an involuntary
case in which it is the debtor,
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(ii) appoints a Custodian of the Company, any Guarantor
or any Restricted Subsidiary thereof or for all or
substantially all of the property of the Company,
any Guarantor or any Restricted Subsidiary thereof
or the Partnership, or
(iii) orders the liquidation of the Company, any
Guarantor or any Subsidiary thereof (other
than a Non-Recourse Subsidiary) or the
Partnership and the order or decree remains
unstayed and in effect for 60 days;
The term "Bankruptcy Law" means Title 11, U.S.
Code or any similar federal or state law for the relief of
debtors. The term "Custodian" means any receiver, trustee,
assignee, liquidator or similar official under any
Bankruptcy Law.
An Event of Default under clause (c), (j) or (k)
of this Section occurs when the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes
has notified the Company of the Default, and the Company or
any Guarantor or the Partnership, as the case may be, fails
to cure the Default or cause the Default to be cured within
the time period specified therein if any. The notice must
specify the Default, demand that it be remedied and state
that the notice is a "Notice of Default."
In the case of any Event of Default pursuant to
the provisions of this Section 6.01 occurring by reason of
any willful action (or inaction) taken (or not taken) by or
on behalf of the Company or any Guarantor with the intention
of avoiding payment of the premium which the Company would
have had to pay if the Company then had elected to redeem
the Notes pursuant to Section 3.07 hereof, an equivalent
premium (or, in the event that the Company would not be
permitted to redeem the Notes pursuant to paragraph 8 of the
Notes, the premium payable on the first date thereafter on
which such redemption would be permissible) shall also
become and be immediately due and payable to the extent
permitted by law, anything in this Indenture or in the Notes
contained to the contrary notwithstanding. If an Event of
Default occurs prior to _______, 1998 by reason of any
willful action (or inaction) taken (or not taken) by or on
behalf of the Company or any Guarantor with the intention of
avoiding the prohibition on redemption of the Notes prior to
_______, 1998, then the Applicable Premium shall also become
immediately due and payable to the extent permitted by law
upon the acceleration of the Notes anything in this
Indenture or in the Notes contained to the contrary
notwithstanding.
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Section 6.02. Acceleration. If an Event of
Default (other than an Event of Default specified in clauses
(n) and (o) of Section 6.01 hereof) occurs and is
continuing, the Trustee by notice to the Company and CPPI,
or the Noteholders of at least 25% in principal amount of
the then outstanding Notes by notice to the Trustee, the
Company and CPPI may declare the unpaid principal of,
premium (if any) and any accrued interest on all the Notes
to be immediately due and payable. For purposes of the
preceding sentence, if a Default or Event of Default is
cured prior to acceleration of the Notes, it shall no longer
be deemed to be continuing. Upon such declaration the
principal, premium (if any) and interest shall be due and
payable immediately. If an Event of Default specified in
clause (n) or (o) of Section 6.01 hereof occurs, such an
amount shall become and be immediately due and payable
without any declaration or other act on the part of the
Trustee or any Noteholder. The Noteholders of a majority in
principal amount of the then outstanding Notes by written
notice to the Trustee may rescind an acceleration and its
consequences if (a) the rescission would not conflict with
any judgment or decree, (b) all existing Events of Default
have been cured or waived except nonpayment of principal,
premium (if any) or interest that has become due solely
because of the acceleration and (c) the Company or the
Guarantor has paid or deposited with the Trustee a sum
sufficient to pay all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses and
disbursements of the Trustee, its agents and counsel.
Section 6.03. Other Remedies. If an Event of
Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal,
premium (if any) or interest on the Notes or to enforce the
performance of any provision of the Notes, the Subsidiary
Guaranties or this Indenture.
The Trustee may maintain a proceeding even if it
does not possess any of the Notes or does not produce any of
them in the proceeding. A delay or omission by the Trustee
or any Noteholder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent
permitted by law. The assertion or employment of any right
or remedy hereunder or otherwise shall not restrict the
concurrent assertion or employment of any other appropriate
right or remedy.
Section 6.04. Waiver of Defaults. The
Noteholders of a majority in principal amount of the then
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outstanding Notes by notice to the Trustee may waive an
existing Default or Event of Default and its consequences
except a continuing Default or Event of Default in the
payment of the principal of or premium (if any) or interest
on any Note. When a Default or Event of Default is waived,
it is cured and ceases; but no such waiver shall extend to
any subsequent or other Default or impair any right
consequent thereon.
Section 6.05. Control by Majority. The
Noteholders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on it.
However, the Trustee may refuse to follow any direction that
the Trustee believes in good faith would conflict with law
or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Noteholders, the Trustee
believes in good faith would subject the Trustee to personal
liability be unduly prejudicial to the interests of Holders
not joining in the giving of such direction, it being
understood that the Trustee should have no duty to ascertain
whether or not such directions would be unduly prejudiced.
Section 6.06. Limitation on Suits. A Noteholder
may pursue a remedy with respect to this Indenture or the
Notes only if:
(a) the Noteholder gives to the Trustee written
notice of a continuing Event of Default;
(b) the Noteholders of a least 25% in principal
amount of the then outstanding Notes make a written
request to the Trustee to pursue the remedy;
(c) such Noteholder or Noteholders offer to the
Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request
within 60 days after receipt of the request and the
offer of indemnity; and
(e) during such 60-day period the Noteholders of
a majority in principal amount of the then outstanding
Notes do not give the Trustee a direction inconsistent
with the request.
A Noteholder may not use this Indenture to prejudice the
rights of another Noteholder or to obtain a preference or
priority over another Noteholder.
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Section 6.07. Rights of Noteholders to Receive
Payment. Notwithstanding any other provision of this
Indenture, the right of any Noteholder of a Note to receive
payment of principal, premium (if any) and interest on the
Note, on or after the respective due dates expressed in the
Note, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be
impaired or affected without the consent of the Noteholder,
except that no Noteholder shall have the right to institute
any such suit or take any action, if and to the extent that
the institution or prosecution thereof or the entry of
judgment therein would under applicable law result in the
surrender, impairment, waiver, or loss of the Lien of the
Related Documents upon any property subject to such Lien.
Section 6.08. Collection Suit by Trustee. If an
Event of Default specified in Section 6.01(a) or (b) hereof
occurs and is continuing, the Trustee may recover judgment
in its own name and as trustee of an express trust against
the Company or the Guarantors or any other obligor on the
Notes for the whole amount of principal, premium (if any)
and interest remaining unpaid on the Notes and interest, to
the extent lawful, on overdue principal, premium (if any)
and interest, in each case at the rate per annum borne by
the Notes as applicable, and such further amount as shall be
sufficient to cover the costs and, to the extent lawful,
expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel and any other amounts due under Section 7.07 hereof)
and the Noteholders allowed in any judicial proceedings
relative to the Company, the Guarantors (or any other
obligor upon the Notes), its creditors or its property and
shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such
claims and to distribute it, and any Custodian in any such
judicial proceedings is hereby authorized by each Noteholder
to make such payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments
directly to the Noteholders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, and any other amounts due the Trustee under Section
7.07 hereof. Nothing herein contained shall be deemed to
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authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Noteholder any plan of
reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Noteholder thereof,
or to authorize the Trustee to vote in respect of the claim
of any Noteholder in any such proceeding.
Section 6.10. Priorities. If the Trustee
collects any money pursuant to this Article, it shall pay
out the money in the following order.
First: to the Trustee for amounts due under Section
7.07 hereof;
Second: to Noteholders for amounts due and unpaid on
the Notes for principal, premium (if any) and
interest, ratably, without preference or
priority of any kind, according to the
amounts due and payable on the Notes for
principal, premium (if any) and interest,
respectively; and
Third: to the Company, the Guarantors or any other
obligor on the Notes, as their interest may
appear or as a court of competent
jurisdiction may direct.
The Trustee may fix a record date and payment date
for any payment to Noteholders.
Section 6.11. Undertaking for Costs. In any suit
for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action
taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in
the suit of an undertaking to pay the costs of the suit, and
the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Noteholder pursuant to Section 6.07
hereof, or a suit by Noteholders of more than 10% in
principal amount of the then outstanding Notes.
Section 6.12. Management of the Existing Hotel
Casino. Notwithstanding any provision of this Article VI to
the contrary:
(a) Following an Event of Default which permits
the taking of possession of the trust property by the
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Trustee or the appointment of a receiver for the trust
property or any part thereof pursuant to the Mortgage,
on or after such taking of possession or such
appointment, the Trustee or any such receiver shall be
authorized, in addition to the rights and powers of the
Trustee and such receiver set forth elsewhere in this
Indenture and the Related Documents, subject to
compliance with applicable law, to retain one or more
experienced operators of hotels or casinos to manage or
operate the Existing Hotel Casino on behalf of the
Noteholders, provided, however, that any operator
shall, and the Noteholders shall, have all necessary
legal qualifications, including all Gaming Permits, to
manage or operate the Existing Hotel Casino; and
(b) No Noteholder shall have any right to take
possession of, operate or manage all or any portion of
the Existing Hotel Casino, individually or as a member
of a group, unless such Noteholder (i) shall have all
necessary legal qualifications, including all Gaming
Permits, to do so, (ii) shall otherwise be qualified to
be retained to manage or operate the Existing Hotel
Casino and (iii) is retained by the Trustee or receiver
to manage or operate the Existing Hotel Casino, in the
case of each of clauses (i), (ii) and (iii), pursuant
to subsection (a) of this Section 6.12.
ARTICLE VII
TRUSTEE
Section 7.01. Duties of Trustee. (a) If any
Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by
this Indenture, and use the same degree of care and skill in
its exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of
Default:
(i) The Trustee need perform only those duties
that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations
shall be read into this Indenture against the Trustee
other than those provided in the TIA.
(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions
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expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case
of certificates or opinions which by any provision
hereof are specifically furnished to the Trustee, the
Trustee shall examine the certificates and opinions to
determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from
liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01
(ii) The Trustee shall not be liable for any error
of judgment made in good faith by a Trust Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect
to any action it takes or omits to take in good faith
in accordance with a direction received by it pursuant
to Section 6.05 hereof.
(d) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request or direction of the Noteholders
pursuant to this Indenture, unless such Noteholders shall
have offered the Trustee reasonable indemnity against the
costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction.
(e) Every provision of this Indenture that in any
way relates to the Trustee is subject to paragraphs (a),
(b), (c) and (d) of this Section 7.01.
(f) The Trustee shall not be liable for interest
on any money received by it except as the Trustee may agree
in writing with the Company or the Guarantors. Money held
in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(g) The Trustee and its directors, officers,
employees and Affiliates shall cooperate with the Casino
Control Commission and the Division of Gaming Enforcement
and provide such information and documentation as may from
time to time be requested by such agencies.
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Section 7.02. Rights of Trustee. (a) The Trustee
may rely on any document reasonably believed by it to be
genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter
stated in the document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books,
records and premises of the Company and the Subsidiaries
personally or by agent or attorney.
(b) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an
Opinion of Counsel, or both. The Trustee shall not be
liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion
of Counsel.
(c) The Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any
agent appointed with due care.
(d) Before it acts or refrains from acting, the
Trustee may consult with counsel and the advice of counsel
or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request, order or direction of any of the
Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs,
expenses, claims, liabilities, judgments, losses or damages
whatsoever which may be incurred therein or thereby as a
result of any action taken at the direction of the Holders;
(f) Prior to the occurrence of an Event of
Default hereunder and after the curing or waiving of all
events of Default the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval,
appraisal, bond, debenture or other paper or document with
respect to such series of Notes unless requested in writing
so to do by the Holders of not less than a majority in
aggregate principal amount of the Notes then outstanding;
provided, however, that (i) if the Trustee shall determine
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to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises relevant
to such inquiry or investigation as provided in Section
7.02(a); and (ii) if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in
the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this
Indenture, the Trustee may require reasonable indemnity
against such expenses or liabilities as a condition to so
proceeding. The reasonable expense of every such
investigation shall be paid by the Company or, if paid by
the Trustee, shall be repaid by the Company upon demand; and
(g) The Trustee shall not be liable for any
action it takes or omits to take in good faith which it
believes to be authorized or within its rights or powers
conferred upon it by this Indenture.
Section 7.03. Individual Rights of Trustee. The
Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with
the Company, the Subsidiaries, or the Guarantors or an
Affiliate with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.
However, the Trustee is subject to Sections 7.10 and 7.11
hereof.
Section 7.04. Trustee's Disclaimer. The Trustee
makes no representation as to the validity or adequacy of
this Indenture, the Notes or the Related Documents; it shall
not be accountable for the Company's use of the proceeds
from the Notes; and it shall not be responsible for any
statement of the Company in this Indenture or any statement
in the Notes other than its authentication. The Trustee
makes no representation as to the validity, value or
condition of any property covered or intended to be covered
by the Lien arising out of the Related Documents or as to
the title of the Subsidiaries thereto or as to the security
afforded by the Mortgage.
The Trustee shall not be under any obligation to
effect or maintain insurance or to renew any policies of
insurance or to inquire as to the sufficiency of any
policies of insurance carried by the Company or to report,
or make or file claims or proof of loss for, any loss or
damage insured against or which may occur, or to keep itself
informed or advised as to the payment of any taxes or
assessments, or to require any such payment to be made. The
Trustee shall have no responsibility in respect of the
validity, sufficiency, due execution, acknowledgement, or
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filing or refiling of this Indenture or the validity or
sufficiency of the security provided hereunder or the
perfection or continuation of perfection of such Security or
in respect of the validity of the Notes or the due execution
or issuance thereof.
The immunities and exemptions from liability if
the Trustee hereunder shall extend to its directors,
officers, employees and agents.
Section 7.05. Notice of Acceleration. (a) If an
Event of Default occurs and is continuing and if it is known
to the Trustee, the Trustee shall mail to the Collateral
Trustee and the Noteholders a notice of the Event of Default
within 90 days after it occurs (a "Notice of Acceleration").
Except in the case of an Event of Default in payment on any
Note (including any failure to make any mandatory redemption
payment required hereunder), the Trustee may withhold the
notice if and so long as a committee of its Trust Officers
in good faith determines that withholding the notice is in
the interests of Noteholders.
(b) So long as a Notice of Acceleration is in
effect, the Collateral Trustee shall exercise the rights and
remedies provided in the Related Documents subject to the
direction of the Required Secured Parties (as defined in the
Collateral Trust Agreement) as provided herein and therein.
The Collateral Trustee is not empowered to exercise any
remedy under any of the Related Documents unless a Notice of
Acceleration is in effect.
(c) Except as otherwise provided by Section
7.05(e), a Notice of Acceleration shall become effective
upon receipt thereof by the Collateral Trustee. A Notice of
Acceleration, once effective, shall remain in effect unless
and until it is cancelled as provided in Section 7.05(d) or
deemed cancelled as provided in Section 7.05(e).
(d) If the Indenture Trustee has given a Notice
of Acceleration, the Indenture Trustee shall be entitled to
cancel such Notice of Acceleration by delivering a written
notice of cancellation to the Collateral Trustee (i) before
the Collateral Trustee takes any action to exercise any
remedy with respect to the Collateral or (ii) thereafter, if
the Collateral Trustee believes that all actions it has
taken to exercise any remedy or remedies with respect to the
Collateral can be reversed without undue difficulty.
(e) Notwithstanding anything to the contrary
contained in this Section 7.05, if the Collateral Trustee
and the Indenture Trustee are the same Person, the Indenture
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Trustee shall not be required to deliver a notice to the
Collateral Trustee in order for a "Notice of Acceleration"
of the Notes under this Indenture to become effective or to
be cancelled. In any such case, a Notice of Acceleration
shall, for all purposes of the Related Documents, (i) be
deemed to have been delivered and to have become effective
immediately upon the Trustee being charged under this
Section 7.05 with knowledge that (x) a Note under the
Indenture had not been paid in full at the stated final
maturity thereof or (y) an Event of Default had occurred
under the terms of this Indenture, and (ii) shall be deemed
to have been cancelled at such time as the Trustee would
have been required to deliver a notice of cancellation
pursuant to Section 7.05 of this Indenture were it not also
the Collateral Trustee.
(f) The Collateral Trustee shall notify the
Company and the Trustee of the effectiveness or the
cancellation of any Notice of Acceleration within three
Business Days thereof; provided that the Collateral Trustee
shall not be required to so notify the Trustee if the
Trustee and the Collateral Trustee are the same Person.
Section 7.06. Reports by Trustee. Within 60 days
after the reporting date stated in Section 12.10 hereof, the
Trustee shall mail to Noteholders a brief report dated as of
such reporting date to the extent required by TIA Section
313 in accordance with the procedures set forth in said
Section. The Company shall notify the Trustee when the
Notes are listed on any stock exchange.
At the expense of the Company, the Trustee or, if
the Trustee is not the Registrar, the Registrar, shall
report the names of record Holders of the Notes to any
Gaming Authority when requested to do so by the Company.
The Trustee shall also comply with the information
requirements relative to the Casino Control Commission and
the Division of Gaming Enforcement set forth in Section
4.02.
To the extent requested by the Company and at the
Company's expense, the Trustee shall cooperate with any
Gaming Authority in order to provide such Gaming Authority
with the information and documentation requested and as
otherwise required by applicable law.
Section 7.07. Compensation and Indemnity. The
Company shall pay to the Trustee from time to time
reasonable compensation for its services hereunder in
accordance with the Trustee's standard fees for such
services. The Trustee's compensation shall not be limited
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by any law on compensation of a trustee of an express trust.
The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred by it in the
performance of its duties hereunder. Such expenses shall
include the reasonable compensation and out-of-pocket
expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee and its
agents for, and hold them harmless against, any loss,
liability or expense incurred without negligence or bad
faith on their part, arising out of or in connection with
the acceptance or administration of this Indenture,
including the costs and expenses of investigating or
defending themselves against any claims or liability in
connection with the exercise or performance of any of their
powers or duties hereunder and the costs and expenses of any
investigation by, or other proceedings before, any Gaming
Authority. The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. The Company
shall defend the claim and the Trustee shall cooperate in
the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made
without its consent, which consent shall not be unreasonably
withheld.
The Company need not reimburse any expense or
indemnify against any loss or liability incurred by the
Trustee through negligence or bad faith on the part of the
Trustee.
The obligation of the Company under this Indenture
to compensate and indemnify the Trustee and to pay or
reimburse the Trustee for expenses, disbursements and
advances shall constitute additional indebtedness hereunder.
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a Lien prior to the Notes on
all money or property held or collected by the Trustee in
its capacity as trustee under this Indenture, except that
held in trust to pay principal, premium (if any) and
interest on particular Notes.
Section 7.08. Replacement of Trustee. A
resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the
successor Trustee's acceptance of appointment as provided in
this Section 7.08.
The Trustee may resign and be discharged from the
trust hereby by so notifying the Company. Subject to the
provisions of the Casino Control Act, the Noteholders of a
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majority in principal amount of the then outstanding Notes
may remove the Trustee by so notifying the Trustee and the
Company. If at any time:
(1) the Trustee fails to comply with Section 7.10
hereof;
(2) the Trustee is adjudged a bankrupt or an
insolvent or an order for relief is entered with
respect to the Trustee under any Bankruptcy Law;
(3) a Custodian or public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
then, in any such case, subject to the provisions of the
Casino Control Act, (i) the Company by action of an
Authorized Officer may remove the Trustee or (ii) any Holder
who has been a bona fide Holder of a Note for at least six
months may, on behalf of itself and all others similarly
situated, petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a
successor Trustee.
Notwithstanding the foregoing, any successor
Trustee may be appointed only with the prior, express
approval of the Casino Control Commission, in consultation
with the Division of Gaming Enforcement, provided that such
successor Trustee must first be qualified as a financial
source by and cooperate with the Casino Control Commission
and the Division of Gaming Enforcement.
If the Trustee resigns or is removed or if a
vacancy exists in the office of Trustee for any reason, the
Company, the Guarantors and any other obligor shall promptly
appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Noteholders of a
majority in principal amount of the then outstanding Notes
may appoint a successor Trustee to replace the successor
Trustee appointed by the Company, the Guarantors and any
other obligor.
If any Gaming Authority requires a Trustee to be
approved, licensed or qualified and the Trustee fails or
declines to do so, which approval, license or qualification
shall be obtained upon the request of, and at the expense
of, the Company unless the Trustee declines to do so, or, if
the Trustee's relationship with any of the Subsidiaries may,
in the Company's discretion, jeopardize any material gaming
license or franchise or right or approval granted thereto,
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the Trustee shall resign, and, in addition, the Trustee may
at its option resign if the Trustee in its sole discretion
determines not to be so approved, licensed or qualified.
If a successor Trustee does not take office within
60 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company or the Noteholders of a
least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10
hereof, any Noteholder may petition any court of competent
jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to
the Company. Thereupon the resignation or removal of the
retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall
mail a notice of its succession to Noteholders. The
retiring Trustee shall promptly transfer all property held
by it as Trustee to the successor Trustee, subject to the
Lien provided for in Section 7.07 hereof. Notwithstanding
replacement of the Trustee pursuant to this Section 7.08,
the Company's obligations and any other obligor's
obligations under Section 7.07 hereof shall continue for the
benefit of the retiring trustee with respect to expenses and
liabilities incurred by it prior to such replacement.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
Section 7.10. Eligibility, Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA section 310(a)(1). The Trustee shall always
have a combined capital and surplus as stated in Section
12.10. The Trustee is subject to TIA section 310(b); provided,
however, that there shall be excluded from the operation of
TIA section 310(b)(1) any indenture or indentures under which
other securities, or certificate of interest or
participation in other securities, of the Company or the
Guarantors are outstanding, if the requirements for such
exclusion set forth in TIA section 310(b)(1) are met.
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Section 7.11. Preferential Collection of Claims
Against the Company. The Trustee is subject to TIA
section 311(a), excluding any creditor relationship listed in TIA
section 311(b). A Trustee who has resigned or been removed shall
be subject to TIA section 311(a) to the extent indicated therein.
Section 7.12. Co-Trustee. It is the purpose
hereof that there shall be no violation of any law of any
jurisdiction denying or restricting the right of banks or
trust companies to transact business as trustee in such
jurisdiction. It is recognized that in case of litigation
hereunder or under the Related Documents and in particular
in case of the enforcement of this Indenture or any of the
Related Documents upon the occurrence of an Event of Default
or an event of default under any of the Related Documents,
it may be necessary that the Trustee appoint an additional
bank or trust company as a separate Trustee or Co-Trustee.
The following provisions of this Section are adopted to
these ends.
Upon the incapacity or lack of authority of the
Trustee, by reason of any present or future law of any
jurisdiction, to exercise any of the rights, powers and
trusts herein granted to the Trustee or to hold title to the
trust estate or to take any other action which may be
necessary or desirable in connection therewith, each and
every remedy, power, right, claim, demand, cause of action,
immunity, estate, title, interest and lien expressed or
intended to be exercised by or vested in or conveyed to the
Trustee with respect thereto shall be exercisable by and
vest in a separate Trustee or Co-Trustee appointed by the
Trustee and every agreement and obligation necessary to the
exercise thereof by such separate Trustee or Co-Trustee
shall run to and be enforceable by either of them.
Should any deed, conveyance or instrument in
writing from the Company be required by the separate Trustee
or Co-Trustee so appointed by the Trustee in order to more
fully and certainly vest in and confirm to such Trustee such
properties, rights, powers, trusts, duties and obligations,
any and all such deeds, conveyances and instruments shall,
on request, be executed, acknowledged and delivered by the
Company upon the written request of the Trustee. In case
any separate Trustee or Co-Trustee, or a successor to
either, shall die, become incapable of acting, resign or be
removed, all the estates, properties, rights, powers,
trusts, duties and obligations of such separate Trustee or
Co-Trustee, so far as permitted by law, shall vest in and be
exercised by the Trustee until the appointment of a new
Trustee or successor to such separate Trustee or Co-Trustee.
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ARTICLE VIII
DISCHARGE OF INDENTURE
Section 8.01. Defeasance and Discharge of this
Indenture and the Notes. (a) When (i) the Company delivers
to the Trustee all outstanding Notes theretofore
authenticated and issued (other than Notes replaced pursuant
to Section 2.07) for cancellation; or (ii) all outstanding
Notes have become due and payable and the Company
irrevocably deposits with the Trustee funds sufficient to
pay at maturity all outstanding Notes, including interest
thereon (other than Notes replaced pursuant to Section 2.07
hereof), and if in either case the Company pays all other
sums payable hereunder by the Company, then this Indenture
shall, subject to Sections 8.01(c), 8.04 and 8.06 hereof,
cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on
demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and
expense of the Company.
(b) Subject to Sections 8.01(c), 8.02 and 8.06
hereof, the Company at any time may terminate (i) all its
obligations under the Notes and this Indenture ("legal
defeasance option") or (ii) its obligations under Sections
3.10, 4.02, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14,
4.15, 4.16, 4.17, 4.19, 4.20 and 4.21 hereof and the
operation of Sections 5.01(a)(iv), 6.01(c), 6.01(d),
6.01(j), 6.01(k) and 6.01(m) hereof ("covenant defeasance
option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant
defeasance option.
If the Company exercises its legal defeasance
option, payment of the Notes may not be accelerated because
of an Event of Default. If the Company exercises its
covenant defeasance option, payment of the Notes may not be
accelerated because of the failure of the Company to comply
with Section 4.02 or clause (iv) of Section 5.01(a) hereof.
Upon satisfaction of the conditions set forth
herein and upon request of the Company, the Trustee shall
acknowledge in writing the discharge of those obligations
that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above,
the Company's obligations in Sections 2.03, 2.04, 2.05,
2.06, 2.07, 4.01, 4.04, 7.07, 7.08, 8.04, 8.05 and 8.06
hereof and the Guarantors' obligations in Section 11.01
shall survive until the Notes have been paid in full.
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Thereafter, the Company's obligations in Sections 7.07 and
8.04 and 8.05 hereof shall survive.
(d) If the Company exercises its legal defeasance
option or its covenant defeasance option in accordance with
Section 8.02 hereof, then upon the request of the Company
and after the effective time of such defeasance, the Trustee
shall release all Collateral subject to a Lien held by the
Trustee pursuant to the Related Documents (other than the
security interest in the deposited U.S. Government
Obligations).
Section 8.02. Conditions to Defeasance. The
Company may exercise either defeasance option only if:
(i) the Company irrevocably deposits in trust
(the "defeasance trust") with the Trustee money or U.S.
Government Obligations or a combination thereof
sufficient to pay the principal of, premium, if any,
and interest on the Notes to redemption or maturity, as
the case may be;
(ii) the Company delivers to the Trustee a
certificate from a nationally recognized firm of
independent accountants expressing their opinion that
the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government
Obligations plus any deposited money without investment
will provide cash at such times and in such amounts as
will be sufficient to pay principal, premium (if any)
and interest when due on all the Notes to maturity or
redemption, as the case may be;
(iii) the Company shall have delivered to the
Trustee an Opinion of Counsel from an independent
Counsel reasonably acceptable to the Trustee to the
effect that all preference periods applicable to the
defeasance trust have expired under any applicable
bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit
or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the
period ending on the 91st day after the day of deposit;
(v) such legal defeasance or covenant defeasance
shall not result in a material breach or violation of
or constitute a default under any other material
agreement or instrument to which the Company is bound;
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(vi) the Company delivers to the Trustee an
Opinion of Counsel to the effect that the trust
resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the
Investment Company Act of 1940, as amended;
(vii) the Company shall have delivered an Opinion
of Counsel to the effect that a valid trust is created
at the time of such deposit and that the Noteholders
shall have a perfected security interest under
applicable law in the U.S. Government Obligations so
deposited;
(viii) in the case of the legal defeasance option,
the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably
acceptable to the Trustee confirming that (i) the
Company has received from, or there has been published
by, the Internal Revenue Service a ruling, or (ii)
since the date of this Indenture there has been a
change in the applicable federal income tax law, in
either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Noteholders
will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same
amounts, in the same manner and at the same times as
would have been the case if such defeasance had not
occurred;
(ix) in the case of the covenant defeasance
option, the Company shall have delivered to the Trustee
an Opinion of Counsel reasonably acceptable to the
Trustee confirming that the Noteholders will not
recognize income, gain or loss for federal income tax
purposes as a result of such covenant defeasance and
will subject to federal income tax on the same amounts,
in the same manner and at the same times as would have
been the case if such covenant defeasance had not
occurred; and
(x) the Company delivers to the Trustee and
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent to the defeasance
and discharge of Notes as contemplated by this Article
VIII have been complied with.
Before or after a deposit, the Company may make
arrangements satisfactory to the Trustee for the redemption
of a Note at a future date in accordance with Article III
hereof.
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Section 8.03. Application of Trust Money. The
Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to Section 8.01
hereof. It shall apply the deposited money and the money
from U.S. Government Obligations through the Paying Agent
and in accordance with this Indenture to the payment of
principal, premium (if any) and interest on the Notes.
Section 8.04. Repayment to Company. The Trustee
and the Paying Agent shall promptly pay to the Company upon
request any excess money or securities held by them at any
time and shall thereupon be relieved from all liability with
respect to such money.
The Trustee and the Paying Agent shall, unless
otherwise required by law, pay to the Company upon request
any money held by them for the payment of principal, premium
(if any) or interest that remains unclaimed for two years
after the date upon which such payment shall have become
due; provided, however, that the Company shall have first
caused notice of such payment to the Company to be mailed to
each Noteholder entitled thereto no less than 30 days prior
to such payment. After payment to the Company, all
liability of the Trustee or the Paying Agent, as the case
may be, shall cease and any Noteholders entitled to the
money must look to the Company or the Guarantors for payment
as general creditors unless an applicable abandoned property
law designates another Person.
Section 8.05. Indemnity for Government
Obligations. The Company and the Guarantors shall pay and
shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S.
Government Obligations or the principal and interest
received on such U.S. Government Obligations.
Section 8.06. Reinstatement. If the Trustee or
the Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 8.02
hereof by reason of any legal proceeding or any order or
judgment of any court or governmental authority (other than
any order of any Gaming Authority restricting the payment of
such money to any particular Noteholder) enjoining,
restraining or otherwise prohibiting such application, the
Company's and the Guarantors' obligations under this
Indenture and the Notes shall be revived and reinstated as
though no deposit had occurred pursuant to Section 8.01
hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section
8.02 hereof; provided, however, that if the Company or the
Guarantors make any payment of interest on or principal of
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any Note following the reinstatement of its obligations, the
Company or the Guarantors shall be subrogated to the rights
of the Noteholders of such Notes to receive such payment
from the money or the U.S. Government Obligations held by
the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS
Section 9.01. Without the Consent of Noteholders.
(a) In addition to those amendments and modifications
permitted by Section 4.19, without the consent of any Holder
of the Notes, the Company, any Guarantors, any other
guarantors or obligor on the Notes and the Trustee may amend
or supplement this Indenture, the Notes, any Related
Document, or any document the form of which is set forth as
an Exhibit to this Indenture:
(i) to cure any ambiguity, defect or
inconsistency;
(ii) to provide for uncertificated Notes in
addition to or in place of certificated Notes;
(iii) to provide for the assumption of the
Company's or any Guarantors' obligations as provided in
this Indenture;
(iv) to comply with the requirements of the SEC in
order to effect or maintain the qualification of this
Indenture under the TIA;
(v) to execute and deliver any documents
necessary or appropriate to release Liens on any
Collateral as permitted by Section 10.04 hereof;
(vi) to provide any additional Collateral for the
benefit of the Noteholders;
(vii) to make any change that would provide any
additional rights or benefits to the Noteholders or
that does not adversely affect the legal rights under
this Indenture of any Holder of the Notes.
Section 9.02. With Consent of Noteholders. (a)
Subject to Section 6.07 hereof, the Company, the Guarantors
and the Trustee may amend this Indenture, the Notes, any
Related Document or any document the form of which is an
Exhibit to this Indenture with the written consent of the
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Noteholders of at least a majority in principal amount of
the then outstanding Notes (including consents obtained in
connection with a tender offer or exchange offer for Notes).
Subject to Sections 6.04 and 6.07 hereof (other than a
continuing Default or Event of Default in the payment of
principal of or premium (if any) or interest on any Notes),
the Noteholders of a majority in principal amount of the
Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for Notes)
may also waive compliance with any provision of this
Indenture, the Notes, any Related Document or any document
the form of which is an Exhibit to this Indenture.
However, without the consent of each Noteholder
affected, an amendment or waiver under this Section 9.02 may
not:
(i) reduce the principal amount of Notes whose
Holders are necessary to consent to an amendment or
supplement to or waiver of this Indenture, the Notes or
any Related Document;
(ii) reduce the principal of or change the Stated
Maturity of any Note;
(iii) alter the provisions with respect to the
redemption or repurchase of the Notes in any manner
adverse to the Holders;
(iv) reduce the rate of or change the time for
payment of interest on any Note;
(v) waive a Default or an Event of Default in the
payment of principal or of premium, if any, or interest
on any Notes (except a rescission of acceleration of
the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of
the payment default that resulted from such
acceleration);
(vi) make any Note payable in money other than
that stated in the Notes;
(vii) make any change to Section 6.04 or 6.07
hereof or this sentence of this Section 9.02;
(viii) waive a redemption payment with respect to
any Note;
(ix) directly or indirectly release Liens on all
or substantially all of the Existing Hotel Casino
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securing the obligations under the Indenture, the Notes
or any Subsidiary Guaranty thereof or directly or
indirectly release the Lien on all or substantially all
of the Collateral securing the obligation under the
Indenture, the Notes or any Subsidiary Guaranties
thereof.
(b) Any amendment or waiver shall be effective
upon receipt by the Trustee of an Officers' Certificate and
Opinion of Counsel from the Company that such amendment or
waiver has been authorized by the Company and that the
consent of the majority of an aggregate principal amount of
the Notes has been obtained, unless such consents specify
that they shall become effective at a later date, in which
case such amendment or waiver shall become effective in the
terms of such consent, and upon execution of a supplemental
Indenture in the case of an amendment to this Indenture.
(c) After an amendment or waiver under this
Section 9.02 becomes effective, the Company shall mail to
Noteholders a notice briefly describing the amendment or
waiver. Any failure of the Company to mail such notice, or
any defect therein, shall not, however, in any way impair or
affect the validity of any supplemental indenture.
(d) It shall not be necessary for the consent of
the Noteholders under this Section 9.02 to approve the
particular form of any proposed amendment or waiver, but it
shall be sufficient if such consent approves the substance
thereof.
Section 9.03. Consideration for Consent. Neither
the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder
of any Notes for or as and inducement to any consent, waiver
or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered
to be paid or agreed to be paid to all Holders of the Notes
that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such
consent, waiver or agreement.
Section 9.04. Compliance with Trust Indenture
Act. Every amendment to this Indenture or the Notes shall
be set forth in a supplemental indenture that complies with
the TIA as then in effect.
Section 9.05. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to
it by a Noteholder is a continuing consent by the Noteholder
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and every subsequent Holder of a Note or portion of a Note
that evidences the same Indebtedness as the consenting
Noteholders's Note, even if notation of the consent is not
made on any Note. However, any such Noteholder or
subsequent Noteholder may revoke the consent as to his Note
or portion of a Note if the Trustee receives the notice of
revocation before the date on which the Trustee receives an
Officers' Certificate certifying that the Noteholders of the
requisite principal amount of Notes have consented to the
amendment or waiver.
The Company may, but shall not be obligated to,
fix a record date for the purpose of determining the
Noteholders entitled to consent to any amendment or waiver.
If a record date is fixed, then notwithstanding the
provisions of the immediately preceding paragraph, those
persons who were Noteholders at such record date (or their
duly designated proxies), and only those Persons, shall be
entitled to consent to such amendment or waiver or to revoke
any consent previously given, whether or not such Persons
continue to be Noteholders after such record date. No
consent shall be valid or effective for more than 90 days
after such record date unless consents from Noteholders of
the principal amount of Notes required hereunder for such
amendment or waiver to be effective shall have also been
given and not revoked within such 90-day period.
After an amendment, supplement or waiver becomes
effective it shall bind every Noteholder, unless it is of
the type described in any of clauses (i) through (ix) of
Section 9.02 hereof, in which case, the amendment,
supplement or waiver shall bind each Noteholder of a Note
who has consented to it and every subsequent Noteholder of a
Note that evidences the same Indebtedness as the consenting
Noteholder's Note; provided that any such waiver shall not
impair or affect the right of any Noteholder to receive
payment of principal of, premium (if any) and interest on a
Note, on or after the respective due dates expressed in such
Note, or to bring suit for the enforcement of any such
payment on or after such respective dates without the
consent of such Noteholder.
Section 9.06. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an
amendment or waiver on any Note thereafter authenticated.
The Company in exchange for all Notes may issue and the
Trustee shall authenticate the Notes that reflect the
amendment or waiver.
Section 9.07. Trustee Protected. The Trustee
shall sign all supplemental indentures, except that the
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Trustee need not sign any supplemental indenture that
adversely affects its rights. An Opinion of Counsel and an
Officers' Certificate shall be furnished to the Trustee
stating that such supplemental indenture is permitted
hereunder and all conditions precedent have been complied
with.
ARTICLE X
SECURITY
Section 10.01. Security. The Notes will be
secured by the Collateral pursuant to the Related Documents,
including (i) the Mortgage executed by the Partnership in
favor of the Collateral Trustee creating a first priority
Lien on the Hotel Assets (including, without limitation, its
fee and leasehold interests as well as interests in all
furniture, furnishings, fixtures, equipment and other
personal property, which are not subject to any Lien
permitted to be granted under Section 4.07 in favor of any
third party lender providing financing for the acquisition
or the lease thereof), and (ii) the pledge by the Company of
all of the outstanding shares of Capital Stock of CPPI
pursuant to the Company Pledge Agreement. The obligations
of CPPI under the CPPI Guaranty will be secured by (x) a
collateral assignment of the Wraparound Mortgage and (y) 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 a working capital facility
in an amount of up to $7.5 million. The Notes will also be
secured by a mortgage representing a first priority lien on
the Contemplated Expansion. In the case of a Project
Expansion, the Notes will be secured by a lien that is
senior or pari passu with the liens securing any
Indebtedness incurred to finance the costs of such
expansion, as contemplated in Section 4.07 hereof. The
collateral for the Notes will not include (i) certain gaming
equipment which has been financed by third parties and is
pledged to those parties or (ii) any New Project.
Each Holder of the Notes, by its acceptance
thereof, consents and agrees to the terms of the Related
Documents (including without limitation the provisions
providing for the release of the collateral provided for
herein and therein) as the same may be in effect or may be
amended from time to time in accordance with their terms and
authorizes and directs the Trustee and the Collateral
Trustee to perform their respective obligations and exercise
their rights under the Related Documents in accordance
therewith; provided, however, that if any provision of the
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Related Documents limits, qualifies or conflicts with the
duties imposed by the provisions of the TIA, the TIA shall
control.
Section 10.02. Recording, etc. The Guarantors
and the Company will cause the applicable Related Documents
including the Mortgage and any financing statements, all
amendments or supplements to each of the foregoing and any
other similar security documents as necessary, to be
registered, recorded and filed and/or re-recorded, re-filed
and renewed in such manner and in such place or places, if
any, as may be required by law or reasonably requested by
the Trustee or the Collateral Trustee in order fully to
preserve and protect the Lien of the Collateral Trustee
securing (for the ratable benefit of the Noteholders) the
Notes or the Subsidiary Guaranties and to effectuate and
preserve the security of the Noteholders and all rights of
the Trustee and the Collateral Trustee.
The Company, the Guarantors and any other obligors
shall furnish the Trustee and the Collateral Trustee:
(a) promptly after the execution and delivery of
this Indenture, and promptly after the execution and
delivery of any other instrument of further assurance
or amendment, an Opinion of Counsel either (i) stating
that, in the opinion of such counsel, this Indenture,
the Mortgage and applicable Related Documents and all
other instruments of further assurance or amendment
have been properly recorded, registered and filed, as
appropriate, to the extent necessary to make effective
the Lien intended to be created by such Related
Documents and reciting the details of such action or
referring to prior Opinions of Counsel in which such
details are given, and stating that as to such Related
Documents and such other instruments such recording,
registering and filing are the only recordings,
registerings and filings necessary to give notice
thereof and that no re-recordings, re-registerings or
re-filings are necessary to maintain such notice, and
further stating that all financing statements and
continuation statements have been executed and filed
that are necessary fully to preserve and protect the
rights of the Noteholders and the Trustee hereunder and
under the Related Documents or (ii) stating that, in
the opinion of such counsel, no such action is
necessary to make any other Lien created under any of
the Related Documents effective as intended by such
Related Documents; and
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(b) within 30 days after January 1 in each year
beginning with the year 1995, an Opinion of Counsel,
dated as of such date, either (i) stating that, in the
opinion of such counsel, such action has been taken
with respect to the recording, registering, filing,
re-recording, re-registering and re-filing of this
Indenture and all supplemental indentures, financing
statements, continuation statements or other
instruments of further assurance as is necessary to
maintain the Lien of this Indenture and the Related
Documents and reciting the details of such action or
referring to prior Opinions of Counsel in which such
details are given, and stating that all financing
statements and continuation statements have been
executed and filed that are necessary fully to preserve
and protect the rights of the Holders and the Trustee
hereunder and under the Related Documents or (ii)
stating that, in the opinion of such counsel, no such
action is necessary to maintain such Lien.
Section 10.03. Protection of the Trust Estate.
The Trustee and the Collateral Trustee shall have the power
to enforce the obligations of the Guarantors, the Company or
any Subsidiary under this Indenture or the Related
Documents, to institute and maintain such suits and
proceedings as it may deem expedient to prevent any
impairment of the Collateral under any of the Related
Documents and in the profits, rents, revenues and other
income arising therefrom, including the power to institute
and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of,
or compliance with, such enactment, rule or order would
impair any Collateral or be prejudicial to the interests of
the Noteholders or the Trustee, to the extent permitted
thereunder. Upon receipt of notice that the Company or CPPI
is not in compliance with any of the requirements of the
Mortgage with respect to maintenance of insurance, the
Trustee may, but shall have no obligation to purchase, at
the Company's expense, such insurance coverage necessary to
comply with the appropriate section of the respective
Mortgage.
Section 10.04. Release of Lien. (a) Subject to
the provisions of Section 9.02(a), Collateral may be
released from the Lien and security created by this
Indenture and the Related Documents at any time or from time
to time in accordance with the provisions of the Related
Documents, the TIA and as provided hereby.
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(b) Upon the request of the Company pursuant to
an Officers' Certificate and an Opinion of Counsel
certifying that all conditions precedent hereunder have been
met (and at the sole cost and expense of the Company) and
upon the satisfaction of such conditions precedent
hereunder, the Trustee or the Collateral Trustee, as the
case may be, may release (i) Collateral which is the subject
of an Ordinary Course Sale or an Asset Sale, provided that
the Net Proceeds from any such Asset Sale are applied in
accordance with Section 4.10 hereof, (ii) Collateral which
may be released pursuant to Section 5.02 of the Collateral
Trust Agreement, (iii) Collateral which may be released with
the consent of the Noteholders pursuant to Article 9 hereof,
and (iv) all Collateral (except as provided in Article 8
hereof) upon discharge or defeasance of this Indenture in
accordance with Article 8 hereof.
(c) Upon receipt of such Officers' Certificate,
the Trustee or the Collateral Trustee, as the case may be,
must execute, deliver or acknowledge any necessary or proper
instruments of termination, satisfaction or release to
evidence the release of any Collateral permitted to be
released pursuant to this Indenture or the Related
Documents.
(d) The release of any Collateral from the terms
of this Indenture and the Related Documents will not be
deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent
the Collateral is released pursuant to the terms hereof. To
the extent applicable, the Company, the Guarantors and any
other obligor shall cause TIA section 314(d) relating to the
release of property from the Lien arising out of the Related
Documents to be complied with. Any certificate or opinion
required by TIA section 314(d) may be made by the Chairman of the
Board, any Vice Chairman of the Board, the President, any
Vice President, the Treasurer or Secretary of the Company or
the Guarantors, provided, however, that to the extent
required TIA section 314(d), any such certificate or opinion shall
be made by an independent engineer, appraiser or other
expert (as such terms are set forth in TIA section 314(d)), who is
not an Affiliate of the Company or the Guarantors.
Whenever Collateral is to be released pursuant to
this Section 10.04, the Trustee or the Collateral Trustee,
as the case may be, will execute any reasonable document or
termination statement necessary to release the Lien of this
Indenture and Related Documents.
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ARTICLE XI
Subsidiary Guaranties
Section 11.01. Subsidiary Guaranties. Subject to
the provisions of this Article 11, each Guarantor hereby
unconditionally guarantees (such guaranty being the
"Subsidiary Guaranties") to each Noteholder of a Note
authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the
validity and enforceability of this Indenture, the Notes or
the obligations of the Company under this Indenture or the
Notes, that: (i) the principal of, premium if any, and
interest on the Notes will be paid in full when due, whether
at the maturity or interest payment or redemption or
repurchase date, by acceleration, call for redemption or
otherwise, and interest on the overdue principal of and
interest, if any, on the Notes and all other obligations of
the Company to the Noteholders or the Trustee under this
Indenture, the Related Documents, or the Notes will be
promptly paid in full or performed, all in accordance with
the terms of this Indenture, the Related Documents, and the
Notes; (ii) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, they
will be paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at
maturity, by acceleration or otherwise; and (iii) the
payment of any and all reasonable costs and expenses
(including reasonable attorneys' fees) incurred by the
Trustee or any Noteholder in enforcing any rights under the
Subsidiary Guaranties and any other amounts payable by the
Company to the Trustee pursuant to this Indenture. Failing
payment when due of any amount so guarantied for whatever
reason, the Guarantors will be obligated to pay the same
whether or not such failure to pay have become an Event of
Default which could cause acceleration pursuant to Section
6.02 hereof. The Guarantors agree that this is a guaranty
of payment and not a guaranty of collection. The
obligations of each Guarantor under its Subsidiary Guarantee
will rank senior in right of payment to all subordinated
indebtedness of such Guarantor and pari passu in right of
payment to all other senior indebtedness of such Guarantor.
The obligations of each Guarantor hereunder shall
be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(i) any extension, compromise, waiver or
release in respect of any obligation of the
Company or any other Guarantor under this
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Indenture or any Note, by operation of law or
otherwise;
(ii) any modification or amendment of or
supplement to this Indenture or any Note;
(iii) any release, non-perfection or
invalidity of any direct or indirect security for
any obligation of the Company or any other
Guarantor under this Indenture or any Note;
(iv) any change in the corporate existence,
structure or ownership of the Company or any other
Guarantor, or any insolvency, bankruptcy,
reorganization or other similar proceeding
affecting the Company or any other Guarantor or
their respective assets or any resulting release
or discharge of any obligation of the Company or
any other Guarantor contained in this Indenture or
any Note;
(v) the existence of any claim, set-off or
other rights which such Guarantor may have at any
time against the Company, any other Guarantor, the
Trustee, the Partnership, any Noteholder or any
other Person, whether in connection herewith or
any unrelated transactions; provided that nothing
herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability
relating to or against the Company or any other
Guarantor for any reason of this Indenture or any
Note, or any provision of applicable law or
regulation purporting to prohibit the payment by
the Company or any other Guarantor of the
principal of or premium or interest on any Note or
any other amount payable by the Company or any
other Guarantor under this Indenture; or
(vii) any other act or omission to act or
delay of any kind by the Company, any other
Guarantor, the Trustee, the Partnership, any
Noteholder or any other Person or any other
circumstance whatsoever which might, but for the
provisions of this paragraph, constitute a legal
or equitable discharge of such Guarantor's
obligations hereunder.
SECTION 11.02. Discharge Only Upon Payment In
Full; Reinstatement In Certain Circumstances. Subject to
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Section 4.15(b), each Guarantor's obligations hereunder
shall remain in full force and effect until the Indenture
shall have terminated and the principal of and premium and
interest on the Notes and all other amounts payable by the
Company under this Indenture shall have been paid in full.
If at any time any payment of the principal of or premium or
interest on any Note or any other amount payable by the
Company under this Indenture is rescinded or must be
otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Company or otherwise,
each Guarantor's obligations hereunder with respect to such
payment shall be reinstated as though such payment had been
due but not made at such time.
SECTION 11.03. Waiver by the Guarantors. Each
Guarantor irrevocably waives acceptance hereof, presentment,
demand, protest and any notice not provided for herein, as
well as any requirement that at any time any action be taken
by any Person against the Company or any other Person.
SECTION 11.04. Subrogation; Contribution.
(a) Upon making any payment hereunder in respect of its
Guarantee, each Guarantor (i) shall be subrogated to the
rights of the payee against the Company with respect to such
payment and (ii) shall be entitled to a contribution from
each other Guarantor in an amount pro rata, based upon the
net assets of each Guarantor, at the time of the payment
giving rise to such right of contribution (determined in
accordance with generally accepted accounting principles as
in effect on the date of such determination). Upon making
any contribution hereunder to a Guarantor that has made any
payment in respect of its Guarantee (a "Paying Guarantor"),
each Guarantor shall become vested with the Paying
Guarantor's subrogation rights against the Company to the
extent of the amount of such contribution.
(b) No Guarantor shall enforce any right against
the Company or any other Guarantor or receive any payment by
way of subrogation or contribution until all amounts of
principal of and premium and interest on the Notes and all
other amounts payable by the Company under this Indenture
have been paid in full.
SECTION 11.05. Stay of Acceleration. If
acceleration of the time for payment of any amount payable
by the Company under this Indenture or any Note is stayed
upon the insolvency, bankruptcy or reorganization of the
Company, all such amounts otherwise subject to acceleration
under the terms of this Indenture shall nonetheless be
payable by each Guarantor hereunder forthwith on demand by
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the Trustee made at the request of the requisite number of
Noteholders.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls. If
any provision of this Indenture limits, qualifies, or
conflicts with another provision which is required to be
included in this Indenture by the TIA, the required
provision shall control. If any provision of this Indenture
modifies or excludes any provision of the Trust Indenture
that may be so modified or excluded, the latter provision
shall be deemed to apply to this Indenture as so modified or
excluded, as the case may be.
Section 12.02. Notices. Any notice or
communication by the Company, the Guarantors or the Trustee
to the other parties hereto is duly given if in writing and
delivered in Person or mailed by first-class mail to such
party's address stated in Section 12.10 hereof. The
Company, the Guarantors or the Trustee by notice to any
other party hereto may designate additional or different
addresses for subsequent notices or communications.
Any notice or communication to a Noteholder shall
be effectively given if mailed by first-class mail to the
address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or
any defect in it shall not affect its sufficiency with
respect to other Noteholders.
Except for a notice to the Trustee, which is
deemed to be given only when received, if a notice or
communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company or the Guarantors mails a notice or
communication to Noteholders, it shall mail a copy to the
Trustee, and each Agent at the same time.
All other notices or communications shall be in
writing.
Section 12.03. Communication by Noteholders with
Other Noteholders. Noteholders may communicate pursuant to
TIA section 312(b) with other Noteholders with respect to their
rights under this Indenture or the Notes. The Company, the
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Guarantors, the Trustee, the Registrar and anyone else shall
have the protection of TIA section 312(c).
Section 12.04. Certificate and Opinion as to
Conditions Precedent. Upon any request or application by
the Company or the Guarantors to the Trustee to take any
action under this Indenture, the Company or the Guarantors
shall furnish to the Trustee at the request of the Trustee:
(a) an Officers' Certificate stating that, in the
opinion of the signers, all conditions precedent, if
any, provided for in this Indenture relating to the
proposed action have been complied with in all material
respects; and
(b) an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent
have been complied with in all material respects.
Section 12.05. Statements Required in Certificate
or Opinion. Each certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Indenture shall include:
(a) a statement that the person making such
certificate or opinion has read such covenant or
condition;
(b) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based;
(c) a statement that, in the opinion of such
person, he has made such examination or investigation
as is necessary to enable him to express an informed
opinion as to whether or not such covenant or condition
has been complied with in all material respects; and
(d) a statement as to whether or not, in the
opinion of such person, such condition or covenant has
been complied with in all material respects;
provided, however, that with respect to matters of law, an
Officers' Certificate may be based upon an Opinion of
Counsel, unless the signers know, or in the exercise of
reasonable care should know, that such Opinion of Counsel is
erroneous, and provided further, that with respect to
matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials,
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unless the signer knows, or in the exercise of reasonable
care should know, that any such document is erroneous.
Section 12.06. Rules by Trustee, the Registrar
and Paying Agents. The Trustee may make reasonable rules
for action by or a meeting of Noteholders. Any Agent may
make reasonable rules and set reasonable requirements for
its functions.
Section 12.07. Legal Holidays. A "Legal Holiday"
is a Saturday, a Sunday or a day on which banking
institutions in the State of New York are not required to be
open. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period.
Section 12.08. No Recourse Against Others. A
director, officer, employee or shareholder as such of any of
the Company or the Guarantors shall not have any liability
for any obligations of the Company or the Guarantors under
the Notes, this Indenture or any Related Document or for any
claim based on, in respect of or by reason of such
obligations or their creation. Each Noteholder by accepting
a Note irrevocably waives and releases all such liability.
The waiver and release are part of the consideration for the
issuance of the Notes.
Section 12.09. Counterparts. This Indenture may
be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
Section 12.10. Variable Provisions. The Company
initially appoints the Trustee as Paying Agent and
Registrar. The Trustee will initially act as Authenticating
Agent.
The first certificate pursuant to Section 4.03
hereof shall be for the fiscal year ending on December 31,
1994.
The reporting date for Section 7.06 hereof is
May 15 of each year. The first reporting date is May 15,
1994.
The Trustee or, in the case of a corporation
included in a bank holding company system, shall, always
have a combined capital and surplus of at least $25,000,000
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as set forth in its most recent published annual report of
condition.
The Company's address:
The Claridge Hotel & Casino Corporation
Boardwalk and Park Place
Atlantic City, New Jersey 08401
Attn: Raymond A. Spera
Frank Bellis, Jr., Esq.
CPPI's address is:
The Claridge at Park Place, Incorporated
Boardwalk and Park Place
Atlantic City, New Jersey 08401
Attn: Raymond A. Spera
Frank Bellis, Jr., Esq.
The Trustee's address is:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attn: Corporate Trust and Agencies
Administration
Section 12.11. Governing Law. The internal laws
of the State of New York shall govern this Indenture, the
Notes and the Subsidiary Guaranties, without regard to the
conflicts of laws rules thereof. Each of the Company and
the Guarantors hereby irrevocably submits to the non-
exclusive jurisdiction of any New York State court sitting
in the First Judicial Department or any federal court in the
Southern District of New York in respect of any suit, action
or proceeding arising out of or in relation to this
Indenture or the Subsidiary Guaranties if such suit, action
or proceeding is commenced by the trustee or the Noteholders
in such jurisdiction or if the Company or any of the
Guarantors commences any such suit, action or proceeding,
and each of the Company or any of the Guarantors commences
any such suit, action or proceeding, and each of the Company
and the Guarantors irrevocably agrees that all claims in
respect of any such suit, action or proceeding commenced in
such jurisdiction by such parties may be heard and
determined in any such court. Each of the Company and the
Guarantors irrevocably waives, to the fullest extent it may
effectively to do so under applicable law, any objection
which it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any
such court and any claim that any such suit action or
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proceeding brought in any such court has been brought in an
inconvenient forum. The two immediately preceding sentences
shall not be read to prohibit the Trustee or the Noteholders
from commencing any action in any other jurisdiction which
the Trustee or the Noteholders, as the case may be, may deem
appropriate. The Company and CPPI irrevocably consent to
the service of any and all process in any such action or
proceeding in or of the State of New York by the delivery of
copies of such process to the Company or CPPI, as the case
may be, at their respective addresses specified in Section
12.10.
Section 12.12. No Adverse Interpretation of Other
Agreements. This Indenture may not be used to interpret
another indenture, loan or debt agreement of the Company or
a Subsidiary except as expressly state herein. Any such
indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 12.13. Successors. All agreements of the
Company in this Indenture and the Notes shall bind its
successor. All agreements of the Trustee in this Indenture
shall bind its successor.
Section 12.14. Severability. In case any
provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 12.15. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table, and headings
of the Articles and Sections of this Indenture have been
inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
Section 12.16. Benefits of Indenture. Nothing in
this Indenture or the Notes, express or implied, shall give
to any person, other than the parties hereto and there
successors hereunder, and the Noteholders, any benefit or
any legal or equitable right, remedy or claim under this
Indenture.
Section 12.17. Amendment to Related Documents.
Unless the context otherwise requires, any references to any
of the Related Documents or any document the form of which
is set forth as an Exhibit hereto shall be deemed to be a
reference to such Related Document or other document as it
may be amended, supplemented or modified from time to time
as permitted by this Indenture.
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Section 12.18. Casino Control Act.
Notwithstanding the provisions of Section 12.12 hereof, each
of the provisions of this Indenture is subject to and shall
be enforced in compliance with the provisions of the Casino
Control Act and the regulations promulgated thereunder,
unless such provisions are in conflict with the TIA, in
which case the TIA shall control. The Notes are to be held
subject to the conditions that if a holder thereof is found
to be disqualified by the Casino Control Commission pursuant
to the provisions of the Casino Control Act, such holder
shall dispose of the Notes in accordance with the provisions
of Section 3.08 hereof. The Company shall have the right
to repurchase the Notes at the lowest of (i) the principal
amount thereof, (ii) the amount which the disqualified
Holder or beneficial owner paid for the Note(s), together
with accrued interest up to the date of the determination of
disqualification, or (iii) the market value of such Note(s),
in the event that the Casino Control Commission disapproves
a transfer of the Notes in accordance with the provisions of
the Casino Control Act.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused
this Indenture to be duly executed, all as of the date first
written above.
THE CLARIDGE HOTEL AND CASINO
CORPORATION
as Issuer
(SEAL) By: _____________________________
Name:
Title
THE CLARIDGE AT PARK PLACE,
INCORPORATED
as Guarantor
(SEAL) By: ______________________________
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY
as Trustee
By: ______________________________
Name:
Title
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THE CLARIDGE HOTEL AND CASINO CORPORATION
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
Personally appeared before me, the undersigned
authority in and for the said county and state, on this ____
day of __________, 1994, within my jurisdiction, the within
named __________________________ who acknowledged that he is
__________________________ of The Claridge Hotel and Casino
Corporation, a New York Corporation, and that for and on
behalf of the said corporation, and as its act and deed he
executed the above and foregoing instrument, after first
having been duly authorized by said corporation so to do.
____________________________
NOTARY PUBLIC
My Commission expires:
________________________
(Affix official seal, if applicable)
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THE CLARIDGE AT PARK PLACE, INCORPORATED
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
Personally appeared before me, the undersigned
authority in and for the said county and state, on this ____
day of _______________, 1994, within my jurisdiction, the
within named __________________________ who acknowledged
that he is _________________________ of The Claridge at Park
Place, Incorporated, a New Jersey corporation, that for and
on behalf of the said corporation, and as its act and deed
he executed the above and foregoing instrument, after first
having been duly authorized by said corporation so to do.
____________________________
NOTARY PUBLIC
My Commission expires:
________________________
(Affix official seal, if applicable)
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<PAGE>
IBJ SCHRODER BANK & TRUST COMPANY
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
Personally appeared before me, the undersigned
authority in and for the said county and state, on this ____
day of _______________, 1994, within my jurisdiction, the
within named __________________________ who acknowledged
that (he)(she) is ________________________ of IBJ Schroder
Bank & Trust Company, a New York banking corporation and
that for and on behalf of the said corporation, and as its
act and deed (he)(she) executed the above and foregoing
instrument, after first having been duly authorized by said
corporation so to do.
____________________________
NOTARY PUBLIC
My Commission expires:
________________________
(Affix official seal, if applicable)
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EXHIBIT A
(Face of Note)
THE CLARIDGE HOTEL AND CASINO CORPORATION
__% First Mortgage Note due 2002
No.____________ $______________
The Claridge Hotel and Casino Corporation, a New York corporation
(hereinafter called the "Company", which term includes any successor entity
under the Indenture hereinafter referred to), for value received, hereby
promises to pay ________________ or registered assigns, the principal sum of
________________ Dollars on ______________, 2002.
Interest Payment Dates: _________ and _________, commencing __________, 1994
Record Dates: _________ and _________
Reference is hereby made to the further provisions of this Note
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers and a facsimile of
its seal to be affixed hereto or imprinted hereto.
THE CLARIDGE HOTEL AND CASINO
CORPORATION
By: ___________________________
By: ___________________________
(SEAL)
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred
to in the within mentioned Indenture
IBJ Schroder Bank & Trust OR _____________________________,
Company, as Trustee as Authenticating Agent
By: _________________________ By: _________________________
Authorized Signatory
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(Reverse of Note)
___% FIRST MORTGAGE NOTE DUE 2002
1. Interest. The Claridge Hotel and Casino
Corporation (the "Company") promises to pay interest on the
principal amount of this Note at the rate and in the manner
specified below. Interest on this Note will accrue at ___% per
annum from the date this Note is issued until maturity and will
be payable semiannually in cash on ___________ and ____________
of each year, or if any such day is not a Business Day on the
next succeeding Business Day (each an "Interest Payment Date").
Interest on this Note will accrue from the most recent date on
which interest has been paid or, if no interest has been paid,
from ____________, 1994, provided that the first Interest Payment
Day shall be ____________, 1994. The Company shall pay interest
on overdue principal and premium, if any, from time to time on
demand at the rate of 2% per annum in excess of the interest rate
then in effect and shall pay interest on overdue installments of
interest (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. Method of Payment. The Company will pay interest
on this Note (except default interest) to the Person who is the
registered Holder of this Note at the close of business on the
record date for the next Interest Payment Date even if such Note
is cancelled after such record date and to collect principal
payments on such Notes. The Company will pay principal, premium,
if any, and interest in money of the United States that at the
time of payment is legal tender for payment of public and private
debts. However, the Company may pay principal, premium, if any,
and interest by check payable in such money, and any such check
may be mailed to a Holder's registered address.
3. Paying Agent and Registrar. IBJ Schroder Bank &
Trust Company (the "Trustee") will initially act as the Paying
Agent and Registrar. The Company may appoint additional paying
agents or co-registrars, and change the Paying Agent, any
additional paying agent, the Registrar or any co-registrar
without prior notice to any Holder. The Company or any of its
Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an
Indenture, dated as of __________, 1994 (the "Indenture"), by and
among the Company, as issuer of the Notes, The Claridge at Park
Place, Incorporated as guarantor of the Company's obligations
under the Indenture and the Notes, and the Trustee. The terms of
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<PAGE>
the Note include those stated in this Indenture and those made
part of this Indenture by reference to the Trust Indenture Act of
1939 (15 U.S. Code sectionsection 77aaa-77bbbb) as in effect on the date of
the original issuance of the Notes (the "Trust Indenture Act").
The Notes are subject to, and qualified by, all such terms,
certain of which are summarized herein, and Holders are referred
to this Indenture and the Trust Indenture Act for a statement of
such terms (all capitalized terms not defined herein shall have
the meanings assigned them in this Indenture). The Notes are
senior secured general obligations of the Company limited to
$85,000,000 in aggregate principal amount.
5. Redemption Provisions. The Notes are not
redeemable at the Company's option prior to ________, 1998 except
as may be required by a Gaming Authority as provided below. The
Notes will be subject to redemption at the option of the Company,
in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed
during the twelve-month period beginning on __________ of the
years indicated below:
Year Percentage
---- ----------
1998 . . . . . . . . . . . . ___%
1999 . . . . . . . . . . . . ___%
2000 . . . . . . . . . . . . ___%
2001 and thereafter . . . . . 100%
If any Gaming Authority requires that a holder or
beneficial owner of Notes must be licensed, qualified or found
suitable under any applicable gaming law and the holder or
beneficial owner fails to apply for a license, qualification or a
finding of suitability within 30 days after being requested to do
so by the Gaming Authority, or if such holder or such beneficial
owner is not so licensed, qualified or found suitable, the
Company shall have the right, at is option, (i) to require such
holder or beneficial owner to dispose of such holder's or
beneficial owner's Notes without 30 days of receipt of such
notice of such finding by the applicable Gaming Authority or such
earlier date as may be ordered by such Gaming Authority or (ii)
to call for the redemption of the Notes of such holder or
beneficial owner at the lesser of the principal amount thereof or
the price at which such holder or beneficial owner acquired the
Notes, together with, in either case, accrued interest to the
earlier of the date of redemption or the date of the finding of
unsuitability by such Gaming Authority, which may be less than 30
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days following the notice or redemption, if so ordered by such
Gaming Authority. The Company is required under the Indenture to
notify the Trustee in writing of any such redemption as soon as
practicable. Any holder or beneficial owner of Notes applying
for a license, qualification or a finding of suitability must pay
all costs of the licensure or investigation for such
qualification or finding of suitability.
6. Mandatory Redemption. The Notes are subject to
mandatory redemption if at any time the Company determines that
principal payments scheduled to be made on the Wraparound
Mortgage (other than principal payments scheduled to be made at
the final maturity of the Wraparound Mortgage) during the 180-day
period immediately following that determination will cause the
aggregate principal amount of the indebtedness secured by the
Wraparound Mortgage to be less than the aggregate principal
amount of the Notes, in an amount which, after giving effect to
the redemption and the principal payments (other than principal
payments scheduled to be made at the final maturity of the
Wraparound Mortgage) scheduled to be made during the 180-day
period on the indebtedness secured by the Wraparound Mortgage,
will cause the aggregate principal amount of the Notes to be less
than the aggregate principal amount of indebtedness secured by
the Wraparound Mortgage. Any Notes redeemed in this way will be
selected by lot. The redemption price will be 100% of principal
amount, plus accrued and unpaid interest to the date of
redemption, plus (i) if so redeemed prior to __________, 1998,
the Applicable Premium or (ii) if so redeemed on or after _____,
1998 the premium, if any, that would otherwise be payable in the
case of an optional redemption by the Company on such date. The
maximum aggregate principal amount of Notes that may be redeemed
pursuant to this provision is $10 million.
Except as provided above and as set forth below under
"Annual Excess Cash Tender" and "Redemption or Repurchase at the
Option of Holders," the Company is not required to make mandatory
redemption or sinking fund payment with respect to the Notes.
7. Selection and Notice. If less than all of the
Notes are to be redeemed at any time, selection of Notes for
redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if
any, on which the Notes are listed, or, if the Notes are not so
listed, on a pro rata basis, by lot or by such method as the
Trustee shall deem fair and appropriate, provided that no Notes
of $1,000 or less shall be redeemed in part. Notice of
redemption shall be mailed by first class mail at least 30 but
not more than 60 days before the redemption date to each holder
of Notes to be redeemed at its registered address. If any Note
is to be redeemed in part only, the notice of redemption that
relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount
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<PAGE>
equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon cancellation of the original
Note. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
8. Annual Excess Cash Tender. Beginning in 1995 and
annually thereafter, the Company will make an offer (an "Excess
Cash Offer") to all holders of Notes to purchase the maximum
principal amount of Notes that may be purchased out of an amount
equal to 50% of the Company's Excess Cash from the immediately
preceding fiscal year (the "Available Excess Funds"), at an offer
price in cash in an amount equal to 100% of the outstanding
principal amount thereof (the "Cash Offer Amount"). The
Commencement Date for any Excess Cash Offer shall be the date
specified in a notice given by the Company to the Trustee in
accordance with Section 3.11(d) hereof and shall be not later
than 30 days after the publication of the Company's audited
financial statements for the immediately preceding fiscal year.
To the extent that the aggregate amount of Notes tendered
pursuant to an Excess Cash Offer is less than the Available
Excess Funds, the Company may use the remaining amount for
general corporate purposes. If the aggregate principal amount of
Notes tendered by holders in response to an Excess Cash Offer
exceeds the amount of Available Excess Funds, the Trustee will
select the Notes to be purchased on a pro rata basis. No Excess
Cash Offer shall be required to be made to the extent the Excess
Cash for the immediately preceding fiscal year is less than $10
million. Excess Cash from any fiscal year shall not be carried
forward or be used to compute Excess Cash in any subsequent
fiscal year.
9. Redemption or Repurchase at the Option of the
Holder. (a) Upon the occurrence of a Change of Control, each
holder of Notes shall have the right to require the Company to
repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at a purchase
price equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase
(the "Change of Control Payment"). Within 30 days following any
Change of Control, the Company shall mail a notice to each holder
specifying certain matters required by Section 4.14 of the
Indenture.
(b) Upon the receipt of any Net Proceeds from any
Asset Sale that are not reinvested as provided in Section 4.10(b)
of the Indenture and where the aggregate amount of such Net
Proceeds (the "Excess Proceeds") exceeds $10 million, the Company
will make an offer (an "Asset Sale Offer") to (i) all holders of
Notes to purchase the maximum principal amount of Notes that may
be purchased out of the Excess Proceeds or (ii) at the Company's
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option, make an Asset Sale Offer to redeem outstanding Notes and
Pari Passu Indebtedness, on a pro rata basis in relation to the
outstanding aggregate principal amount of such Indebtedness and
the aggregate principal amount of the Notes then outstanding, in
each case at an offer price in cash in an amount equal to 100% of
the outstanding principal amount thereof plus accrued and unpaid
interest, if any, to the date fixed for the closing of such
offer, in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer to purchase is less than
the Excess Proceeds, the Company may use such deficiency for
general corporate purposes. If the aggregate principal amount of
Notes surrendered by holders thereof exceeds the amount of Excess
Proceeds, the Trustee will select the Notes to be purchased on a
pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds will be reset at zero.
(c) Holders may tender all or, subject to Section ___
below, any portion of their Notes in an Offer by completing the
form below entitled "OPTION OF HOLDER TO ELECT PURCHASE".
(d) Promptly after consummation of any Offer, (i) the
Paying Agent shall mail to each Holder of Notes or portions
thereof accepted for payment an amount equal to the purchase
price for, plus any accrued and unpaid interest on, such Notes,
(ii) with respect to any tendered Note not accepted for payment
in whole or in party, the Trustee shall return such Note to the
Holder thereof, and (iii) with respect to any Note accepted for
payment in part, the Trustee shall authenticate and mail to each
such Holder a new Note equal in principal amount to the
unpurchased portion of the tendered Note.
(e) The Company will (i) announce the results of the
Offer to Holders on or as soon as practicable after the Purchase
Date, and (ii) comply with Rule 14E-1 under the Securities
Exchange Act of 1934, as amended, and any other securities laws
and regulations to the extent applicable to any Offer.
10. Persons Deemed Owners. The registered holder of a
Note may be treated as its owner for all purposes.
11. Amendments, Supplements and Waivers. Except as
provided in the next succeeding paragraph, the Indenture or the
Notes may be amended or supplemented with the consent of the
holders of at least a majority in principal amount of the Notes
then outstanding (including consents obtained in connection with
a tender offer or exchange offer for Notes), and any existing
default or compliance with any provision of the Indenture or the
Notes may be waived with the consent of the holders of a majority
in principal amount of the then outstanding Notes (including
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consents obtained in connection with a tender offer or exchange
offer for Notes).
Without the consent of each holder affected, an
amendment or waiver may not (with respect to any Notes held by a
non-consenting holder of Notes) (i) reduce the principal amount
of Notes whose holders must consent to an amendment, supplement
or waiver; (ii) reduce the principal of or change the fixed
maturity of any Note; (iii) alter the provisions with respect to
the redemption or repurchase of the Notes in any manner adverse
to the holders; (iv) reduce the rate of or change the time for
payment of interest on any Note; (v) waive a Default or Event of
Default in the payment of principal of or premium, if any, or
interest on the Notes (except a rescission of acceleration of the
Notes by the holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default
that resulted from such acceleration); (vi) make any Note payable
in money other than that stated in the Notes; (vii) make any
change in the provisions of the Indenture relating to waivers of
past Defaults or the right so holders of Notes to receive
payments of principal of or interest on the Notes or make any
change in the foregoing amendment and waiver provisions; (viii)
waive a redemption payment with respect to any Note; or (ix)
directly or indirectly release the Liens on all or substantially
all of the Existing Hotel Casino securing the obligations under
the Indenture, the Notes or any Subsidiary Guarantee thereof or
directly or indirectly release the Liens on all or substantially
all of the Collateral securing the obligations under the
Indenture, the Notes or any Subsidiary Guarantee thereof.
Notwithstanding the foregoing, without the consent of
any holder of Notes, the Company and the Trustee may amend or
supplement the Indenture or the Notes to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the
assumption of the Company's or any Guarantor's obligations to
holders of Notes in the case of a merger or consolidation, to
provide any additional Collateral for the benefit of the holders
of Notes, to make any change that would provide any additional
rights or benefits to the holders of Notes or that does not
adversely affect the legal rights under the Indenture of any such
holder, or to comply with requirements of the Commission in order
to effect, or maintain the qualification of the Indenture under
the Trust Indenture Act or to execute and deliver any documents
necessary or appropriate to release Liens on any Collateral as
permitted by the Indenture.
12. Security. The Notes are secured by (i) a non-
recourse mortgage granted by the Partnership representing a first
priority lien on the Hotel Assets (subject to certain permitted
exceptions) and (ii) a pledge granted by the Company of all the
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outstanding shares of capital stock of CPPI. The obligations of
CPPI under its guarantee are secured by (x) a collateral
assignment of the Wraparound Mortgage and (y) 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 a working capital facility in an amount of
up to $7.5 million. Each holder of a Note consents and agrees to
all of the terms and provisions of each of the Related Documents,
as the same may be amended from time to time to pursuant to the
provisions of the Related Documents and this Indenture,
authorizes and directs the Trustee and the Collateral Trustee to
enter into each of the Related Documents to which it is a party
and to perform their respective obligations and exercise their
respective rights thereunder and in accordance therewith, and
agrees that the Collateral may from time to time be released from
the Lien of the Indenture and the Related Documents in accordance
therewith without notice to the holder.
13. Defaults and Remedies. Events of Default include:
(i) default in payment when due at maturity, upon any redemption,
pursuant to the provisions described under "Annual Excess Cash
Tender," "Redemption or Repurchase at the Option of Holders," by
declaration or otherwise, of principal on the Notes by the
Company; (ii) default for 30 days in the payment when due of
interest on the Notes or any other amount payable to holders
under the Indenture by the Company; (iii) failure by the Company
or any Subsidiary thereof or the Partnership for 30 days to
comply with any of the other provisions of the Indenture or the
Related Documents; (iv) default under any mortgage, indenture or
instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness for money borrowed by
the Company or any Restricted Subsidiary, or the payment of which
is guaranteed by the Company or any Restricted Subsidiary,
whether such indebtedness or guarantee now exists, or is created
after the date of the Indenture, which default (A) is caused by a
failure to pay when due principal or interest on such
indebtedness within the grace period provided in such
indebtedness (which failure continues beyond any applicable grace
period) (a "Payment Default") or (B) results in the acceleration
of such indebtedness prior to its express maturity and, in each
case, the principal amount of any such indebtedness, together
with the principal amount of any other such indebtedness under
which there has been a Payment Default or the maturity of which
has been so accelerated, aggregates $2.5 million or more; (v)
failure by the Company or any Restricted Subsidiary to pay any
final judgments aggregating in excess of $5 million, which
judgments are not stayed within 60 days after their entry; (vi)
an event of default under any of the Related Documents; (vii)
except as permitted by the Indenture, any guarantee of the Notes
is held in any judicial proceeding to be unenforceable or invalid
or ceases for any reason to be in full force and effect or any
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guarantor, or any person acting on behalf of any guarantor,
denies or disaffirms its obligations under its guarantee; (viii)
the loss or suspension for more than 90 consecutive days of any
license required for the operation of the Existing Hotel Casino;
(ix) the cessation of business at the Existing Hotel Casino
beyond such time period covered by business interruption
insurance; (x) any material default of the Partnership under the
Wraparound Mortgage other than the failure of the Partnership to
make payments of principal when due upon maturity so long as CPPI
may exercise a right of offset in respect thereof under the
Claridge Lease, which default continues uncured for a period of
30 days; (xi) any material default of CPPI or the Partnership
under the Claridge Lease, which default continues uncured for a
period of 30 days (other than by reason of the exercise by CPPI
of a right of offset); (xii) failure by the Company to own,
directly or indirectly, 100% of the outstanding capital stock of
CPPI; (xiii) the termination of the Claridge Lease other than a
termination in connection with a Unification Transaction; and
(xiv) certain events of bankruptcy or insolvency with respect to
the Company, the Partnership or any of the Company's Restricted
Subsidiaries. If an Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of
the Notes may declare all outstanding Notes to be due and payable
immediately in an amount equal to the principal amount of and
premium, if any, on such Notes, plus any accrued and unpaid
interest; provided, however, that in the case of an Event of
Default arising from certain events of bankruptcy or insolvency,
the principal amount of any premium on, if any, and any accrued
and unpaid interest on, the Notes becomes due and payable
immediately without further action or notice. Subject to certain
exceptions, Holders of a majority in aggregate principal amount
of the then outstanding Notes may direct the time, method and
place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on it by
the indenture, provided that the Trustee may refuse to follow any
direction that conflicts with law or the Indenture, that the
Trustee determines may be unduly prejudicial to the rights of
other Holders, or would involve the Trustee in personal
liability. The Trustee may withhold from Holders notice of any
continuing default (except a Payment Default) if it determines
that withholding notice is in their interests.
14. Guarantee. Payment of principal, premium, if any,
and interest (including interest on overdue principal and overdue
interest, to the extent lawful) on the Notes and all other
Obligations of the Company to the Holders or the Trustee under
the Indenture and the Notes is, unconditionally guaranteed by the
Guarantor pursuant to and subject to terms of Article XI of the
Indenture.
9
<PAGE>
15. Trustee Dealings with Company. The Trustee in its
individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Company or any of its
Affiliates with the same rights it would have if it were not
Trustee.
16. No Recourse Against Others. No director, officer,
employee, incorporator or stockholder of the Company or any
Guarantor shall have any liability for any obligation of the
Company under the Indenture or the Notes or for any claim based
one, in respect of, or by reason of, such obligation or the
creation of any such obligation. Each Holder by accepting a Note
waives and releases all such liability, and such waiver and
release is part of the consideration for the Issuance of the
Notes.
17. Successor Substituted. Upon the merger,
consolidation or other business combination involving the Company
or upon the sale, assignment, transfer, lease, conveyance, or
other disposition of all or substantially all of the Company's
properties and assets, the Surviving Person (if other than the
Company) resulting from such Disposition shall succeed to, and be
substituted for, and may exercise every right and power of, the
Company under the Indenture with the same effect as if such
Surviving Person had been named as the Company in this Indenture.
18. Governing Law. This Note shall be governed by and
construed in accordance with the internal law of the State of New
York, without regard to the conflict of laws provisions thereof.
19. Authentication. This Note shall not be valid
until authenticated by the manual signature of the Trustee or an
authenticating agent.
20. Abbreviations. Customary abbreviations may be
used in the name of a Holder or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT
TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform
Gifts to Minors Act).
20. CUSIP Numbers. Pursuant to a recommendation
promulgated by the Committee on Uniform Note Identification
Procedures, the Company has caused CUSIP numbers to be printed on
the Notes and have directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either
as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other
identification numbers printed on the securities.
10
<PAGE>
The Company will furnish to any Holder upon written
request and without charge a copy of this Indenture, which has in
it the text of Note in larger type. Request may be made to: The
Claridge Hotel and Casino Corporation, Indiana Avenue and The
Boardwalk, Atlantic City, New Jersey 08041.
11
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto
_____________________________________________________________________________
Please insert social security or other identifying number of assignee
____________________________________________________________
Please print or typewrite name including
postal zip code of assignee
____________________________________________________________
the within Note and all rights thereunder, hereby irrevocably
constituting and appointing ____________________ to transfer said
Note on the books for the Company. The agent may substitute
another to act for him.
Date: ______________ Your Signature:______________________________________
(Sign exactly as your name appears on
the other side of this Note)
Signature Guarantee: _________________________
12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Note purchased by the Company
pursuant to an Excess Cash Offer under Section 3.10 of this
Indenture, check the Box: / /
If you elect to have this Note purchased by the Company
pursuant to an Asset Sale Offer under Section 4.10 of this
Indenture, check the Box: / /
If you elect to have this Note purchased by the Company
pursuant to a Change of Control Offer under Section 4.14 of this
Indenture, check the box: / /
If you elect to have only part of this Note purchased
by the Company pursuant to an Excess Cash Offer, an Asset Sale
Offer or a Change of Control Offer, state the amount (multiples
of $1,000 only):
$_____________________
Date:_________________ Your Signature:____________________________________
(Sign exactly as your name appears on
the other sided of this Note)
Signature Guarantee: _________________________________
13
<PAGE>
GUARANTEE
The "Guarantor", which term includes any successor or
assign under the Indenture (the "Indenture") has irrevocably and
unconditionally guaranteed the due and punctual payment of the
principal of, premium, if any, and interest on ___% First
Mortgage Notes Due 2002 (the "Notes") whether at stated maturity,
by acceleration or otherwise.
The obligations of the Guarantor to the Noteholder and
to the Trustee pursuant to its Guarantee and the Indenture are
expressly set forth in the Indenture and reference is hereby made
to such Indenture for the precise terms of this Guarantee.
The Guarantee is a continuing guarantee and shall
remain in full force and effect and shall be binding upon the
Guarantor and its successors and assigns of all of the Company's
obligations under the Notes and the Indenture and shall inure to
the benefit of the successors and assigns of the Trustee and the
Noteholders and in the event of any transfer or assignment of
rights by any Noteholder or the Trustee, the rights and
privileges herein conferred upon that party shall automatically
assign and be vested in such transferee or assignee, all subject
to the terms and condition hereof. This is a guarantee of
payment and not a guarantee of collection.
Capitalized terms used herein have the same meanings
given in the Indenture unless otherwise indicated.
THE CLARIDGE AT PARK PLACE,
INCORPORATED
As Guarantor
By: _____________________________
14
<PAGE>
<PAGE>
EXHIBIT A
to
Collateral Trust Agreement
This instrument was prepared by the
attorney described below and, when
recorded, the recorded counterparts
should be returned to:
James P. McIntyre, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
By:_________________________
James P. McIntyre, Esq.
===========================================================
MORTGAGE,
ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
dated as of January _, 1994
by
ATLANTIC CITY
BOARDWALK ASSOCIATES, L.P.,
the Mortgagor
to
IBJ SCHRODER BANK & TRUST COMPANY,
as Collateral Trustee,
the Mortgagee
Property:
The Claridge Hotel and Casino
City of Atlantic City
County of Atlantic
State of New Jersey
===========================================================
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.
<PAGE>
TABLE OF CONTENTS
Page
PREAMBLE . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . 1
GRANTING CLAUSES . . . . . . . . . . . . . . . . . 2
GRANTING CLAUSE I. Land . . . . . . . . . . . . 2
GRANTING CLAUSE II. Improvements . . . . . . . . 3
GRANTING CLAUSE III. Appurtenant Rights . . . . . 3
GRANTING CLAUSE IV. Agreements . . . . . . . . . 4
GRANTING CLAUSE V. Operating Leases . . . . . . 4
GRANTING CLAUSE VI. Rents, Issues and Profits . . 4
GRANTING CLAUSE VII. Permits . . . . . . . . . . . 5
GRANTING CLAUSE VIII. Proceeds and Awards . . . . . 5
GRANTING CLAUSE IX. Additional Property . . . . 5
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 Definitions . . . . . . . . . . . . . 6
1.02 Interpretation . . . . . . . . . . . 12
1.03 Resolution of Drafting Ambiguities . 13
ARTICLE II
CERTAIN WARRANTIES AND COVENANTS OF THE MORTGAGOR
SECTION 2.01 Title, Authority and Further
Assurances . . . . . . . . . . . . 13
2.02 Compliance . . . . . . . . . . . . . 14
2.03 Status and Care of the Property . . . 14
2.04 Legal and Insurance Requirements . . 14
2.05 Permitted Contests . . . . . . . . . 15
2.06 Impositions . . . . . . . . . . . . . 16
2.07 Liens. . . . . . . . . . . . . . . . 16
2.08 Transfer . . . . . . . . . . . . . . 16
2.09 Indemnification . . . . . . . . . . . 17
2.10 Expansion . . . . . . . . . . . . 17
2.11 Environmental Matters . . . . . . . 18
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* The Table of Contents is not part of this Mortgage.
<PAGE>
Page
ARTICLE III
INSURANCE, CASUALTY AND CONDEMNATION
SECTION 3.01 Insurance. . . . . . . . . . . . . . 20
3.02 Casualty . . . . . . . . . . . . . 21
3.03 Insurance Claims and Proceeds . . . . 21
3.04 Restoration . . . . . . . . . . . . . 23
3.05 Insurance Escrow . . . . . . . . . . 24
3.06 Condemnation Proceedings and Awards . 25
ARTICLE IV
DEFAULTS, REMEDIES AND RIGHTS
SECTION 4.01 Events of Default . . . . . . . . . . 26
4.02 Remedies . . . . . . . . . . . . . 26
4.03 Waivers by the Mortgagor . . . . . . 30
4.04 Jurisdiction and Process . . . . . . 31
4.05 Sales. . . . . . . . . . . . . . . . 31
4.06 Proceeds . . . . . . . . . . . . . 34
4.07 Assignment of Operating Leases . . . 35
4.08 Dealing With the Mortgaged Property . 36
4.09 Right of Entry . . . . . . . . . . . 36
4.10 Right to Perform Obligations . . . . 37
4.11 Concerning the Mortgagee . . . . . . 37
ARTICLE V
SECURITY AGREEMENT AND FIXTURE FILING
SECTION 5.01 Security Agreement . . . . . . . . . 38
5.02 Fixture Filing . . . . . . . . . . . 38
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 Estoppel Certificates . . . . . . . . 39
6.02 Release of Mortgaged Property . . . . 40
6.03 Notices . . . . . . . . . . . . . . . 40
6.04 Amendments in Writing . . . . . . . . 41
6.05 Severability . . . . . . . . . . . . 41
6.06 Binding Effect . . . . . . . . . . . 41
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<PAGE>
6.07 GOVERNING LAW . . . . . . . . . . . . 42
6.08 Receipt of True Copy . . . . . . . 42
6.09 Non-Recourse . . . . . . . . . . . . 42
6.10 Operating Leases . . . . . . . . . 42
Exhibit A - Description of the Land
Exhibit B - Permitted Encumbrances
-iii-
<PAGE>
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT (this "Mortgage")
is dated as of January _, 1994 by ATLANTIC CITY BOARDWALK
ASSOCIATES, L.P., a New Jersey limited partnership, having an
address at Indiana Avenue and the Boardwalk, Atlantic City,
New Jersey 08401 (the "Mortgagor"), to IBJ SCHRODER BANK &
TRUST COMPANY, a New York banking corporation, as Collateral
Trustee under the Collateral Trust Agreement (hereinafter
defined) (the "Mortgagee"), having an address at 1 State
Street, 11th Floor, New York, New York 10004.
W I T N E S S E T H:
RECITALS
A. The Property. The Mortgagor is now the owner of
the Property known as the Claridge Hotel and Casino, Atlantic
City, New Jersey, which is leased by the Mortgagor to CPPI
pursuant to the Operating Leases.
B. The Wraparound Mortgage. The Property is
encumbered by a second lien Wraparound Mortgage in the maximum
principal amount of $152,000,000 now held by CPPI, which
Wraparound Mortgage was inclusive of a first lien prior
mortgage.
C. The Indenture. CPPI has executed and delivered
the Indenture pursuant to which CPPI has issued Notes in the
aggregate principal amount of $85,000,000. A portion of the
proceeds of the Notes has been used to pay in full the Prior
Mortgage.
D. Mortgage. Pursuant to Section 2.09 of the
Wraparound Mortgage, the Lien of this Mortgage is being
granted to secure payment, performance and observance of the
following indebtedness, liabilities and obligations, whether
now or hereafter owed or owing, hereinafter referred to
collectively as the "Secured Obligations":
(i) the full and punctual payment when due
of (a) all principal of, premium and interest
(including any interest which accrues after the
commencement of any case, proceeding or other action
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* Capitalized terms are defined in, or by reference in,
Section 1.01.
<PAGE>
relating to the bankruptcy, insolvency or
reorganization of the Mortgagor, the Company or
CPPI) on each Note issued under the Indenture; (b)
all other amounts payable by the Company or CPPI
under the Indenture; (c) all amounts payable by the
Mortgagor, the Company or CPPI under any Financing
Document, including this Mortgage; and (d) any
renewals or extensions of any of the foregoing; and
(ii) the performance and observance of each
other term, covenant, agreement, obligation,
requirement, condition and provision to be performed
or observed by the Mortgagor, the Company or CPPI
under the Financing Documents, including this
Mortgage.
E. Subordination. Pursuant to the Subordination
Agreement, CPPI, the Company and the Mortgagor have confirmed
the subordination of the Lien of the Wraparound Mortgage to
the lien of this Mortgage.
F. Collateral Trust Agreement. Pursuant to the
Collateral Trust Agreement dated as of the date hereof among
the Company, CPPI, the Mortgagor and the Mortgagee, the
Collateral Trustee has been appointed and granted the
authority to act as trustee on behalf of the Secured Parties
with respect to the Collateral (including the Mortgaged
Property).
GRANTING CLAUSES
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, for the purpose
of securing the due and punctual payment, performance and
observance of the Secured Obligations and intending to be
bound hereby, the Mortgagor does hereby BARGAIN, SELL, CONVEY,
MORTGAGE, ASSIGN, TRANSFER and WARRANT to the Mortgagee, and
(to the extent covered by the UCC) does hereby GRANT AND
WARRANT to the Mortgagee a continuing first security interest
in and to all of the property and rights described in the
following Granting Clauses (all of which property and rights
are collectively called the "Mortgaged Property"), to wit:
GRANTING CLAUSE I.
Land. The lots, pieces, tracts or parcels of land
located in Atlantic County, New Jersey, more particularly
described in Exhibit A (the "Land").
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<PAGE>
GRANTING CLAUSE II.
Improvements. The hotel, garage and office building
and all other buildings, structures, facilities and other
improvements of every kind and description now or hereafter
located on the Land, including all parking areas, roads,
driveways, walks, fences, walls and berms; all estate, right,
title and interest of the Mortgagor in, to, under or derived
from: all recreation, drainage and lighting facilities and
other site improvements; all water, sanitary and storm sewer,
drainage, electricity, steam, gas, telephone,
telecommunications and other utility equipment and facilities;
all plumbing, lighting, heating, ventilating,
air-conditioning, refrigerating, incinerating, compacting,
fire protection and sprinkler, surveillance and security,
vacuum cleaning, public address and communications equipment
and systems; all screens, awnings, floor coverings,
partitions, elevators, escalators, people movers, motors,
electrical, computer and other wiring, machinery, pipes,
fittings and racking and shelving; and all other items of
fixtures, equipment and personal property of every kind and
description, in each case now or hereafter located on the Land
or affixed (actually or constructively) to the Improvements
which by the nature of their location thereon or affixation
thereto are real property under applicable law; and including
all materials intended for the construction, reconstruction,
repair, replacement, alteration, addition or improvement of or
to such buildings, equipment, fixtures, structures and
improvements, all of which materials shall be deemed to be
part of the Mortgaged Property immediately upon delivery
thereof on the Land and to be part of the improvements
immediately upon their incorporation therein (the foregoing
being collectively called the "Improvements").
GRANTING CLAUSE III.
Appurtenant Rights. All estate, right, title and
interest of the Mortgagor in, to, under or derived from: the
air rights and the easement described in Exhibit A (such
rights and easements, together with the Land and Improvements,
being collectively called the "Property"); all tenements,
hereditaments and appurtenances now or hereafter relating to
the Property; the streets, roads, sidewalks and alleys
abutting the Property; all strips and gores within or
adjoining the Land; all land in the bed of any body of water
adjacent to the Land; all land adjoining the Land created by
artificial means or by accretion; all air space and rights to
use air space above the Land; all development or similar
rights now or hereafter appurtenant to the Land; all rights of
ingress and egress now or hereafter appertaining to the
Property; all other easements and rights of way now or
-3-
<PAGE>
hereafter appertaining to the Property; and all royalties and
other rights now or hereafter appertaining to the use and
enjoyment of the Property, including alley, party walls,
support, drainage, crop, timber, agricultural, horticultural,
oil, gas and other mineral, water stock, riparian and other
water rights.
GRANTING CLAUSE IV.
Agreements. All estate, right, title and interest
of the Mortgagor in, to, under or derived from: all Insurance
Policies (including all unearned premiums and dividends
thereunder), all guarantees and warranties relating to the
Property and all supply and service contracts for water,
sanitary and storm sewer, drainage, electricity, steam, gas,
telephone and other utilities now or hereafter relating to the
Property (the foregoing being collectively called the
"Agreements").
GRANTING CLAUSE V.
Operating Leases. All estate, right, title and
interest of the Mortgagor in, to, under or derived from: that
certain operating lease agreement between the Mortgagor and
CPPI dated as of October 31, 1983 and that certain expansion
operating lease agreement dated as of March 17, 1986, each as
amended on June 15, 1989, March 27, 1990 and August 1, 1991
(as amended, modified or supplemented from time to time in
accordance with their respective terms, collectively, the
"Operating Leases"); and all other Leases now or hereafter in
effect, whether or not of record, for the use or occupancy of
all or any part of the Property.
GRANTING CLAUSE VI.
Rents, Issues and Profits. All estate, right, title
and interest of the Mortgagor in, to, under or derived from:
all rents, royalties, issues, profits, receipts, revenue,
income and other benefits now or hereafter accruing with
respect to the Property, including all rents and other sums
now or hereafter payable pursuant to the Operating Leases or
any other Leases; all other sums now or hereafter payable with
respect to the use, occupancy, management, operation or
control of the Property; and all other claims, rights and
remedies now or hereafter belonging or accruing with respect
to the Property, including fixed, additional and percentage
rents, occupancy charges, security deposits, parking,
maintenance, common area, tax, insurance, utility and service
charges and contributions (whether collected under the
Operating Leases, the other Leases or otherwise), proceeds of
sale of electricity, gas, heating, air-conditioning and other
-4-
<PAGE>
utilities and services (whether collected under the Operating
Leases, the other Leases or otherwise), and deficiency rents
and liquidated damages following default or cancellation (the
foregoing rents and other sums described in this Granting
Clause being collectively called the "Rents").
GRANTING CLAUSE VII.
Permits. All estate, right, title and interest of
the Mortgagor in, to, under or derived from all licenses,
authorizations, certificates, variances, consents, approvals
and other permits now or hereafter appertaining to the
Property (the foregoing being collectively called the
"Permits"), excluding the Excluded Licenses from the grant
under this Granting Clause (but not the definition of the term
"Permits" for the other purposes hereof).
GRANTING CLAUSE VIII.
Proceeds and Awards. All estate, right, title and
interest of the Mortgagor in, to, under or derived from all
proceeds of any Transfer, financing, refinancing or conversion
into cash or liquidated claims, whether voluntary or involun-
tary, of any of the Mortgaged Property, including all
Insurance Proceeds, Awards and title insurance proceeds under
any title insurance policy now or hereafter held by the
Mortgagor, and all rights, dividends and other claims of any
kind whatsoever (including damage, secured, unsecured,
priority and bankruptcy claims) now or hereafter relating to
any of the Mortgaged Property, all of which the Mortgagor
hereby irrevocably directs be paid to the Mortgagee to the
extent provided hereunder, to be held, applied and disbursed
as provided in this Mortgage.
GRANTING CLAUSE IX.
Additional Property. All greater, additional or
other estate, right, title and interest of the Mortgagor in,
to, under or derived from the Mortgaged Property now or
hereafter acquired by the Mortgagor, including all right,
title and interest of the Mortgagor in, to, under or derived
from all extensions, improvements, betterments, renewals,
substitutions and replacements of, and additions and
appurtenances to, any of the Mortgaged Property hereafter
acquired by or released to the Mortgagor or constructed or
located on, or affixed to, the Property, in each case,
immediately upon such acquisition, release, construction,
location or affixation; all estate, right, title and interest
of the Mortgagor in, to, under or derived from any other
property and rights which are, by the provisions of this
Mortgage, required or intended to be subjected to the Lien
-5-
<PAGE>
hereof; all estate, right, title and interest of the Mortgagor
in, to, under or derived from any other property and rights
which are necessary to maintain the Property and the
Mortgagor's business or operations conducted therein as a
going concern in each case, to the fullest extent permitted by
law, without any further conveyance, mortgage, assignment or
other act by the Mortgagor; and all estate, right, title and
interest of the Mortgagor in, to, under or derived from all
other property and rights which are by any instrument or
otherwise subjected to the Lien hereof by the Mortgagor.
TO HAVE AND TO HOLD the Mortgaged Property, together
with all estate, right, title and interest of the Mortgagor
and anyone claiming by, through or under the Mortgagor in, to,
under or derived from the Mortgaged Property and all rights
and appurtenances relating thereto, to the Mortgagee, forever.
PROVIDED ALWAYS that this Mortgage is upon the
express condition that the Mortgaged Property shall be
released from the Lien of this Mortgage in the manner and at
the time provided in Section 6.02.
THE MORTGAGOR ADDITIONALLY COVENANTS AND AGREES WITH
THE MORTGAGEE AS FOLLOWS:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01. Definitions. (a) Capitalized terms
used in this Mortgage, but not otherwise defined herein, are
defined in, or are defined by reference in, the Indenture and
have the same meanings herein as therein.
(b) In addition, as used herein, the following
terms have the following meanings:
"Agreements" is defined in Granting Clause IV.
"Awards" means, at any time, all awards or
payments received or receivable by reason of any
Condemnation, including all amounts received or
receivable with respect to any Transfer in lieu or
anticipation of Condemnation or in connection with
any agreement with any condemning authority which
has been made in settlement of any proceeding
relating to a Condemnation.
"Casualty" means any damage to, or destruction
of, the Property.
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<PAGE>
"Collateral Assignment of Operating Leases"
means that certain Collateral Assignment of Lessor's
Interest in Operating Leases dated as of the date
hereof between the Mortgagor, as assignor, and the
Mortgagee, as assignee.
"Collateral Trust Agreement" is defined in the
Recitals.
"Company" means The Claridge Hotel and Casino
Corporation, a New York corporation.
"Condemnation" means any condemnation or other
taking or temporary or permanent requisition of the
Property, any interest therein or right appurtenant
thereto, or any change of grade affecting the
Property, as the result of the exercise of any right
of condemnation or eminent domain. A Transfer to a
governmental authority in lieu or anticipation of
Condemnation shall be deemed to be a Condemnation.
"CPPI" means The Claridge at Park Place,
Incorporated, a New Jersey corporation.
"DEP" means the New Jersey Department of
Environmental Protection and Energy, together with its
successors.
"ECRA" means the Environmental Cleanup
Responsibility Act, N.J.S.A. 13:1k-6 et seq., as amended
from time to time, including as amended by the Industrial
Site Recovery Act.
"Environmental Laws" means any and all laws and
Legal Requirements relating to environmental matters,
pollution or hazardous substances, including the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Sections 9601-9657; the
Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Sections 6901 et seq.; the Hazardous Materials
Transportation Act (49 U.S.C. Sections 1801 et seq.);
ECRA; the Spill Act; any other laws that may form the
basis of any claim, action, demand, suit, proceeding,
hearing, or notice of violation that is based on or
related to the generation, manufacture, processing,
distribution, use, existence, treatment, storage,
disposal, transport, or handling, or the emission,
discharge, release or threatened release into the
environment, of any Hazardous Material, or other threat
to the environment, as now or at any time hereafter in
effect.
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<PAGE>
"Excluded Licenses" means the (Casino License).
"Hazardous Materials" means any hazardous substance
or toxic chemical and shall include, without limitation,
gasoline, refined petroleum products, explosives,
radioactive materials, asbestos, polychlorinated
biphenyls or related or similar materials, or any other
substance or material defined as a hazardous or toxic
substance or waste or toxic pollutant by any federal,
state or local law, ordinance, rule or regulation,
including Environmental Laws.
"Impositions" means all taxes (including real
estate taxes and transfer taxes), assessments
(including all assessments for public improvements
or benefits, whether or not commenced or completed
prior to the date hereof), water, sewer or other
rents, rates and charges, excises, levies, license
fees, permit fees, inspection fees and other autho-
rization fees and other charges, in each case
whether general or special, ordinary or extraordi-
nary, foreseen or unforseen, of every character
(including all interest and penalties thereon),
which at any time may be assessed, levied, confirmed
or imposed upon the Mortgagor or in respect of, or
be a Lien upon, (i) the Property, any other
Mortgaged Property or any interest therein, (ii) any
occupancy, use or possession of, or activity
conducted on, the Property, or (iii) the Rents from
the Property or the use or occupancy thereof, but
excluding income, excess profits, franchise, capital
stock, estate, inheritance, succession, gift or
similar taxes of the Mortgagor or the Mortgagee or
any other Secured Party, except to the extent that
such taxes of the Mortgagor or the Mortgagee or any
other Secured Party are imposed in whole or in part
in lieu of, or as a substitute for, any taxes which
are or would otherwise be Impositions.
"Improvements" is defined in Granting Clause
II.
"Indenture" means that certain Indenture among
the Company, CPPI and the Indenture Trustee dated as
of January _, 1994.
"Insurance Policies" means the insurance poli-
cies and coverages required to be maintained with
respect to the Property pursuant to the Indenture.
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"Insurance Premiums" means all premiums payable
under the Insurance Policies.
"Insurance Proceeds" means, at any time, all
insurance proceeds or payments to which the
Mortgagor may be or become entitled under the
Insurance Policies pursuant to the Operating Leases
or otherwise by reason of any Casualty plus all
insurance proceeds and payments to which the
Mortgagor may be or become entitled by reason of any
Casualty under any other insurance policies or
coverages maintained by the Mortgagor with respect
to the Property.
"Insurance Requirements" means all provisions
of the Insurance Policies, all requirements of the
issuer of any of the Insurance Policies and all
orders, rules, regulations and any other require-
ments of the National Board of Fire Underwriters (or
any other body exercising similar functions) binding
upon the Mortgagor and applicable to the Property,
any adjoining vaults, sidewalks, parking areas or
driveways or any use or condition thereof.
"Land" is defined in Granting Clause I.
"Lease" means each of the Operating Leases and
each other lease, sublease, tenancy, subtenancy,
license, franchise, concession or other occupancy
agreement entered into by the Mortgagor relating to
the Property, together with any guarantee of the
obligations of the tenant thereunder or any right to
possession under any federal or state bankruptcy
code in the event of the rejection of any sublease
by the sublandlord thereof or its trustee pursuant
to said code.
"Legal Requirements" means all provisions of
the Permitted Encumbrances, all provisions of the
Permits and all applicable laws (including
Environmental Laws), statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions,
rules, regulations, directions and requirements of,
and agreements with, governmental bodies, agencies
or officials, now or hereafter applicable to the
Property, or any use or condition thereof.
"Mortgage" is defined in the Preamble.
"Mortgaged Property" is defined in the Granting
Clauses.
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"Mortgagee" is defined in the Preamble.
"Mortgagor" is defined in the Preamble.
"Operating Leases" is defined in Granting Clause V.
"Partnership Security Agreement" means that
certain Partnership Security Agreement dated as of
the date hereof between the Mortgagor and the
Mortgagee, pursuant to which the Mortgagor grants to
the Mortgagee a security interest in certain
personal property.
"Permits" is defined in Granting Clause VII.
"Permitted Encumbrances" means (i) the matters
described in Exhibit B, (ii) subordinate Liens
created pursuant to the Wraparound Mortgage, (iii)
Liens of taxes not yet due and payable and any other
Liens permitted by the Operating Leases, (iv) Liens
being contested pursuant to Section 2.05, and (v)
materialmen's, mechanics', workers', repairmen's,
employees' or other like Liens for amounts not yet
due.
"Property" is defined in Granting Clause III.
"Receiver" is defined in Section 4.02(a)(iv).
"Related Documents" is defined in the Collateral
Trust Agreement.
"Rents" is defined in Granting Clause VI.
"Restoration" means the restoration, repair,
replacement or rebuilding of the Property after a
Casualty or Condemnation and "Restore" means to
restore, repair, replace or rebuild the Property
after a Casualty or Condemnation, in each case as
nearly as possible to a value and condition adequate
to the Mortgagor's use as conducted prior to the
Casualty or Condemnation.
"Secured Obligations" is defined in the
Recitals.
"Secured Parties" means (i) the Noteholders
and (ii) the Mortgagee.
"Security Deposit" means any payment, note, or
other security or deposit delivered to the Mortgagor
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made or given by or on behalf of a tenant under the
Operating Leases or any other Lease as security for
the performance of its obligations thereunder, and
any interest accrued thereon.
"Security Documents" is defined in the Collateral
Trust Agreement.
"Spill Act" means the Spill Compensation and Control
Act. N.J.S.A. 58:10-23.11 et seq., together with any
amendments or revisions thereof and any regulations
promulgated pursuant thereto.
"Subordination Agreement" means that certain
Subordination of Wraparound Mortgage dated as of the
date hereof among CPPI, the Mortgagor and the
Mortgagee.
"TIC" means First American Title Insurance Company.
"Transfer" means, when used as a noun, any
sale, conveyance, assignment, lease, or other
transfer and, when used as a verb, to sell, convey,
assign, lease, or otherwise transfer, in each case
(i) whether voluntary or involuntary, (ii) whether
direct or indirect and (iii) including any agreement
providing for a Transfer or granting any right or
option providing for a Transfer.
"Unavoidable Delays" means delays due to acts
of God, fire, flood, earthquake, explosion or other
Casualty, inability to procure or shortage of labor,
equipment, facilities, sources of energy (including
electricity, steam, gas or gasoline), materials or
supplies, failure of transportation, strikes,
lockouts, action of labor unions, Condemnation,
litigation relating to Legal Requirements, inability
to obtain Permits or other causes beyond the reason-
able control of the Mortgagor, provided that lack of
funds shall not be deemed to be a cause beyond the
control of the Mortgagor.
"UCC" means the New Jersey Uniform Commercial
Code, as in effect from time to time.
"Wraparound Mortgage" means that certain Expandable
Wraparound Mortgage and Security Agreement dated as of
December 31, 1983 from the Mortgagor, as mortgagor, to
CPPI, as mortgagee, as amended by that certain First
Supplemental Amendment to Expandable Wraparound Mortgage
and Security Agreement dated as of March 17, 1986, and as
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further amended by that certain Second Amendment to
Expandable Wraparound Mortgage and Security Agreement
dated June 15, 1989, as further amended or modified from
time to time.
(c) In this Mortgage, unless otherwise specified,
references to this Mortgage, the Wraparound Mortgage,
Operating Leases, other Leases, Permits, Indenture, Notes,
Partnership Security Agreement, Financing Documents and
Related Documents include all amendments, supplements,
consolidations, replacements, restatements, extensions,
renewals and other modifications thereof, in whole or in part.
SECTION 1.02. Interpretation. In this Mortgage,
unless otherwise specified, (i) singular words include the
plural and plural words include the singular; (ii) words which
include a number of constituent parts, things or elements,
including the terms Operating Leases, Leases, Improvements,
Land, Secured Obligations, Property and Mortgaged Property,
shall be construed as referring separately to each constituent
part, thing or element thereof, as well as to all of such
constituent parts, things or elements as a whole; (iii) words
importing any gender include the other genders; (iv) refer-
ences to any Person include such Person's successors and
assigns and in the case of an individual, the word "suc-
cessors" includes such Person's heirs, devisees, legatees,
executors, administrators and personal representatives; (v)
references to any statute or other law include all applicable
rules, regulations and orders adopted or made thereunder and
all statutes or other laws amending, consolidating or replac-
ing the statute or law referred to; (vi) the words "consent",
"approve", "agree" and "request", and derivations thereof or
words of similar import, mean the prior written consent,
approval, agreement or request of the Person in question;
(vii) the words "include" and "including", and words of
similar import, shall be deemed to be followed by the words
"without limitation"; (viii) the words "hereto", "herein",
"hereof" and "hereunder", and words of similar import, refer
to this Mortgage in its entirety; (ix) references to Articles,
Sections, Schedules, Exhibits, subsections, paragraphs and
clauses are to the Articles, Sections, Schedules, Exhibits,
subsections, paragraphs and clauses of this Mortgage; (x) the
Schedules and Exhibits to this Mortgage are incorporated
herein by reference; (xi) the titles and headings of Articles,
Sections, Schedules, Exhibits, subsections, paragraphs and
clauses are inserted as a matter of convenience and shall not
affect the construction of this Mortgage; (xii) all
obligations of the Mortgagor hereunder shall be satisfied by
the Mortgagor at the Mortgagor's sole cost and expense; and
(xiii) all rights and powers granted to the Mortgagee
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hereunder shall be deemed to be coupled with an interest and
be irrevocable.
SECTION 1.03. Resolution of Drafting Ambiguities.
The Mortgagor acknowledges that it was represented by counsel
in connection with this Mortgage, that it and its counsel
reviewed and participated in the preparation and negotiation
of this Mortgage and that any rule of construction to the
effect that ambiguities are to be resolved against the
drafting party or the Mortgagee shall not be employed in the
interpretation of this Mortgage.
ARTICLE II
CERTAIN WARRANTIES AND COVENANTS OF THE MORTGAGOR
SECTION 2.01. Title, Authority and Further
Assurances. (a) The Mortgagor warrants that (i) the Mortgagor
has good and marketable title to the fee simple interest in
the Property, free and clear of all Liens other than the
Permitted Encumbrances, the Operating Leases and the
Wraparound Mortgage; (ii) this Mortgage constitutes, or upon
the full execution of the Subordination Agreement will
constitute, a valid, binding and enforceable first Lien on the
Mortgaged Property, subject only to the Permitted Encumbrances
described in Exhibit B and the Lien of taxes not yet due and
payable; (iii) the Mortgagor is a limited partnership, duly
formed and validly existing under the laws of the State of New
Jersey, and has all governmental licenses, authorizations,
consents, approvals and other qualifications required to carry
on its business as now conducted, to own the Mortgaged
Property and to execute, deliver and perform this Mortgage;
(iv) the execution, delivery and performance by the Mortgagor
of this Mortgage and the other Security Documents to which it
is a party are within the Mortgagor's partnership power, and
have been duly authorized by all necessary partnership action,
require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene,
or constitute a default under, any provision of applicable
law, of the partnership agreement of the Mortgagor or of any
agreement, judgment, injunction, order, decree or other
instrument binding upon the Mortgagor or relating to the
Property or result in the creation or imposition of any Lien
on any asset of the Mortgagor (other than the Lien of this
Mortgage); and (v) this Mortgage constitutes a legal, valid,
binding and enforceable agreement of the Mortgagor.
(b) The Mortgagor shall (i) cause the warranties in
subsection (a) of this Section to be true and correct in each
and every respect; and (ii) forever preserve, protect, warrant
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and defend (A) its estate, right, title and interest in and to
the Mortgaged Property, (B) the validity, enforceability and
priority of the Lien of this Mortgage on the Mortgaged
Property, and (C) the right, title and interest of the
Mortgagee and any purchaser at any sale of the Mortgaged
Property hereunder or relating hereto, in each case, against
all other Liens and claims whatsoever, subject only to the
Permitted Encumbrances.
(c) The Mortgagor shall (i) promptly correct any
defect or error which may be discovered in this Mortgage or
any financing statement or other document relating hereto; and
(ii) promptly execute, acknowledge, deliver, record and
re-record, register and re-register, and file and re-file this
Mortgage and any financing statements or other documents which
the Mortgagee reasonably may require from time to time (all in
form and substance reasonably satisfactory to the Mortgagee)
in order (A) to effectuate, complete, perfect, continue or
preserve the Lien of this Mortgage as a first Lien on the
Mortgaged Property, whether now owned or hereafter acquired,
subject only to the Permitted Encumbrances, or (B) to
effectuate, complete, perfect, continue or preserve any right,
power or privilege granted or intended to be granted to the
Mortgagee hereunder or otherwise accomplish the purposes of
this Mortgage. To the extent permitted by law, the Mortgagor
hereby authorizes the Mortgagee to execute and file financing
statements or continuation statements without the Mortgagor's
signature appearing thereon. The Mortgagor shall pay on
demand the costs of, or incidental to, any recording or filing
of any financing or continuation statement, or amendment
thereto, concerning the Mortgaged Property.
SECTION 2.02. Compliance. The Mortgagor shall
comply with the terms and provisions applicable to the
mortgagor under the Wraparound Mortgage and the landlord under
the Operating Leases.
SECTION 2.03. Status and Care of the Property. The
Mortgagor shall (a) not cause or permit the Property to be
wasted or become in disrepair; (b) operate and maintain the
Property, or cause the same to be operated and maintained, in
good and substantial repair; (c) promptly make, or cause to be
made, all repairs, replacements, alterations, additions and
improvements of and to the Property, whether interior or
exterior, structural or nonstructural, foreseen or unforseen,
which may be necessary or appropriate to keep the Property in
good and substantial repair; and (d) not remove or demolish or
substantially alter any of the Improvements.
SECTION 2.04. Legal and Insurance Requirements.
(a) The Mortgagor represents and warrants that to the best of
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its knowledge, without investigation, (i) as of the date
hereof, the Property and the use and operation thereof comply
with all Legal Requirements and Insurance Requirements, (ii)
there is no default under any Legal Requirement or Insurance
Requirement; and (iii) the execution, delivery and performance
of this Mortgage will not contravene any provision of or
constitute a default under any Legal Requirement or Insurance
Requirement.
(b) The Mortgagor shall (i) subject to Section
2.05, duly and punctually comply or cause compliance with all
Legal Requirements and Insurance Requirements; (ii) procure or
cause to be procured, maintain or cause to be maintained and,
subject to Section 2.05, duly and punctually comply or cause
compliance with all Permits required for any construction,
reconstruction, repair, alteration, addition, improvement,
maintenance, management, use and operation of the Property as
then conducted; (iii) promptly notify the Mortgagee of the
receipt by the Mortgagor of any notice of default regarding
any Legal Requirement or Insurance Requirement or any possible
or actual termination of any Permit or Insurance Policy and
furnish to the Mortgagee a copy of such notice of default or
termination; (iv) promptly after obtaining knowledge thereof
notify the Mortgagee of any condition which, with or without
the giving of notice or the passage of time or both, would
constitute a default regarding any Legal Requirement or
Insurance Requirement or a termination of any Permit or
Insurance Policy and the action being taken to remedy such
condition; (v) upon request, promptly furnish to the Mortgagee
a copy of any Permit obtained by the Mortgagor with respect to
the Property after the date hereof; and (vi) upon request,
promptly deliver to the Mortgagee such other information and
documents with respect to the matters referred to in this
Section as the Mortgagee shall reasonably request.
SECTION 2.05. Permitted Contests. Upon prior
notice to the Mortgagee, the Mortgagor may contest, by
appropriate proceedings conducted in good faith and with due
diligence, any Legal Requirement, any Insurance Requirement,
any Imposition or Lien therefor on the Mortgaged Property or
any interest therein or any Lien of any laborer, mechanic,
materialman, supplier or vendor on the Mortgaged Property or
any interest therein, provided that no Notice of Acceleration
is in effect and (i) no Mortgaged Property or interest therein
is in danger of being sold, forfeited or lost, or the priority
of the Lien of the Mortgagee is not at risk, as a result of
such contest or proceedings; (ii) in the case of any Legal
Requirement, the Mortgagee and the other Secured Parties are
not in danger of any criminal or material civil penalty or any
other liability for failure to comply therewith and no
Mortgaged Property or interest therein is subject to the
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imposition of any Lien as a result of such failure which is
not properly contested pursuant to this Section; (iii) in the
case of any Insurance Requirement, no Insurance Policy or
coverage is in danger of being forfeited or lost as a result
of such contest or proceedings, unless replaced; and (iv) in
the case of (A) any Lien of a laborer, mechanic, materialman,
supplier or vendor, or (B) any Imposition or Lien therefor,
such proceedings suspend the foreclosure of such Lien or any
other collection thereof from the Mortgaged Property and all
interests therein. Upon request, the Mortgagor shall promptly
deliver to the Mortgagee (x) a certificate of the Mortgagor
describing in detail reasonably satisfactory to the Mortgagee
the contests pending as of the date thereof and evidencing
that the Mortgagor has complied with the provisions of this
Section with respect thereto and (y) such other information
and documents with respect to the contests conducted pursuant
to this Section as the Mortgagee shall reasonably request.
SECTION 2.06. Impositions. The Mortgagor shall (i)
subject to Section 2.05, duly and punctually pay or cause to
be paid all Impositions prior to the delinquency date thereof;
(ii) promptly notify the Mortgagee of the receipt by the
Mortgagor of any notice of default in the payment of any
Imposition or in the filing of any return or other statement
relating to any Imposition and simultaneously furnish to the
Mortgagee a copy of such notice of default; and (iii) upon
request, promptly deliver to the Mortgagee (A) to the extent
available to the Mortgagor, copies of official receipts
evidencing the payment of the Impositions, and (B) to the
extent available to the Mortgagor, such other information and
documents with respect to the matters referred to in this
Section as the Mortgagee shall reasonably request.
SECTION 2.07. Liens. Subject to the provisions of
Section 2.05, the Mortgagor shall not create or permit to be
created or to remain, and shall immediately discharge or cause
to be discharged, any Lien on the Mortgaged Property or any
interest therein, in each case (i) whether voluntarily or
involuntarily created; (ii) whether directly or indirectly a
Lien thereon; and (iii) whether or not subordinated hereto,
except Permitted Encumbrances and the Wraparound Mortgage.
The provisions of this Section shall apply to each and every
Lien (other than Permitted Encumbrances and the Wraparound
Mortgage) on the Mortgaged Property or any interest therein,
regardless of whether or not a consent to, or waiver of a
right to consent to, any other Lien thereon has been
previously obtained in accordance with the terms of the
Financing Documents.
SECTION 2.08. Transfer. The Mortgagor shall not
Transfer, or suffer any Transfer of, the Mortgaged Property or
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any part thereof or interest therein, except to CPPI or the
Company or permitted successor or Affiliate in connection with
a Unification Transaction in accordance with the Indenture
where the obligations of the Mortgagor hereunder are expressly
assumed by CPPI or the Company or permitted successor or
Affiliate, as the case may be. The provisions of this Section
shall apply to each and every Transfer of the Mortgaged
Property or any interest therein, regardless of whether or not
a consent to, or waiver of a right to consent to, any other
Transfer thereof has been previously obtained in accordance
with the terms of the Financing Documents.
SECTION 2.09. Indemnification. Subject to the
provisions of Section 6.09, the Mortgagor shall protect,
indemnify and defend each of the Mortgagee and the other
Secured Parties from and against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever
(including reasonable attorneys' fees and expenses) which may
be imposed on, incurred by or asserted against any Secured
Party or the Mortgaged Property by reason or on account of, or
in connection with (a) the Mortgagee's proper and lawful
exercise of any of its rights and remedies hereunder; (b) any
accident, injury to or death of persons or loss of or damage
to property occurring in, on or about the Property or any part
thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, street or ways; (c) any
failure on the part of the Mortgagor to perform or comply with
any of the terms of this Mortgage; (d) the performance of any
labor or services or the furnishing of any materials or other
property in respect of the Mortgaged Property or any part
thereof; or (e) any other conduct or misconduct of the
Mortgagor, any lessee of any of the Mortgaged Property, or any
of their respective agents, contractors, subcontractors,
servants, employees, licensees or invitees; provided, however,
that any claims caused by the willful misconduct or gross
negligence of any Secured Party as determined by a court of
competent jurisdiction shall be excluded from the foregoing
indemnification of such Secured Party. Any amount payable
under this Section will be deemed a demand obligation and will
bear interest at the default rate specified in the Notes. The
obligations of the Mortgagor under this Section shall survive
the release of this Mortgage.
SECTION 2.10. Expansion. If the Mortgagor acquires
after the date hereof any property which is contiguous or
adjacent to the Property, including in connection with the
Contemplated Expansion or the Project Expansion, the Mortgagor
shall do all such acts and shall promptly execute, deliver and
record such mortgages and other security documents,
conveyances, financing statements and assurances as the
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Mortgagee may reasonably deem necessary or desirable (or a
supplement, spreader or an amendment to this Mortgage) as may
be necessary, or as the Mortgagee reasonably may request, to
subject such property to a first priority Lien in favor of the
Mortgagee, subject only to such title exceptions as are
reasonably acceptable to the Mortgagee, securing the Secured
Obligations, and deliver to the Mortgagee an appropriate
endorsement to the existing title insurance or supplemental
title insurance in amount, form and substance reasonably
satisfactory to the Mortgagee insuring the Lien of such
mortgage or of this Mortgage (as so supplemented, spread and
amended); provided, that in connection with any Project
Expansion, such Lien may be senior to or pari passu with any
Lien securing any Indebtedness of the Mortgagor or CPPI which
is used to finance such expansion.
SECTION 2.11. Environmental Matters. (a) The
Mortgagor represents and warrants that, to the best of its
actual knowledge, without inquiry, (i) there are no Hazardous
Materials on or at the Mortgaged Property, except those in
material compliance with all applicable federal, state and
local laws, ordinances, rules and regulations, and (ii)
neither the Mortgagor nor any occupant of, nor any prior owner
or occupant of, the Mortgaged Property has received any
notice, notification, demand or order with respect to any
alleged violation of any applicable federal, state or local
law, ordinance, rule or regulation from any governmental
agency or any source whatsoever with respect to Hazardous
Materials on, from or affecting the Mortgaged Property. The
Mortgagor covenants that the Mortgaged Property shall be kept
free of Hazardous Materials except in compliance with all
applicable federal, state and local laws, ordinances, rules
and regulations, and neither the Mortgagor nor any occupant of
the Mortgaged Property shall use, transport, store or dispose
of Hazardous Materials on the Mortgaged Property, except in
compliance with all applicable federal, state and local laws,
ordinances, rules and regulations. The Mortgagor shall comply
with, and ensure compliance by all occupants of the Mortgaged
Property with, all applicable federal, state and local laws,
ordinances, rules and regulations, including Environmental
Laws. The Mortgagor shall have ninety (90) days after notice
thereof (or such longer time periods as is reasonably required
under the circumstances, provided the Mortgagor promptly
commences or causes the commencement of, and diligently
prosecutes or causes to be diligently prosecuted the
completion of, such cure) to cure any Lien imposed on any
portion of the Mortgaged Property pursuant to Environmental
Laws. If the Mortgagor fails to do so, then the Mortgagee may
cure any such Lien and the Mortgagor shall indemnify the
Mortgagee with respect to any expenditures that the Mortgagee
incurs in doing so. This shall not limit any other rights or
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remedies available to the Mortgagee. In the event that the
Mortgagor receives any notice, notification, demand or order
from any governmental agency or any source whatsoever with
respect to Hazardous Materials on, from or affecting the
Mortgaged Property, the Mortgagor shall immediately notify the
Mortgagee. The Mortgagor shall conduct and complete all
investigations, studies, sampling, and testing and all
remedial actions necessary to clean up and remove all
Hazardous Materials on or at the Mortgaged Property in
accordance with all applicable federal, state, and local laws,
ordinances, rules and regulations.
(b) The Mortgagor represents and warrants that, to
the Mortgagor's actual knowledge without inquiry and
investigation, no Lien has attached to the Mortgaged Property
as a result of any action by the DEP or its designee pursuant
to the New Jersey Spill Compensation Fund (as such term is
defined in the Spill Act), expending monies from said fund to
pay for "cleanup and removal costs" or "natural resources"
damages as a result of any "discharge" of any "hazardous
substances" on or at the Mortgaged Property (as such terms are
defined in the Spill Act). The Mortgagor further represents,
warrants and covenants that, to the best of Mortgagor's actual
knowledge, the Mortgagor did not in the past, and does not
now, own, operate or control and shall not prior to the
satisfaction and discharge of the Lien of this Mortgage
acquire, own, operate or control any "major facility" (as such
term is defined in the Spill Act) or any hazardous or solid
waste disposal facility.
(c) Subject to Section 2.05, if a Lien is filed
against the Mortgaged Property pursuant to the Spill Act, the
Mortgagor shall promptly either (i) pay the claim and remove
the Lien from the Mortgaged Property or cause the same to be
done, or (ii) furnish or cause to be furnished (A) a bond, if
required, satisfactory to the Mortgagee and the TIC in the
amount of the claim out of which the Lien arises, or (B) other
security reasonably satisfactory to the Mortgagee in an amount
sufficient to discharge the claim of which the Lien arises.
(d) Upon the Mortgagee's request in connection with
the "closing, terminating or transferring of operations" (as
such term is defined in ECRA) relating to the Mortgagor or any
one or more of the tenants under any of the Leases, the
Mortgagor shall promptly provide the Mortgagee with:
(i) a letter of non-applicability from the DEP
accompanied by the supporting affidavit of the
applicant or an Opinion of Counsel, addressed to the
Mortgagee, in a form reasonably satisfactory to the
Mortgagee's counsel, stating that ECRA does not
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apply to such closing, terminating of transferring
of operations; or
(ii) a negative declaration duly approved by
the DEP; or
(iii) a "remedial action work plan" (as such
term is defined in ECRA) duly approved by the DEP;
or
(iv) a "remediation agreement" duly approved by
the DEP.
Nothing in this subsection (d) shall be construed as
limiting the Mortgagor's obligation to otherwise comply with
ECRA.
(e) If the Mortgagor complies with subsection (d)
of this Section by obtaining an approved remedial action work
plan or remediation agreement, the Mortgagor shall promptly
implement and prosecute to completion or cause to be so
implemented and prosecuted, the remedial action work plan or
the requirements of the remediation agreement, as the case may
be, in accordance with the schedules contained therein as may
be otherwise ordered or directed by the DEP. The Mortgagor
expressly understands and acknowledges that the Mortgagor's
compliance with the provisions of this subsection (e) may
require the Mortgagor to expend funds or do acts after the
expiration or termination of the term of one or more Leases.
The Mortgagor shall expend such funds though the term of the
relevant Lease shall have previously expired and
notwithstanding any provision in any such Lease or in ECRA
placing the burden of compliance on the tenant under such
Lease.
ARTICLE III
INSURANCE, CASUALTY AND CONDEMNATION
SECTION 3.01. Insurance. The Mortgagor shall
maintain or cause to be maintained in full force and effect
Insurance Policies with respect to the Property as required by
the Indenture. The Mortgagor shall cause CPPI to pay promptly
when due any Insurance Premiums on such Insurance Policies and
any renewals thereof. The form of such Insurance Policies
shall be reasonably acceptable to the Mortgagee. All such
policies and renewals thereof shall be held by the Mortgagee
and shall name the Mortgagee as the first mortgagee and
contain a noncontributory standard or "New York" mortgagee
endorsement (Form 438 BFU or its equivalent) or its equivalent
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making losses payable to the Mortgagee, subject to Section
3.03(c), and shall name the Mortgagee as an additional
insured. At least thirty (30) days prior to the expiration
date of all such Insurance Policies, renewals thereof
satisfactory to the Mortgagee shall be delivered to the
Mortgagee together with receipts evidencing the payment of all
premiums on such Insurance Policies and renewals. In the
event of the foreclosure of this Mortgage or any other
Transfer of title to the Mortgaged Property in extinguishment
or satisfaction of the Secured Obligations, all right, title
and interest of the Mortgagee in and to all Insurance Policies
and renewals thereof then in force shall pass to the purchaser
or grantee, upon delivery of written notice to the Mortgagee
within thirty (30) days following the occurrence of such loss.
SECTION 3.02. Casualty. (a) The Mortgagor
represents and warrants that, as of the date hereof, there is
no Casualty affecting the Property.
(b) Upon obtaining knowledge of any Casualty, the
Mortgagor shall (i) immediately give notice thereof to the
Mortgagee; and (ii) immediately take or cause to be taken such
action as may be necessary or appropriate to preserve the
undamaged portion of such Property and to protect against
personal injury or property damage.
SECTION 3.03. Insurance Claims and Proceeds. In
the event of any Casualty, (a) the Mortgagor shall promptly
make, or cause to be made, proof of loss under the applicable
Insurance Policies and diligently pursue, or cause to be
pursued, to conclusion its claim for the Insurance Proceeds
payable thereunder and any suit, action or other proceeding
necessary or appropriate to obtain payment of such Insurance
Proceeds and, after five (5) days prior written notice to the
Mortgagor, the Mortgagee may make proof of loss if not made
promptly by the Mortgagor; (b) if the Insurance Proceeds with
respect to any Casualty amount to $1,000,000 or more or if a
Default is continuing, the Mortgagor shall have no right to
settle, and shall not permit to be settled, any such claim or
proceeding without the consent of the Mortgagee; (c) if the
Insurance Proceeds with respect to any Casualty amount to less
than $1,000,000, such Insurance Proceeds shall be paid to the
Mortgagor to be held, applied and disbursed pursuant to the
Operating Leases; and (d) if the Insurance Proceeds with
respect to any Casualty amount to $1,000,000 or more, such
Insurance Proceeds shall be paid to the Mortgagee for deposit
in a segregated trust account established pursuant to the
Collateral Trust Agreement to be held, applied and disbursed
as follows:
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(i) In the event of a Casualty which affects fifty
percent (50%) or more of the Mortgaged Property (a "Major
Loss"), within five (5) days following receipt of notice
from CPPI pursuant to the Operating Leases as to whether
or not CPPI intends to Restore the Mortgaged Property
affected by such Casualty, the Mortgagor shall notify the
Mortgagee of such election (or, in the event the
Operating Leases have terminated and no Notice of
Acceleration is in effect, within thirty (30) days after
the event of such Casualty the Mortgagor shall notify the
Mortgagee whether or not it intends to make such
Restoration) and provide an Officers' Certificate of CPPI
or the Mortgagor (as the case may be) certifying that
such Restoration will meet the requirements of Section
4.10(d) of the Indenture. If the Mortgagor notifies the
Mortgagee that CPPI or the Mortgagor (as the case may be)
intends to Restore, then the Insurance Proceeds shall be
disbursed in accordance with the provisions of Section
3.04 hereof to reimburse or pay for the costs of such
Restoration pursuant to this Section 3.03(d)(i), and the
Mortgagee shall make such amounts available in accordance
with Section 3.04.
(ii) In the event of a Casualty which does not
constitute a Major Loss or if CPPI or the Mortgagor (as
the case may be) elects to Restore or cause the
Restoration of the Mortgaged Property in the event of a
Major Loss, whether or not the Insurance Proceeds with
respect to such Casualty available to pay the cost of
Restoration are sufficient for that purpose, the
Mortgagor shall promptly commence or cause the
commencement of the Restoration and diligently pursue or
cause to be prosecuted to completion the Restoration of
the Mortgaged Property affected by such Casualty, subject
to Unavoidable Delays.
(iii) If the Mortgagor fails to notify the Mortgagee
that CPPI or the Mortgagor (as the case may be) intends
to Restore or cause the Restoration of the Mortgaged
Property affected by such Casualty within said five (5)
day period (or, in the event the Operating Leases have
terminated, thirty (30) day period) as provided in
Section 3.03(d)(i) hereof, or if CPPI or the Mortgagor
(as the case may be) has elected not to Restore or cause
the Restoration of the Mortgaged Property affected by
such Casualty, or if the Operating Leases have terminated
and a Notice of Acceleration is in effect, or if an Asset
Sale Offer is required under Section 4.10 of the
Indenture, or in the event there remains any Insurance
Proceeds following such Restoration, then in any such
event the Insurance Proceeds then remaining shall be
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applied to the repayment of the Notes in accordance with
Section 4.10(c)(i) of the Indenture.
SECTION 3.04. Restoration. Provided that (a) the
Indenture does not require a repurchase of the Notes and no
Notice of Acceleration is in effect at the time the Mortgagor
seeks the benefit of this Section 3.04, (b) CPPI or the
Mortgagor (as the case may be) certifies that it has the
ability (including financial ability) to Restore or cause the
Restoration of the Mortgaged Property affected by such
Casualty to a condition substantially the same as prior to the
Casualty, and pay for the complete costs of such Restoration
(taking into account available Insurance Proceeds), and (c)
the Mortgagor complies with this Section 3.04, the Mortgagee
agrees that it shall apply the Insurance Proceeds received by
the Mortgagee under the provisions of Section 3.03(c) on
account of such Casualty for the purpose of the Restoration of
the Mortgaged Property in the following manner and upon
satisfaction of the following conditions:
(i) Such Insurance Proceeds shall be paid over to
the Mortgagee or its designee, for deposit in the
segregated trust account established pursuant to the
Collateral Trust Agreement for the disbursement thereof
as provided herein. If a Notice of Acceleration is in
effect prior to the completion of the Restoration, the
Mortgagee at its option shall, while such Notice of
Acceleration is in effect, have the right to either apply
all or any portion of the Insurance Proceeds toward the
Restoration or toward any amounts secured hereby.
(ii) The manner of disbursement by the Mortgagee of
such Insurance Proceeds shall be by the request of the
Mortgagor, not more than once per week, and only if no
Notice of Acceleration shall be in effect and the
Mortgagee shall have received an Officers' Certificate of
CPPI or the Mortgagor (as the case may be), dated not
more than seven (7) days prior to the date of the
application for the withdrawal and payment of such
Insurance Proceeds: (A) that expenditures have been made,
or costs incurred, in a specified amount for the purpose
of making Restoration, which shall be briefly described,
(B) that no part of such expenditures or costs has been
or is being made the basis for the withdrawal of any
Insurance Proceeds in any previous or then pending
application pursuant to this Section 3.04; (C) that there
is no outstanding amount, other than costs for which
payment is being requested, for the purchase price or
construction of such repairs, rebuildings or
replacements, or for labor, wages, materials or supplies
in connection with the making thereof, which, if unpaid,
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might become the basis of a vendors', mechanics',
laborers', materialmen's, statutory or other similar
Liens upon any of such repairs, rebuildings or
replacements, which Lien might, in the opinion of the
signers of such certificate, materially impair the
security afforded by such repairs, rebuildings or
replacements; and (D) that all conditions precedent
herein provided for relating to such withdrawal and
payment have been complied with.
(iii) If the Mortgagee reasonably determines that
the amount of the Insurance Proceeds available for the
Restoration shall be insufficient for the performance and
completion of such work, the Mortgagor covenants and
agrees, as a condition precedent to any disbursement of
Insurance Proceeds, to deliver or cause to be delivered
to the Mortgagee an amount, which together with the
Insurance Proceeds, shall be sufficient to pay the total
amount necessary or reasonably required to Restore the
Mortgaged Property as herein provided, and which amount
shall be disbursed in accordance herewith.
(iv) Without limiting the generality of the
foregoing provisions, any Restoration shall be subject to
and performed in accordance with each of the following
provisions: (A) such work and the performance thereof
shall be conducted in a first-class, workmanlike manner,
shall not permanently weaken nor impair the structural
strength of any existing Improvements, nor change the
character thereof or the purpose for which the same may
be used, nor lessen the value of the Mortgaged Property;
(B) before the commencement of any such work, the plans
and specifications (the "Plans") therefor shall be filed
with and approved by all Governmental Authorities shall
have been obtained, and all such work shall be done
subject to and in accordance with all applicable Legal
Requirements; and (C) before commencing any such work,
the Mortgagor shall have delivered to the Mortgagee the
Plans and a line item budget setting forth with
reasonable particularity the cost of completing such
work together with a certificate in a form, and from a
licensed architect certifying (1) that the execution of
the work described in the Plans will substantially
Restore the Mortgaged Property and (2) that the budget
constitutes a reasonable estimation of the cost of
Restoring the Mortgaged Property in accordance with the
Plans.
SECTION 3.05. Insurance Escrow. In order to
further secure the performance and discharge of the
Mortgagor's obligations under Sections 3.01, 3.02, 3.03 and
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3.04, but not in lieu of such obligations, the Mortgagor
shall, upon the occurrence of any Event of Default resulting
from the Mortgagor's breach of Section 3.01 and upon the
request of the Mortgagee, pay over to the Mortgagee an amount
equal to one-twelfth (1/12th) of the next maturing annual
Insurance Premiums of each month that has lapsed since the
last date to which such Insurance Premiums were paid; and the
Mortgagor shall, in addition, pay over to the Mortgagee, on
the first day of each month, sufficient funds (as estimated
from time to time by the Mortgagee in its sole discretion) to
permit the Mortgagee to pay said Insurance Premiums when due.
Such deposits shall not be, nor be deemed to be, trust funds
but may be commingled with the general funds of the Mortgagee,
and no interest shall be payable in respect thereof except as
required by law. Upon demand by the Mortgagee, the Mortgagor
shall deliver to the Mortgagee such additional monies as are
necessary to make up and deficiencies in the amounts necessary
to enable the Mortgagee to pay such Insurance Premiums when
due.
SECTION 3.06. Condemnation Proceedings and Awards.
(a) The Mortgagor represents and warrants that, to the best
of the Mortgagor's actual knowledge, without inquiry, as of
the date hereof, (i) there is no Condemnation affecting the
Property, (ii) there are no negotiations or proceedings which
might result in such a Condemnation and (iii) no such
Condemnation is proposed or threatened.
(b) In the event of any Condemnation or the
commencement of any negotiation or proceeding which might
result in a Condemnation or in the event of any proposed or
threatened Condemnation, the Mortgagor shall promptly after
receiving notice or obtaining knowledge thereof give notice
thereof to the Mortgagee. In the event of any such
Condemnation, (i) the Mortgagor shall, promptly after
receiving notice or obtaining knowledge thereof, do all things
deemed necessary or appropriate by the Mortgagor or requested
by the Mortgagee to preserve the Mortgagor's interest in such
Property and promptly make claim for the Awards payable with
respect thereto and diligently pursue to conclusion such claim
for such Awards and any suit, action or other proceeding
necessary or appropriate to obtain payment thereof; (ii) the
Mortgagor shall have no right to settle, and shall not settle,
any such claim, negotiation or proceeding without the consent
of the Mortgagee; and (iii) upon receipt and to the extent
required pursuant to the Indenture, the Mortgagor shall
promptly pay the Awards with respect to such Condemnation to
the Mortgagee for deposit in the Partnership Cash Collateral
Account to be held, applied and disbursed in accordance with
the Financing Documents.
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(c) In the event of any Condemnation affecting less
than all or substantially all of the Mortgaged Property (a
"Partial Taking"), the Mortgagor shall promptly Restore or
cause the Restoration of the Mortgaged Property substantially
in accordance with the provisions of Section 3.04, whether or
not the Awards with respect to such Partial Taking are
sufficient for such purpose. For the purposes of this Section
3.06, a taking of "substantially all" of the Mortgaged
Property shall mean a taking of so much of the Mortgaged
Property as, in the reasonable judgment of the Mortgagor,
shall render the remainder insufficient for the purpose for
which said Mortgaged Property was being used immediately prior
to such taking or if such taking results in the revocation of
any license necessary for the operation of the Mortgaged
Property as a hotel and casino. In the event that there shall
remain any balance of any Award after the payment of
settlement costs and the payment of costs of Restoration under
this Section 3.06, any balance shall be applied in accordance
with the Financing Documents.
(d) In the event that all or substantially all of
the Mortgaged Property is condemned, then such Award shall be
applied in accordance with the provisions of Section 4.10 of
the Indenture.
ARTICLE IV
DEFAULTS, REMEDIES AND RIGHTS
SECTION 4.01. Events of Default. (a) The failure
of the Mortgagor to observe or perform any of the provisions
of this Mortgage for a period of thirty (30) days after
receipt of a Notice of Default with respect to such failure
constitutes an Event of Default under the Indenture, the
occurrence of which, or of any other Event of Default set
forth in the Indenture, may result in a Notice of Acceleration
becoming effective pursuant to the terms of the Indenture and
the right of the Mortgagee to exercise its rights set forth in
Section 4.02.
(b) All notice and cure periods provided in the
Indenture and the other Financing Documents shall run
concurrently with any notice or cure periods provided under
applicable law.
SECTION 4.02. Remedies. (a) If following any
Event of Default any Notice of Acceleration is in effect, the
Mortgagee shall have the right and power to exercise any of
the following remedies and rights, subject to mandatory
provisions of applicable law, to wit:
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(i) to institute a proceeding or proceedings,
by judicial process or otherwise as provided under
applicable law, for the complete or partial
foreclosure of this Mortgage or the complete or
partial sale of the Mortgaged Property under the
power of sale hereunder or under any applicable
provision of law; or
(ii) to institute a suit, action or proceeding
for the specific performance of any of the provi-
sions of this Mortgage; or
(iii) to be entitled to the appointment of a
receiver, supervisor, trustee, liquidator, conserva-
tor or other custodian (a "Receiver") of the Mort-
gaged Property, upon notice to Mortgagor, to the
fullest extent permitted by law, as a matter of
right and without regard to, or the necessity to
disprove, the adequacy of the security for the
Secured Obligations or the solvency of the Mortgagor
or any other Obligor, and the Mortgagor hereby, to
the fullest extent permitted by applicable law,
irrevocably waives such necessity and consents to
such appointment, without notice, said appointee to
be vested with the fullest powers permitted under
applicable law, including to the extent permitted
under applicable law those under clause (iv) of this
subsection (a); or
(iv) to the fullest extent permitted by law, in
the name of the Mortgagee or a Receiver as required
by law (whichever is the Person exercising the
rights under this clause) or, at such Person's
option, in the name of the Mortgagor, to collect,
receive, sue for and recover all Rents and proceeds
of or derived from the Mortgaged Property, and after
deducting therefrom all costs, expenses and liabili-
ties of every character incurred by the Person exer-
cising the rights under this clause in collecting
the same and in using, operating, managing, preserv-
ing and controlling the Mortgaged Property and
otherwise in exercising the rights under clause
(iii) of this subsection (a) or any other rights
hereunder, including all amounts necessary to pay
Impositions, Rents, Insurance Premiums and other
costs, expenses and liabilities relating to the
Property, as well as reasonable compensation for the
services of such Person and its managers, employees,
contractors, agents or other representatives, to
apply the remainder as provided in Section 4.06; or
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(v) to take any action with respect to any
Mortgaged Property permitted under the UCC; or
(vi) to take any other action, or pursue any
other remedy or right, as the Mortgagee may have
under applicable law, and the Mortgagor does hereby
grant the same to the Mortgagee.
(b) To the fullest extent permitted by applicable
law,
(i) each remedy or right hereunder shall be in
addition to, and not exclusive or in limitation of,
any other remedy or right hereunder, under any other
Financing Document or under applicable law;
(ii) every remedy or right hereunder, under any
other Financing Document or under applicable law may
be exercised concurrently or independently and
whenever and as often as deemed appropriate by the
Mortgagee;
(iii) no failure to exercise or delay in exer-
cising any remedy or right hereunder, under any
other Financing Document or under applicable law
shall be construed as a waiver of any Default
hereunder or under any other Financing Document;
(iv) no waiver of, failure to exercise or delay
in exercising any remedy or right hereunder, under
any other Financing Document or under applicable law
upon any Default hereunder or under any other
Financing Document shall be construed as a waiver
of, or otherwise limit the exercise of, such remedy
or right upon a Notice of Acceleration given upon
any other or subsequent Event of Default;
(v) no single or partial exercise of any
remedy or right hereunder, under any other Financing
Document or under applicable law shall preclude or
otherwise limit the exercise of any other remedy or
right hereunder, under any other Financing Document
or under applicable law upon a Notice of
Acceleration given after such Event of Default or
upon any other or subsequent Event of Default;
(vi) the acceptance by the Mortgagee or any
other Secured Party of any payment less than the
amount of the Secured Obligation in question shall
be deemed to be an acceptance on account only and
shall not be construed as a waiver of any Default
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hereunder or under any other Financing Document with
respect thereto; and
(vii) the acceptance by the Mortgagee or any
other Secured Party of any payment of, or on account
of, any Secured Obligation shall not be deemed to be
a waiver of any Default hereunder or under any other
Financing Document with respect to any other Secured
Obligation.
(c) If the Mortgagee has proceeded to enforce any
remedy or right hereunder or with respect hereto by
foreclosure or otherwise, it may compromise, discontinue or
abandon such proceeding for any reason without notice to the
Mortgagor or any other Person (other than other Secured
Parties as may be required by the other Financing Documents);
and, in the event that any such proceeding shall be
discontinued, abandoned or determined adversely for any
reason, the Mortgagor and the Mortgagee shall retain and be
restored to their former positions and rights hereunder with
respect to the Mortgaged Property, subject to the Lien hereof
except to the extent any such adverse determination
specifically provides to the contrary.
(d) For the purpose of carrying out any provisions
of Section 2.01(c), 4.02(a)(iii), 4.02(a)(iv), 4.05, 4.07 or
4.10 or any other provision hereunder authorizing the
Mortgagee or any other Person to perform any action on behalf
of the Mortgagor, the Mortgagor hereby irrevocably appoints
the Mortgagee or a Receiver appointed pursuant to Section
4.02(a)(iii) or such other Person (as the case may be as the
Person appointed under this subsection) as the
attorney-in-fact of the Mortgagor (with a power to substitute
any other Person in its place as such attorney-in-fact) to act
in the name of the Mortgagor or, at the option of the Person
appointed to act under this subsection, in such Person's own
name, to take the action authorized under Section 2.01(c),
4.02(a)(iv), 4.05, 4.07 or 4.10 or such other provision, and
to execute, acknowledge and deliver any document in connection
therewith or to take any other action incidental thereto as
the Person appointed to act under this subsection shall deem
appropriate in its discretion; and the Mortgagor hereby
irrevocably authorizes and directs any other Person to rely
and act on behalf of the foregoing appointment and a
certificate of the Person appointed to act under this
subsection that such Person is authorized to act under this
subsection; provided, with respect to Section 2.01(c), the
power of attorney granted in this Section 4.02(d) shall not be
effective unless an Event of Default shall have occurred and
be continuing.
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SECTION 4.03. Waivers by the Mortgagor. (a) To the
fullest extent permitted under applicable law, the Mortgagor
shall not assert, and hereby irrevocably waives, any right or
defense the Mortgagor may have under any statute or rule of
law or equity now or hereafter in effect relating to (i)
appraisement, valuation, homestead exemption, extension,
moratorium, stay, statute of limitations, redemption,
marshalling of the Mortgaged Property or the other assets of
the Mortgagor, sale of the Mortgaged Property in any order or
notice of deficiency or intention to accelerate any Secured
Obligation; (ii) impairment of any right of subrogation or
reimbursement; (iii) any requirement that at any time any
action must be taken against any other Person, any portion of
the Mortgaged Property or any other asset of the Mortgagor or
any other Person; (iv) any provision barring or limiting the
right of the Mortgagee to sell any Mortgaged Property after
any other sale of any other Mortgaged Property or any other
action against the Mortgagor or any other Person; (v) any
other provision of applicable law which might defeat, limit or
adversely affect any right or remedy of the Mortgagee or the
holders of the Secured Obligations under or with respect to
this Mortgage or any other Security Document as it relates to
any Mortgaged Property; (vi) the fact that there has occurred
without the Mortgagor's knowledge or consent any amendment or
modification of, or supplement to, any of the Financing
Documents to which it is a party or any part thereof, or any
assignment or transfer of any thereof, or any furnishing or
acceptance of additional security, or any release of, loss,
alteration or dealing with, any Collateral, or any change in,
modification of or any extension of, the Secured Obligations,
whether or not any of the foregoing is made in accordance with
the terms of any of the Financing Documents, provided, that
none of the foregoing is prohibited by the Wraparound
Mortgage; (viii) any failure on the part of the Company or
CPPI to perform or comply with any of the Financing Documents
or any failure of the Mortgagee to compel strict performance
or compliance with any terms of any of the Financing
Documents; (ix) any failure of the Mortgagee to retain or
preserve any rights against the Company or CPPI or any person
pursuant to the Financing Documents or against the Mortgaged
Property or any part thereof, or any failure to perfect or
delay in perfection or failure to continue the perfection of,
the Mortgagee's security interest in the Mortgaged Property or
any part thereof, or the invalidity of any such rights which
the Mortgagee may attempt to obtain or enforce; (x) the lack
of prior enforcement by the Mortgagee of any rights against
the Company or CPPI or any other person or in or against the
Mortgaged Property or any part thereof; or (xi) the right of
the Mortgagee to foreclose this Mortgage in its own name on
behalf of all of the Secured Parties by judicial action as the
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real party in interest without the necessity of joining any
other Secured Party.
(b) Except for the proper delivery of a notice of
Default or Notice of Acceleration, the Mortgagor hereby
unconditionally waives (i) notice of any of the matters
referred to in subparagraph (a) hereof; (ii) all notices which
may be required or provided by statute, rule of law or
otherwise to preserve any rights against the Mortgagor
hereunder, including any demand, protest, proof or notice of
nonperformance or non-compliance of any of the Secured
Obligations; (iii) any requirement for the enforcement,
assertion or exercise of any right, remedy, power or privilege
under or in respect of any of the Financing Documents either
against the Mortgaged Property or any part thereof or CPPI;
(iv) any requirement to mitigate the damages resulting from a
default by the Company, CPPI or the Mortgagor under the
Financing Documents; and (v) any requirement that the
Mortgagor be joined as a party to any proceedings against the
Company or CPPI for the enforcement of any provisions of any
of the Financing Documents.
SECTION 4.04. Jurisdiction and Process. (a) To
the extent permitted under applicable law, in any suit, action
or proceeding arising out of or relating to this Mortgage or
any other Security Document as it relates to any Mortgaged
Property, the Mortgagor irrevocably consents to the
jurisdiction of any state or federal court sitting in the
State in which the Property is located and irrevocably waives
any defense or objection which it may now or hereafter have to
the jurisdiction of such court or the venue of such court for
or the convenience of such court as the forum for any such
suit, action or proceeding.
(b) Nothing in this Section shall affect the right
of the Mortgagee to bring any suit, action or proceeding
arising out of or relating to this Mortgage or any other
Security Document in any court having jurisdiction under the
provisions of any other Security Document or applicable law or
to serve any process, notice of sale or other notice in any
manner permitted by any other Security Document or applicable
law.
SECTION 4.05. Sales. Except as otherwise provided
herein, to the fullest extent permitted under applicable law,
at the election of the Mortgagee, the following provisions
shall apply to any sale of the Mortgaged Property pursuant to
Section 4.02:
(a) The Mortgagee or the court officer
(whichever is the Person conducting any sale) may
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conduct any number of sales from time to time. The
power of sale hereunder or with respect hereto shall
not be exhausted by any sale as to any part or
parcel of the Mortgaged Property which is not sold,
unless and until the Secured Obligations shall have
been paid in full, and shall not be exhausted or
impaired by any sale which is not completed or is
defective. Any sale may be as a whole or in part or
parcels and as provided in Section 4.03, the
Mortgagor has thereby waived its right to direct the
order in which the Mortgaged Property or any part or
parcel thereof is sold.
(b) Any sale may be postponed or adjourned by
public announcement at the time and place appointed
for such sale or for such postponed or adjourned
sale without further notice.
(c) After each sale, the Person conducting
such sale shall execute and deliver to the purchaser
or purchasers at such sale a good and sufficient
instrument or instruments granting, conveying,
assigning and transferring all right, title and
interest of the Mortgagor in and to the Mortgaged
Property sold and shall receive the proceeds of such
sale and apply the same as provided in Section 4.06.
The Mortgagor hereby irrevocably appoints the Person
conducting such sale as the attorney-in-fact of the
Mortgagor (with full power to substitute any other
Person in its place as such attorney-in-fact) to act
in the name of the Mortgagor or, at the option of
the Person conducting such sale, in such Person's
own name, to make without warranty or representation
by or recourse to such Person any conveyance,
assignment, transfer or delivery of the Mortgaged
Property sold, and to execute, acknowledge and
deliver any instrument of conveyance, assignment,
transfer or delivery or other document in connection
therewith or to take any other action incidental
thereto, as the Person conducting such sale shall
deem appropriate in its discretion; and the
Mortgagor hereby irrevocably authorizes and directs
any other Person to rely and act upon the foregoing
appointment and a certificate of the Person conduct-
ing such sale that such Person is authorized to act
hereunder. Nevertheless, upon the request of such
attorney-in-fact the Mortgagor shall promptly
execute, acknowledge and deliver any documentation
which such attorney-in-fact may require for the
purpose of ratifying, confirming or effectuating the
powers granted hereby or any such conveyance,
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assignment, Transfer or delivery by such attorney-
in-fact.
(d) Any statement of fact or other recital
made in any instrument referred to in Section
4.05(c) given by the Person conducting any sale as
to the nonpayment of any Secured Obligation, the
occurrence of any Notice of Acceleration is in
effect, the amount of the Secured Obligations due
and payable, the request to the Mortgagee to sell,
the notice of the time, place and terms of sale and
of the Mortgaged Property to be sold having been
duly given, the refusal, failure or inability of the
Mortgagee to act, the appointment of any substitute
or successor agent, any other act or thing having
been duly done by the Mortgagor, the Mortgagee or
any other such Person, shall be taken as conclusive
and binding against all other Persons as evidence of
the truth of the facts so stated or recited.
(e) The receipt by the Person conducting any
sale of the purchase money paid at such sale shall
be sufficient discharge therefor to any purchaser of
any Mortgaged Property sold, and no such purchaser,
or its representatives, grantees or assigns, after
paying such purchase price and receiving such
receipt, shall be bound to see to the application of
such purchase price or any part thereof upon or for
any trust or purpose of this Mortgage or, in any
manner whatsoever, be answerable for any loss,
misapplication or nonapplication of any such
purchase money or be bound to inquire as to the
authorization, necessity, expediency or regularity
of such sale.
(f) Subject to mandatory provisions of
applicable law, any sale shall operate to divest all
of the estate, right, title, interest, claim and
demand whatsoever, whether at law or in equity, of
the Mortgagor in and to the Mortgaged Property sold,
and shall be a perpetual bar both at law and in
equity against the Mortgagor and any and all Persons
claiming such Mortgaged Property or any interest
therein by, through or under the Mortgagor.
(g) At any sale, the Mortgagee may bid for and
acquire the Mortgaged Property sold and, in lieu of
paying cash therefor, may make settlement for the
purchase price by causing the Secured Parties to
credit against the Secured Obligations, including
the expenses of the sale and the cost of any
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enforcement proceeding hereunder, the amount of the
bid made therefor to the extent necessary to satisfy
such bid.
(h) If the Mortgagor or any Person claiming
by, through or under the Mortgagor shall transfer or
fail to surrender possession of the Mortgaged
Property, after any sale of the Mortgaged Property
pursuant hereto, then the Mortgagor or such Person
shall be deemed a tenant at sufferance of the
purchaser at such sale, subject to eviction by means
of summary process for possession of land, or
subject to any other right or remedy available
hereunder or under applicable law.
(i) Upon any sale, it shall not be necessary
for the Person conducting such sale to have any
Mortgaged Property being sold present or construc-
tively in its possession.
(j) The Mortgagee may at any time institute
suit for the collection of the Secured Obligations
or for the foreclosure of this Mortgage; or if the
Mortgagee should institute a suit for collection of
the Secured Obligations or the foreclosure of this
Mortgage, the Mortgagee may at any time before the
entry of final judgment in said suit dismiss the
same and sell the Mortgaged Property in accordance
with the provisions of this Mortgage.
SECTION 4.06. Proceeds. Except as otherwise
provided herein or required under applicable law, the proceeds
of any sale of the Mortgaged Property hereunder, whether made
pursuant to the power of sale hereunder, any judicial
proceeding or any judgment or decree of foreclosure or sale or
otherwise shall be applied and paid as follows:
(a) First: to pay of all expenses of such
sale, including compensation for the Person
conducting such sale (which may include the Mort-
gagee), the cost of title searches, foreclosure
certificates and attorneys' fees and expenses
incurred by such Person;
(b) Second: to the payment of the expenses
and other amounts payable under Section 4.10, if
any;
(c) Third: to the payment of the other
Secured Obligations in the order and priority set
forth in Section 3.02 of the Collateral Trust
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Agreement, until all Secured Obligations shall have
been paid in full; and
(d) Fourth: to the payment of the surplus, if any,
to the relevant Obligor or its successors and assigns, or
as a court of competent jurisdiction may direct.
SECTION 4.07. Assignment of Operating Leases. (a)
Subject to paragraph (d) below, the assignments of the
Operating Leases and the other Leases and the Rents under
Granting Clauses V and VI and under the Assignment of
Operating Leases are and shall be present, absolute and
irrevocable assignments by the Mortgagor to the Mortgagee and,
subject to the license to the Mortgagor under Section 4.07(b),
the Mortgagee or a Receiver appointed pursuant to Section
4.02(a)(iii) (as the case may be as the Person exercising the
rights under this Section) shall have the absolute, immediate
and continuing right to collect and receive all Rents now or
hereafter, including during any period of redemption, accruing
with respect to the Property. At the request of the Mortgagee
or such Receiver, the Mortgagor shall promptly execute,
acknowledge, deliver, record, register and file any specific
assignment of Lease in addition to the Assignment of Operating
Leases which the Mortgagee or such Receiver may require from
time to time (all in form and substance satisfactory to the
Mortgagee or such Receiver) to effectuate, complete, perfect,
continue or preserve the assignments of the Operating Leases
or the other Leases and the Rents under Granting Clauses V and
VI and under the Assignment of Operating Leases.
(b) In the absence of a Notice of Acceleration, the
Mortgagor shall have a license granted hereby to collect and
receive all Rents and apply the same subject to the provisions
of the Financing Documents to which it is a party. This
license shall terminate, at the option of the Mortgagee, if a
Notice of Acceleration shall be in effect.
(c) If any Notice of Acceleration shall be in
effect, the Mortgagee or a Receiver appointed pursuant to
Section 4.02(a)(iii) (as the case may be as the Person
exercising the rights under this Section) shall have the right
to terminate the license granted under Section 4.07(b), upon
notice to the Mortgagor, and to exercise the rights and
remedies provided under Section 4.07(a), under Section
4.02(a)(iv) or under applicable law. If a Notice of
Acceleration is in effect, upon demand by the Person
exercising the rights under this Section, the Mortgagor shall
promptly pay to such Person all Security Deposits under any
Lease and all Rents allocable to any period after such Notice
of Acceleration is given. Subject to Section 4.02(a)(iv) and
any applicable requirement of law, any Rents received
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hereunder by such Receiver shall be promptly paid to the
Mortgagee, and any Rents received hereunder by the Mortgagee
shall be deposited in the Partnership Cash Collateral Account,
to be held, applied and disbursed as provided in the
Collateral Trust Agreement, provided that, subject to Section
4.02(a)(iv) and any applicable requirement of law, any
Security Deposits actually received by such Receiver shall be
promptly paid to the Mortgagee, and any Security Deposits
actually received by the Mortgagee shall be held, applied and
disbursed as provided in the applicable Leases and applicable
law.
(d) Nothing herein shall be construed to be an
assumption by the Person exercising the rights under this
Section, or otherwise to make such Person liable for the
performance, of any of the obligations of the Mortgagor under
the Operating Leases or the other Leases, provided that such
Person shall be accountable as provided in Section 4.07(c) for
any Rents or Security Deposits actually received by such
Person. The Mortgagee acknowledges that the Mortgagor has
informed it that as of the date hereof no Security Deposits
are being held by the Mortgagor.
SECTION 4.08. Dealing With the Mortgaged Property.
Subject to Section 6.02, the Mortgagee shall have the right to
release any portion of the Mortgaged Property to or at the
request of the Mortgagor, for such consideration as the
Mortgagee may require without, as to the remainder of the
Mortgaged Property, in any way impairing or affecting the Lien
or priority of this Mortgage, or improving the position of any
subordinate lienholder with respect thereto, or the position
of any guarantor, endorser, co-maker or other obligor of the
Secured Obligations, except to the extent that the Secured
Obligations shall have been reduced by any actual monetary
consideration received for such release and applied to the
Secured Obligations, and may accept by assignment, pledge or
otherwise any other property in place thereof as the Mortgagee
may require without being accountable therefor to any other
lienholder.
SECTION 4.09. Right of Entry. The Mortgagee and
the representatives of the Mortgagee shall have the right,
(i) without notice, if a Notice of Acceleration is in effect,
(ii) with simultaneous notice, if any payment or performance
is necessary in the opinion of the Mortgagee to preserve the
Mortgagee's rights under this Mortgage or with respect to the
Mortgaged Property, or (iii) after reasonable notice, in all
other cases, to enter upon the Property at reasonable times,
and with reasonable frequency, to inspect the Mortgaged
Property or, subject to the provisions hereof, to exercise any
right, power or remedy of the Mortgagee hereunder, provided
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that any Person so entering the Property shall not
unreasonably interfere with the ordinary conduct of the
business conducted at the Property, and provided further that
no such entry on the Property, for the purpose of performing
obligations under Section 4.10 or for any other purpose, shall
be construed to be (x) possession of the Property by such
Person or to constitute such Person as a mortgagee in
possession, unless such Person exercises its right to take
possession of the Property or (y) a cure of any Default or
waiver of any Default or Secured Obligation.
SECTION 4.10. Right to Perform Obligations. If the
Mortgagor fails to pay or perform any obligation of the
Mortgagor hereunder, the Mortgagee and the representatives of
the Mortgagee shall have the right, (i) without notice if a
Notice of Acceleration is in effect, (ii) with simultaneous
notice if such payment or performance is necessary in the
opinion of the Mortgagee to preserve the Mortgagee's rights
under this Mortgage or with respect to the Mortgaged Property,
or (iii) after notice given reasonably in advance to allow the
Mortgagor an opportunity to cure, if no Notice of Acceleration
is in effect, to pay or perform such obligation, provided the
Mortgagor is not contesting payment or performance in
accordance with the terms hereof and further provided that no
such payment or performance shall be construed to be a cure of
any Default or waiver of any Default or Secured Obligation.
SECTION 4.11. Concerning the Mortgagee. The
provisions of Article VI of the Collateral Trust Agreement
shall inure to the benefit of the Mortgagee in respect of this
Mortgage and shall be binding upon the parties to the
Indenture in such respect. In furtherance and not in
derogation of the rights, privileges and immunities of the
Mortgagee therein set forth:
(i) The Mortgagee is authorized to take all
such action as is provided to be taken by it as
Mortgagee hereunder and all other action incidental
thereto. As to any matters not expressly provided
for herein (including the timing and methods of
realization upon the Mortgaged Property) the
Mortgagee shall act or refrain from acting in
accordance with written instructions from the
Holders of a majority in principal amount of the
then outstanding Notes or, in the absence of such
instructions, in accordance with its discretion.
(ii) The Mortgagee shall not be responsible
for the existence, genuineness or value of any of
the Mortgaged Property or for the validity, perfec-
tion, priority or enforceability of the Lien of this
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Mortgage on any of the Mortgaged Property, whether
impaired by operation of law or by reason of any
action or omission to act on its part hereunder.
The Mortgagee shall have no duty to ascertain or
inquire as to the performance or observance of any
of the terms of this Mortgage by the Mortgagor.
ARTICLE V
SECURITY AGREEMENT AND FIXTURE FILING
SECTION 5.01. Security Agreement. To the extent
that the Mortgaged Property constitutes or includes personal
property, including goods or items of personal property which
are or are to become fixtures under applicable law, the
Mortgagor hereby grants a security interest therein and this
Mortgage shall also be construed as a pledge and a security
agreement under the UCC; and, if any Notice of Acceleration is
in effect, the Mortgagee shall be entitled with respect to
such personal property to all remedies available under the UCC
and all other remedies available under applicable law.
Without limiting the foregoing, any personal property may, at
the Mortgagee's option and, except as otherwise required by
applicable law, without the giving of notice, (i) be sold
hereunder, (ii) be sold pursuant to the UCC or (iii) be dealt
with by the Mortgagee in any other manner permitted under
applicable law. The Mortgagee may require the Mortgagor to
assemble the personal property and make it available to the
Mortgagee at a place to be designated by the Mortgagee. If
any Notice of Acceleration is in effect, the Mortgagee shall
be the attorney-in-fact of the Mortgagor with respect to any
and all matters pertaining to the personal property with full
power and authority to give instructions with respect to the
collection and remittance of payments, to endorse checks, to
enforce the rights and remedies of the Mortgagor and to
execute on behalf of the Mortgagor and in Mortgagor's name any
instruction, agreement or other writing required therefor.
The Mortgagor acknowledges and agrees that a disposition of
the personal property in accordance with the Mortgagee's
rights and remedies in respect to the Property as heretofore
provided is a commercially reasonable disposition thereof.
Notwithstanding the foregoing, to the extent that the
Mortgaged Property includes personal property covered by the
Security Agreement or any other Security Document, the
provisions of the Security Agreement or such other Security
Document shall govern with respect to such personal property.
SECTION 5.02. Fixture Filing. To the extent that
the Mortgaged Property includes goods or items of personal
property which are or are to become fixtures under applicable
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<PAGE>
law, the filing of this Mortgage in the real estate records of
the county in which the Mortgaged Property is located shall
also operate from the time of filing as a fixture filing with
respect to such Mortgaged Property, and the following
information is applicable for the purpose of such fixture
filing, to wit:
(a) Name and Address of the debtor:
Atlantic City Boardwalk Association, L.P.
Indiana Avenue and the Boardwalk
Atlantic City, New Jersey 08401
(b) Name and Address of the secured party:
IBJ Schroder Bank & Trust Company
1 State Street
11th Floor
New York, New York 10004
(c) This document covers goods or items of personal
property which are or are to become fixtures upon the
Property.
(d) The name of the record owner of the real estate
on which such fixtures are or are to be located is Atlantic
City Boardwalk Associates, L.P.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Estoppel Certificates. The Mortgagor
agrees, at any time and from time to time prior to payment in
full of the Secured Obligations, upon not less than ten (10)
days' notice by the Mortgagee, to execute, acknowledge and
deliver to the Mortgagee or any proposed assignee of this
Mortgage, a certificate stating (a) that this Mortgage is
unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as
modified and stating the modifications); (b) whether or not,
to the best knowledge of the signer of such certificate, the
Mortgagor is in default in performance of any term, covenant
or condition contained in this Mortgage and, if so, specifying
each such default of which the signer may have knowledge; (c)
whether or not, to the best knowledge of the signer of such
certificate, the Mortgagor has any offsets, counterclaims or
defenses to the payment of any of the Secured Obligations and
other charges payable hereunder and if so, specifying each
such offset, counterclaim or defense of which the signer may
have knowledge; and (d) as to such other matters may be
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<PAGE>
reasonably requested by the party requesting such certificate,
it being intended that any such statement delivered pursuant
to this Section may be relied upon by any prospective
purchaser of the interest of the Mortgagee or any grantee
thereof, or any prospective assignee thereof, or by any
prospective assignee of the Mortgaged Property.
SECTION 6.02. Release of Mortgaged Property. (a)
This Mortgage shall cease, terminate and thereafter be of no
further force or effect in the event all of the Secured
Obligations shall have been paid, performed and satisfied in
full.
(b) Any termination or release required or
permitted under this Section 6.02 shall be at the Mortgagor's
request and expense and either in the statutory form or in a
form reasonably satisfactory to the Mortgagee.
SECTION 6.03. Notices. All notices, approvals,
requests, demands and other communications hereunder
(including any modifications of, or waivers or consents under
this Mortgage) shall be given or made by telex, telegraph,
telecopy, cable or other writing and telexed, telecopied,
telegraphed, cabled, mailed or delivered to the intended
recipient at the following addresses, or at such other address
as shall be designated by such party in a notice to the
Mortgagor and the Mortgagee in accordance with this Section
6.03:
If to the Mortgagor, to it at:
Atlantic City Boardwalk Associates, L.P.
Indiana Avenue and the Boardwalk
Atlantic City, New Jersey 08401
With copies to:
Atlantic City Boardwalk Associates, L.P.
c/o Gerald Heetland, Esq.
2880 West Meade Avenue
Suite 201
Las Vegas, Nevada 89102
Alan Wovsaniker, Esq.
Lowenstein, Sandler, Kohl, Fisher & Boylan
65 Livingstone Avenue
Roseland, New Jersey 07068-1791
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<PAGE>
If to the Mortgagee, to it at:
IBJ Schroder Bank & Trust Company
1 State Street
11th Floor
New York, New York 10004
Except as otherwise provided in this Mortgage, all such
communications shall be deemed to have been duly given when
transmitted by telex or telecopier, delivered to the telegraph
or cable office or personally delivered or, in the case of a
mailed notice, upon receipt, in each case given or addressed
as aforesaid.
SECTION 6.04. Amendments in Writing. No provision
of this Mortgage shall be modified, waived or terminated, and
no consent to any departure by the Mortgagor from any
provision of this Mortgage shall be effective, unless the same
shall be by an instrument in writing, signed by the Mortgagor
and the Mortgagee with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (or
in the case of Section 6.02 or this Section, all of the
Noteholders). Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for
which given.
SECTION 6.05. Severability. All rights, powers and
remedies provided in this Mortgage may be exercised only to
the extent that the exercise thereof does not violate appli-
cable law, and all the provisions of this Mortgage are
intended to be subject to all mandatory provisions of applica-
ble law and to be limited to the extent necessary so that they
will not render this Mortgage illegal, invalid, unenforceable
or not entitled to be recorded, registered or filed under
applicable law. If any provision of this Mortgage or the
application thereof to any Person or circumstance shall, to
any extent, be illegal, invalid or unenforceable, or cause
this Mortgage not to be entitled to be recorded, registered or
filed, the remaining provisions of this Mortgage or the
application of such provision to other Persons or
circumstances shall not be affected thereby, and each provi-
sion of this Mortgage shall be valid and be enforced to the
fullest extent permitted under applicable law.
SECTION 6.06. Binding Effect. (a) The provisions
of this Mortgage shall be binding upon and inure to the
benefit of each of the parties hereto and their respective
successors and assigns.
(b) To the fullest extent permitted under applica-
ble law, the provisions of this Mortgage binding upon the
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Mortgagor shall be deemed to be covenants which run with the
land.
(c) Nothing in this Section shall be construed to
permit the Mortgagor to Transfer or grant a Lien upon the
Mortgaged Property contrary to the provisions of the
Indenture.
SECTION 6.07. GOVERNING LAW. THIS MORTGAGE SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW JERSEY.
SECTION 6.08. Receipt of True Copy. THE MORTGAGOR
HEREBY ACKNOWLEDGES RECEIPT OF A TRUE COPY OF THE WITHIN
MORTGAGE WITHOUT CHARGE.
SECTION 6.09. Non-Recourse. No general or limited
partner of the Mortgagor nor any of their respective agents,
officers, directors or employees as such shall be personally
liable to any Secured Party or other person for any
obligations of the Mortgagor (or the Company or the
Guarantors) under this Mortgage or any of the other Financing
Documents or for any claim based upon or in respect of such
obligations. In addition, the Mortgagor shall not have
general liability for any such obligations, recourse to the
Mortgagor in respect of all such obligations being expressly
limited to the Collateral. Nothing contained in this Section
shall limit, restrict or impair the rights of the Mortgagor,
the Trustee or the Noteholders to take actions or bring suit
against any person to enforce such obligations and the
remedies provided in the Financing Documents (so long as none
of the Mortgagor, its general or limited partners, nor their
respective agents, officers, directors or employees as such
shall have any personal liability thereon, satisfaction
thereon being limited to the Collateral). Each Noteholder, by
accepting a Note, irrevocably waives and releases all such
liability. The waiver and release contained herein are part
of the consideration for the granting of the Mortgage and
related security interests by the Mortgagor.
SECTION 6.10. Operating Leases. So long as the
Operating Leases are in full force and effect, to the extent
any of Sections 2.03, 2.04(b)(i) and (ii), 2.06(i), 3.01, 3.03
and 3.06(b) are inconsistent with a substantially comparable
provision of the Operating Leases and CPPI is in compliance
with its obligations under such comparable provisions, the
Mortgagor shall be deemed to be in compliance hereunder.
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IN WITNESS WHEREOF, the Mortgagor has executed and
delivered this Mortgage as of the day first set forth above.
ATLANTIC CITY BOARDWALK
ASSOCIATES, L.P.
(Seal)
By:________________________
Name:
Title: General Partner
By:________________________
Name:
Title: General Partner
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<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this ____ day of January
___, 1994, before me, the subscriber, a Notary Public of the
State of New York, personally appeared ______________________,
General Partner of Atlantic City Boardwalk Associates, L.P., a
New Jersey limited partnership, who, I am satisfied, is the
person who has signed the within instrument; and having first
made known to him the contents thereof, he thereupon
acknowledged that he signed and delivered the within instrument
as his voluntary act and deed and as the voluntary act and deed
of Atlantic City Boardwalk Associates, L.P., a New Jersey
limited partnership.
___________________________
Notary Public
My Commissions Expires:
_________________________________
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<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this ____ day of January
___, 1994, before me, the subscriber, a Notary Public of the
State of New York, personally appeared _____________________,
General Partner of Atlantic City Boardwalk Associates, L.P., a
New Jersey limited partnership, who, I am satisfied, is the
person who has signed the within instrument; and having first
made known to him the contents thereof, he thereupon
acknowledged that he signed and delivered the within instrument
as his voluntary act and deed and as the voluntary act and deed
of Atlantic City Boardwalk Associates, L.P., a New Jersey
limited partnership.
_________________________
Notary Public
My Commissions Expires:
____________________________________
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<PAGE>
EXHIBIT A
Description of the Land
TRACT I:
BEGINNING in the Northeasterly line of Indiana Avenue
(60 feet wide) at a point 150 feet Southeastwardly of the
Southeasterly line of Pacific Avenue (60 feet wide) and
extending
1. North 62 degrees 32 minutes East, parallel with
Pacific Avenue, 155 fee; thence
2. South 27 degrees 28 minutes East, parallel with
Indiana Avenue, 50.10 feet; thence
3. South 62 degrees 32 minutes West, parallel with
Pacific Avenue 155 fee to the first mentioned Northeasterly
line of Indiana Avenue; thence
4. North 27 degrees 28 minutes West, along same,
50.10 feet to the point and place of BEGINNING.
TRACT II:
BEGINNING in the Southwesterly line of Indiana Avenue
(60 feet wide) at a point 150 feet Southeastwardly of the
Southeasterly line of Pacific Avenue (60 feet wide) and
extending:
1. South 27 degrees 28 minutes East, along said
Southwesterly line of Indiana Avenue, 300 feet; thence
2. South 62 degrees 32 minutes West, parallel with
Pacific Avenue, 138.10 feet to the Northeasterly line of Park
Place, (60 feet wide); thence
3. North 27 degrees 28 minutes West, along same, 300
feet; thence
4. North 62 degrees 32 minutes West, parallel with
Pacific Avenue, 138.10 feet to the point and place of
BEGINNING.
<PAGE>
TRACT III:
BEGINNING in the Northeasterly line of Ohio Avenue,
(50 feet wide) at a point 200 feet Southeastwardly of the
Southeasterly line of Pacific Avenue (60 feet wide), and
extending
1. North 62 degrees 32 minutes East, parallel with
Pacific Avenue, 145.60 feet to the Southwesterly line of Park
Place, (60 feet wide); thence
2. South 27 degrees 28 minutes East, along same, 150
feet; thence
3. South 62 degrees 32 minutes West, parallel with
Pacific Avenue, 145.60 feet to the First mentioned
Northeasterly line of Ohio Avenue; thence
4. North 27 degrees 28 minutes West, along same, 150
feet to the point and place of BEGINNING
TRACT IV: AIR RIGHTS
ALL THAT CERTAIN real property in the City of
Atlantic City, County of Atlantic, State of New Jersey, which
lies above (but not below) the horizontal plane the elevation
of which is 26.0 feet above that certain datum level which
designates as zero an elevation equal to mean sea level at
Atlantic City, as computed and established by the United States
Coast and Geodetic Survey and which lies below (but not above)
another horizontal plane the elevation of which is 71.5 feet
above said datum level, and which is bounded by and lies within
that certain plot or parcel described as follows:
ALL THAT CERTAIN lot, tract, or parcel of land and
premises, situate, lying and being in the City of Atlantic
City, County of Atlantic, and State of New Jersey, bounded and
described as follows:
BEGINNING at a point in the Westerly line of Park
Place (60 feet wide), said point being distant 200.00 feet
South of the Southerly line of Pacific Avenue (60 feet wide),
and extending from said beginning point; thence
1. South 27 degrees 28 minutes 00 seconds West, in
and along the Westerly line of Park Place, a distance of 150.00
feet to a point; thence
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<PAGE>
2. North 89 degrees 42 minutes 23 seconds East,
crossing Park Place, a distance of 67.44 feet to the easterly
line of Park Place; thence
3. North 27 degrees 28 minutes 00 seconds West, in
and along the easterly line of Park Place, a distance of 180.80
feet; thence
4. South 62 degrees 32 minutes 00 seconds West
crossing Park Place, a distance of 60.00 feet to the point and
place of BEGINNING.
TOGETHER with the benefits of a certain easement from
the City of Atlantic City to Del E. Webb New Jersey, Inc. dated
3-20-86, recorded in Deed Book 4216, page 299.
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<PAGE>
EXHIBIT B
Permitted Encumbrances
The following exceptions described in Schedule B, Part II
to that certain title policy commitment number 30876
issued with respect to the Property by First American
Title Insurance Company dated November 23, 1993 and
revised ________________, 1994:
Building restrictions as in Deed Book 46, page 29.
(Affects Track I)
Building restrictions as in Deed Book 72, pages 655 and
658. (Affects southerly 200 feet of Tract II)
Building restrictions as in Deed Book 74, page 544, Deed
Book 75, page 699 and Deed Book 84, page 474 and 476.
(Affects northerly 50 feet of Tract II)
Building restrictions as in Deed Book 73, page 7.
(Affects northerly 50 feet of Tract III)
Building restrictions as in Deed Book 76, page 41.
(Affects southerly 150 feet of Tract II)
Rights granted to the Atlantic City Electric Company in
Deed Book 969, page 124. (Affects Tract I)
Rights granted to the Atlantic City Electric Company in
Deed Book 939, page 384. (Affects southerly 200 feet to
Tract II)
Rights granted to Atlantic City Electric Company in Deed
Book 939, page 206. (Affects northerly 50 feet of Tract
III)
Easement to Del E. Webb New Jersey, Inc. in Deed Book
4216, Page 299, assigned to Atlantic City Boardwalk
Associates, L.P. in Deed Book 4921, page 341.
Subject to the terms and conditions of the Deed for Air
Rights over Park Place recorded in Deed Book 4216, Page
295.
Easement granted by Claridge at Park Place Inc., trading
as Del E. Webb's Claridge Casino Hotel;e to Great Bay
Hotel and Casino Inc., trading as Sands Hotel Casino &
Country Club, in Deed Book 4651, Page 347 and re-recorded
in Deed Book 4672, Page 59.
<PAGE>
Based upon a survey made by Robert J. C & Associates, P.A.
dared 1-18-89, the Company hereby insured against loss or
damage which the insured shall sustain by reason of any
encroachments, overlaps, boundary line disputes or
easements, except as follows:
TRACT I: Brick wall encroaches into bed of Indiana Avenue
TRACT II: (a) People mover encroaches over Indiana Avenue
(second floor)
(b) Glass enclosures encroach over Indiana
Avenue and Park Place (Third Floor)
(c) Roof encroaches over southerly title line.
TRACT III: NONE
TRACT IV: NONE
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<PAGE>
This instrument was prepared by the
attorney described below and, when
recorded, the recorded counterparts
should be returned to:
James P. McIntyre, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
By:_________________________
James P. McIntyre, Esq.
MORTGAGE,
ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT
-3-
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<PAGE>
============================================================
COLLATERAL TRUST AGREEMENT
among
THE CLARIDGE HOTEL AND CASINO CORPORATION
THE CLARIDGE AT PARK PLACE, INCORPORATED
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
and
IBJ SCHRODER BANK & TRUST COMPANY
as Collateral Trustee
Dated as of January __, 1994
============================================================
TABLE OF CONTENTS
Page
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE I
DEFINITIONS AND
CERTAIN OTHER GENERAL PROVISIONS
SECTION 1.01 Definition . . . . . . . . . . . . . . . . .
1.02 Limitation of Rights . . . . . . . . . . . .
1.03 Effectiveness of the Collateral
Trust Agreement . . . . . . . . . . . . . . .
ARTICLE II
ACCELERATION OF SECURED OBLIGATIONS
SECTION 2.01 Notice of Acceleration . . . . . . . . . . .
2.02 General Authority of the Collateral
Trustee Over the Collateral . . . . . . . . .
2.03 Right to Initiate Judicial Proceedings . . .
2.04 Exercise of Powers; Instructions
of Secured Parties . . . . . . . . . . . . .
2.05 Remedies Not Exclusive . . . . . . . . . . .
2.06 Waiver and Estoppel . . . . . . . . . . . . .
2.07 Limitation on Collateral Trustee's Duty
in Respect of Collateral . . . . . . . . . .
2.08 Limitation by Law . . . . . . . . . . . . . .
2.09 Rights of Secured Parties under Secured
Documents and Related Documents . . . . . . .
ARTICLE III
REMEDIES UPON NOTICE
OF ACCELERATION; DISTRIBUTIONS
SECTION 3.01 Remedies Upon Notice of Acceleration . . . .
3.02 Application of Proceeds . . . . . . . . . . .
3.03 Collateral Trustee's Calculations . . . . . .
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ARTICLE IV
AGREEMENTS WITH TRUSTEES
SECTION 4.01 Delivery of Secured Documents . . . . . . . .
4.02 Information as to Secured Parties
and Indenture Trustee . . . . . . . . . . . .
4.03 Compensation and Expenses . . . . . . . . . .
4.04 Stamp and Other Similar Taxes . . . . . . . .
4.05 Filing Fees, Excise Taxes, Etc. . . . . . . .
4.06 Indemnification . . . . . . . . . . . . . . .
4.07 Collateral Trustee's Lien . . . . . . . . . .
4.08 Further Assurances . . . . . . . . . . . . .
4.09 Other Agreements of the Pledgors . . . . . .
ARTICLE V
POSSESSION AND USE OF
COLLATERAL; PARTIAL RELEASES
SECTION 5.01 Use Prior to Acceleration . . . . . . . . . .
5.02 Releases . . . . . . . . . . . . . . . . . .
ARTICLE VI
THE COLLATERAL TRUSTEE
SECTION 6.01 Acceptance of Trust . . . . . . . . . . . . .
6.02 Exculpatory Provisions . . . . . . . . . . .
6.03 Delegation of Duties . . . . . . . . . . . .
6.04 Reliance by Collateral Trustee . . . . . . .
6.05 Limitations and Duties of Collateral
Trustee. . . . . . . . . . . . . . . . . . .
6.06 Proceeds to be Held in Trust . . . . . . . .
6.07 Resignation and Removal of the Collateral
Trustee . . . . . . . . . . . . . . . . . . .
6.08 Status of Successor Collateral Trustee . . .
6.09 Merger of the Collateral Trustee . . . . . .
6.10 Co-Trustee; Separate Collateral Trustee . . .
6.11 Treatment of Payee or Indorsee by
Collateral Trustee; Representatives
of Secured Parties . . . . . . . . . . . . .
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Page
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Notices . . . . . . . . . . . . . . . . . . .
7.02 No Waiver . . . . . . . . . . . . . . . . . .
7.03 Amendments, Supplements and Waivers . . . . .
7.04 Headings . . . . . . . . . . . . . . . . . .
7.05 Severability . . . . . . . . . . . . . . . .
7.06 Successors and Assigns . . . . . . . . . . .
7.07 NEW JERSEY LAW TO GOVERN . . . . . . . . . .
7.08 Counterparts . . . . . . . . . . . . . . . .
7.09 Termination . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . .
Exhibit A - The Mortgage . . . . . . . . . . . . . . . A-1
Exhibit B - Company Pledge Agreement . . . . . . . . . B-1
Exhibit C - CPPI Pledge Agreement . . . . . . . . . . . C-1
Exhibit D - CPPI Cash Collateral Pledge Agreement . . . D-1
Exhibit E - CPPI Security Agreement . . . . . . . . . . E-1
Exhibit F - CPPI Trademark Security Agreement . . . . F-1
Exhibit G - CPPI Collateral Assignment of the
Wraparound Mortgage . . . . . . . . . . . . G-1
Exhibit H - The Partnership Security Agreement . . . . H-1
Exhibit I - The Partnership Cash Collateral
Pledge Agreement . . . . . . . . . . . . . I-1
Exhibit J - The Partnership Assignment of the
Operating Leases . . . . . . . . . . . . . J-1
Exhibit K-1 - Form of Intercreditor Agreement for
the Working Capital Credit Facility . . . . K-1-A
Exhibit K-2 - Form of Intercreditor Agreement for
Pari Passu Indebtedness . . . . . . . . . . K-2-A
Exhibit L - Subordination Agreement . . . . . . . . . . L-1
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Page
Exhibit M - CPPI Assignment of Leases and Rents
and Other Contract Rights . . . . . . . . . M-2
iv
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COLLATERAL TRUST AGREEMENT dated as of January __,
1994, among THE CLARIDGE HOTEL & CASINO CORPORATION, a New
York corporation (the "Company"), THE CLARIDGE AT PARK
PLACE, INCORPORATED, a New Jersey corporation ("CPPI"),
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P., a New Jersey
limited partnership (the "Partnership") and IBJ SCHRODER
BANK & TRUST COMPANY, a New York banking corporation and/or
such other persons as may from time to time be included
within the definition of "Collateral Trustee" under Section
1.01 hereof, as Collateral Trustee (the "Collateral
Trustee").
W I T N E S S E T H :
WHEREAS, the Company has heretofore entered into
an indenture dated as of the date hereof (the "Indenture")
among the Company, CPPI as guarantor, and IBJ Schroder Bank
& Trust Company as trustee, pursuant to which the Company
has issued $85,000,000 aggregate principal amount of its
First Mortgage Notes Due 2002 (the "Notes"); and
WHEREAS, in order to secure its obligations under
the Indenture and all other Secured Obligations (as defined
below), the Company has heretofore entered into a Pledge
Agreement dated as of the date hereof between itself as
Pledgor and the Collateral Trustee (the "Company Pledge
Agreement"); and
WHEREAS, in order to secure its obligations under
the Indenture and all other Secured Obligations (as defined
below), CPPI has heretofore entered into (i) a Pledge
Agreement dated as of the date hereof between itself as
Pledgor and the Collateral Trustee (the "CPPI Pledge
Agreement"), (ii) a Cash Collateral Pledge Agreement dated
as of the date hereof between itself as a Pledgor and the
Collateral Trustee (the "CPPI Cash Collateral Pledge
Agreement"), (iii) a Security Agreement dated as of the date
hereof between itself as Pledgor and the Collateral Trustee
(the "CPPI Security Agreement"), (iv) a Trademark Security
Agreement dated as of the date hereof between itself as
Pledgor and the Collateral Trustee (the "CPPI Trademark
Security Agreement") and (v) a Collateral Assignment of the
Wraparound Mortgage dated as of the date hereof between
itself as Assignor and the Collateral Trustee as Assignee
(the "CPPI Collateral Assignment"); and
WHEREAS, in order to secure the Secured
Obligations (as defined below) the Partnership has entered
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into (i) a mortgage dated as of the date hereof between
itself as Mortgagor and the Collateral Trustee as Mortgagee
(the "Mortgagee"), (ii) a Security Agreement dated as of the
date hereof between itself as Pledgor and the Collateral
Trustee (the "Partnership Security Agreement"), (iii) a Cash
Collateral Pledge Agreement dated as of the date hereof
between itself as Pledgor and the Collateral Trustee (the
"Partnership Cash Collateral Pledge Agreement") and (iv) an
Assignment of the Lessor's Interest in the Operating Leases
dated as of the date hereof between itself as Assignor and
the Collateral Trustee as Assignee (the "Partnership
Assignment"); and
WHEREAS, the Company, CPPI, and the Partnership
intend to provide, among other things, for the Collateral
Trustee to hold in trust all of its right, title and
interest in the Collateral, pursuant to and under the
Security Documents (as defined below) upon the terms and
conditions specified therein for the benefit of the holders
from time to time of the Notes and the other Secured Parties
referred to herein.
DECLARATION OF TRUST:
NOW THEREFORE, in order to secure the payment of
the Secured Obligations (as defined below) and in
consideration of the premises and the mutual agreements set
forth herein, the Collateral Trustee does hereby declare
that it holds and will hold as trustee in trust under this
Agreement all of its right, title and interest in, to and
under all the following, whether now existing or hereafter
arising, and the Pledgors (as defined below) do hereby
consent thereto:
(A) the Mortgage and the collateral granted to
the Collateral Trustee thereunder;
(B) the Company Pledge Agreement and the
collateral granted to the Collateral Trustee
thereunder;
(C) the CPPI Pledge Agreement and the collateral
granted to the Collateral Trustee thereunder;
(D) the CPPI Cash Collateral Pledge Agreement and
the collateral granted to the Collateral Trustee
thereunder;
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(E) the CPPI Security Agreement and the
collateral granted to the Collateral Trustee
thereunder;
(F) the CPPI Trademark Security Agreement and the
collateral granted to the Collateral Trustee
thereunder;
(G) the CPPI Collateral Assignment and the
collateral granted to the Collateral Trustee
thereunder;
(H) the Partnership Security Agreement and the
collateral granted to the Collateral Trustee
thereunder;
(I) the Partnership Cash Collateral Pledge
Agreement and the collateral granted to the Collateral
Trustee thereunder;
(J) the Partnership Assignment and the collateral
granted to the Collateral Trustee thereunder; and
(K) each agreement entered into pursuant to
Section 7.03(c) and the collateral granted to the
Collateral Trustee thereunder;
TO HAVE AND TO HOLD the foregoing Related
Documents and the entire Collateral (the right, title and
interest of the Collateral Trustee in the Related Documents
and the Collateral being hereinafter referred to as the
"Collateral Trust Estate") unto the Collateral Trustee and
its successors in trust under this Agreement and its assigns
and their assigns forever;
IN TRUST, NEVERTHELESS, under and subject to the
conditions herein set forth and for the benefit of the
Secured Parties, and for the enforcement of the payment of
all Secured Obligations, and as security for the performance
of and compliance with the covenants and conditions of this
Agreement and each of the other Related Documents;
PROVIDED, HOWEVER, that these presents are upon
the condition that, if the Company or its successors or
assigns shall satisfy all the conditions set forth in
Section 7.10 hereof, then this Agreement and the estate and
rights hereby granted shall thereupon cease and be void;
otherwise they shall remain and be in full force and effect;
AND IT IS HEREBY COVENANTED, DECLARED AND AGREED by
each of the Pledgors that all the Secured Obligations are to
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be secured and that all the Collateral Trust Estate is to be
held subject to the further covenants, conditions, uses and
trusts herein set forth, and each of the Pledgors, for
itself and its successors and assigns, does hereby covenant
and agree to and with the Collateral Trustee and its
successors in said trust, for the benefit of those who shall
hold the Secured Obligations or any of them, as set forth
herein.
ARTICLE I
DEFINITIONS AND
CERTAIN OTHER GENERAL PROVISIONS
SECTION 1.01 Definitions. (a) Terms defined in
the Indenture and not otherwise defined herein have, as used
herein, the respective meanings specified therein. The
following additional terms, as used herein, have the
following meanings:
"Agreement" means this Collateral Trust Agreement,
as the same may be amended or otherwise modified from time
to time.
"Collateral" means all property in which a
security interest is granted or purported to be granted to
the Collateral Trustee pursuant to the Security Documents
and not released pursuant to the terms hereof.
"Collateral Trust Estate" has the meaning set
forth in the Declaration of Trust hereof.
"Collateral Trustee" means (i) IBJ Schroder Bank &
Trust Company in its capacity as collateral trustee
hereunder, and any co-trustee appointed pursuant to Section
6.10, in its capacity as such, together with their
respective successors in such capacities, or (ii) in respect
of any Collateral as to which any separate trustee for the
Secured Parties shall be appointed pursuant to Section 6.10,
such separate trustee in its capacity as such, and any
successor in such capacity.
"Distribution Date" means each date fixed by the
Collateral Trustee for a distribution to the Secured Parties
of proceeds held by it, the first of which shall be within
120 days after the date on which a Notice of Acceleration
becomes effective and the remainder of which shall be
monthly thereafter (for so long as such Notice of
Acceleration remains in effect) on the day or date
corresponding to the first Distribution Date (or, if there
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is no such corresponding day, the last day of such month),
provided that if any such day is not a Business Day, such
Distribution Date shall be the next Business Day.
"Indenture Trustee" means the "Trustee" under the
Indenture.
"Note Obligations" means at any time all principal
of and premium and interest (including, without limitation,
any interest which accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Company, whether or not
allowed or allowable as a claim in such proceeding) on the
outstanding Notes and all other amounts payable by the
Company under the Indenture.
"Notice of Acceleration" means a notice delivered
(or deemed to have been delivered pursuant to Section
2.01(d)) to the Collateral Trustee and the Noteholders by
the Indenture Trustee pursuant to Section 7.05 of the
Indenture.
"Opinion of Counsel" means an opinion in writing
signed by legal counsel reasonably satisfactory to the
Collateral Trustee, who may be counsel regularly retained by
the Company or the Collateral Trustee. Any Opinion of
Counsel may state that insofar as it relates to factual
matters or matters of business or technical judgment (other
than legal matters) such opinion is based upon affidavits,
certificates, statements or reports made by a chief
financial officer or chief accounting officer or by other
Persons upon which in such counsel's opinion it is proper to
rely.
"outstanding" means, when used with respect to
Secured Obligations, any Secured Obligations then or
theretofore issued or incurred by the Company or any
Restricted Subsidiary (except Secured Obligations which the
Company or any Restricted Subsidiary has paid and Notes
which are no longer "outstanding" under the Indenture);
provided that Secured Obligations owned by the Company or
any Restricted Subsidiary or any Affiliate of the Company
shall be disregarded and deemed not to be outstanding for
purposes of this Agreement, except that, in determining
whether the Collateral Trustee shall be protected in relying
upon any request, demand, authorization, direction, notice,
consent or waiver, only Secured Obligations which the
Collateral Trustee knows to be so owned shall be so
disregarded; and provided further that any indebtedness
under the Indenture shall be deemed outstanding hereunder if
it is then outstanding for purposes of the Indenture.
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"Pledged Securities" means the "Pledged
Securities" referred to in the CPPI Pledge Agreement and the
Company Pledge Agreement.
"Pledgors" means, collectively, the Partnership,
the Company, CPPI, each Restricted Subsidiary of the Company
that becomes a party to this Agreement after the Issue Date
in connection with its being added as a Guarantor as
provided in the Indenture and their respective permitted
successors and assigns.
"Proceeds" means all proceeds within the meaning
of the UCC.
"Related Documents" means this Agreement and the
Security Documents.
"Required Secured Parties" means at any time (i)
in the case of any release from the security interest
created by the Collateral Documents of all of the Collateral
pursuant to Section 5.02, all of the Secured Parties, or
(ii) in all other cases, Secured Parties holding a majority
in aggregate outstanding principal amount of the Notes.
"Secured Documents" means the Notes and the
Indenture.
"Secured Obligations" means the Note Obligations
and all sums payable by the Pledgors under the Related
Documents (including, without limitation, Trustee Fees).
"Secured Parties" means at any time the holders of
Secured Obligations at such time.
"Security Documents" means (i) the Mortgage, (ii)
the Company Pledge Agreement, (iii) the CPPI Pledge
Agreement, (iv) the CPPI Cash Collateral Pledge Agreement,
(v) the CPPI Security Agreement, (vi) the CPPI Trademark
Security Agreement, (vii) the CPPI Collateral Assignment,
(viii) the Partnership Cash Collateral Pledge Agreement,
(viii) the Partnership Security Agreement, (ix) the
Partnership Assignment, (x) the Assignment of Leases and
Rents and other Contracts, (xi) the Subordination Agreement,
and (xii) any other supplemental or additional pledge
agreement, security agreement or other similar instrument
delivered pursuant hereto or thereto, in each case as the
same may be amended or otherwise modified from time to time.
"Trustee Fees" means all fees, costs, indemnifica-
tion and expenses of the Collateral Trustee of the types
described in Sections 4.03, 4.04, 4.05 and 4.06.
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"UCC" means the Uniform Commercial Code as in
effect from time to time in the State of New York.
(b) The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section
references are to this Agreement unless otherwise specified.
SECTION 1.02 Limitation of Rights. Nothing in
the Related Documents, expressed or implied, is intended or
shall be construed to confer upon or give to any Person
other than the parties hereto and the Secured Parties any
right, remedy or claim under or by reason of the Related
Documents or any covenant, condition or stipulation herein
contained, and all the covenants, stipulations, promises and
agreements in the Related Documents contained by or on
behalf of the Pledgors shall be for the sole and exclusive
benefit of the parties hereto and the Secured Parties.
SECTION 1.03 Effectiveness of the Collateral
Trust Agreement. This Agreement shall be effective as of
the Issue Date.
ARTICLE II
ACCELERATION OF SECURED OBLIGATIONS
SECTION 2.01 Notice of Acceleration. (a) So
long as a Notice of Acceleration is in effect, the
Collateral Trustee shall exercise the rights and remedies
provided in this Agreement and in the Security Documents
subject to the direction of the Required Secured Parties as
provided herein and therein. The Collateral Trustee is not
empowered to exercise any remedy hereunder or under any of
the Security Documents unless a Notice of Acceleration is in
effect.
(b) Except as otherwise provided by Section
2.01(d), a Notice of Acceleration shall become effective
upon receipt thereof by the Collateral Trustee. A Notice of
Acceleration, once effective, shall remain in effect unless
and until it is cancelled as provided in Section 2.01(c) or
deemed cancelled as provided in Section 2.01(d).
(c) If the Indenture Trustee has given a Notice
of Acceleration, the Indenture Trustee shall be entitled to
cancel such Notice of Acceleration by delivering a written
notice of cancellation to the Collateral Trustee (i) before
the Collateral Trustee takes any action to exercise any
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remedy with respect to the Collateral or (ii) thereafter, if
the Collateral Trustee believes that all actions it has
taken to exercise any remedy or remedies with respect to the
Collateral can be reversed or discontinued without undue
difficulty.
(d) Notwithstanding anything to the contrary
contained in this Section 2.01, if the Collateral Trustee
and the Indenture Trustee are the same Person, the Indenture
Trustee shall not be required to deliver a notice to the
Collateral Trustee in order for a "Notice of Acceleration"
of the Note Obligations under the Indenture to become
effective or to be cancelled. In any such case, a Notice of
Acceleration shall, for all purposes of this Agreement and
the other Related Documents, (i) be deemed to have been
delivered and to have become effective immediately upon the
Indenture Trustee being charged under Section 7.05(a) of the
Indenture with knowledge that (x) a Default in payment on
any Note or (y) an Event of Default shall have occurred and
shall be continuing under the terms of the Indenture that
would cause the Note Obligations to become due and payable
prior to their stated maturity under the terms of the
Indenture, and (ii) be deemed to have been cancelled at such
time as the Indenture Trustee would have been required to
deliver a notice of cancellation pursuant to the last
sentence of Section 7.05(e) of the Indenture were it not
also the Collateral Trustee.
(e) The Collateral Trustee shall notify the
Company and the Indenture Trustee of the effectiveness or
the cancellation of any Notice of Acceleration within three
Business Days thereof; provided that the Collateral Trustee
shall not be required to so notify the Indenture Trustee if
the Indenture Trustee and the Collateral Trustee are the
same Person.
SECTION 2.02 General Authority of the Collateral
Trustee Over the Collateral. Each Pledgor hereby
irrevocably constitutes and appoints the Collateral Trustee
and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with
full power and authority in the name of such Pledgor or in
its own name, from time to time in the Collateral Trustee's
discretion, so long as any Notice of Acceleration is in
effect, to take any and all appropriate action and to
execute any and all documents and instruments which may be
necessary or desirable to carry out the terms of this
Agreement and the Security Documents and accomplish the
purposes hereof and thereof and, without limiting the
generality of the foregoing, each Pledgor hereby gives the
Collateral Trustee the power and right on behalf of such
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Pledgor, without notice to or further assent by such
Pledgor, so long as any Notice of Acceleration is in effect,
to do the following:
(i) to ask for, demand, sue for, collect, receive
and give acquittance for any and all moneys due or to
become due upon, or in connection with, the Collateral;
(ii) to receive, take, endorse, assign and deliver
any and all checks, notes, drafts, acceptances,
documents and other negotiable and non-negotiable
instruments taken or received by the Collateral Trustee
as, or in connection with, the Collateral;
(iii) to commence, prosecute, defend, settle,
compromise or adjust any claim, suit, action or
proceeding with respect to, or in connection with, the
Collateral;
(iv) to sell, transfer, assign or otherwise deal
in or with the Collateral or any part thereof as fully
and effectively as if the Collateral Trustee were the
absolute owner thereof;
(v) to do, at its option and at the expense and
for the account of the Pledgors, jointly and severally,
at any time or from time to time, all acts and things
which the Collateral Trustee deems necessary to protect
or preserve the Collateral and to realize upon the
Collateral; and
(vi) to perform all acts described in Section
3.01(d) hereof;
provided that the Collateral Trustee shall give the Pledgors
not less than ten Business Days' prior written notice of the
time and place of any sale or other intended disposition of
any of the Collateral except any Collateral which in the
sole judgment of the Collateral Trustee is perishable or
threatens to decline speedily in value. The Collateral
Trustee and the Pledgors agree that such notice constitutes
"reasonable notification" within the meaning of Section
9-504(3) of the UCC.
SECTION 2.03 Right to Initiate Judicial
Proceedings. If a Notice of Acceleration is in effect, the
Collateral Trustee, subject to the provisions of Section
2.04(b), (i) shall have the right and power to institute and
maintain such suits and proceedings as it may deem appro-
priate to protect and enforce the rights vested in it by
this Agreement and the Security Documents and (ii) may
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either after entry, or without entry, proceed by suit or
suits at law or in equity to enforce such rights and to
foreclose upon the Collateral and to sell all or, from time
to time, any of the Collateral under the judgment or decree
of a court of competent jurisdiction.
SECTION 2.04 Exercise of Powers; Instructions of
Secured Parties. (a) All of the powers, remedies and
rights of the Collateral Trustee as set forth in this
Agreement may be exercised by the Collateral Trustee in
respect of the Security Documents as though set forth in
full therein and all of the powers, remedies and rights of
the Collateral Trustee and the Indenture Trustee as set
forth in the Related Documents may be exercised from time to
time as herein and therein provided.
(b) The Required Secured Parties shall have the
right, by one or more instruments in writing executed and
delivered to the Collateral Trustee, to direct the time,
method and place of conducting any proceeding for any right
or remedy available to the Collateral Trustee, or of
exercising any trust or power conferred on the Collateral
Trustee, or for the appointment of a receiver, or to direct
the taking or the refraining from taking of any action
authorized by this Agreement or the Security Documents;
provided that (i) such direction shall not conflict with the
provisions of any law or of this Agreement, the Indenture or
any Security Document and (ii) the Collateral Trustee shall
be adequately secured and indemnified as provided in Section
6.04(d). Nothing in this Section 2.04(b) shall impair the
right of the Collateral Trustee in its discretion to take
any action or omit to take any action which it deems proper
and which is not inconsistent with such direction. The
Collateral Trustee shall have no duty to take or refrain
from taking any action unless explicitly required herein.
SECTION 2.05 Remedies Not Exclusive. (a) No
remedy conferred upon or reserved to the Collateral Trustee
herein or in the Security Documents is intended to be
exclusive of any other remedy or remedies, but every such
remedy shall be cumulative and shall be in addition to every
other remedy conferred herein or in the Security Documents
or now or hereafter existing at law or in equity or by
statute.
(b) No delay or omission by the Collateral
Trustee to exercise any right, remedy or power under this
Agreement or the Security Documents shall impair any such
right, remedy or power or shall be construed to be a waiver
thereof, and every right, power and remedy provided to the
Collateral Trustee under any of the Related Documents may be
10
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exercised from time to time and as often as may be deemed
expedient by the Collateral Trustee.
(c) If the Collateral Trustee shall have
proceeded to enforce any right, remedy or power under this
Agreement or the Security Documents and the proceeding for
the enforcement thereof shall have been discontinued or
abandoned for any reason or shall have been determined
adversely to the Collateral Trustee, then the Pledgors, the
Collateral Trustee and the Secured Parties shall, subject to
any determination in such proceeding, severally and
respectively be restored to their former positions and
rights hereunder with respect to the Collateral Trust Estate
and in all other respects, and thereafter all rights,
remedies and powers of the Collateral Trustee shall continue
as though no such proceeding had been taken.
(d) All rights of action and of asserting claims
upon or under this Agreement or the Security Documents may
be enforced by the Collateral Trustee without the possession
of the Related Documents or any instrument evidencing any
Secured Obligation or the production thereof at any trial or
other proceeding relative thereto, and any suit or
proceeding instituted by the Collateral Trustee shall,
subject to Sections 6.05(c) and 6.10(b)(ii), be brought in
its name as Collateral Trustee and any recovery of judgment
shall be held as part of the Collateral Trust Estate.
SECTION 2.06 Waiver and Estoppel. (a) Each
Pledgor agrees, to the extent it may lawfully do so, that it
will not at any time in any manner whatsoever claim or take
the benefit or advantage of any appraisement, valuation,
stay, extension, moratorium, turnover or redemption law, or
any law permitting it to direct the order in which the
Collateral shall be sold, now or at any time hereafter in
force, which may delay, prevent or otherwise affect the
performance or enforcement of this Agreement or the Security
Documents and hereby waives all benefit or advantage of all
such laws and covenants that it will not hinder, delay or
impede the execution of any power granted to the Collateral
Trustee in this Agreement or the Security Documents but will
suffer and permit the execution of every such power as
though no such law were in force; provided that nothing
contained in this Section 2.06(a) shall be construed as a
waiver of any rights of any of the Pledgors under any
applicable bankruptcy law.
(b) Each Pledgor, to the extent it may lawfully
do so, on behalf of itself and all who claim through or
under it, including, without limitation, any and all
subsequent creditors, vendees, assignees and lienors, waives
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and releases all rights to demand or to have any marshalling
of the Collateral upon any sale, whether made under any
power of sale granted herein or in the Security Documents or
pursuant to judicial proceedings or upon foreclosure or any
enforcement of the Related Documents and consents and agrees
that all the Collateral may at any such sale be offered and
sold as an entirety.
(c) Each Pledgor waives, to the extent permitted
by applicable law, presentment, demand, protest and any
notice of any kind (except notices explicitly required under
the Related Documents) in connection with this Agreement and
the Security Documents and any action taken by the
Collateral Trustee with respect to the Collateral.
SECTION 2.07 Limitation on Collateral Trustee's
Duty in Respect of Collateral. Beyond its duties as to the
custody thereof expressly provided herein or in the Security
Documents and to account to the Secured Parties and the
Pledgors for moneys and other property received by it
hereunder or under the Security Documents, the Collateral
Trustee shall not have any duty to the Pledgors or to the
Secured Parties as to any Collateral in its possession or
control or in the possession or control of any of its agents
or nominees, or any income thereon or as to the preservation
of rights against prior parties or any other rights
pertaining thereto.
SECTION 2.08 Limitation by Law. All rights,
remedies and powers provided herein may be exercised only to
the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions hereof
are intended to be subject to all applicable mandatory
provisions of law which may be controlling and to be limited
by the extent necessary so that they will not render this
Agreement invalid, unenforceable in whole or in part or not
entitled to be recorded, registered or filed under
provisions of any applicable law.
SECTION 2.09 Rights of Secured Parties under
Secured Documents and Related Documents. Notwithstanding
any other provision of this Agreement or the Security
Documents, the right of each Secured Party to receive
payment of the Secured Obligations held by such Secured
Party when due (whether at the stated maturity thereof, by
acceleration or otherwise) as expressed in the Secured
Document or Related Document evidencing or governing such
Secured Obligation or to institute suit for the enforcement
of such Secured Obligation on or after such due date, and
the obligation of the Company to pay such Secured Obligation
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when due, shall not be impaired or affected without the
consent of such Secured Party.
ARTICLE III
REMEDIES UPON NOTICE
OF ACCELERATION; DISTRIBUTIONS
SECTION 3.01 Remedies Upon Notice of
Acceleration. (a) If a Notice of Acceleration shall be in
effect, the Collateral Trustee may exercise on behalf of the
Secured Parties, but only in accordance with applicable law,
all the rights of a secured party under the Uniform
Commercial Code (whether or not in effect in the
jurisdiction where such rights are exercised) and exercise
any other remedies provided under the Related Documents and,
in addition, the Collateral Trustee may, without being
required to give any notice, except as herein provided or as
may be required by mandatory provisions of law, (i) withdraw
all cash and Liquid Investments in the Collateral Accounts
and apply such cash and Liquid Investments and other cash,
if any, then held by it as Collateral as specified in
Section 3.02 and (ii) sell the Collateral or any part
thereof at public or private sale or, in the case of Pledged
Securities, at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery, and
at such price or prices as the Collateral Trustee may deem
satisfactory. The Collateral Trustee or any Secured Party
may be the purchaser of any or all of the Collateral so sold
at any public sale (or, if the Collateral is of a type
customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price
quotations, at any private sale). In the case of any sale
of Pledged Securities, the Collateral Trustee is authorized,
if it deems it advisable so to do, (i) to restrict the
prospective bidders on or purchasers of any of the Pledged
Securities to a limited number of sophisticated investors
who will represent and agree that they are purchasing for
their own account for investment and not with a view to the
distribution or sale of any of such Pledged Securities,
(ii) to cause to be placed on certificates for any or all of
the Pledged Securities or on any other securities pledged
under the Security Documents a legend to the effect that
such security has not been registered under the Securities
Act of 1933 and may not be disposed of in violation of the
provision of said Act, and (iii) to impose such other
limitations or conditions in connection with any such sale
as the Collateral Trustee deems necessary or advisable in
order to comply with said Act or any other law. Each
Pledgor covenants and agrees that it will execute and
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deliver such documents and take such other action as the
Collateral Trustee deems necessary or advisable in order
that any sale of Collateral may be made in compliance with
law. Upon any such sale the Collateral Trustee shall have
the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold, and such Collateral shall
thereupon be released. Each purchaser at any such sale
shall hold the Collateral so sold absolutely and free from
any claim or right of whatsoever kind, including any equity
or right of redemption of the Pledgors which may be waived,
and each Pledgor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or
appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such
sale required by Section 2.02 shall (1) in case of a public
sale, state the time and place fixed for such sale, (2) in
the case of a private sale, state the day after which such
sale may be consummated and (3) in case of a sale of Pledged
Securities at a broker's board or on a securities exchange,
state the board or exchange at which such sale is to be made
and the day on which the Pledged Securities, or the portion
thereof so being sold, will first be offered for sale at
such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at
such place or places as the Collateral Trustee may fix in
the notice of such sale. At any such sale the Collateral
may be sold in one lot as an entirety or in separate
parcels, as the Collateral Trustee may determine in its sole
discretion. The Collateral Trustee shall not be obligated
to make any such sale pursuant to any such notice. The
Collateral Trustee may, without notice or publication,
adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and
place fixed for the sale, and such sale may be made at any
time or place to which the same may be so adjourned. In
case of any sale of all or any part of the Collateral on
credit or for future delivery, the Collateral so sold may be
retained by the Collateral Trustee until the selling price
is paid by the purchaser thereof, but the Collateral Trustee
shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold and,
in the case of any such failure, such Collateral may again
be sold upon like notice. The Collateral Trustee, instead
of exercising the power of sale herein conferred upon it,
may proceed by a suit or suits at law or in equity to
foreclose the security interests created by the Security
Documents and sell the Collateral, or any portion thereof,
under a judgment or decree of a court or courts of competent
jurisdiction.
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(b) For the purpose of enforcing any and all
rights and remedies under this Agreement, the Collateral
Trustee may (i) require any Pledgor to, and each Pledgor
agrees that it shall, at its expense and upon the request of
the Collateral Trustee, forthwith assemble all or any part
of the Collateral as directed by the Collateral Trustee and
make it available at a place designated by the Collateral
Trustee which is, in its opinion, reasonably convenient to
the Collateral Trustee and such Pledgor, whether at the
premises of such Pledgor or otherwise, (ii) to the extent
permitted by applicable law, enter, with or without process
of law and without breach of the peace, any premises where
any of the Collateral is or may be located, and without
charge or liability to it seize and remove such Collateral
from such premises, (iii) have access to and use such
Pledgor's books and records relating to the Collateral and
(iv) prior to the disposition of the Collateral, store or
transfer it without charge in or by means of any storage or
transportation facility owned or leased by such Pledgor,
process, repair or recondition it or otherwise prepare it
for disposition in any manner and to the extent the
Collateral Trustee deems appropriate and, in connection with
such preparation and disposition, use without charge any
trademark, trade name, copyright, patent or technical
process used by such Pledgor.
(c) If the Collateral Trustee shall determine to
exercise its right to sell all or any of the Collateral and
if in the opinion of counsel for the Collateral Trustee it
is necessary, or if in the opinion of the Collateral Trustee
it is advisable, to have the Pledged Securities, or the
portion thereof to be sold, registered under the provisions
of the Securities Act of 1933, the Pledgors agree, jointly
and severally, at their own expense, (i) to execute and
deliver, and to use their best efforts to cause each issuer
of Pledged Securities that are to be sold and its directors
and officers to execute and deliver, all such instruments
and documents, and to do or cause to be done all other such
acts and things, as may be necessary or, in the opinion of
the Collateral Trustee, advisable to register such
securities under the provisions of the Securities Act of
1933 and to cause the registration statement relating
thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished,
and to make or cause to be made all amendments and
supplements thereto and to the related prospectus which, in
the opinion of the Collateral Trustee, are necessary or
advisable, all in conformity with the requirements of the
Securities Act of 1933 and the rules and regulations of the
Securities and Exchange Commission thereunder, (ii) to use
their best efforts to cause each Issuer whose securities are
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to be sold to agree to make, and to make available to its
security holders as soon as practicable, an earnings
statement (which need not be audited) covering a period of
at least 12 months, beginning with the first month after the
effective date of any such registration statement, which
earnings statement will satisfy the provisions of Section
11(a) of the Securities Act of 1933, (iii) to use their best
efforts to qualify such securities under state Blue Sky or
securities laws and to obtain the approval of any
governmental authorities for the sale of such securities, as
requested by the Collateral Trustee, and (iv) at the request
of the Collateral Trustee, to indemnify and hold harmless
the Collateral Trustee, the Secured Parties and any
underwriters of such securities (and any Person controlling
any of the foregoing) from and against any loss, liability,
claim, damage and expense (and reasonable counsel fees
incurred in connection therewith) under the Securities Act
of 1933 or otherwise insofar as such loss, liability, claim,
damage or expense arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact
contained in such registration statement or prospectus or in
any preliminary prospectus or any amendment or supplement
thereto, or arises out of or is based upon any omission or
alleged omission to state therein a material fact required
to be stated or necessary to make the statements therein not
misleading in light of the circumstances under which they
were made, such indemnification to remain operative
regardless of any investigation made by or on behalf of the
Collateral Trustee, any Secured Party or any such under-
writer (or any Person controlling any of the foregoing),
provided that the Pledgors shall not be liable to the
Collateral Trustee, any Secured Party or any such
underwriter (or any Person controlling any of the foregoing)
to the extent that any such loss, liability, claim, damage
or expense arises out of or is based upon an untrue
statement or alleged untrue statement or an omission or an
alleged omission made in reliance upon and in conformity
with written information relating to such Person furnished
to the Pledgors by such Person expressly for use in such
registration statement or prospectus or amendment or
supplement thereto.
(d) Without limiting the generality of the
foregoing, if a Notice of Acceleration is in effect:
(i) the Collateral Trustee, subject to compliance
with the Casino Control Act, itself, or by such
officers, agents or receiver as it may appoint, may
enter and take possession of all of the Collateral
Trust Estate without liability for trespass, damages or
otherwise, and may exclude the Pledgors and their
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agents and employees wholly therefrom and may have
access to the books, papers and accounts of the
Pledgors;
(ii) subject to compliance with the Casino Control
Act, upon every such entering upon or taking of
possession, the Collateral Trustee may hold, store,
use, operate, manage and control the Collateral Trust
Estate and conduct the business thereof, and, from time
to time in its sole and absolute discretion and without
being under any duty to so act:
(1) make all necessary and proper
maintenance, repairs, renewals, replacements,
additions, betterments and improvements thereto
and thereon and purchase or otherwise acquire
additional fixtures, personalty and other
property;
(2) insure or keep the Collateral Trust
Estate insured;
(3) manage and operate the Collateral Trust
Estate and exercise all rights and powers of the
Pledgors in their name or otherwise with respect
to the same.
(iii) subject to compliance with the Casino Control
Act, the Collateral Trustee may have a receiver
appointed upon notice to the Pledgors or any third
party, and the Collateral Trustee may waive any
requirement that the receiver post a bond. The
Collateral Trustee shall have the power to designate
and select the Person who shall serve as the receiver
and to negotiate all terms and conditions under which
such receiver shall serve. Any receiver appointed on
the Collateral Trustee's behalf may be an Affiliate of
the Collateral Trustee. The expenses, including
receiver's fees, attorneys' fees, costs and agent's
compensation, incurred pursuant to the powers herein
contained shall be considered Collateral. The right to
enter and take possession of and to manage and operate
the Collateral Trust Estate and to collect all rents,
income and profits, whether by a receiver or otherwise,
shall be cumulative to any other right or remedy
available to the Collateral Trustee under this
Agreement, the Indenture or otherwise available to the
Collateral Trustee and may be exercised concurrently
therewith or independently thereof.
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(iv) the Collateral Trustee may license, or
sublicense, whether general, special or otherwise, and
whether on an exclusive or non-exclusive basis, any
patents, trademarks or copyrights included in the
Collateral throughout the world for such term or terms,
on such conditions and in such manner as the Collateral
Trustee shall in its sole discretion determine;
(v) the Collateral Trustee may (without assuming
any obligations or liability thereunder), at any time
and from time to time, enforce (and shall have the
exclusive right to enforce) against any licensee or
sublicensee all rights and remedies of the Pledgors in,
to and under any patent licenses, trademark licenses or
copyright licenses and take or refrain from taking any
action under any thereof, and each Pledgor hereby
releases the Collateral Trustee and each of the Secured
Parties from, and agrees to hold the Collateral Trustee
and each of the Secured Parties free and harmless from
and against any claims arising out of, any lawful
action so taken or omitted to be taken with respect
thereto; and
(vi) the Collateral Trustee may, at any time and
from time to time, institute and maintain any suit,
action or proceeding for any infringement or alleged
infringement of the Pledgor's right, title and interest
in or to any patent, trademark or copyright included in
the Collateral (and, if the Collateral Trustee shall
deem it necessary or advisable to join the Pledgor as a
party in any such suit, action or proceeding, the
Pledgor shall execute and deliver such documents and
perform such other acts as the Collateral Trustee may
require in furtherance thereof).
SECTION 3.02 Application of Proceeds. (a) If a
Notice of Acceleration is in effect, the proceeds of any
sale of, or other realization upon, all or any part of the
Collateral and any cash held in the Collateral Accounts
shall be applied by the Collateral Trustee in the following
order of priority:
First: to payment of the expenses of such sale or
other realization, including reasonable compensation to
agents and counsel for the Collateral Trustee, and all
expenses, liabilities and advances incurred or made by
the Collateral Trustee in connection therewith, and to
the Collateral Trustee for the amount of any allowed
Trustee Fees constituting administrative expenses
allowable under Section 503(b) of the Bankruptcy Code
of 1978, and then to any Secured Party which has
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theretofore advanced or paid any such Trustee Fees an
amount equal to the amount thereof so advanced or paid
by such Secured Party and for which such Secured Party
has not been reimbursed prior to such Distribution
Date;
Second: to the Collateral Trustee for any other
unpaid Trustee Fees, and then to any Secured Party
which has theretofore advanced or paid any such other
Trustee Fees an amount equal to the amount thereof so
advanced or paid by such Secured Party and for which
such Secured Party has not been reimbursed prior to
such Distribution Date;
Third: to payment of any amounts owing to the
Indenture Trustee under the Indenture;
Fourth: to the Secured Parties in an amount equal
to the unpaid principal in respect of the Secured
Obligations then outstanding and, if such moneys shall
be insufficient to pay such amounts in full, then
ratably (without priority of any one over any other) to
the Secured Parties in proportion to the unpaid amounts
thereof on such Distribution Date;
Fifth: to the Secured Parties in an amount equal
to the unpaid interest on and fees or similar charges,
if any, in respect of, the Secured Obligations then
outstanding and, if such moneys shall be insufficient
to pay such amounts in full, then ratably (without
priority of any one over any other) to the Secured
Parties in proportion to the unpaid amounts thereof on
such Distribution Date;
Sixth: to the Secured Parties, amounts equal to
all other sums which constitute Secured Obligations,
including, without limitation, the costs and expenses
of the Secured Parties and their representatives which
are due and payable under the governing Secured
Documents and Related Documents and which constitute
Secured Obligations as of such date, and, if such
moneys shall be insufficient to pay such sums in full,
then ratably to the Secured Parties in proportion to
such sums; and
Seventh: any surplus then remaining shall be paid
to the Company, for the benefit of the applicable
Pledgor, or its successors or assigns or to whomsoever
may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct.
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(b) The Collateral Trustee shall make all
payments and distributions under this Section on account of
the Note Obligations to the Indenture Trustee for
distribution to holders of such Note Obligations in
accordance with the priorities set forth herein and in the
Indenture.
SECTION 3.03 Collateral Trustee's Calculations.
In making the determination and allocations required by
Section 3.02, the Collateral Trustee may rely upon informa-
tion supplied by the Indenture Trustee as to the amounts
payable with respect to the Notes under the Indenture, and
the Collateral Trustee shall have no liability to the
Pledgors or any of the Secured Parties for actions taken in
reliance on such information. All distributions made by the
Collateral Trustee pursuant to Section 3.02 shall be
(subject to any decree of any court of competent
jurisdiction) final, and the Collateral Trustee shall have
no duty to inquire as to the application by the Indenture
Trustee of any amounts distributed to it.
ARTICLE IV
AGREEMENTS WITH TRUSTEES
SECTION 4.01 Delivery of Secured Documents. The
Company shall deliver to the Collateral Trustee, promptly
upon the execution thereof, a true and complete copy of each
Secured Document (other than the Notes) as originally
executed and delivered and all amendments or modifications
of, or supplements to, each such Secured Document.
SECTION 4.02 Information as to Secured Parties
and Indenture Trustee. The Company shall promptly deliver
to the Collateral Trustee, from time to time upon request of
the Collateral Trustee, a list setting forth as of a date
not more than 30 days prior to the date of such delivery the
aggregate unpaid principal amount of outstanding Notes and
the current name and address of the Indenture Trustee. In
addition, the Company will promptly notify the Collateral
Trustee of any change in the identity of the Indenture
Trustee.
SECTION 4.03 Compensation and Expenses. The
Pledgors, other than the Partnership, agree, jointly and
severally, to pay to the Collateral Trustee, from time to
time, (i) reasonable compensation (which shall not be
limited by any provision of law in regard to compensation of
fiduciaries or of a trustee of an express trust) for its
services hereunder and under the Related Documents and for
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administering the Collateral Trust Estate and (ii) all of
the fees, costs and expenses of any kind or nature
whatsoever of the Collateral Trustee (including, without
limitation, the reasonable fees and disbursements of its
counsel and such special counsel, accountants or other
experts as the Collateral Trustee elects to retain) (A)
arising in connection with the preparation, execution,
delivery, modification or termination of this Agreement and
the Security Documents or the enforcement of any of the
provisions hereof or thereof, (B) incurred or required to be
advanced in connection with the administration of the
Collateral Trust Estate, the sale or other disposition of
Collateral pursuant to the Related Documents and the
preservation, protection or defense of the Collateral
Trustee's rights under this Agreement and the Security
Documents and in and to the Collateral Trust Estate or
(C) incurred by the Collateral Trustee in connection with
its resignation or removal pursuant to Section 6.07(a).
SECTION 4.04 Stamp and Other Similar Taxes. The
Pledgors, other than the Partnership, agree, jointly and
severally, to indemnify and hold harmless the Collateral
Trustee, the Indenture Trustee and each Secured Party from
any present or future claim for liability for any stamp or
any other similar tax and any penalties or interest with
respect thereto, which may be assessed, levied or collected
by any jurisdiction in connection with this Agreement and
the Security Documents, the Collateral Trust Estate or any
Collateral.
SECTION 4.05 Filing Fees, Excise Taxes, Etc. The
Pledgors, other than the Partnership, agree, jointly and
severally, to pay or to reimburse the Collateral Trustee for
any and all payments made by the Collateral Trustee in
respect of all search, filing, recording and registration
fees, taxes, excise taxes and other similar imposts which
may be payable or determined to be payable in respect of the
execution and delivery of this Agreement and the Security
Documents.
SECTION 4.06 Indemnification. The Pledgors,
other than the Partnership, agree, jointly and severally, to
pay, indemnify, and hold the Collateral Trustee, in its
individual capacity, harmless from and against any and all
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including,
without limitation, the reasonable fees and disbursements of
counsel) or disbursements of any kind or nature whatsoever
(collectively, "Liabilities") with respect to the execution,
delivery, enforcement, performance and administration of
this Agreement and the Security Documents, unless arising
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from the negligence or willful misconduct of the Collateral
Trustee, including, without limitation, indemnification of
the Collateral Trustee for liabilities of the Collateral
Trustee for the net amount of taxes (after taking account of
any deduction, credit or other tax reduction or benefit
available by reason of the imposition of any such tax) in
any jurisdiction in which the Collateral Trustee would not
otherwise be subject to tax except by reason of its acting
under this Agreement or the Security Documents (directly or
through agents, separate trustees or co-trustees), provided
that such indemnification for taxes (a) shall apply only (i)
in respect of taxes attributable to the performance of the
Collateral Trustee's obligations as Collateral Trustee
hereunder and (ii) to the extent that the Collateral
Trustee, using reasonable efforts, shall have been unable to
avoid or minimize the same as contemplated by Section 6.10,
and (b) shall in no event cover any federal, state, local or
other taxes imposed upon the Collateral Trustee with respect
to or measured by its net income or profits. In any suit,
proceeding or action brought by the Collateral Trustee under
or with respect to any contract, agreement, interest or
obligation constituting part of the Collateral for any sum
owing thereunder, or to enforce any provisions thereof, the
Pledgors, jointly and severally, will save, indemnify and
keep the Collateral Trustee harmless from and against all
expense, loss or damage suffered by reason of any defense,
setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder, arising out of a
breach by any Pledgor of any obligation thereunder or
arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such obligor
or its successors from such Pledgor, and all such
obligations of such Pledgor shall be and remain enforceable
against and only against such Pledgor and shall not be
enforceable against the Collateral Trustee.
SECTION 4.07 Collateral Trustee's Lien. Notwith-
standing anything to the contrary in this Agreement, as
security for the payment of Trustee Fees, (i) the Collateral
Trustee is hereby granted a lien upon all Collateral and
(ii) the Collateral Trustee shall have the right to use and
apply any funds in its possession to satisfy unpaid Trustee
Fees; provided that the foregoing is not intended to relieve
any Pledgor of its obligation to pay such Trustee Fees.
SECTION 4.08 Further Assurances. At any time and
from time to time, upon the written request of the
Collateral Trustee, each Pledgor, at its expense, will
promptly execute, acknowledge, delivery, record, re-record,
file, re-file, register and re-register, and all such
further acts, deeds, conveyances, security agreements,
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mortgages, assignments, estoppel certificates, financing
statements and continuations thereof, termination
statements, notices of assignment, transfers, certificates,
assurances and other instruments as may be required from
time to time in order (i) to carry out more effectively the
purposes of the Related Documents, (ii) to subject the Liens
created by any of the Related Documents or any of the
properties, rights or interests covered by any of the
Related Documents, (iii) to perfect and maintain the
validity, effectiveness and priority of any of the Related
documents and the Liens intended to be created thereby, and
(iv) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to the Trustee any of the
rights granted or now or hereafter intended to be granted to
the Trustee or under any other instrument executed in
connection therewith or granted to the Company under the
Related Documents or under any other instrument executed in
connection therewith. Each Pledgor also hereby authorizes
the Collateral Trustee to sign and to file any such
financing or continuation statements without the signature
of such Pledgor.
SECTION 4.09 Other Agreements of the Pledgors.
(a) Each Pledgor shall furnish to the Collateral Trustee
from time to time, promptly upon the Collateral Trustee's
request, schedules identifying and describing the Collateral
and such other reports in connection with the Collateral as
the Collateral Trustee may reasonably request.
(b) Each Pledgor will permit the Collateral
Trustee, or any agent designated by it, at any time and from
time to time during normal business hours, to inspect,
audit, check and make abstracts from such Pledgor's books,
records and other papers relating to the Collateral.
(c) Promptly following the failure by any Pledgor
to perform any of its agreements hereunder or under the
Security Documents, such Pledgor will furnish to the
Collateral Trustee and the Indenture Trustee a certificate
of the chief financial officer or the chief accounting
officer of such Pledgor setting forth the details thereof
and the action which such Pledgor is taking or proposes to
take with respect thereto.
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ARTICLE V
POSSESSION AND USE OF
COLLATERAL; PARTIAL RELEASES
SECTION 5.01 Use Prior to Acceleration. So long
as no Notice of Acceleration is in effect, the Pledgors
shall have the right: (i) to remain in possession and
retain exclusive control of the Collateral (other than
Collateral a security interest in which is perfected by
possession under the UCC) with power freely and without
hindrance on the part of the Collateral Trustee or the
Secured Parties to operate, manage, develop, use and enjoy
the Collateral and to receive the rents, issues, tolls,
profits, royalties, revenues and other income thereof, and
(ii) to sell or otherwise dispose of, free and clear of any
lien and security interest created by Section 4.07 and by
the Related Documents, any Collateral (including, without
limitation, any Collateral within the Collateral Accounts)
to the extent consistent with Section 5.02. The Collateral
Trustee shall have no duty to monitor the exercise by the
Pledgors of their rights under this Section.
SECTION 5.02 Releases. (a) So long as no Notice
of Acceleration is in effect, Collateral shall be released
from the security interest created by the Related Documents
at any time or from time to time, subject in the case of the
Company, CPPI and the Trustee to compliance with Section
9.02(a) and 10.04 of the Indenture, (i) in connection with
any Ordinary Course Sale or Asset Sale provided that the Net
Proceeds from any such Asset Sale are applied in accordance
with Section 4.10 of the Indenture, (ii) in the case of
Collateral consisting of cash or Liquid Investments in the
Cash Collateral Accounts as specified in the CPPI Cash
Collateral Pledge Agreement or the Partnership Cash
Collateral Pledge Agreement, as applicable, (iii) Collateral
which may be released with the consent of the Noteholders
pursuant to Article Nine of the Indenture, or (iv) in
accordance with Section 7.10(a) of this Agreement; provided
that (x) in the case of releases of Collateral pursuant to
clause (i) above in connection with dispositions of
inventory (as defined in the UCC), no such release shall
occur (A) in cases where the Collateral Trustee and the
Indenture Trustee are the same Person, if the Company shall
have failed to deliver to the Indenture Trustee the
Officers' Certificate and Opinion of Counsel required by
Section 10.04(b) of the Indenture and shall not have cured
such failure, or (B) in cases where the Collateral Trustee
and the Indenture Trustee are different Persons, if the
Collateral Trustee shall have received a certificate from
the Indenture Trustee stating that the Company has failed to
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deliver the Officers' Certificate and Opinion of Counsel
required by Section 10.04(b) of the Indenture and shall not
thereafter have received a certificate from the Indenture
Trustee stating that the Company has cured such failure, and
(y) in the case of other releases of Collateral pursuant to
clauses (i) and (iii) above, if the Indenture Trustee and
the Collateral Trustee are different persons, then no such
release shall occur unless the Collateral Trustee shall have
received a certificate from the Indenture Trustee that is
not the same Person as the Collateral Trustee stating that
the Indenture Trustee has received all documentation that is
required by Section 314(d) of the Trust Indenture Act of
1939 in connection with such release. No provision of this
Agreement is intended or shall be construed to prohibit the
collection of accounts receivable by any Pledgor so long as
no Notice of Acceleration is in effect; provided that no
such collection shall occur (A) in cases where the
Collateral Trustee and the Indenture Trustee are the same
Person, if the Company shall have failed to deliver to the
Indenture Trustee the Officers' Certificate and Opinion of
Counsel required by Section 10.04(b) of the Indenture and
shall not have cured such failure, or (B) in cases where the
Collateral Trustee and the Indenture Trustee are different
Persons, if the Collateral Trustee shall have received a
certificate from the Indenture Trustee stating that the
Company has failed to deliver the Officers' Certificate and
Opinion of Counsel required by Section 10.04(b) of the
Indenture and shall not thereafter have received a certifi-
cate from the Indenture Trustee stating that the Company has
cured such failure. No such permitted sales or other
dispositions or other permitted releases of Collateral shall
require any written or oral release or consent of the
Collateral Trustee. Nevertheless, in connection with any
release of Collateral under the Security Documents, any
Pledgor may request that the Collateral Trustee execute and
deliver to such Pledgor or any purchaser of such Collateral
a written release, disclaimer or quitclaim of the Collateral
Trustee's interest in such Collateral (including without
limitation any termination statements filed pursuant to the
UCC), and such purchaser shall be entitled to rely
conclusively on such release, disclaimer or quitclaim. Such
request shall be in writing and signed by the chief
financial officer, the chief accounting officer, the
Treasurer or any Vice President of such Pledgor, shall
describe the property to be released in reasonable detail
and shall state that such release is permitted under the
terms hereof.
(b) If any Collateral which is being released
pursuant to Section 5.02(a) is in the possession of the
Collateral Trustee or any agent or nominee thereof, the
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Collateral Trustee or such agent or nominee shall release
such Collateral to the relevant Pledgor in connection with
such sale or disposition upon a written request signed by
the chief financial officer or the chief accounting officer
of such Pledgor, which request shall describe the property
to be released in reasonable detail and shall state that
such release is permitted under the terms hereof; provided,
however, that none of the Pledgors shall be required to
deliver the certificates and opinions provided for in
Section 5.02(a) or (b) in connection with Collateral being
released under the CPPI Cash Collateral Pledge Agreement or
the Partnership Cash Collateral Pledge Agreement if and so
long as no Notice of Acceleration is in effect.
(c) The notices, statements, directions and
certificates requested under or required by this Section
(together with any required certificate under Section
6.04(e)) shall be full authority for and direction to the
Collateral Trustee to execute and deliver the releases,
disclaimers, quitclaims and other instruments referred to in
this Section, and the Collateral Trustee shall promptly do
so. The Collateral Trustee in so doing shall have no
liability to any Person.
ARTICLE VI
THE COLLATERAL TRUSTEE
SECTION 6.01 Acceptance of Trust. The Collateral
Trustee, for itself and its successors, hereby accepts the
trusts created by this Agreement upon the terms and
conditions hereof.
SECTION 6.02 Exculpatory Provisions. (a) The
Collateral Trustee shall not be responsible in any manner
whatsoever for the correctness of any recitals, statements,
representations or warranties herein or in the Security
Documents, all of which are made solely by the Pledgors.
The Collateral Trustee makes no representations as to the
value or condition of the Collateral Trust Estate or any
part thereof, or as to the title of the Pledgors thereto or
as to the security afforded by this Agreement or the
Security Documents, or as to the validity, execution (except
their own execution), enforceability, legality or
sufficiency of this Agreement or the Security Documents or
the Secured Obligations, and the Collateral Trustee shall
incur no liability or responsibility in respect of any such
matters. The Collateral Trustee shall not be responsible
for insuring the Collateral or for the payment of taxes,
charges or assessments or discharging of liens upon the
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Collateral or otherwise as to the maintenance of the
Collateral, except that if the Collateral Trustee takes
possession of any Collateral, the Collateral Trustee shall
use reasonable care in the physical preservation of the
Collateral in its possession.
(b) The Collateral Trustee shall not be required
to ascertain or inquire as to the performance by the
Pledgors of any of the covenants or agreements contained in
the Related Documents or in the Secured Documents. Whenever
it is necessary, or in the opinion of the Collateral Trustee
advisable, for the Collateral Trustee to ascertain the
amount of Secured Obligations then held by Secured Parties,
the Collateral Trustee may rely on a certificate of the
Indenture Trustee containing such information.
(c) The Collateral Trustee shall be under no
obligation or duty to take any action under this Agreement
or the Security Documents if taking such action (i) would
subject the Collateral Trustee to a tax in any jurisdiction
where it is not then subject to a tax, (ii) would require
the Collateral Trustee to qualify to do business in any
jurisdiction where it is not then so qualified, unless the
Collateral Trustee receives security or indemnity
satisfactory to it against such tax (or equivalent
liability), or any liability resulting from such
qualification, in each case as results from the taking of
such action under this Agreement or the Security Documents
or (iii) would subject the Collateral Trustee to in personam
jurisdiction in any location where it is not then so
subject.
(d) Notwithstanding any other provision of this
Agreement, the Collateral Trustee shall not, in its
individual capacity, be personally liable for any action
taken or omitted to be taken by it in accordance with the
Related Documents except for its own gross negligence or
willful misconduct.
(e) The Collateral Trustee shall have the same
rights with respect to any Secured Obligation held by it as
any other Secured Party and may exercise such rights as
though it were not the Collateral Trustee hereunder, and may
accept deposits from, lend money to, and generally engage in
any kind of banking or trust business with the Pledgors as
if it were not the Collateral Trustee.
SECTION 6.03 Delegation of Duties. The
Collateral Trustee may execute any of the trusts or powers
hereof and perform any duty hereunder either directly or by
or through agents or attorneys-in-fact, who may include
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officers and employees of the Pledgors. The Collateral
Trustee shall be entitled to advice of counsel concerning
all matters pertaining to such trusts, powers and duties.
The Collateral Trustee shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact
selected by the Collateral Trustee without gross negligence
or willful misconduct.
SECTION 6.04 Reliance by Collateral Trustee.
(a) Whenever in the administration of this Agreement or the
Security Documents the Collateral Trustee shall deem it
necessary or desirable that a factual matter be proved or
established in connection with the Collateral Trustee
taking, suffering or omitting any action hereunder, such
matter (unless other evidence in respect thereof is herein
specifically prescribed) may be deemed to be conclusively
proved or established by a certificate of the chief
financial officer or the chief accounting officer of the
Company delivered to the Collateral Trustee, and such
certificate shall be full warrant to the Collateral Trustee
for any action taken, suffered or omitted in reliance
thereon, subject, however, to the provisions of Section
6.05.
(b) The Collateral Trustee may consult with
counsel, accountants or other experts, and any Opinion of
Counsel or opinion of accountants or other experts shall be
full and complete authorization and protection in respect of
any action taken or suffered by the Collateral Trustee
hereunder or under the Security Documents in accordance
therewith. The Collateral Trustee shall have the right at
any time to seek instructions concerning the administration
of this Agreement and the Security Documents from any court
of competent jurisdiction.
(c) The Collateral Trustee may rely, and shall be
fully protected in acting, upon any resolution, statement,
certificate, instrument, opinion, report, notice request,
consent, order, bond or other paper or document which it
believes to be genuine and to have been signed or presented
by the proper party or parties or, in the case of cables,
telecopies and telexes, to have been sent by the proper
party or parties. In the absence of its gross negligence or
willful misconduct, the Collateral Trustee may conclusively
rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or
opinions furnished to the Collateral Trustee and conforming
to the requirements of this Agreement and the Security
Documents.
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(d) The Collateral Trustee shall not be under any
obligation to exercise any of the rights or powers vested in
the Collateral Trustee by this Agreement and the Security
Documents nor shall the security interests of the Secured
Parties in any of the Collateral be released, at the request
or direction of the Required Secured Parties pursuant to
this Agreement or otherwise, unless the Collateral Trustee
shall have been provided adequate security and indemnity
against the costs, expenses and liabilities which may be
incurred by it in connection therewith, including such
reasonable advances as may be requested by the Collateral
Trustee.
(e) Upon any application or demand by any Pledgor
(except any such application or demand which is expressly
permitted to be made orally) to the Collateral Trustee to
take or permit any action under any of the provisions of
this Agreement or the Security Documents, such Pledgor shall
furnish to the Collateral Trustee a certificate of its chief
financial officer or chief accounting officer stating that
all conditions precedent, if any, provided for in this
Agreement, in the Security Documents or in the Indenture
relating to the proposed action have been complied with, and
in the case of any such application or demand as to which
the furnishing of any document is specifically required by
any provision of this Agreement or the Security Documents
relating to such particular application or demand, such
additional document shall also be furnished.
(f) Any Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate of the
Company's chief financial officer or chief accounting
officer or such other officer of the Company as the counsel
rendering the opinion shall deem appropriate or
representations made by any such officer in a writing
delivered to the Collateral Trustee.
(g) In any case in which the Collateral Trustee
shall be required or permitted to make any determination as
to the extent to which the lien of the Security Documents
secures any Secured Obligations, the Collateral Trustee is
authorized, at the cost and expense of the Collateral Trust
Estate and without any direction from, or requirements for
consent of or authorization by, the Secured Parties (or any
of them), to institute proceedings in a court of competent
jurisdiction for the obtaining of any authoritative deter-
mination of such matter. If the Collateral Trustee insti-
tutes any such proceeding, it shall give prompt written
notice thereof to the Indenture Trustee and shall afford the
Indenture Trustee the opportunity to participate in such
proceeding.
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SECTION 6.05 Limitations and Duties of Collateral
Trustee. (a) Unless a Notice of Acceleration is in effect,
the Collateral Trustee shall be obligated to perform such
duties and only such duties as are specifically set forth in
this Agreement and the Security Documents, and no implied
covenants or obligations shall be read into this Agreement
or the Security Documents against the Collateral Trustee.
If and so long as a Notice of Acceleration is in effect, the
Collateral Trustee shall, subject to the provisions of
Section 2.04(b), exercise the rights and powers vested in it
by this Agreement and the Security Documents, and shall not
be liable with respect to any action taken by it, or omitted
to be taken by it, in accordance with the provisions of
Section 2.04(b).
(b) Except as herein otherwise expressly
provided, the Collateral Trustee shall not be under any
obligation to take any action which is discretionary with
the Collateral Trustee under the provisions of this
Agreement or the Security Documents except upon the written
request of the parties authorized to give such instructions
pursuant to Section 2.04(b). Upon written request by the
Indenture Trustee, the Collateral Trustee shall make
available for inspection and copying by the Indenture
Trustee each certificate or other paper furnished to the
Collateral Trustee by any Pledgor under or in respect of
this Agreement, the Security Documents or the Collateral.
(c) No provision of this Agreement or the
Security Documents shall be deemed to impose any duty or
obligation on the Collateral Trustee to perform any act or
acts or to exercise any right, power, duty or obligation
conferred or imposed on it, in any jurisdiction in which it
shall be illegal, or in which the Collateral Trustee shall
be legally unqualified or incompetent, to perform any such
act or acts or to exercise any such right, power, duty or
obligation or if such performance or exercise would
constitute doing business by the Collateral Trustee in such
jurisdiction or would impose a tax on the Collateral Trustee
by reason thereof.
SECTION 6.06 Proceeds to be Held in Trust. All
proceeds received by the Collateral Trustee under or
pursuant to any provision of this Agreement or the Security
Documents (except Trustee Fees) shall be held in trust for
the purposes for which they were paid or are held, and the
Collateral Trustee shall not be liable for any interest
thereon.
SECTION 6.07 Resignation and Removal of the
Collateral Trustee. (a) The Collateral Trustee may at any
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time, by giving written notice to the Company and the
Indenture Trustee, resign and be discharged of the
responsibilities hereby created, such resignation to become
effective upon (i) the appointment of a successor Collateral
Trustee by the Company, (ii) the acceptance of such
appointment by such successor Collateral Trustee and (iii)
the approval of such successor Collateral Trustee (which
approval shall not be unreasonably withheld) evidenced by an
instrument signed by the Indenture Trustee. If no successor
Collateral Trustee shall be appointed and shall have
accepted such appointment within 90 days after the
Collateral Trustee gives the aforesaid notice of
resignation, the Collateral Trustee, the Indenture Trustee
or any Secured Party may apply to any court of competent
jurisdiction to appoint a successor Collateral Trustee to
act until such time, if any, as a successor Collateral
Trustee shall have been appointed as provided in this
Section 6.07. Any successor Collateral Trustee so appointed
by such court shall immediately and without further act be
superseded by any successor Collateral Trustee appointed as
provided in this Section 6.07. The Required Secured Parties
may, at any time upon giving 10 days' prior written notice
thereof to the Indenture Trustee, remove the Collateral
Trustee and the Company may appoint a successor Collateral
Trustee, such removal to be effective upon the acceptance of
such appointment by the successor. Any Collateral Trustee
shall be entitled to Trustee Fees to the extent incurred or
arising, or relating to events occurring, before such
resignation or removal.
(b) If at any time the Collateral Trustee shall
resign or be removed or otherwise become incapable of
acting, the powers, duties, authority and title, of such
Collateral Trustee shall be terminated and cancelled without
procuring its resignation and without any formality (except
as may be required by applicable law) other than the
appointment and designation of a successor Collateral
Trustee in writing duly acknowledged and delivered to the
predecessor Collateral Trustee, the Company and the
Indenture Trustee. Such appointment and designation shall
be full evidence of the right and authority to make the same
and of all the facts therein recited, and this Agreement and
the Security Documents shall vest in such successor
Collateral Trustee, without any further act, deed or
conveyance, all the estates, properties, rights, powers,
trusts, duties, authority and title of its predecessor
Collateral Trustee; but such predecessor Collateral Trustee
shall, nevertheless, on the written request of the Indenture
Trustee, the Company or the successor Collateral Trustee
execute and deliver an instrument transferring to such
successor Collateral Trustee all the estates, properties,
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rights, powers, trusts, duties, authority and title of such
predecessor Collateral Trustee hereunder and under the
Security Documents and shall deliver all Collateral held by
it or him or its or his agents to such successor Collateral
Trustee. Should any deed, conveyance or other instrument in
writing from any Pledgor be required by any successor
Collateral Trustee for more fully and certainly vesting in
such successor Collateral Trustee the estates, properties,
rights, powers, trusts, duties, authority and title vested
or intended to be vested in the predecessor Collateral
Trustee, any and all such deeds, conveyances and other
instruments in writing shall, on request of such successor
Collateral Trustee, be executed, acknowledged and delivered
by such Pledgor. If such Pledgor shall not have executed
and delivered any such deed, conveyance or other instrument
within 10 days after it receives a written request from the
successor Collateral Trustee to do so, or if a Notice of
Acceleration is in effect, the predecessor Collateral
Trustee may execute the same on behalf of such Pledgor.
Each Pledgor hereby appoints any predecessor Collateral
Trustee as its agent and attorney to act for it as provided
in the next preceding sentence.
SECTION 6.08 Status of Successor Collateral
Trustee. Every successor Collateral Trustee appointed
pursuant to Section 6.07 shall be a bank or trust company in
good standing and having power to act as Collateral Trustee
hereunder, incorporated under the laws of the United States
of America or any State thereof or the District of Columbia
and having its principal corporate trust office within the
48 contiguous States and shall also have capital, surplus
and undivided profits of not less than $50,000,000, if there
be such an institution with such capital, surplus and
undivided profits willing, qualified and able to accept the
trust hereunder upon reasonable or customary terms.
SECTION 6.09 Merger of the Collateral Trustee.
Any corporation into which the Collateral Trustee may be
merged, or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to
which the Collateral Trustee shall be a party, shall be
Collateral Trustee under this Agreement and the Security
Documents without the execution or filing of any paper or
any further act on the part of the parties hereto.
SECTION 6.10 Co-Trustee; Separate Collateral
Trustee. (a) If at any time it shall be necessary or
prudent in order to conform to any law of any jurisdiction
in which any of the Collateral shall be located, or to avoid
any violation of law or imposition on the Collateral Trustee
of taxes by such jurisdiction not otherwise imposed on the
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Collateral Trustee, or the Collateral Trustee shall be
advised by counsel, satisfactory to it, that it is necessary
or prudent in the interest of the Secured Parties, or the
Indenture Trustee shall in writing so request the Collateral
Trustee and the Company, or the Collateral Trustee shall
deem it desirable for its own protection in the performance
of its duties hereunder or under the Security Documents, the
Collateral Trustee and the Company shall execute and deliver
all instruments and agreements necessary or proper to
constitute another bank or trust company, or one or more
persons approved by the Collateral Trustee and the Company,
either (i) to act as co-trustee or co-trustees of all or any
of the Collateral under this Agreement or under the Security
Documents, jointly with the Collateral Trustee, or (ii) to
act as separate trustee or trustees for the Secured Parties
with respect to any of the Collateral. If the Company shall
not have joined in the execution of such instruments and
agreements within 10 days after it receives a written
request from the Collateral Trustee to do so, or if a Notice
of Acceleration is in effect, the Collateral Trustee may act
under the foregoing provisions of this Section 6.10(a)
without the concurrence of the Company and execute and
deliver such instruments and agreements on behalf of the
Company. The Company hereby appoints the Collateral Trustee
as its agent and attorney to act for it under the foregoing
provisions of this Section 6.10(a) in either of such
contingencies.
(b) Every co-trustee appointed pursuant to
Section 6.10(a) shall, to the extent permitted by law, be
appointed and act and be such, subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations
conferred upon the Collateral Trustee in respect of the
custody, control and management of moneys, papers or
securities shall be exercised solely by the Collateral
Trustee or any agent appointed by the Collateral
Trustee;
(ii) all rights, powers, duties and obligations
conferred or imposed upon the Collateral Trustee
hereunder and under the Security Documents shall be
conferred or imposed and exercised or performed by the
Collateral Trustee and such co-trustee or co-trustees,
jointly, as shall be provided in the instrument
appointing such co-trustee or co-trustees, except to
the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed
the Collateral Trustee shall be incompetent or
unqualified to perform such act or acts, or unless the
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performance of such act or acts would result in the
imposition of any tax on the Collateral Trustee which
would not be imposed absent such joint act or acts, in
which event such rights, powers, duties and obligations
shall be exercised and performed by such co-trustee or
co-trustees;
(iii) no power given hereby or by the Security
Documents to, or which it is provided herein or therein
may be exercised by, any such co-trustee or co-trustees
shall be exercised hereunder or thereunder by such
co-trustee or co-trustees except jointly with, or with
the consent in writing of, the Collateral Trustee
anything contained herein or therein to the contrary
notwithstanding; and
(iv) no trustee hereunder shall be personally
liable by reason of any act or omission of any other
trustee hereunder.
(c) Every separate trustee for the Secured
Parties appointed pursuant to Section 6.10(a) with respect
to any Collateral shall, to the extent permitted by law, be
appointed and act as the sole Collateral Trustee hereunder
with respect to such Collateral, subject to the following
provisions and conditions:
(i) no power given hereby or by the Security
Documents to, or which it is provided herein or therein
may be exercised by, any such separate trustee shall be
exercised hereunder or thereunder by such separate
trustee except with the consent in writing of the
Collateral Trustee, anything contained herein or
therein to the contrary notwithstanding; and
(ii) no trustee hereunder shall be personally
liable by reason of any act or omission of any other
trustee hereunder.
(d) The Company and the Collateral Trustee, at
any time by an instrument in writing executed by them
jointly, may accept the resignation of or remove any such
separate trustee or co-trustee and, in that case by an
instrument in writing executed by them jointly, may appoint
a successor to such separate trustee or co-trustee, as the
case may be, anything contained herein to the contrary
notwithstanding. If the Company shall not have joined in
the execution of any such instrument within 10 Business Days
after it receives a written request from the Collateral
Trustee to do so, or if a Notice of Acceleration is in
effect, the Collateral Trustee shall have the power to
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accept the resignation of or remove any such separate
trustee or co-trustee and to appoint a successor without the
concurrence of the Company, the Company hereby appointing
the Collateral Trustee its agent and attorney to act for it
in such connection in such contingency. If the Collateral
Trustee shall have appointed a separate trustee or separate
trustees or co-trustee or co-trustees as above provided, the
Collateral Trustee may at any time, by an instrument in
writing, accept the resignation of or remove any such
separate trustee or co-trustee and the successor to any such
separate trustee or co-trustee shall be appointed by the
Company and the Collateral Trustee, or by the Collateral
Trustee alone pursuant to this Section 6.10(d).
SECTION 6.11 Treatment of Payee or Indorsee by
Collateral Trustee; Representatives of Secured Parties.
(a) The Collateral Trustee may treat the registered holder
or, if none, the payee or indorsee of any promissory note or
debenture evidencing a Secured Obligation as the absolute
owner thereof for all purposes and shall not be affected by
any notice to the contrary, whether such promissory note or
debenture shall be past due or not.
(b) Any Person (other than the Indenture Trustee)
which shall be designated as the duly authorized
representative of one or more Secured Parties to act as such
in connection with any matters pertaining to this Agreement,
the Security Documents or the Collateral shall present to
the Collateral Trustee such documents, including, without
limitation, Opinions of Counsel, as the Collateral Trustee
may reasonably require, in order to demonstrate to the
Collateral Trustee the authority of such Person to act as
the representative of such Secured Parties. If the
Collateral Trustee and the Indenture Trustee are different
Persons, then the authority of the Indenture Trustee shall
be demonstrated by inclusion as such in the lists from time
to time delivered pursuant to Section 4.02.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01 Notices. Unless otherwise specified
herein, all notices, requests, demands or other communica-
tions given to the Pledgors, the Collateral Trustee or the
Indenture Trustee shall be given in writing (including bank
wire, telex or telecopy or similar writing) and shall be
addressed (x) if to a Pledgor or the Collateral Trustee, to
such party at its address specified on the signature pages
hereof or any other address which such party shall have
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specified as its address for the purpose of communications
hereunder, by notice given in accordance with this Section
to the party sending such communication, or (y) if to the
Indenture Trustee, to it at its address specified from time
to time in the list provided by the Company to the
Collateral Trustee pursuant to Section 4.02. Each such
notice, request or other communication shall be effective
and deemed received (i) if given by telex or telecopy, when
such telex or telecopy is transmitted to the telex number
specified in this Section and, in the case of telecopy,
telephone confirmation of receipt is received, and in the
case of telex, the appropriate answerback is received, (ii)
if given by mail, 96 hours after such communication is
deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section;
provided that any notice, request or demand to the
Collateral Trustee shall not be effective until actually
received by the Collateral Trustee in the corporate trust
division at the office designated by it pursuant to this
Section.
SECTION 7.02 No Waiver. No failure on the part
of the Collateral Trustee, any co-trustee, any separate
trustee, the Indenture Trustee or any Secured Party to
exercise, no course of dealing with respect to, and no delay
in exercising, any right, power or privilege under this
Agreement or the Security Documents shall operate as a
waiver thereof nor shall any single or partial exercise of
any such right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege.
SECTION 7.03 Amendments, Supplements and Waivers.
(a) With the written consent of the Required Secured
Parties, the Collateral Trustee and the Pledgors may, from
time to time, enter into written agreements supplemental
hereto for the purpose of amending or waiving any provision
of this Agreement or any Security Document or changing in
any manner the rights of the Collateral Trustee, the Secured
Parties or the Pledgors hereunder or thereunder; provided,
however, that no such supplemental agreement shall:
(i) amend, modify or waive any provision of this
Section without the written consent of the Indenture
Trustee;
(ii) change the definition of "Required Secured
Parties" without the written consent of all of the
Secured Parties; or
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(iii) amend, modify or waive any provision of this
Agreement in a manner that would affect the rights,
duties and privileges of the Collateral Trustee without
the written consent of the Collateral Trustee.
Any such supplemental agreement shall be binding upon the
Pledgors, the Indenture Trustee, the Secured Parties and the
Collateral Trustee and their respective successors and
assigns. The Collateral Trustee shall not enter into any
such supplemental agreement unless it shall have received a
certificate of the chief financial officer or the chief
accounting officer of the Company and an Opinion of Counsel
to the effect that such supplemental agreement will not
result in a breach of any provision or covenant contained in
the Indenture.
(b) Without the consent of the Indenture Trustee
and the Secured Parties (or any of them), the Collateral
Trustee and the Pledgors, at any time and from time to time,
may, upon ten days written notice to the Indenture Trustee,
enter into one or more agreements supplemental hereto or to
the Security Documents, in form satisfactory to the
Collateral Trustee, (i) to add to the covenants of the
Pledgors for the benefit of the Secured Parties or to
surrender any right or power herein conferred upon the
Pledgors, (ii) to mortgage or pledge to the Collateral
Trustee, or grant a security interest in favor of the
Collateral Trustee in, any property or assets as additional
security for the Secured Obligations, or (iii) to cure any
ambiguity, to correct or supplement any provision in the
Security Documents which may be defective or inconsistent
with any other provision herein or therein, or to make any
other provision with respect to matters or questions arising
hereunder which shall not be inconsistent with any provision
hereof; provided that any such action contemplated by clause
(iii) above shall not adversely affect the interests of the
Secured Parties.
(c) Without the consent of the Indenture Trustee,
the existing Pledgors or the Secured Parties (or any of
them), the Collateral Trustee, at any time and from time to
time, may, upon ten days written notice to the Indenture
Trustee and the existing Pledgors, enter into one or more
agreements supplemental hereto or to the Security Documents,
in form satisfactory to the Collateral Trustee, to add as a
Pledgor hereunder any Restricted Subsidiary that is added as
a Guarantor after the Issue Date as provided in the
Indenture.
SECTION 7.04 Headings. The table of contents and
the headings of Sections have been included in this
37
<PAGE>
Agreement and the Security Documents for convenience only
and should not be considered in interpreting this Agreement
or the Security Documents.
SECTION 7.05 Severability. If any provision
hereof is invalid or unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor
of the Secured Parties in order to carry out the intentions
of the parties hereto as nearly as may be possible and (ii)
the invalidity or enforceability of such provision in such
jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction.
SECTION 7.06 Successors and Assigns. This Agree-
ment shall be binding upon and inure to the benefit of each
of the parties hereto and their respective successors and
assigns and shall inure to the benefit of each of the
Secured Parties and their respective successors and assigns,
and nothing herein is intended or shall be construed to give
any other Person any right, remedy or claim under, to or in
respect of this Agreement, the Security Documents or any
Collateral.
SECTION 7.07 Non-Recourse. No general or limited
partner of the Partnership nor any of their respective
agents, officers, directors or employees as such shall be
personally liable to any Secured Party or other person for
any obligations of the Partnership (or the Company or the
Guarantors) under this Agreement or any of the other
Financing Documents or for any claim based upon or in
respect of such obligations. In addition, the Partnership
shall not have general liability for any such obligations,
recourse to the Partnership in respect of all such
obligations being expressly limited to the Collateral.
Nothing contained in this Section shall limit, restrict or
impair the rights of the Collateral Trustee, the Trustee or
the Noteholders to take actions or bring suit against any
person to enforce such obligations and the remedies provided
in the Financing Documents (so long as none of the
Partnership, its general or limited partners, nor their
respective agents, officers, directors or employees as such
shall have any personal liability thereon, satisfaction
thereon being limited to the Collateral). Each Noteholder,
by accepting a Note, irrevocably waives and releases all
such liability. The waiver and release contained herein are
part of the consideration for the granting of the Mortgage
and related security interests by the Partnership.
38
<PAGE>
SECTION 7.08 NEW JERSEY LAW TO GOVERN. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW JERSEY, EXCEPT TO THE
EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF ANY
JURISDICTION OTHER THAN NEW JERSEY ARE GOVERNED BY THE LAWS
OF SUCH JURISDICTION.
SECTION 7.09 Counterparts. This Agreement may be
signed in any number of counterparts with the same effect as
if the signatures thereto and hereto were upon the same
instrument.
SECTION 7.10 Termination. (a) Upon (i) receipt
by the Collateral Trustee from the Indenture Trustee of a
written notice stating that all Secured Obligations
outstanding under the Indenture have either been (x) paid
and discharged in full or (y) deemed to have been paid and
discharged in full pursuant to the defeasance provisions of
Section 8.01 of the Indenture and (ii) payment in full of
all Trustee Fees, the security interests created here by and
by the Security Documents shall terminate immediately and
all right, title and interest of the Collateral Trustee in
and to the Collateral shall revert to the Pledgors; provided
that such termination shall not affect the provisions of
Section 4.07 and Section 5.02(c) as to any funds then held
in trust thereunder and such provisions (together with any
other provisions defining the rights, duties, obligations
and responsibilities of the Collateral Trustee in respect
thereof) shall continue in effect until all such funds have
been distributed or released in accordance therewith.
(b) Upon the termination of the Collateral
Trustee's security interest and the release of the
Collateral in accordance with Section 7.10(a), the
Collateral Trustee will promptly upon the written request of
any Pledgor and at such Pledgor's sole expense (i) execute
and deliver to such Pledgor such documents as such Pledgor
shall reasonably request to evidence the termination of such
security interest or the release of the Collateral and (ii)
deliver or cause to be delivered to the Pledgors all
property of the Pledgors then held by the Collateral Trustee
or any agent thereof.
(c) This Agreement shall terminate when the
security interest granted under the Security Documents has
terminated and the Collateral has been released; provided
that the provisions of Sections 4.03, 4.04, 4.05 and 4.06
shall survive the termination of this Agreement.
39
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
IBJ SCHRODER BANK & TRUST COMPANY
By: ___________________________
Title:
One State Street
11th Floor
New York, New York 10004
Attention:
Telecopy Number:
THE CLARIDGE HOTEL & CASINO
CORPORATION
By: ___________________________
Title:
Indiana Avenue and The Boardwalk
Atlantic City, New Jersey 08401
Attention: Frank A. Bellis, Jr.
Raymond A. Spera
Telecopy Numbers: (609) 340-3589
(609) 345-1128
THE CLARIDGE AT PARK PLACE,
INCORPORATED
By: __________________________
Title:
Indiana Avenue and The Boardwalk
Atlantic City, New Jersey 08401
Attention: Frank A. Bellis, Jr.
Raymond A. Spera
Telecopy Numbers: (609) 340-3589
(609) 345-1128
40
<PAGE>
ATLANTIC CITY BOARDWALK ASSOCIATES,
L.P.
By: _________________________
Title:
Indiana Avenue and the Boardwalk
Atlantic City, New Jersey 08401
Attention:
Telecopy Number:
With copies to:
Atlantic City Boardwalk
Associates, L.P.
c/o Gerald Heetland, Esq.
2880 West Meade Avenue
Suite 201
Las Vegas, Nevada 89102
Alan Wovsaniker, Esq.
Lowenstein, Sandler, Kohl,
Fisher & Boylan
65 Livingstone Avenue
Roseland, New Jersey 07068-1791
41
<PAGE>
<PAGE>
EXHIBIT B
to
Collateral Trust Agreement
COMPANY PLEDGE AGREEMENT
AGREEMENT dated as of ________, 1994 between THE
CLARIDGE HOTEL AND CASINO CORPORATION a New York corporation
(with its successors, the "Pledgor"), and IBJ SCHRODER BANK
& TRUST COMPANY as trustee under the Collateral Trust
Agreement referred to herein (the "Collateral Trustee");
W I T N E S S E T H :
WHEREAS, simultaneously with the execution and
delivery of the Collateral Trust Agreement dated as of the
date hereof, the Pledgor as issuer is entering into an
indenture (the "Indenture") among the Pledgor, The Claridge
of Park Place, Incorporated ("CPPI"), as guarantor, and IBJ
Schroder Bank & Trust Company, as trustee, pursuant to which
the Pledgor will issue its First Mortgage Notes Due 2002
(the "Notes"); and
WHEREAS, in order to secure its obligations under
the Indenture and all other Secured Obligations (as defined
herein), the Pledgor has agreed to grant to the Collateral
Trustee a continuing security interest in and to the
Collateral (as defined herein);
NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. Definitions. Terms used herein and
not otherwise defined herein have the respective meanings
given to such terms in the Collateral Trust Agreement, or if
not defined therein, in the Indenture. The following
additional terms, as used herein, have the following
respective meanings:
"Agreement" means this Company Pledge Agreement
dated as of the date hereof, as the same may be amended or
otherwise modified from time to time.
"Collateral" has the meaning assigned to such term
in Section 4(A).
<PAGE>
"Collateral Trust Agreement" means the Collateral
Trust Agreement dated as of the date hereof, among the
Pledgor, CPPI, Atlantic City Boardwalk Associates, L.P. and
the Collateral Trustee, as the same may be amended or
otherwise modified from time to time.
"CPPI Shares" means all shares of common stock
issued and outstanding as of the date of this Agreement and
which are described on Schedule I hereto.
"Issuers" means, at any time, all Subsidiaries of
the Pledgor (other than Non-Recourse Subsidiaries) at such
time.
"Pledged Instruments" means any securities (other
than capital stock) or other instruments of a Subsidiary
(other than a Non-Recourse Subsidiary) which are owned by
the Pledgor and required to be pledged to the Collateral
Trustee pursuant to Section 4(B).
"Pledged Securities" means the Pledged Instruments
and the Pledged Stock.
"Pledged Stock" means (i) the CPPI Shares and (ii)
any other capital stock required to be pledged to the
Collateral Trustee pursuant to Section 4(B).
"Secured Obligations" means (i) the Note
Obligations and (ii) all sums payable by the Pledgor under
the Related Documents (including, without limitation,
Trustees fees).
"Security Interests" means the security interests
in the Collateral granted by the Pledgor to the Collateral
Trustee hereunder securing the Secured Obligations.
Unless otherwise defined herein, or unless the
context otherwise requires, all terms used herein which are
defined in the Uniform Commercial Code as in effect from
time to time in the State of New York shall have the
meanings therein stated.
SECTION 2. Representations and Warranties. The
Pledgor represents and warrants as follows:
(A) Title to Pledged Securities. The Pledgor
owns all of the CPPI Shares, free and clear of any
Liens other than the Security Interests. The CPPI
Shares include all of the issued and outstanding
capital stock of CPPI. All of the CPPI Shares have
been duly authorized and validly issued, and are fully
B-2
<PAGE>
paid and non-assessable, and are subject to no options
to purchase or similar rights of any Person. The
Pledgor is not a party to or otherwise bound by any
agreement, other than this Agreement or the Indenture,
which restricts in any manner the rights of any present
or future holder of any of the Pledged Securities with
respect thereto.
(B) Validity, Perfection and Priority of Security
Interests. Upon the delivery of the Pledged
Instruments and certificates representing the Pledged
Stock to the Collateral Trustee in accordance with
Section 5 hereof, the Collateral Trustee will have
valid and perfected security interests in the
Collateral subject to no prior Lien. No registration,
recordation or filing with any governmental body,
agency or official is required in connection with the
execution or delivery of this Agreement or necessary
for the validity or enforceability hereof or for the
perfection or enforcement of the Security Interests.
Neither the Pledgor nor any of its Subsidiaries has
performed any acts which might prevent the Collateral
Trustee from enforcing any of the terms and conditions
of this Agreement or which would limit the Collateral
Trustee in any such enforcement.
SECTION 3. Covenants.
(A) Other Agreements. Except as permitted or
contemplated by the Indenture, the Pledgor shall not become
a party to or otherwise be bound by any agreement, other
than this Agreement, which restricts in any manner the
rights of any present or future holder of any of the Pledged
Securities with respect thereto.
(B) Enforceability. Neither the Pledgor nor any
of its Subsidiaries shall perform any acts which might
prevent the Collateral Trustee from enforcing any of the
terms and conditions of this Agreement or which would limit
the Collateral Trustee in any such enforcement.
SECTION 4. The Security Interests. (A) In order
to secure the full and punctual payment of the Secured
Obligations in accordance with the terms thereof, and to
secure the performance of all the obligations of the Pledgor
hereunder, the Pledgor hereby assigns and pledges to and
with the Collateral Trustee and grants to the Collateral
Trustee security interests in the Pledged Securities, and
all of its rights and privileges with respect to the Pledged
Securities, and all proceeds, income and profits thereon,
and all interest, dividends and other payments and
B-3
<PAGE>
distributions with respect thereto (collectively, the
"Collateral"). The Pledgor will deliver to the Collateral
Trustee in pledge hereunder the certificates representing
the CPPI Shares.
(B) If any Subsidiary (other than a Non-Recourse
Subsidiary) at any time issues to the Pledgor any additional
or substitute shares of capital stock of any class, or owes
any Indebtedness to the Pledgor, the Pledgor will
immediately pledge and deposit with the Collateral Trustee
certificates representing all such shares or a note or other
instrument evidencing such Indebtedness (as the case may be)
as additional security for the Secured Obligations. If any
entity that is not a Subsidiary on the date hereof hereafter
becomes a Subsidiary (other than a Non-Recourse Subsidiary),
the Pledgor will immediately pledge and deposit with the
Collateral Trustee certificates representing all capital
stock of such entity owned by the Pledgor as additional
security for the Secured Obligations. All such shares,
notes and instruments referred to in this Section 4(B)
constitute Pledged Securities and are subject to all
provisions of this Agreement.
(C) The Security Interests are granted as
security only and shall not subject the Collateral Trustee
or any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Pledgor or any of
its Subsidiaries with respect to any of the Collateral or
any transaction in connection therewith.
SECTION 5. Delivery of Pledged Securities. All
Pledged Instruments delivered to the Collateral Trustee by
the Pledgor hereunder shall be endorsed in suitable form for
transfer by endorsement and delivery by the Collateral
Trustee, and accompanied by any required transfer tax
stamps, all in form and substance reasonably satisfactory to
the Collateral Trustee. All certificates representing the
Pledged Stock delivered to the Collateral Trustee by the
Pledgor pursuant hereto shall be in suitable form for
transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank,
with signatures appropriately guaranteed, and accompanied by
any required transfer tax stamps, all in form and substance
reasonably satisfactory to the Collateral Trustee.
SECTION 6. Filing; Further Assurances. The
Pledgor agrees that it will, at its expense and in such
manner and form as the Collateral Trustee may require,
execute, deliver, file and record any financing statement,
specific assignment or other paper and take any other action
that may be necessary, or that the Collateral Trustee may
B-4
<PAGE>
reasonably request, in order to create, preserve, perfect or
validate any Security Interest or to enable the Collateral
Trustee to exercise and enforce its rights hereunder with
respect to any of the Collateral. To the extent permitted
by applicable law, the Pledgor hereby authorizes the
Collateral Trustee to execute and file, in the name of the
Pledgor or otherwise, Uniform Commercial Code financing
statements (which may be carbon, photographic, photostatic
or other reproductions of this Agreement or of a financing
statement relating to this Agreement) which the Collateral
Trustee in its discretion may deem necessary or appropriate
to further perfect the Security Interests.
SECTION 7. Record Ownership of Pledged Stock.
(A) While a Notice of Acceleration is in effect, the
Collateral Trustee shall have the right to cause any or all
of the Pledged Stock to be transferred of record into the
name of the Collateral Trustee or its nominee.
(B) The Pledgor will promptly give to the
Collateral Trustee copies of any notices or other
communications received by it with respect to Pledged Stock
registered in the name of the Pledgor, and the Collateral
Trustee will promptly give to the Pledgor copies of any
notices and communications received by the Collateral
Trustee with respect to Pledged Stock registered in the name
of the Collateral Trustee or its nominee.
SECTION 8. Right to Receive Distributions on
Collateral. Unless a Notice of Acceleration shall be in
effect, the Pledgor shall have the right to receive and
retain all dividends, interest and other payments and
distributions made upon or with respect to the Collateral.
While a Notice of Acceleration is in effect, the
Collateral Trustee shall have the right to receive and to
retain as Collateral hereunder all dividends, interest and
other payments and distributions made upon or with respect
to the Collateral, and the Pledgor shall take all such
action as the Collateral Trustee may deem necessary or
appropriate to give effect to such right. All such
dividends, interest and other payments and distributions
which are received by the Pledgor while a Notice of
Acceleration is in effect shall be received in trust for the
benefit of the Collateral Trustee and, if the Collateral
Trustee so directs, shall forthwith be segregated from other
funds of the Pledgor and paid over to the Collateral Trustee
as Collateral in the same form as received (with any
necessary endorsement).
B-5
<PAGE>
SECTION 9. Right to Vote Pledged Stock. Unless
a Notice of Acceleration shall be in effect, the Pledgor
shall have the right, from time to time, to vote and to give
consents, ratifications and waivers with respect to the
Pledged Stock, and the Collateral Trustee shall, upon
receiving a written request from the Pledgor, deliver to the
Pledgor or as specified in such request such proxies, powers
of attorney, consents, ratifications and waivers in respect
of any of the Pledged Stock which is registered in the name
of the Collateral Trustee or its nominee as shall be
specified in such request.
While a Notice of Acceleration is in effect, the
Collateral Trustee shall have the right to the extent
permitted by law to vote and to give consents, ratifications
and waivers, and to take any other action with respect to
any or all of the Pledged Stock, with the same force and
effect as if the Collateral Trustee were the absolute and
sole owner thereof, and the Pledgor shall take all such
action as the Collateral Trustee may deem necessary or
appropriate to give effect to such right.
SECTION 10. Remedies upon Notice of
Acceleration. If a Notice of Acceleration shall be in
effect, the Collateral Trustee may exercise on behalf of the
Secured Parties the rights set forth in Article Three of the
Collateral Trust Agreement.
SECTION 11. Release of Collateral; Termination
of Security Interests. Collateral may be released from the
Security Interests created hereunder from time to time
pursuant to Section 5.02 of the Collateral Trust Agreement.
The Security Interests shall terminate and all rights to the
Collateral shall revert to the Pledgor in accordance with
Section 7.09 of the Collateral Trust Agreement.
SECTION 12. Notices. All notices,
communications and distributions hereunder shall be given in
accordance with Section 7.01 of the Collateral Trust
Agreement.
SECTION 13. Waiver; Non-Exclusive Remedies. No
failure on the part of the Collateral Trustee to exercise,
and no delay in exercising and no course of dealing with
respect to, any right under this Agreement or any other
Related Document shall operate as a waiver hereof or
thereof; nor shall any single or partial exercise by the
Collateral Trustee of any right under this Agreement or any
other Related Document preclude any other or further
exercise thereof or the exercise of any other right. The
B-6
<PAGE>
rights in this Agreement are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 14. Successors and Assigns. This
Agreement is for the benefit of the Collateral Trustee and
the Secured Parties and their successors and assigns, and in
the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable
to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the
Pledgor and its successors and assigns.
SECTION 15. Changes in Writing. Neither this
Agreement nor any provision hereof may be changed, amended
or waived except in accordance with Section 7.03 of the
Collateral Trust Agreement.
SECTION 16. New York Law. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT REMEDIES
PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK
ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
SECTION 17. Severability. If any provision
hereof is invalid or unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor
of the Collateral Trustee and the Secured Parties in order
to carry out the intentions of the parties hereto as nearly
as may be possible, and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 18. Counterparts. This Agreement may be
signed in any number of counterparts with the same effect as
if the signatures thereto and hereto were upon the same
instrument.
SECTION 19. No Recourse Against Others. A
director, officer, employee or shareholder as such of any of
the Pledgor shall not have any liability of any obligations
of the Pledgor under the Notes, this Indenture or any
Related Document or for any claim based on, in respect of or
by reason of such obligations or their creation. Each
Noteholder by accepting a Note irrevocably waives and
releases all such liability. The waiver and release are
part of the consideration for the issuance of the Notes.
B-7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officer as of the day and year first above
written.
THE CLARIDGE HOTEL AND CASINO
CORPORATION
By: ___________________________
Title:
IBJ SCHRODER BANK & TRUST COMPANY
not in its individual capacity
but solely as trustee under the
Collateral Trust Agreement referred
to above
By: ___________________________
Title:
B-8
<PAGE>
SCHEDULE I
INITIAL PLEDGED STOCK
Type of Number of Certificate % of
Issuer Shares Shares Number Series
- ------ ------- --------- ----------- ------
CPPI Common 1000 1 100%
Stock, $.10
par value
B-9
<PAGE>
<PAGE>
EXHIBIT C
to
Collateral Trust Agreement
CPPI PLEDGE AGREEMENT
AGREEMENT dated as of ________, 1994 between THE
CLARIDGE OF PARK PLACE, INCORPORATED, a New Jersey
corporation (with its successors, the "Pledgor"), and IBJ
SCHRODER BANK & TRUST COMPANY, as trustee under the
Collateral Trust Agreement referred to herein (the
"Collateral Trustee");
W I T N E S S E T H :
WHEREAS, simultaneously with the execution and
delivery of the Collateral Trust Agreement dated as of the
date hereof, The Claridge Hotel & Casino Corporation (the
"Company") is entering into an indenture (the "Indenture")
among the Company, as issuer, the Pledgor, as guarantor and
IBJ Schroder Bank & Trust Company, as trustee, pursuant to
which the Company will issue its First Mortgage Notes Due
2002 (the "Notes"); and
WHEREAS, in order to secure its obligations under
the Indenture and all other Secured Obligations (as defined
herein), the Pledgor has agreed to grant to the Collateral
Trustee a continuing security interest in and to the
Collateral (as defined herein);
NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. Definitions. Terms used herein and
not otherwise defined herein have the respective meanings
given to such terms in the Collateral Trust Agreement, or if
not defined therein, in the Indenture. The following
additional terms, as used herein, have the following
respective meanings:
"Agreement" means this CPPI Pledge Agreement dated
as of the date hereof as the same may be amended or
otherwise modified from time to time.
"Collateral" has the meaning assigned to such term
in Section 4(A).
<PAGE>
"Collateral Trust Agreement" means the Collateral
Trust Agreement dated as of the date hereof, among the
Company, the Pledgor, Atlantic City Boardwalk Associates,
L.P. and the Collateral Trustee, as the same may be amended
or otherwise modified from time to time.
"Pledged Instruments" means any securities (other
than capital stock) or other instruments which are owned by
the Pledgor and required to be pledged to the Collateral
Trustee pursuant to Section 4(B).
"Pledged Securities" means the Pledged Instruments
and the Pledged Stock.
"Pledged Stock" means any capital stock which is
owned by the Pledgor and required to be pledged to the
Collateral Trustee pursuant to Section 4(B).
"Secured Obligations" means (i) the Note
Obligations and (ii) all sums payable by the Pledgor under
the Related Documents (including, without limitation,
Trustee's fees).
"Security Interests" means the security interests
in the Collateral granted by the Pledgor to the Collateral
Trustee hereunder securing the Secured Obligations.
"Wraparound Mortgage" means the Expandable
Wraparound Mortgage and Security Agreement dated October 31,
1983 between the Partnership and CPPI, as amended, including
the notes, the loan agreement and all additional documents
given as security therefor.
Unless otherwise defined herein, or unless the
context otherwise requires, all terms used herein which are
defined in the Uniform Commercial Code as in effect from
time to time in the State of New York shall have the
meanings therein stated.
SECTION 2. Representations, Warranties and
Covenants. The Pledgor represents, warrants and covenants
as follows:
(A) except as contemplated or permitted by the
Indenture, all Pledged Securities hereafter delivered
to the Collateral Trustee will be owned by the Pledgor
free and clear of all claims, mortgages, pledges,
liens, encumbrances and security interests of every
nature whatsoever, except in favor of the Collateral
Trustee;
C-2
<PAGE>
(B) except as contemplated or permitted by the
Indenture, the Pledgor will not sell, transfer, assign,
pledge or grant a security interest in the Pledged
Securities to any person other than the Collateral
Trustee;
SECTION 3. Covenants.
(A) Other Agreements. Except as permitted or
contemplated by the Indenture, the Pledgor shall not
become a party to or otherwise be bound by any
agreement, other than this Agreement, which restricts
in any manner the rights of any present or future
holder of any of the Pledged Securities with respect
thereto;
(B) Enforceability. Neither the Pledgor nor any
of its Subsidiaries shall perform any acts which might
prevent the Collateral Trustee from enforcing any of
the terms and conditions of this Agreement or which
would limit the Collateral Trustee in any such
enforcement.
SECTION 4. The Security Interest. (A) In order
to secure the due and punctual payment, performance and
observance of the Secured Obligations in accordance with the
terms thereof, and to secure the performance of all the
obligations of the Pledgor hereunder, the Pledgor hereby
assigns and pledges to the Collateral Trustee and grants
Collateral Trustee a security interest in the following
property (collectively, the "Pledged Securities"), and all
of its rights and privileges with respect to the Pledged
Securities, and all proceeds, income and profits thereon,
and all interest, dividends and other payments and
distributions with respect thereto (collectively, the
"Collateral"):
(i) the Wraparound Mortgage and the notes
thereunder, including those listed on Schedule I
hereto;
(ii) all shares of capital stock of a corporation
(other than a Non-Recourse Subsidiary) and all
obligations for borrowed money or the like of any
person (other than "Cash Collateral Investments" as
such term is defined in the CPPI Cash Collateral Pledge
Agreement dated the date hereof between the Pledgor and
the Collateral Trustee, and the certificates or other
instruments or documents evidencing same), in each
case, now owned or hereafter acquired by the Pledgor;
and
C-3
<PAGE>
(iii) all dividends, distributions and moneys paid
or distributed in respect of or in exchange for, and
all other proceeds of, any or all of the foregoing.
(B) If any corporation (other than a Non-Recourse
Subsidiary) at any time issues to the Pledgor any additional
or substitute shares of capital stock of any class, or owes
any Indebtedness to the Pledgor, the Pledgor will
immediately pledge and deposit with the Collateral Trustee
certificates representing all such shares or a note or other
instrument evidencing such Indebtedness (as the case may be)
as additional security for the Secured Obligations. Without
limitation of the foregoing, if any entity that is not a
Subsidiary (other than a Non-Recourse Subsidiary) on the
date hereof hereafter becomes a Subsidiary (other than a
Non-Recourse Subsidiary), the Pledgor will immediately
pledge and deposit with the Collateral Trustee certificates
representing all capital stock of such entity owned by the
Pledgor as additional security for the Secured Obligations.
All such shares, notes and instruments referred to in this
Section 4(B) constitute Pledged Securities and are subject
to all provisions of this Agreement.
(C) The Security Interests are granted as
security only and shall not subject the Collateral Trustee
or any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Pledgor or any of
its Subsidiaries with respect to any of the Collateral or
any transaction in connection therewith.
SECTION 5. Delivery of Pledged Securities. All
Pledged Instruments delivered to the Collateral Trustee by
the Pledgor hereunder shall be endorsed in suitable form for
transfer by endorsement and delivery by the Collateral
Trustee, and accompanied by any required transfer tax
stamps, all in form and substance reasonably satisfactory to
the Collateral Trustee. All certificates representing the
Pledged Stock delivered to the Collateral Trustee by the
Pledgor pursuant hereto shall be in suitable form for
transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank,
with signatures appropriately guaranteed, and accompanied by
any required transfer tax stamps, all in form and substance
reasonably satisfactory to the Collateral Trustee.
SECTION 6. Filing; Further Assurances. The
Pledgor agrees that it will, at its expense and in such
manner and form as the Collateral Trustee may require,
execute, deliver, file and record any financing statement,
specific assignment or other paper and take any other action
(including without limitation the granting of its consent or
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<PAGE>
waiver under the Claridge Lease or Wraparound Mortgage) that
may be necessary, or that the Collateral Trustee may
reasonably request, in order to create, preserve, perfect or
validate any Security Interest or to enable the Collateral
Trustee to exercise and enforce its rights hereunder with
respect to any of the Collateral. To the extent permitted
by applicable law, the Pledgor hereby authorizes the
Collateral Trustee to execute and file, in the name of the
Pledgor or otherwise, Uniform Commercial Code financing
statements (which may be carbon, photographic, photostatic
or other reproductions of this Agreement or of a financing
statement relating to this Agreement) which the Collateral
Trustee in its discretion may deem necessary or appropriate
to further perfect the Security Interests.
SECTION 7. Record Ownership of Pledged Stock.
(A) While a Notice of Acceleration is in effect, the
Collateral Trustee shall have the right to cause any or all
of the Pledged Stock to be transferred of record into the
name of the Collateral Trustee or its nominee.
(B) The Pledgor will promptly give to the
Collateral Trustee copies of any notices or other
communications received by it with respect to Pledged Stock
registered in the name of the Pledgor, and the Collateral
Trustee will promptly give to the Pledgor copies of any
notices and communications received by the Collateral
Trustee with respect to Pledged Stock registered in the name
of the Collateral Trustee or its nominee.
SECTION 8. Right to Receive Distributions on
Collateral. Unless a Notice of Acceleration shall be in
effect, the Pledgor shall have the right to receive and
retain all dividends, interest and other payments and
distributions made upon or with respect to the Collateral.
While a Notice of Acceleration is in effect, the
Collateral Trustee shall have the right to receive and to
retain as Collateral hereunder all dividends, interest and
other payments and distributions made upon or with respect
to the Collateral, and the Pledgor shall take all such
action as the Collateral Trustee may deem necessary or
appropriate to give effect to such right. All such
dividends, interest and other payments and distributions
which are received by the Pledgor while a Notice of
Acceleration is in effect shall be received in trust for the
benefit of the Collateral Trustee and, if the Collateral
Trustee so directs, shall forthwith be segregated from other
funds of the Pledgor and paid over to the Collateral Trustee
as Collateral in the same form as received (with any
necessary endorsement).
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SECTION 9. Right to Vote Pledged Stock. Unless
a Notice of Acceleration shall be in effect, the Pledgor
shall have the right, from time to time, to vote and to give
consents, ratifications and waivers with respect to the
Pledged Stock, and the Collateral Trustee shall, upon
receiving a written request from the Pledgor, deliver to the
Pledgor or as specified in such request such proxies, powers
of attorney, consents, ratifications and waivers in respect
of any of the Pledged Stock which is registered in the name
of the Collateral Trustee or its nominee as shall be
specified in such request.
While a Notice of Acceleration is in effect, the
Collateral Trustee shall have the right to the extent
permitted by law to vote and to give consents, ratifications
and waivers, and to take any other action with respect to
any or all of the Pledged Stock, with the same force and
effect as if the Collateral Trustee were the absolute and
sole owner thereof, and the Pledgor shall take all such
action as the Collateral Trustee may deem necessary or
appropriate to give effect to such right.
SECTION 10. Remedies upon Notice of
Acceleration. If a Notice of Acceleration shall be in
effect, the Collateral Trustee may exercise on behalf of the
Secured Parties the rights set forth in Article Three of the
Collateral Trust Agreement.
SECTION 11. Release of Collateral; Termination
of Security Interests. Collateral may be released from the
Security Interests created hereunder from time to time
pursuant to Section 5.02 of the Collateral Trust Agreement.
The Security Interests shall terminate and all rights to the
Collateral shall revert to the Pledgor in accordance with
Section 7.09 of the Collateral Trust Agreement.
SECTION 12. Notices. All notices, communications
and distributions hereunder shall be given in accordance
with Section 7.01 of the Collateral Trust Agreement.
SECTION 13. Waiver; Non-Exclusive Remedies. No
failure on the part of the Collateral Trustee to exercise,
and no delay in exercising and no course of dealing with
respect to, any right under this Agreement or any other
Related Document shall operate as a waiver hereof or
thereof; nor shall any single or partial exercise by the
Collateral Trustee of any right under this Agreement or any
other Related Document preclude any other or further
exercise thereof or the exercise of any other right. The
rights in this Agreement are cumulative and are not
exclusive of any other remedies provided by law.
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<PAGE>
SECTION 14. Successors and Assigns. This
Agreement is for the benefit of the Collateral Trustee and
the Secured Parties and their successors and assigns, and in
the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable
to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the
Pledgor and its successors and assigns.
SECTION 15. Changes in Writing. Neither this
Agreement nor any provision hereof may be changed, amended
or waived except in accordance with Section 7.03 of the
Collateral Trust Agreement.
SECTION 16. New York Law. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT REMEDIES
PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK
ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
SECTION 17. Severability. If any provision
hereof is invalid or unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor
of the Collateral Trustee and the Secured Parties in order
to carry out the intentions of the parties hereto as nearly
as may be possible, and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 18. Counterparts. This Agreement may be
signed in any number of counterparts with the same effect as
if the signatures thereto and hereto were upon the same
instrument.
SECTION 19. No Recourse Against Others. A
director, officer, employee or shareholder as such of any of
the Pledgor shall not have any liability for any obligations
of the Pledgor under the Notes, this Indenture or any
Related Document or for any claim based on, in respect of or
by reason of such obligations or their creation. Each
Noteholder by accepting a Note irrevocably waives and
releases all such liability. The waiver and release are
part of the consideration for the issuance of the Notes.
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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officer as of the day and year first above
written.
THE CLARIDGE AT PARK PLACE,
INCORPORATED
By: _____________________________
Title:
IBJ SCHRODER BANK & TRUST COMPANY
not in its individual capacity
but solely as trustee under the
Collateral Trust Agreement referred
to above
By: _____________________________
Title:
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Schedule I
That certain Expandable Wraparound Mortgage and
Security Agreement dated as of December 31, 1983 from the
Mortgagor, as mortgagor, to CPPI, as mortgagee, as amended
by that certain First Supplemental Amendment to Expandable
Wraparound Mortgage and Security Agreement dated as of March
17, 1986, and as further amended by that certain Second
Amendment to Expandable Wraparound Mortgage and Security
Agreement dated June 15, 1989, as further amended or
modified from time to time.
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<PAGE>
EXHIBIT D
to Collateral Trust Agreement
CPPI CASH COLLATERAL PLEDGE AGREEMENT
AGREEMENT (this "Agreement") dated as of ______
__, 1994 between THE CLARIDGE AT PARK PLACE, INCORPORATED, a
New Jersey corporation (with its successors, the "Pledgor"),
and IBJ SCHRODER BANK & TRUST COMPANY, as trustee under the
Collateral Trust Agreement referred to therein (the
"Collateral Trustee").
W I T N E S S E T H :
WHEREAS, simultaneously with the execution and
delivery of the Collateral Trust Agreement dated as of the
date hereof, The Claridge Hotel & Casino Corporation (the
"Company") is entering into an indenture (the "Indenture")
among the Company, as issuer, the Pledgor as guarantor, and
IBJ Schroder Bank & Trust Company, as trustee, pursuant to
which the Company will issue its First Mortgage Notes Due
2002 (the "Notes"); and
WHEREAS, in order to secure its obligations under
the Indenture and all other Secured Obligations (as defined
herein), the Pledgor has agreed to grant to the Collateral
Trustee a continuing security interest in and to the
Collateral (as defined herein);
NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. Definitions. Terms used herein and
not otherwise defined herein have the respective meanings
given to such terms in the Collateral Trust Agreement, or if
not defined therein, in the Indenture. The following
additional terms, as used herein, have the following
respective meanings:
"Agreement" means this CPPI Cash Collateral Pledge
Agreement dated as of the date hereof, as the same may be
amended or otherwise modified from time to time.
"Cash Collateral Investments" has the meaning
assigned to such term in Section 4.
<PAGE>
"Collateral" has the meaning assigned to such term
in Section 2.
"Collateral Trust Agreement" means the Collateral
Trust Agreement dated as of the date hereof, among the
Pledgor, the Company, Atlantic City Boardwalk Associates,
L.P. (the "Partnership") and the Collateral Trustee, as the
same may be amended or otherwise modified from time to time.
"CPPI Cash Collateral Account" has the meaning
assigned to such term in Section 2.
"Secured Obligations" means (i) the Note
Obligations (as defined in the Collateral Trust Agreement)
and (ii) all sums payable by the Pledgor under the Related
Documents (including, without limitation, Trustee's fees).
"Security Interests" means the security interests
in the Cash Collateral granted by the Pledgor to the
Collateral Trustee hereunder securing the Secured
Obligations.
Unless otherwise defined herein, or unless the
context otherwise requires, all terms used herein which are
defined in the Uniform Commercial Code as in effect from
time to time in the State of New York shall have the
meanings therein stated.
SECTION 2. Grant of Security Interest. In order
to secure the due and punctual payment, performance and
observance of the Secured Obligations, the Pledgor hereby
assigns, transfers and pledges to the Collateral Trustee,
and grants to the Collateral Trustee a continuing security
interest in, right of setoff against, and lien upon, all
right, title and interest of the Pledgor in and to the
following property whether presently existing or hereafter
arising or acquired (the "Collateral"):
(i) the deposit account, account number ________
and any other deposit account now or hereafter
maintained by the Pledgor (the "CPPI Cash Collateral
Account"), all cash deposited therein and all
certificates and instruments, if any, from time to time
representing or evidencing the CPPI Cash Collateral
Account and all benefits, claims, demands and choses in
action of the Pledgor arising thereunder;
(ii) Cash Collateral Investments (as hereinafter
defined) from time to time made and all certificates
and instruments, if any, from time to time representing
or evidencing such Cash Collateral Investments;
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(iii) all interest, dividends, cash, instruments,
and other property and income from time to time
received, receivable or otherwise distributed in
respect of or in exchange for any or all of the CPPI
Cash Collateral Account and Cash Collateral
Investments; and
(iv) all Net Proceeds as defined in the Indenture
in respect of any Asset Sale (including any insurance
and condemnation proceeds) which are to be required to
be placed in the CPPI Cash Collateral Account pursuant
to Section 3 hereof.
(v) to the extent not covered by clauses (i)
through (iii) above, all proceeds of any or all of the
foregoing (whether the same arise or are acquired
before or after the commencement of a case under Title
11 of the United States Code as amended from time to
time or any similar law of any state or foreign
country, or political subdivision thereof in which the
Pledgor in a debtor.)
SECTION 3. The CPPI Cash Collateral Account.
(a) The Pledgor agrees that the CPPI Cash Collateral
Account shall at all times be maintained with the Collateral
Trustee or any other bank, trust company or financial
institution that has combined capital and surplus in excess
of $100,000,000 reasonably acceptable to the Trustee (a
"Permitted Depositary") and shall be designated a "cash
collateral account" or shall have such other designation as
the Collateral Trustee deems sufficient or appropriate to
evidence the pledge created hereby and to enable the
Collateral Trustee to pursue the remedies purported to be
granted to it hereunder and under the Collateral Trust
Agreement. The Pledgor agrees to deposit from time to time
into the CPPI Cash Collateral Account immediately upon
receipt thereof (i) all payments received from the
Partnership in respect of the Wraparound Mortgage, (ii)
receipts in respect of any Asset Sale that exceed $3 million
and (iii) all cash income, receipts, profits or other
benefits to which the Company may be entitled from the
Existing Hotel Casino. Any income received with respect to
the balance from time to time standing to the credit of the
CPPI Cash Collateral Account, including any interest or
capital gains on Cash Collateral Investments, shall remain,
or be deposited, in the CPPI Cash Collateral Account. All
right, title and interest in and to the cash amounts on
deposit from time to time in the CPPI Cash Collateral
Account together with any Cash Collateral Investments from
time to time made therein shall vest in the Collateral
Trustee, shall constitute part of the Collateral hereunder
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and shall not constitute payment of the Secured Obligations
until applied thereto as hereinafter provided.
(b) The Pledgor hereby irrevocably constitutes
and appoints any one or more officers of the Collateral
Trustee, acting individually or in any combination, the true
and lawful agent and attorney-in-fact of the Pledgor with
full power of substitution, with, from and after the
occurrence of a Notice of Acceleration and so long as any
Notice of Acceleration is continuing, the sole and exclusive
right as sole signatory for the CPPI Cash Collateral Account
to (i) ask, demand, collect, receive, receipt for, sue for,
compromise and give acquittance for any and all amounts
which may be or become due or payable under the CPPI Cash
Collateral Account, (ii) execute any and all checks,
withdrawal receipts or other orders for the payment of money
drawn on the CPPI Cash Collateral Account and to endorse the
name of the Pledgor on all commercial paper given in payment
or in part payment thereof, and (iii) in the Collateral
Trustee's discretion, to file any claim or take any other
action or institute any proceeding, either in its own name
or in the name of the Pledgor or otherwise, which such agent
and attorney may deem necessary or appropriate to protect
and preserve the right, title and interest of the Collateral
Trustee hereunder and, without limiting the foregoing, such
agent and attorney shall have and is hereby given full power
and authority, from and after the occurrence of a Notice of
Acceleration and so long as any Notice of Acceleration is
continuing, to transfer the CPPI Cash Collateral Account
into the name of the Collateral Trustee or its nominee.
(c) The Pledgor agrees that the amounts referred
to in (a) above shall as promptly as possible be deposited
by the Pledgor into the CPPI Cash Collateral Account. Until
so deposited, all such proceeds shall be held in trust by
the Pledgor for and as the property of the Collateral
Trustee and the Secured Parties and shall not be commingled
with any other funds or property of the Pledgor.
(d) The balance from time to time standing to the
credit of the CPPI Cash Collateral Account shall, if and so
long as no Notice of Acceleration is in effect, be in the
sole control of the Pledgor and may be applied for any
purpose not inconsistent with the terms of the Indenture
without the need for any consent or release by the
Collateral Trustee or any other Secured Party. If and so
long as a Notice of Acceleration is in effect, the
Collateral Trustee may assume sole control over the CPPI
Cash Collateral Account. If a Notice of Acceleration shall
be in effect, the Collateral Trustee shall, if so instructed
by the Required Secured Parties, apply or cause to be
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applied (subject to collection) any or all of the balance
from time to time standing to the credit of and all of the
Cash Collateral Investments in the CPPI Cash Collateral
Account in the manner specified in the Collateral Trust
Agreement.
SECTION 4. Investments of Funds Deposited in
CPPI Cash Collateral Accounts. Amounts on deposit in the
CPPI Cash Collateral Account and all interest and income on
and the proceeds from investment thereof may be invested or
reinvested by the Pledgor (so long as no Notice of
Acceleration is in effect) or the Collateral Trustee (if and
so long as a Notice of Acceleration is in effect), in
Marketable Securities (as defined in the Indenture) or as
otherwise permitted by the Indenture, provided, however,
that in order to provide the Collateral Trustee with a
perfected security interest therein, each such investment
shall be either (i) evidenced by negotiable certificates or
instruments, or if non-negotiable or represented only by a
confirmation, then issued in the name of the Pledgor, a
Permitted Depositary or the Collateral Trustee which
(together with any appropriate instruments of transfer in
blank) are delivered to, and held by, the Collateral Trustee
of a Permitted Depositary as agent for the Collateral
Trustee; or (ii) in book-entry form and issued by the United
States and subject to pledge under applicable state law and
Treasury regulations and in which (in the written opinion of
counsel to the Collateral Trustee) the Collateral Trustee
shall have a perfected security interest (all such
investments being "Cash Collateral Investments").
(b) Except during the continuance of a Notice of
Acceleration, the Pledgor shall control the investment and
reinvestment of the funds in the CPPI Cash Collateral
Account in accordance with the provisions of Section 4(a)
hereof. During the continuance of a Notice of Acceleration,
the Collateral Trustee shall invest and reinvest all funds
in the CPPI Cash Collateral Account.
SECTION 5. Representations, Warranties and
Covenants. The Pledgor represents, warrants and covenants
as follows:
(a) Upon deposit of the cash required to be
pledged hereunder, the Collateral Trustee will have a
valid lien on, assignment of, and security interest in,
such Cash Collateral under all applicable state and
federal laws and regulations. No registration,
recordation or filing with any governmental body or
agency is required for the Collateral Trustee's
security interest in the Cash Collateral. The Pledgor
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has not performed any acts which might prevent the
Collateral Trustee from enforcing any of the terms and
conditions of the pledge of Cash Collateral as set
forth in this Pledge Agreement or the Loan Agreement or
which would limit the Collateral Trustee in any
enforcement.
(b) The offices of the Pledgor are located at the
address set forth on the signature page hereto and the
Pledgor will not change same, without prior written
notice to and consent of the Collateral Trustee.
(c) The Cash Collateral is now, and at all times
will be, owned by the Pledgor free and clear of all
liens, security interests, claims and encumbrances
(including any right of setoff), except in favor of the
Collateral Trustee and the Pledgor will not suffer or
permit any of the same to occur with respect to any
Cash Collateral.
(d) The Pledgor has made, and will continue to
make, payment or deposit, or otherwise has provided and
will provide for the payment, when due, of all taxes,
assessments or contributions or other public or private
charges which have been or may be levied or assessed
against the Pledgor, with respect to any Cash
Collateral, and will deliver to the Collateral Trustee,
on demand, certificates or other evidence satisfactory
to the Collateral Trustee attesting thereto.
(e) The Collateral Trustee shall have the sole
right to demand and receive, and may apply, any
insurance monies with respect to the Cash Collateral at
any time to the payment of the Secured Obligations,
whether or not due, in any order the Collateral Trustee
may determine, any surplus (after payment of all costs,
reasonable attorney's fees and disbursements), subject
to contrary requirements of law, to be remitted to the
Pledgor.
(f) The Pledgor will pay the Collateral Trustee
for any sums, costs and expenses which the Collateral
Trustee may pay or incur pursuant to the provisions of
this Agreement or in enforcing this Agreement or the
security interest granted herein or in enforcing
payment of the Secured Obligations or otherwise in
connection with the provisions hereof, including but
not limited to court costs, collection charges, travel
expenses and reasonable attorney's fees, all of which
shall be part of the Secured Obligations and shall be
payable, together with interest on demand.
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SECTION 6. Filing; Further Assurances. The
Pledgor will, at its expense and in such manner and form as
the Collateral Trustee may require, execute, deliver, file
and record any financing statement, specific assignment or
other paper and take any other action that may be necessary
or desirable, or that the Collateral Trustee may reasonably
request, in order to create, preserve, perfect or validate
any Security Interest and the first priority thereof or to
enable the Collateral Trustee to exercise and enforce its
rights hereunder with respect to any of the Cash Collateral.
To the extent permitted by applicable law, the Pledgor
hereby authorizes the Collateral Trustee to execute and
file, in the name of the Pledgor or otherwise, Uniform
Commercial Code financing statements (which may be carbon,
photographic, photostatic, or other reproductions of this
Agreement or of a financing statement relating to this
Agreement) which the Collateral Trustee in its sole
discretion may deem necessary or appropriate to further
perfect the Security Interests.
SECTION 7. Record Ownership of Cash Collateral
Investments. (a) So long as no Notice of Acceleration is in
effect, all of the Cash Collateral Investments may be
registered in the Pledgor's name on the books of the
applicable issuer, clearing corporation, financial
intermediary, custodian, nominee or bailee. The Pledgor
will promptly give to the Collateral Trustee copies of any
notices and communications received by the Pledgor with
respect to the Cash Collateral Investments.
(b) If and so long as a Notice of Acceleration is
in effect, all of the Cash Collateral Investments shall be
registered in the Collateral Trustee's name on the books of
the applicable issuer, clearing corporation, financial
intermediary, custodian, nominee or bailee. The Collateral
Trustee will promptly give to the Pledgor copies of any
notices and communications received by the Cash Collateral
Trustee with respect to the Cash Collateral Investments.
SECTION 8. Right to Receive Distributions on
Cash Collateral. Unless a Notice of Acceleration shall be
in effect, the Pledgor shall have the right to receive and
retain all dividends, interest and other payments and
distributions made upon or with respect to the Collateral.
While a Notice of Acceleration is in effect, the
Collateral Trustee shall have the right to receive and to
retain as Collateral hereunder all dividends, interest and
other payments and distributions made upon or with respect
to the Collateral, and the Pledgor shall take all such
action as the Collateral Trustee may deem necessary or
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appropriate to give effect to such right. All such
dividends, interest and other payments and distributions
which are received by the Pledgor while a Notice of
Acceleration is in effect shall be received in trust for the
benefit of the Collateral Trustee and, if the Collateral
Trustee so directs, shall forthwith be segregated from other
funds of the Pledgor and paid over to the Collateral Trustee
as Collateral in the same form as received (with any
necessary endorsement).
SECTION 9. Remedies Upon a Notice of
Acceleration. If a Notice of Acceleration shall be in
effect, the Collateral Trustee may exercise on behalf of the
Secured Parties the rights set forth in Article Three of the
Collateral Trust Agreement.
SECTION 10. Release of Cash Collateral;
Termination of Security Interest. Cash Collateral may be
released from the Security Interests created hereunder from
time to time pursuant to Section 3(d) hereof or Section 5.02
of the Collateral Trust Agreement. The Security Interests
shall terminate and all rights to the Cash Collateral shall
revert to the Pledgor in accordance with Section 7.09 of the
Collateral Trust Agreement.
SECTION 11. Waivers; Nonexclusive Remedies. No
failure on the part of the Collateral Trustee to exercise,
and no delay in exercising and no course of dealing with
respect to, any right under this Agreement or any other
Related Document shall operate as a waiver hereof or
thereof; nor shall any single or partial exercise by the
Collateral Trustee of any right under this Agreement or any
other Related Document preclude any other or further
exercise thereof or the exercise of any other right. The
rights in this Agreement are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 12. Duties of the Collateral Trustee
Regarding Certain Events. The Collateral Trustee shall have
no duty as to the collection or protection of the Collateral
or any income thereon or as to the preservation of any
rights pertaining thereto, beyond the safe custody of any
thereof actually in its possession.
Except as set forth above, the Collateral Trustee
shall not be deemed to assume any such further obligation
with respect to any Collateral in its possession, and each
Pledgor releases the Collateral Trustee from any claims,
causes of action and demands at any time arising out of or
with respect to this Agreement or the Cash Collateral Pledge
Agreements, the Collateral and/or any actions, taken or
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omitted to be taken by the Collateral Trustee with respect
thereto, and each Pledgor hereby agrees to hold the
Collateral Trustee harmless from and with respect tot any
and all such claims, causes of action and demands other than
those relating to the gross negligence or willful misconduct
of the Collateral Trustee.
SECTION 13. Collateral Trustee May Perform. If
the Pledgor fails to perform any obligation it may have
hereunder, the Collateral Trustee may itself perform or
cause to be performed such obligation and the expenses of
the Collateral Trustee incurred therewith shall be payable
by the Pledgor in accordance with Section 5(f) hereof.
SECTION 14. Successors and Assigns. This
Agreement is for the benefit of the Collateral Trustee and
the Secured Parties and their successors and assigns, in the
event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable
to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the
Pledgor and its successors and assigns.
SECTION 15. Notices. All notices,
communications and distributions hereunder shall be given in
accordance with Section 7.01 of the Collateral Trust
Agreement.
SECTION 16. Changes in Writing. Neither this
Agreement nor any provision hereof may be changed, amended
or waived except in accordance with Section 7.03 of the
Collateral Trust Agreement.
SECTION 17. NEW YORK LAW. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT REMEDIES
PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK
ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
SECTION 18. Severability. If any provision
hereof is invalid or unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor
of the Collateral Trustee and the Secured Parties in order
to carry out the intentions of the parties hereto as nearly
as may be possible, and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such
provision in any other jurisdiction.
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SECTION 19. Counterparts. This Agreement may be
signed in any number of counterparts with the same effect as
if the signatures thereto and hereto were upon the same
instrument.
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IN WITNESS WHEREOF, the Pledgor and the Collateral
Trustee have caused this Agreement to be duly executed by
their respective officers duly authorized as of the day and
year first above written.
THE CLARIDGE AT PARK PLACE,
INCORPORATED
By: ___________________________
Name:
Address:
IBJ SCHRODER BANK AND TRUST COMPANY
By: __________________________
Name:
Title:
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<PAGE>
EXHIBIT E
to
Collateral Trust Agreement
CPPI SECURITY AGREEMENT
AGREEMENT dated as of ________, 1994 between THE
CLARIDGE AT PARK PLACE, INCORPORATED, a New Jersey
corporation (with its successors, the "Pledgor"), and IBJ
SCHRODER BANK & TRUST COMPANY, as trustee under the
Collateral Trust Agreement referred to herein (the
"Collateral Trustee");
W I T N E S S E T H :
WHEREAS, simultaneously with the execution and
delivery of the Collateral Trust Agreement dated as of the
date hereof, The Claridge Hotel and Casino Corporation (the
"Company") is entering into an indenture (the "Indenture")
among the Company, as issuer, the Pledgor, as guarantor, and
IBJ Schroder Bank & Trust Company, as trustee, pursuant to
which the Company will issue its First Mortgage Notes Due
2002 (the "Notes"); and
WHEREAS, in order to secure its obligations under
the Indenture and all other Secured Obligations (as defined
herein), the Pledgor has agreed to grant to the Collateral
Trustee a continuing security interest in and to the
Collateral (as defined herein);
NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. Definitions. Terms used herein and
not otherwise defined herein have the respective meanings
given to such terms in the Collateral Trust Agreement, or if
not defined therein, in the Indenture. The following
additional terms, as used herein, have the following
respective meanings:
"Agreement" means this CPPI Security Agreement
dated as of the date hereof, as the same may be amended or
otherwise modified from time to time.
"Collateral" has the meaning set forth in
Section 3.
<PAGE>
"Collateral Trust Agreement" means the Collateral
Trust Agreement dated as of the date hereof, among the
Company, the Pledgor, Atlantic City Boardwalk Associates,
L.P. (the "Partnership") and the Collateral Trustee, as the
same may be amended or otherwise modified from time to time.
"Perfection Certificate" means a certificate
substantially in the form of Exhibit A hereto, completed and
supplemented with the schedules and attachments contemplated
thereby, and duly executed by two senior officers of the
Pledgor.
"Permitted Liens" means the Security Interests and
the other Liens expressly permitted to be created or to
exist pursuant to Section 4.07(c) of the Indenture.
"Secured Obligations" means (i) the Note
Obligations and (ii) all sums payable by the Pledgor under
the Related Documents (including, without limitation,
Trustee's fees).
"Security Interests" means the security interests
in the Collateral granted by the Pledgor to the Collateral
Trustee hereunder securing the Secured Obligations.
"Trademark Security Agreement" means the CPPI
Trademark Security Agreement dated as of the date hereof
executed and delivered by the Pledgor in favor of the
Collateral Trustee, substantially in the form of Exhibit F
to the Collateral Trust Agreement, as the same may be
amended from time to time.
"UCC" means the Uniform Commercial Code as in
effect from time to time in the State of New York; provided
that if by reason of mandatory provisions of law, the
perfection or the effect of perfection or non-perfection of
the Security Interests in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other
than New York, "UCC" means the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of
perfection or non-perfection.
SECTION 2. Representations and Warranties. The
Pledgor represents and warrants as follows:
(A) The Pledgor has good and marketable title to
all of the Collateral, free and clear of any Liens
other than Permitted Liens. The Pledgor has taken all
actions necessary under the UCC to perfect its interest
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in any accounts (as defined in the UCC) purchased or
otherwise acquired by it, as against its assignors and
creditors of its assignors.
(B) The Pledgor has not performed any acts which
would prevent the Collateral Trustee from enforcing any
of the terms of this Agreement or which would limit the
Collateral Trustee in any such enforcement. Other than
financing statements or other similar or equivalent
documents or instruments with respect to the Security
Interests and other Permitted Liens and other than such
as are being released as of the Issue Date, no
financing statement, mortgage, security agreement or
similar or equivalent document or instrument covering
all or any part of the Collateral is on file or of
record in any jurisdiction in which such filing or
recording would be effective to perfect a Lien on such
Collateral. No Collateral is in the possession of any
Person (other than the Pledgor) asserting any claim
thereto or security interest therein, except that the
Collateral Trustee or its designee may have possession
of Collateral as contemplated hereby.
(C) Prior to the Issue Date, the Pledgor shall
have delivered the Perfection Certificate to the
Collateral Trustee. The information set forth therein
is correct and complete in all material respects. Not
later than 60 days following the Issue Date, the
Pledgor shall have furnished to the Collateral Trustee
file search reports from each UCC filing office set
forth in Schedule 7 to the Perfection Certificate
confirming the filing information set forth in such
Schedule.
(D) The Security Interests constitute valid
security interests under the UCC securing the Secured
Obligations to the extent that security interests in
the Collateral may be created under Article 9 of the
UCC. When UCC financing statements shall have been
filed in the offices specified in the Perfection
Certificate, the Security Interests shall constitute
perfected security interests in the Collateral (except
inventory (as defined in the UCC) in transit) to the
extent that a security interest therein may be
perfected by filing pursuant to the UCC, prior to all
other Liens and rights of others therein except for
other Permitted Liens.
(E) No consent of any party (other than the New
Jersey Casino Control Commission) to any material
contract (as defined in the UCC) is required, in
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connection with the execution, delivery and performance
of this Agreement. Except as to matters that, in the
aggregate, could not reasonably be expected to
materially impair the value of that portion of the
Collateral consisting of contracts, (i) each contract
is in full force and effect and constitutes a valid and
legally enforceable obligation of the Pledgor and
except as enforceability may be limited by bankruptcy,
insolvency reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights
generally, (ii) no consent or authorization of, filing
with or other act by or in respect of any governmental
authority is required in connection with the execution,
delivery, performance, validity or enforceability of
any of the contracts by the Pledgor other than those
which have been duly obtained, made or performed, are
in full force and effect and do not subject the scope
of any such contract to any material adverse
limitation, either specific or general in nature, (iii)
the Pledgor is not in material default in the
performance or observance of any of the terms thereof,
(iv) the Pledgor has fully performed in all material
respects all its obligations under each contract and
(v) to the best of the Pledgor's knowledge, the right,
title and interest of the Pledgor in, to and under each
contract are not subject to any defense, offset,
counterclaim or claim (except those as set forth
therein or otherwise provided) which would materially
adversely affect the value of such contract or
Collateral, nor have any of the foregoing been asserted
or alleged against the Pledgor as to any contract.
(F) All of the Pledgor's Trademarks, Trademark
registrations and Trademark applications as of the date
hereof are listed on Schedule 1 to the Trademark
Security Agreement, and all of the Pledgor's Trademark
Licenses as of the date hereof are listed on Schedule 2
to the Trademark Security Agreement.
SECTION 3. The Security Interests. (A) In
order to secure the full and punctual payment of the Secured
Obligations in accordance with the terms thereof, and to
secure the performance of all of the obligations of the
Pledgor hereunder, the Pledgor hereby grants to the
Collateral Trustee a continuing security interest in and to
all of the following property of the Pledgor listed on
Schedule I attached hereto, whether now owned or existing or
hereafter acquired or arising, and regardless of where
located (all being collectively referred to herein as the
"Collateral"; provided, however, that the term "Collateral"
specifically shall not include any assets now owned or
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hereafter acquired or leased with the proceeds of Gaming
Business Purchase Money Obligations permitted to be incurred
under Section 4.08(b)(iii) of the Indenture in an amount not
to exceed $10 million outstanding at any one time which are
encumbered by liens or security interests in favor of the
holders of such Gaming Business Purchase Money Obligations.
(B) The Security Interests are granted as
security only and shall not subject the Collateral Trustee
or any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Pledgor with
respect to any of the Collateral or any transaction in
connection therewith.
SECTION 4. Further Assurances; Covenants. (A)
Except or permitted by the Indenture, the Pledgor will not
change its name, identity or corporate structure in any
manner unless it shall have given the Collateral Trustee
prior notice thereof and delivered an opinion of counsel
with respect thereto in accordance with Section 4(M) hereof.
The Pledgor will not change the location of (i) its chief
executive office or chief place of business or (ii) the
locations where it keeps or holds any Collateral (except for
Inventory) or any records relating thereto from the
applicable location described in the Perfection Certificate
unless it shall have given the Collateral Trustee prior
notice thereof and delivered an opinion of counsel with
respect thereto in accordance with Section 4(M) hereof. The
Pledgor shall not in any event change the location of any
Collateral if such change would cause the Security Interests
in such Collateral to lapse or cease to be perfected.
(B) The Pledgor will, from time to time, at its
expense, execute, deliver, file and record any statement,
assignment, instrument, document, agreement or other paper
and take any other action (including, without limitation,
any filings with the United States Patent and Trademark
Office and any filings of financing or continuation
statements under the UCC) that from time to time may be
necessary or desirable, or that the Collateral Trustee may
reasonably request, in order to create, preserve, perfect,
confirm or validate the Security Interests or to enable the
Collateral Trustee and the Secured Parties to obtain the
full benefits of this Agreement, or to enable the Collateral
Trustee to exercise and enforce any of its rights, powers
and remedies hereunder with respect to any of the
Collateral. To the extent permitted by applicable law, the
Pledgor hereby authorizes the Collateral Trustee to execute
and file financing statements or continuation statements
without the Pledgor's signature appearing thereon. The
Pledgor agrees that a carbon, photographic, photostatic or
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other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement to the
extent permitted by applicable law or regulation. The
Pledgor shall pay the costs of, or incidental to, any
recording or filing of any financing or continuation
statements concerning the Collateral.
(C) If any Collateral (except for inventory) is
at any time in the possession or control of any
warehouseman, bailee or any of the Pledgor's agents or
processors, the Pledgor shall notify such warehouseman,
bailee, agent or processor of the Security Interests created
hereby and to hold all such Collateral for the Collateral
Trustee's account subject to the Collateral Trustee's
instructions.
(D) The Pledgor shall keep full and accurate
books and records relating to the Collateral, and stamp or
otherwise mark such books and records in such manner as the
Collateral Trustee may reasonably require in order to
reflect the Security Interests.
(E) The Pledgor will immediately deliver and
pledge each Instrument to the Collateral Trustee,
appropriately endorsed to the Collateral Trustee, provided
that so long as no Notice of Acceleration is in effect, the
Pledgor may retain for collection in the ordinary course of
business any instruments (as defined in the UCC) received by
it in the ordinary course of business and the Collateral
Trustee shall, promptly upon request of the Pledgor, make
appropriate arrangements for making any other instrument
pledged by the Pledgor available to it for purposes of
presentation, collection or renewal (any such arrangement to
be effected, to the extent deemed appropriate by the
Collateral Trustee, against trust receipt or like document).
(F) The Pledgor shall cause to be collected from
its account debtors, as and when due, any and all amounts
owing under or on account of each account (as defined in the
UCC) (including, without limitation, Accounts which are
delinquent, such accounts to be collected in accordance with
lawful collection procedures) in accordance with its normal
business procedures and shall apply forthwith upon receipt
thereof all such amounts as are so collected to the
outstanding balance of such account. Subject to the rights
of the Collateral Trustee hereunder while a Notice of
Acceleration is in effect, the Pledgor may allow in the
ordinary course of business as adjustments to amounts owing
under its accounts (i) an extension or renewal of the time
or times of payment, or settlement for less than the total
unpaid balance, which the Pledgor finds appropriate in
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accordance with sound business judgment and (ii) a refund or
credit due as a result of returned or damaged merchandise,
all in accordance with the Pledgor's ordinary course of
business consistent with its historical collection practices
or otherwise consistent with sound business practices
prevailing in the industry. The costs and expenses
(including, without limitation, reasonable attorney's fees)
of collection, whether incurred by the Pledgor or the
Collateral Trustee, shall be borne by the Pledgor.
(G) While any Notice of Acceleration is in
effect, the Pledgor will promptly notify (and the Pledgor
hereby authorizes the Collateral Trustee so to notify) each
account debtor in respect of any Account or Instrument that
such Collateral has been assigned to the Collateral Trustee
hereunder, and that any payments due or to become due in
respect of such Collateral are to be made directly to the
Collateral Trustee or its designee.
(H) The Pledgor will, as promptly as practicable
upon request, provide to the Collateral Trustee all
information and evidence it may reasonably request
concerning the Collateral to enable the Collateral Trustee
to enforce the provisions of this Agreement.
(I) The Pledgor shall notify the Collateral
Trustee promptly if it knows that any application or
registration relating to any patent, Trademark or copyright
material to the business and operations of the Pledgor may
become abandoned or dedicated, or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any court)
regarding the Pledgor's ownership of any such patent,
Trademark or copyright, its right to register the same, or
to keep and maintain the same. In the event that any
patent, patent license, trademark, trademark license,
copyright or copyright license is infringed, misappropriated
or diluted by a third party, the Pledgor shall take such
actions as the Pledgor shall reasonably deem appropriate
under the circumstances to protect such patent, patent
license, Trademark, Trademark License, copyright or
copyright license. The Pledgor shall notify the Collateral
Trustee not later than 15 business days after the end of
each fiscal quarter of the Pledgor of any and all
applications that the Pledgor, itself or through any agent,
employee or licensee, has filed for the registration of any
patent or Trademark with the United States Patent and
Trademark Office or of any copyright with the United States
Copyright Office or, in any such case, any similar office or
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agency in any other country or any political subdivision
thereof, during the immediately preceding fiscal quarter.
The Pledgor shall execute and deliver any and all
agreements, instruments, documents and papers which may be
necessary or that the Collateral Trustee may reasonably
request to evidence the Security Interests in such patent,
Trademark or copyright and the goodwill and general
intangibles of the Pledgor relating thereto or represented
thereby, and the Pledgor hereby constitutes the Collateral
Trustee its attorney-in-fact to, at any time that a Notice
of Acceleration is in effect, execute and file all such
writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power
being coupled with an interest shall be irrevocable until
the Secured Obligations are paid in full.
(J) The Pledgor shall promptly inform the
Collateral Trustee of any additions to or deletions from the
equipment and shall not permit any such items to become a
fixture to real estate or an accession to other personal
property.
(K) On or prior to the Issue Date, the Pledgor
will cause the Collateral Trustee to be named as an insured
party and loss payee on each insurance policy covering risks
relating to any of its inventory and equipment (as defined
respectively in the UCC). The Pledgor will deliver to the
Collateral Trustee, upon request of the Collateral Trustee,
the insurance policies for such insurance or certificates of
insurance evidencing such coverage. Each such insurance
policy shall include effective waivers by the insurer of all
claims for insurance premiums against the Collateral
Trustee, provide for coverage to the Collateral Trustee
regardless of the breach by the Pledgor of any warranty or
representation made therein, provide that no cancellation,
termination or material modification thereof shall be
effective until at least 30 days after receipt by the
Collateral Trustee of written notice thereof and be
reasonably satisfactory in all other respects to the
Collateral Trustee. The Pledgor hereby appoints the
Collateral Trustee as its attorney-in-fact to, at any time
that a Notice of Acceleration is in effect, make proof of
loss, claim for insurance and adjustments with insurers, and
to execute or endorse all documents, checks or drafts in
connection with payments made as a result of any insurance
policies.
(L) While any Notice of Acceleration is in
effect, the Pledgor shall, upon the request of the
Collateral Trustee, institute lock-box and concentration
account arrangements satisfactory to the Collateral Trustee
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pursuant to which (i) all amounts and other proceeds pledged
to the Collateral Trustee (whether under this Agreement or
any of the other Related Documents) shall be paid into lock-
box accounts in the name of the Collateral Trustee (which
shall contain no other monies) and shall thereafter be paid
into a concentration account in the name of the Collateral
Trustee (which shall contain no other monies); and (ii) the
concentration bank shall agree to act upon the instructions,
whenever received, of the Collateral Trustee, pursuant to
which amounts in the concentration account would be paid on
a daily basis into a collateral account to be established by
the Collateral Trustee. The lock-box and concentration
account arrangements provided for herein shall, once
instituted, unless the Collateral Trustee otherwise agrees,
thereafter at all times be maintained without regard to the
existence of a Notice of Acceleration.
(M) From time to time upon request by the
Collateral Trustee, the Pledgor shall, at its cost and
expense, cause to be delivered to the Collateral Trustee an
opinion of counsel reasonably satisfactory to the Collateral
Trustee as to such matters relating to the transactions
contemplated hereby as the Collateral Trustee may reasonably
request, including, without limitation, the continuing
perfection of the Security Interests hereunder.
SECTION 5. Remedies upon Notice of Acceleration.
While a Notice of Acceleration is in effect, the Collateral
Trustee may exercise on behalf of the Secured Parties the
rights set forth in Article III of the Collateral Trust
Agreement.
SECTION 6. Release of Collateral; Termination
of Security Interests. Collateral may be released from the
Security Interests created hereunder from time to time
pursuant to Section 5.02 of the Collateral Trust Agreement.
The Security Interests shall terminate and all rights to the
Collateral shall revert to the Pledgor in accordance with
Section 7.09 of the Collateral Trust Agreement.
SECTION 7. Notices. All notices, communications
and distributions hereunder shall be given in accordance
with Section 7.01 of the Collateral Trust Agreement.
SECTION 8. No Waiver; Non-Exclusive Remedies.
No failure on the part of the Collateral Trustee to
exercise, and no delay in exercising and no course of
dealing with respect to, any right under this Agreement or
any other Related Document shall operate as a waiver hereof
or thereof; nor shall any single or partial exercise by the
Collateral Trustee of any right under this Agreement or any
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other Related Document preclude any other or further
exercise thereof or the exercise of any other right. The
rights in this Agreement are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 9. Successors and Assigns. This
Agreement is for the benefit of the Collateral Trustee and
the Secured Parties and their successors and assigns, and in
the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable
to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the
Pledgor and its successors and assigns.
SECTION 10. Changes in Writing. Neither this
Agreement nor any provision hereof may be changed, amended
or waived except in accordance with Section 7.03 of the
Collateral Trust Agreement.
SECTION 11. NEW YORK LAW. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT REMEDIES
PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN NEW YORK
ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
SECTION 12. Severability. If any provision
hereof is invalid or unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor
of the Collateral Trustee and the Secured Parties in order
to carry out the intentions of the parties hereto as nearly
as may be possible and (ii) the invalidity or
unenforceability of such provision in any such jurisdiction
shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 13. No Recourse Against Others. A
director, officer, employee or shareholder as such of any of
the Pledgor shall not have any liability for any obligations
of the Pledgor under the Notes, this Indenture or any
Related Document or for any claim based on, in respect of or
by reason of such obligations or their creation. Each
Noteholder by accepting a Note irrevocably waives and
releases all such liability. The waiver and release are
part of the consideration for the issuance of the Notes.
SECTION 14. Counterparts. This Agreement may be
signed in any number of counterparts with the same effect as
if the signatures thereto and hereto were upon the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
THE CLARIDGE AT PARK PLACE,
INCORPORATED
By: ___________________________
Title:
IBJ SCHRODER BANK & TRUST COMPANY
not in its individual capacity
but solely as trustee under the
Collateral Trust Agreement referred
to above
By ___________________________
Title:
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SCHEDULE I
The Collateral is described as follows; provided,
however, that the term "Collateral" specifically shall not
include any assets now owned or hereafter acquired or leased
with the proceeds of Gaming Business Purchase Money
Obligations permitted to be incurred under Section
4.08(b)(iii) of the Indenture in an amount not to exceed $10
million outstanding at any one time which are encumbered by
liens or security interests in favor of the holders of such
Gaming Business Purchase Money Obligations, and also
includes all attachments, accessions and equipment now or
hereafter affixed to the Collateral or used in connection
therewith, substitutions and replacements thereof, all items
of Collateral now owned or existing and hereafter acquired,
created or arising, and all products and proceeds thereof
(including, without limitation, claims of Pledgor against
third parties for loss or damage to or destruction of any
Collateral): (a) all equipment, machinery, furniture,
fittings and fixtures of every nature, kind and description,
wherever located, whether now owned or hereafter acquired by
Pledgor, and whether now or hereafter affixed to, attached
to, installed in, placed upon, or used in any way in
connection with the complete and comfortable use, enjoyment,
occupancy or operation of realty or the business of the
Pledgor, including all proceeds, replacements, accretions,
additions and substitutions thereto, including but not
limited to furnaces, boilers, oil burners, radiators and
piping, plumbing and bathroom fixtures, refrigeration, air
conditioning machinery and equipment, communication
equipment and systems, fire protection and sprinkler
equipment and systems, washtubs, sinks, gas and electric
fixtures, stoves, ranges, awnings, screens, dishwasher,
window shades, elevators, escalators, motors, dynamos,
cooking apparatus, refrigerators, and mechanical kitchen
equipment, laundry equipment, kitchen cabinets,
incinerators, surveillance equipment and systems, plants and
shrubbery, partitions, vaults, safes, fire extinguishing
equipment, parts and supplies, motor vehicles, typewriters,
dictation equipment, materials and supplies, paints,
uniforms of engineering and maintenance personnel and all
supplies used in connection with the maintenance and repair
thereof, and all other furniture equipment and machinery,
tools, appliances, fittings, fixtures and building materials
of any kind now owned or hereafter acquired and whether or
not affixed to realty and further including but not limited
to all room, office and public furnishings, beds, drapes,
dressers, lamps, tables, gaming equipment, restaurant
supplies, kitchen supplies, utensils and equipment, carpets,
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linen supplies, chandeliers, pictures, radios, television
sets, books, papers, records, documents, files and all other
tangible personal property now owned or hereafter acquired
by the Debtor and used in its operation of a hotel and
casino related facilities, including, without limitation,
parking facilities (collectively, the "Equipment"), (b) all
"general intangibles" (as defined in the UCC) now owned or
hereafter acquired by the Pledgor, including, without
limitation, (i) all obligations or indebtedness owing to the
Pledgor (other than Accounts) from whatever source arising,
and all rights to receive moneys due or to become due in
respect of any existing or future license or sublicense of
any trademark, trademark license or other intellectual
property, (ii) all patents, patent licenses, trademarks,
trademark licenses, rights in intellectual property, gaming
licenses, goodwill, trade names, service marks, trade
secrets, copyrights, copyright licenses and other permits
and licenses, (iii) all rights or claims in respect of
refunds for taxes paid and (iv) all rights in respect of any
pension plan or similar arrangement maintained for employees
of any member of the ERISA Group, (c) all trademarks, trade
names, trade styles and service marks of Pledgor (including,
without limitation, the trade marks "The Claridge Hotel and
Casino", "Hi-Ho" and "Compucard"), all prints and labels on
which such trademarks, trade names, trade styles and service
marks of like nature, all now existing or hereafter adopted
or acquired by Pledgeor, all right, title and interest
therein and thereto, all registrations, reissues, extensions
or renewals thereof and all licenses thereof (individually,
the "Trademark" and collectively, the "Trademarks"), (d) all
products and proceeds of the foregoing, in any form,
including, without limitation, insurance proceeds for, and
any claims against third parties for loss or damage to or
destruction of any or all of the foregoing, together with
all monies, securities, drafts, notes, items and other
property of Pledgor and the proceeds thereof, nor or
hereafter held or received by or in transit to Secured
Party, from or for Pledgor, whether for safekeeping,
custody, pledge, transmission, collection or otherwise, and
any and all deposits (general or special), balances, sums,
proceeds and credits of Pledgor with, and any and all claims
of Pledgor against, Secured Party, at any time existing, (e)
all "accounts" (as defined in the UCC) now owned or
hereafter acquired by the Pledgor, and shall also mean and
include all accounts receivable, contract rights, book
debts, notes, drafts and other obligations or indebtedness
owing to the Pledgor arising from the sale, lease or
exchange of goods or other property by it and/or the
performance of services by it (including, without
limitation, any such obligation which might be characterized
as an account, contract right or general intangible under
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the Uniform Commercial Code in effect in any jurisdiction)
and all of the Pledgor's rights in, to and under all
purchase orders for goods, services or other property, and
all of the Pledgor's rights to any goods, services or other
property represented by any of the foregoing (including
returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in
transit) and all monies due to or to become due to the
Pledgor under all contracts for the sale, lease or exchange
of goods or other property and/or the performance of
services by it (whether or not yet earned by performance on
the part of the Pledgor), in each case whether now in
existence or hereafter arising or acquired, including,
without limitation, the right to receive the proceeds of
said purchase orders and contracts and all collateral
security and guarantees of any kind given by any Person with
respect to any of the foregoing, (f) all income, receipts,
profits or other benefits to which the Company may be
entitled to from the Existing Hotel Casino, (g) all
"contracts" (as defined in the UCC) and all franchise
agreements to which the Pledgor is a party, as each such
contract may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all
rights of the Pledgor to receive moneys due and to become
due to it thereunder or in connection therewith, (ii) all
rights of the Pledgor to damages arising out of, or for,
breach or default in respect thereof and (iii) all rights of
the Pledgor to perform and to exercise all remedies
thereunder, (h) all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods
(as defined in the UCC), now owned or hereafter acquired by
the Pledgor and (i) all "instruments", "chattel paper" or
"letters of credit" (each as defined in the UCC) evidencing,
representing, arising from or existing in respect of,
relating to, securing or otherwise supporting the payment
of, any of the Accounts, including (but not limited to)
promissory notes, drafts, bills of exchange and trade
acceptances, now owned or hereafter acquired by the Pledgor.
E-15
<PAGE>
EXHIBIT A
to
Security Agreement
PERFECTION CERTIFICATE
The undersigned, the Chief Financial Officer and
the Associate General Counsel of The Claridge of Park Place,
Incorporated, a New Jersey corporation (the "Pledgor"),
hereby certify with reference to the Security Agreement
dated as of ________, 1994 between the Pledgor and IBJ
Schroder Bank & Trust Company, a New York banking
corporation, as Collateral Trustee (terms defined therein
being used herein as therein defined), to the Collateral
Trustee and each Secured Party as follows:
1. Names. (a) The exact corporate name of the
Pledgor as it appears in its certificate of incorporation is
as follows:
(b) Set forth below is each other corporate name
the Pledgor has had since its organization, together with
the date of the relevant change:
(c) Except as set forth in Schedule 1, the
Pledgor has not changed its identity or corporate structure
in any way within the past five years.
(d) The following is a list of all other names
(including trade names or similar appellations) used by the
Pledgor or any of its divisions or other business units at
any time during the past five years:
E-A-1
<PAGE>
2. Current Locations. (a) The chief executive
office of the Pledgor is located at the following address:
Mailing Address County State
--------------- ------ -----
(b) The following are all the locations where the
Pledgor maintains any books or records relating to any
Accounts:
Mailing
Name Address County State
- ---- ------- ------ -----
(c) The following are all the places of business
of the Pledgor not identified above:
Mailing
Name Address County State
- ---- ------- ------ -----
(d) The following are all the locations where the
Pledgor maintains any Inventory not identified above:
(e) The following are the names and addresses of
all Persons other than the Pledgor which have possession of
any of the Pledgor's Inventory:
3. Prior Locations. (a) Set forth below is the
information required by subparagraphs (a), (b) and (c) of
paragraph 2 with respect to each location or place of
business maintained by the Pledgor at any time during the
past five years:
E-A-2
<PAGE>
(b) Set forth below is the information required
by subparagraphs (d) and (e) of paragraph 2 with respect to
each location or bailee where or with whom Inventory has
been lodged at any time during the past four months:
4. Unusual Transactions. Except as set forth in
Schedule 4, all Accounts have been originated by the Pledgor
and all Inventory and Equipment has been acquired by the
Pledgor in the ordinary course of its business.
5. File Search Reports. Attached hereto as
Schedule 5(A) is a true copy of a file search report from
the Uniform Commercial Code filing office in each
jurisdiction identified in paragraph 2 or 3 above with
respect to each name set forth in paragraph 1 above.
Attached hereto as Schedule 5(B) is a true copy of each
financing statement or other filing identified in such file
search reports.
6. UCC Filings. A duly signed financing
statement on Form UCC-1 in substantially the form of
Schedule 6(A) hereto has been duly filed in the Uniform
Commercial Code filing office in each jurisdiction
identified in paragraph 2 hereof. Attached hereto as
Schedule 6(B) is a true copy of each such filing duly
acknowledged by the filing officer.
7. Schedule of Filings. Attached hereto as
Schedule 7 is a schedule setting forth filing information
with respect to the filings described in paragraph 6 above.
8. Filing Fees. All filing fees and taxes
payable in connection with the filings described in
paragraph 6 above have been paid.
E-A-3
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands
as of the ____ day of __________, 1994.
_______________________________________
Title: Chief Financial Officer
_______________________________________
Title: Associate General Counsel
E-A-4
<PAGE>
SCHEDULE 6(A)*
DESCRIPTION OF COLLATERAL
The Collateral is described as follows; provided,
however, that the term "Collateral" specifically shall not
include any assets now owned or hereafter acquired or leased
with the proceeds of Gaming Business Purchase Money
Obligations permitted to be incurred under Section
4.08(b)(iii) of the Indenture in an amount not to exceed $10
million outstanding at any one time which are encumbered by
liens or security interests in favor of the holders of such
Gaming Business Purchase Money Obligations, and also
includes all attachments, accessions and equipment now or
hereafter affixed to the Collateral or used in connection
therewith, substitutions and replacements thereof, all items
of Collateral now owned or existing and hereafter acquired,
created or arising, and all products and proceeds thereof
(including, without limitation, claims of Pledgor against
third parties for loss or damage to or destruction of any
Collateral): (a) all equipment, machinery, furniture,
fittings and fixtures of every nature, kind and description,
wherever located, whether now owned or hereafter acquired by
Pledgor, and whether now or hereafter affixed to, attached
to, installed in, placed upon, or used in any way in
connection with the complete and comfortable use, enjoyment,
occupancy or operation of realty or the business of the
Pledgor, including all proceeds, replacements, accretions,
additions and substitutions thereto, including but not
limited to furnaces, boilers, oil burners, radiators and
piping, plumbing and bathroom fixtures, refrigeration, air
conditioning machinery and equipment, communication
equipment and systems, fire protection and sprinkler
equipment and systems, washtubs, sinks, gas and electric
fixtures, stoves, ranges, awnings, screens, dishwasher,
window shades, elevators, escalators, motors, dynamos,
cooking apparatus, refrigerators, and mechanical kitchen
equipment, laundry equipment, kitchen cabinets,
incinerators, surveillance equipment and systems, plants and
shrubbery, partitions, vaults, safes, fire extinguishing
equipment, parts and supplies, motor vehicles, typewriters,
dictation equipment, materials and supplies, paints,
uniforms of engineering and maintenance personnel and all
supplies used in connection with the maintenance and repair
thereof, and all other furniture equipment and machinery,
tools, appliances, fittings, fixtures and building materials
of any kind now owned or hereafter acquired and whether or
<PAGE>
not affixed to realty and further including but not limited
to all room, office and public furnishings, beds, drapes,
dressers, lamps, tables, gaming equipment, restaurant
supplies, kitchen supplies, utensils and equipment, carpets,
linen supplies, chandeliers, pictures, radios, television
sets, books, papers, records, documents, files and all other
tangible personal property now owned or hereafter acquired
by the Debtor and used in its operation of a hotel and
casino related facilities, including, without limitation,
parking facilities (collectively, the "Equipment"), all
"general intangibles" (as defined in the UCC) now owned or
hereafter acquired by the Pledgor, including, without
limitation, (i) all obligations or indebtedness owing to the
Pledgor (other than Accounts) from whatever source arising,
and all rights to receive moneys due or to become due in
respect of any existing or future license or sublicense of
any trademark, trademark license or other intellectual
property, (ii) all patents, patent licenses, trademarks,
trademark licenses, rights in intellectual property, gaming
licenses, goodwill, trade names, service marks, trade
secrets, copyrights, copyright licenses and other permits
and licenses, (iii) all rights or claims in respect of
refunds for taxes paid and (iv) all rights in respect of any
pension plan or similar arrangement maintained for employees
of any member of the ERISA Group, (c) all trademarks, trade
names, trade styles and service marks of Pledgor (including,
without limitation, the trade marks "The Claridge Hotel and
Casino", "Hi-Ho" and "Compucard"), all prints and labels on
which such trademarks, trade names, trade styles and service
marks of like nature, all now existing or hereafter adopted
or acquired by Pledgeor, all right, title and interest
therein and thereto, all registrations, reissues, extensions
or renewals thereof and all licenses thereof (individually,
the "Trademark" and collectively, the "Trademarks"), (d) all
products and proceeds of the foregoing, in any form,
including, without limitation, insurance proceeds for, and
any claims against third parties for loss or damage to or
destruction of any or all of the foregoing, together with
all monies, securities, drafts, notes, items and other
property of Pledgor and the proceeds thereof, nor or
hereafter held or received by or in transit to Secured
Party, from or for Pledgor, whether for safekeeping,
custody, pledge, transmission, collection or otherwise, and
any and all deposits (general or special), balances, sums,
proceeds and credits of Pledgor with, and any and all claims
of Pledgor against, Secured Party, at any time existing, (e)
all "accounts" (as defined in the UCC) now owned or
hereafter acquired by the Pledgor, and shall also mean and
include all accounts receivable, contract rights, book
debts, notes, drafts and other obligations or indebtedness
owing to the Pledgor arising from the sale, lease or
<PAGE>
exchange of goods or other property by it and/or the
performance of services by it (including, without
limitation, any such obligation which might be characterized
as an account, contract right or general intangible under
the Uniform Commercial Code in effect in any jurisdiction)
and all of the Pledgor's rights in, to and under all
purchase orders for goods, services or other property, and
all of the Pledgor's rights to any goods, services or other
property represented by any of the foregoing (including
returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in
transit) and all monies due to or to become due to the
Pledgor under all contracts for the sale, lease or exchange
of goods or other property and/or the performance of
services by it (whether or not yet earned by performance on
the part of the Pledgor), in each case whether now in
existence or hereafter arising or acquired, including,
without limitation, the right to receive the proceeds of
said purchase orders and contracts and all collateral
security and guarantees of any kind given by any Person with
respect to any of the foregoing, (f) all income, receipts,
profits or other benefits to which the Company may be
entitled to from the Existing Hotel Casino, (g) all
"contracts" (as defined in the UCC) and all franchise
agreements to which the Pledgor is a party, as each such
contract may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all
rights of the Pledgor to receive moneys due and to become
due to it thereunder or in connection therewith, (ii) all
rights of the Pledgor to damages arising out of, or for,
breach or default in respect thereof and (iii) all rights of
the Pledgor to perform and to exercise all remedies
thereunder, (h) all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods
(as defined in the UCC), now owned or hereafter acquired by
the Pledgor and (i) all "instruments", "chattel paper" or
"letters of credit" (each as defined in the UCC) evidencing,
representing, arising from or existing in respect of,
relating to, securing or otherwise supporting the payment
of, any of the Accounts, including (but not limited to)
promissory notes, drafts, bills of exchange and trade
acceptances, now owned or hereafter acquired by the Pledgor.
<PAGE>
SCHEDULE 7
SCHEDULE OF FILINGS
Debtor Filing Officer File Number Date of Filing*
- ------ -------------- ----------- ---------------
_______________
* Indicate lapse date, if other than fifth anniversary.
<PAGE>
<PAGE>
Exhibit F
to
Collateral Trust Agreement
CPPI TRADEMARK SECURITY AGREEMENT
(TRADEMARKS, TRADEMARK REGISTRATIONS,
TRADEMARK APPLICATIONS AND TRADEMARK LICENSES)
WHEREAS, THE CLARIDGE AT PARK PLACE, INCORPORATED,
a New Jersey corporation (with its successors, the
"Pledgor"), owns the Trademarks, Trademark registrations and
Trademark applications listed on Schedule 1 annexed hereto,
and is a party to the Trademark Licenses listed on Schedule
2 annexed hereto; and
WHEREAS, simultaneously with the execution and
delivery of the Collateral Trust Agreement dated as of
________, 1994, The Claridge Hotel and Casino Corporation
(the "Company") is entering into an indenture (the
"Indenture") among the Company, as issuer, the Pledgor, as
guarantor, and IBJ Schroder Bank & Trust Company, as
trustee, pursuant to which the Company will issue its First
Mortgage Notes Due 2002 (the "Notes"); and
WHEREAS, the Company, the Pledgor, Atlantic City
Boardwalk Associates, L.P. (the "Partnership") and IBJ
Schroder Bank & Trust Company, as collateral trustee (the
"Collateral Trustee"), have entered into a Collateral Trust
Agreement dated as of ________, 1994 (as the same may be
amended or otherwise modified from time to time, the
"Collateral Trust Agreement"), to provide, among other
things, for the Collateral Trustee to take and hold the
Collateral identified therein for the benefit of the Secured
Parties identified therein; and
WHEREAS, in order to secure its obligations under
the Indenture and all other Secured Obligations referred to
in the Security Agreement described below, the Pledgor has
agreed to grant to the Collateral Trustee a continuing
security interest in and to the Collateral (as defined
herein);
WHEREAS, pursuant to the terms of the Security
Agreement dated as of ________, 1994 between the Pledgor and
the Collateral Trustee (as the same may be amended or
otherwise modified from time to time, the "CPPI Trademark
Security Agreement", terms used herein having the respective
meanings specified therein except as otherwise indicated),
<PAGE>
the Pledgor has granted to the Collateral Trustee a security
interest in certain assets of the Pledgor, including all
right, title and interest of the Pledgor in, to and under
all the Pledgor's Trademarks, together with any reissues,
extension or renewals thereof, Trademark registrations,
Trademark applications and Trademark Licenses, whether
presently existing or hereafter arising or acquired,
together with the goodwill of the business symbolized by the
Trademarks and the applications therefor and the
registrations thereof, all royalties and other sums
receivable in respect thereof and all products and proceeds
thereof, including, without limitation, any and all causes
of action which may exist by reason of infringement or
dilution thereof or injury to the associated goodwill, to
secure the payment of all amounts owing under the Secured
Obligations;
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the Pledgor does hereby grant to the
Collateral Trustee a continuing security interest in all of
the Pledgor's right, title and interest in, to and under the
following (all of the following items or types or property
being herein collectively referred to as the "Trademark
Collateral"), whether presently existing or hereafter
arising or acquired:
(i) each Trademark, Trademark registration and
Trademark application, including, without limitation,
each Trademark, Trademark registration and Trademark
application referred to in Schedule 1 annexed hereto,
and all of the goodwill of the business connected with
the use of, and symbolized by, each Trademark,
Trademark registration and Trademark application;
(ii) each Trademark License, including, without
limitation, each Trademark License listed on Schedule 2
annexed hereto, and all of the goodwill of the business
connected with the use of, and symbolized by, each
Trademark licensed;
(iii) all royalties and other moneys due or to
become due in respect of any existing or future license
or sublicense of any Trademark, Trademark License or
other intellectual property; and
(iv) all products and proceeds of the foregoing,
including, without limitation, any claim by the Pledgor
against third parties for past, present or future
infringement or dilution of any Trademark or Trademark
registration, including, without limitation, any
F-2
<PAGE>
Trademark or Trademark registration referred to in
Schedule 1 annexed hereto, and any Trademark licensed
under any Trademark License, including, without
limitation, any Trademark License listed on Schedule 2
annexed hereto, or for injury to the goodwill
associated with any Trademark, Trademark registration
or Trademark licensed under any Trademark License.
This security interest is granted in conjunction with the
security interests granted to the Collateral Trustee
pursuant to the Security Agreement. The Pledgor hereby
further acknowledges and affirms that the rights and
remedies of the Collateral Trustee with respect to the
security interest in the Trademark Collateral made and
granted hereby are more fully set forth in the Security
Agreement and the Collateral Trust Agreement, the terms and
provisions of which, including (without limitation) terms
and provisions with respect to the release of collateral in
certain circumstances, are incorporated by reference herein
as if fully set forth herein.
IN WITNESS WHEREOF, the Pledgor has caused this
Trademark Security Agreement to be duly executed by its
authorized officer thereunto duly authorized as of the ___
day of ______, 1994.
THE CLARIDGE AT PARK PLACE,
INCORPORATED
By: ____________________________
Title:
F-3
<PAGE>
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
On the ____ day of ______, 1993, before me
personally came ________________, to me personally known
who, being by me duly sworn, did depose and say that he
resides at _________________________________; that he is
________________________________________, the corporation
described in and which executed the foregoing instrument;
that the said instrument was signed on behalf of said
corporation by order of its Board of Directors; that he
signed his name thereto by like order; and that he
acknowledged said instrument to be the free act and deed of
said corporation.
______________________
Notary Public
[Seal]
My commission expires:
<PAGE>
Schedule 1
to
Trademark Security Agreement
TRADEMARKS, TRADEMARK REGISTRATIONS
AND TRADEMARK APPLICATIONS
Registration Renewal
Trademarks Number Date
---------- ------------ -------
Claridge (Application) SN 74/394152 Filed 5/24/93
Because Smaller is Friendlier 1,699,536 7/7/92
Claridge Casino Hotel (and Design) 1,426,929 1/27/87
Comp Card 1,432,392 3/10/87
Focas (Application) SN 74,247,270 Filed 3/20/92
<PAGE>
Schedule 2
to
Trademark Security Agreement
TRADEMARK LICENSES
Parties:
Date of
Licensor Licensee(s) Agreement
-------- ----------- ---------
None
<PAGE>
<PAGE>
This instrument was prepared by the
attorney described below and, when
recorded, the recorded counterparts
should be returned to:
James P. McIntyre, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
By:_______________________
James P. McIntyre, Esq.
COLLATERAL ASSIGNMENT OF EXPANDABLE WRAPAROUND
MORTGAGE AND SECURITY AGREEMENT
THIS COLLATERAL ASSIGNMENT OF EXPANDABLE WRAPAROUND
MORTGAGE AND SECURITY AGREEMENT (this "Assignment") is made as of
this ___ day of January, 1994 by THE CLARIDGE AT PARK PLACE,
INCORPORATED, a New Jersey corporation, having an office at
Indiana Avenue and the Boardwalk, Atlantic City, New Jersey (with
its successors, the "Assignor"), in favor of IBJ SCHRODER BANK
AND TRUST COMPANY, as trustee under the Collateral Trust
Agreement (as defined below), having an office at 1 State Street,
11th Floor, New York, New York 10004 (with its successors in such
capacity, the "Assignee").
W I T N E S S E T H :
WHEREAS, simultaneously with the execution and delivery
of the Collateral Trust Agreement dated as of the date hereof
among The Claridge Hotel and Casino Corporation (the "Company"),
the Assignor, Atlantic City Boardwalk Associates, L.P. (the
"Partnership") and the Assignee (as amended, modified or
supplemented from time to time in accordance with its terms, the
"Collateral Trust Agreement"), the Company is entering into an
indenture (as amended, modified or supplemented from time to time
in accordance with its terms, the "Indenture") among the Company,
as issuer, the Assignor, as guarantor, and the Assignee, as
trustee, pursuant to which the Company will issue its First
Mortgage Notes Due 2002; and
WHEREAS, in order to secure its obligations under the
Indenture and under all of the other Financing Documents (as
defined in the Indenture), the Assignor has agreed to assign to
the Assignee its interest in the Expandable Wraparound Mortgage
(as defined below).
<PAGE>
NOW, THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Assignor does
hereby grant, assign, transfer and set over unto the Assignee all
of the Assignor's right, title and interest in and to:
(a) that certain Replacement Wraparound Mortgage Note
dated October 31, 1983, executed by the Partnership
(hereinafter called the "Mortgagor"), payable to the
Assignor, in the original principal amount of
$127,000,000; as amended by that certain First Amendment
to Wraparound Mortgage Note dated March 17, 1986 from the
Mortgagor to the Assignor (collectively, as amended,
modified and supplemented from time to time in accordance
with their respective terms, the "Wraparound Note"),
together with the debts and claims thereby evidenced; and
(b) that certain Expansion Wraparound Mortgage Note
dated March 17, 1983, executed by the Mortgagor, payable
to the Assignor, in the original principal amount of
$17,000,000 (as amended, modified and supplemented from
time to time in accordance with its terms, the "Expansion
Note"; the Wraparound Note and the Expansion Note are
collectively referred to herein as the "Notes"), together
with the debts and claims thereby evidenced; and
(c) the following instruments executed by the Mortgagor
as security for the Notes, all concerning certain
property in Atlantic County, New Jersey, as described on
Exhibit A attached hereto and made a part hereof
(collectively, the "Property"):
(i) that certain Expandable Wraparound Mortgage and
Security Agreement dated as of October 31, 1983,
from the Mortgagor to the Assignor, recorded on
October 31, 1983 in the Office of the Clerk of
Atlantic City, New Jersey in Mortgage Book 2908 at
Page 250; as amended by that certain First
Supplemental Amendment to Expandable Wraparound
Mortgage and Security Agreement dated as of March
17, 1986 between the Assignor and the Mortgagor,
recorded on March 18, 1986 in said Office in Book
3317 at Page 189 and rerecorded in said Office on
April 14, 1986 in Book 3331 at Page 273; and as
further amended by that certain Second Amendment to
Expandable Wraparound Mortgage and Security
Agreement dated June 15, 1989 between the Assignor
and the Partnership, recorded on __________, 1989 in
said Office in Book ________ at Page ________
(collectively, as amended, modified or supplemented
2
<PAGE>
from time to time in accordance with its terms, the
"Expandable Wraparound Mortgage"); and
(ii) any and all other documents, instruments and
agreements serving as collateral security for the
Notes.
TO HAVE AND TO HOLD unto the Assignee forever.
This Assignment is executed in connection with the CPPI
Pledge Agreement dated as of the date hereof between Assignor and
Assignee and is subject to the terms thereof.
This Assignment is delivered as security for the due and
punctual payment of the Secured Obligations of Assignor (as
defined in the CPPI Pledge Agreement).
This instrument shall be binding upon the Assignor's
successors and assigns and shall inure to the benefit of the
Assignee.
Upon satisfaction in full of the Secured Obligations, the
Assignee shall without recourse, representation or warranty,
reassign to the Assignor all rights assigned hereunder.
3
<PAGE>
IN WITNESS WHEREOF, the Assignor has hereunto caused
these presents to be signed by its proper corporate officers and
its corporate seal to be hereto affixed this _ day of January,
1994.
THE CLARIDGE AT PARK PLACE,
INCORPORATED
By:___________________________
Name:
Title:
(Corporate Seal)
4
<PAGE>
STATE OF _________ :
: ss.
COUNTY OF _________ :
BE IT REMEMBERED, that on this _ day of January, 1994,
before me personally appeared _______________, _____________, of
THE CLARIDGE AT PARK PLACE, INCORPORATED, a New Jersey
corporation, who I am satisfied is the person who has signed the
within instrument; and I having first made known to him the
contents thereof, he did acknowledge that he signed, sealed and
delivered the same as such officer aforesaid; and that the within
instrument is the voluntary act and deed of said corporation, and
further acknowledges that he did receive a true copy of the
within instrument.
___________________________
(Notary Public)
5
<PAGE>
Exhibit A
Description of the Property
TRACT I:
BEGINNING in the Northeasterly line of Indiana Avenue (60
feet wide) at a point 150 feet Southeastwardly of the
Southeasterly line of Pacific Avenue (60 feet wide) and extending
1. North 62 degrees 32 minutes East, parallel with
Pacific Avenue, 155 fee; thence
2. South 27 degrees 28 minutes East, parallel with
Indiana Avenue, 50.10 feet; thence
3. South 62 degrees 32 minutes West, parallel with
Pacific Avenue 155 fee to the first mentioned Northeasterly line
of Indiana Avenue; thence
4. North 27 degrees 28 minutes West, along same, 50.10
feet to the point and place of BEGINNING.
TRACT II:
BEGINNING in the Southwesterly line of Indiana Avenue (60
feet wide) at a point 150 feet Southeastwardly of the
Southeasterly line of Pacific Avenue (60 feet wide) and
extending:
1. South 27 degrees 28 minutes East, along said
Southwesterly line of Indiana Avenue, 300 feet; thence
2. South 62 degrees 32 minutes West, parallel with
Pacific Avenue, 138.10 feet to the Northeasterly line of Park
Place, (60 feet wide); thence
3. North 27 degrees 28 minutes West, along same, 300
feet; thence
4. North 62 degrees 32 minutes West, parallel with
Pacific Avenue, 138.10 feet to the point and place of BEGINNING.
6
<PAGE>
TRACT III:
BEGINNING in the Northeasterly line of Ohio Avenue, (50
feet wide) at a point 200 feet Southeastwardly of the
Southeasterly line of Pacific Avenue (60 feet wide), and
extending
1. North 62 degrees 32 minutes East, parallel with
Pacific Avenue, 145.60 feet to the Southwesterly line of Park
Place, (60 feet wide); thence
2. South 27 degrees 28 minutes East, along same, 150
feet; thence
3. South 62 degrees 32 minutes West, parallel with
Pacific Avenue, 145.60 feet to the First mentioned Northeasterly
line of Ohio Avenue; thence
4. North 27 degrees 28 minutes West, along same, 150
feet to the point and place of BEGINNING
TRACT IV: AIR RIGHTS
ALL THAT CERTAIN real property in the City of Atlantic
City, County of Atlantic, State of New Jersey, which lies above
(but not below) the horizontal plane the elevation of which is
26.0 feet above that certain datum level which designates as zero
an elevation equal to mean sea level at Atlantic City, as
computed and established by the United States Coast and Geodetic
Survey and which lies below (but not above) another horizontal
plane the elevation of which is 71.5 feet above said datum level,
and which is bounded by and lies within that certain plot or
parcel described as follows:
ALL THAT CERTAIN lot, tract, or parcel of land and
premises, situate, lying and being in the City of Atlantic City,
County of Atlantic, and State of New Jersey, bounded and
described as follows:
BEGINNING at a point in the Westerly line of Park Place
(60 feet wide), said point being distant 200.00 feet South of the
Southerly line of Pacific Avenue (60 feet wide), and extending
from said beginning point; thence
1. South 27 degrees 28 minutes 00 seconds West, in and
along the Westerly line of Park Place, a distance of 150.00 feet
to a point; thence
7
<PAGE>
2. North 89 degrees 42 minutes 23 seconds East, crossing
Park Place, a distance of 67.44 feet to the easterly line of Park
Place; thence
3. North 27 degrees 28 minutes 00 seconds West, in and
along the easterly line of Park Place, a distance of 180.80 feet;
thence
4. South 62 degrees 32 minutes 00 seconds West crossing
Park Place, a distance of 60.00 feet to the point and place of
BEGINNING.
TOGETHER with the benefits of a certain easement from the
City of Atlantic City to Del E. Webb New Jersey, Inc. dated 3-20-
86, recorded in Deed Book 4216, page 299.
8
<PAGE>
<PAGE>
EXHIBIT H
to
Collateral Trust Agreement
THE PARTNERSHIP SECURITY AGREEMENT
AGREEMENT dated as of _____________, 1994 between
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P., a New Jersey
limited partnership (with its successors, the "Pledgor"),
and IBJ SCHRODER BANK & TRUST COMPANY, as trustee under the
Collateral Trust Agreement referred to herein (the
"Collateral Trustee");
W I T N E S S E T H :
WHEREAS, simultaneously with the execution and
delivery of the Collateral Trust Agreement dated as of the
date hereof, The Claridge Hotel & Casino Corporation (the
"Company") is entering into an indenture (the "Indenture")
among the Company, as issuer, The Claridge at Park Place,
Incorporated ("CPPI"), as guarantor, and IBJ Schroder Bank &
Trust Company, as trustee, pursuant to which the Company
will issue its First Mortgage Notes Due 2002 (the "Notes");
and
WHEREAS, in order to secure the Company's
obligations under the Indenture and all other Secured
Obligations (as defined herein), the Pledgor has agreed to
grant to the Collateral Trustee a continuing security
interest in and to the Collateral (as defined herein);
NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. Definitions. Terms used herein and
not otherwise defined herein have the respective meanings
given to such terms in the Collateral Trust Agreement, or if
not defined therein, in the Indenture. The following
additional terms, as used herein, have the following
respective meanings:
"Agreement" means this Partnership Security
Agreement dated as of the date hereof, as the same may be
amended or otherwise modified from time to time.
<PAGE>
"Collateral" has the meaning set forth in
Section 3.
"Collateral Trust Agreement" means the Collateral
Trust Agreement dated as of the date hereof, among the
Company, CPPI, the Pledgor and the Collateral Trustee, as
the same may be amended or otherwise modified from time to
time.
"Perfection Certificate" means a certificate
substantially in the form of Exhibit A hereto, completed and
supplemented with the schedules and attachments contemplated
thereby, and duly executed by the chief financial officer
and the chief legal officer of the Pledgor.
"Permitted Partnership Liens" means (a) the
Security Interests; (b) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the
ordinary course of business; (c) warehouse and mechanics
Liens; (d) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are
being contested in good faith by appropriate proceedings
promptly instituted and diligently concluded; provided that
any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made
therefor; (e) ground leases in respect of the real property
on which facilities owned or leased by the Pledgor are
located; (f) Liens arising from UCC financing statements
regarding property leased by the Pledgor; (g) easements,
rights-of-way, navigational servitudes, restrictions, minor
defects or irregularities in title and other similar charges
or encumbrances which do not interfere in any material
respect with the ordinary conduct of business of the
Pledgor and (h) any Liens being discharged simultaneously
with the issuance, execution and delivery of the Notes.
"Secured Obligations" means (i) the Note
Obligations and (ii) all sums payable by the Pledgor under
the Related Documents.
"Security Interests" means the security interests
in the Collateral granted by the Pledgor to the Collateral
Trustee hereunder securing the Secured Obligations.
"UCC" means the Uniform Commercial Code as in
effect from time to time in the State of New Jersey;
provided that if by reason of mandatory provisions of law,
the perfection or the effect of perfection or non-perfection
of the Security Interests in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction
H-2
<PAGE>
other than New Jersey, "UCC" means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect
of perfection or non-perfection.
SECTION 2. Representations and Warranties. The
Pledgor represents and warrants as follows:
(A) The Pledgor has good and marketable title to
all of the Collateral, free and clear of any Liens
other than Permitted Liens. The Pledgor has taken all
actions necessary under the UCC to perfect its interest
in any accounts (as defined in the UCC) purchased or
otherwise acquired by it, as against its assignors and
creditors of its assignors.
(B) The Pledgor has not performed any acts which
would prevent the Collateral Trustee from enforcing any
of the terms of this Agreement or which would limit the
Collateral Trustee in any such enforcement. Other than
financing statements or other similar or equivalent
documents or instruments with respect to the Security
Interests and other Permitted Liens, no financing
statement, mortgage, security agreement or similar or
equivalent document or instrument covering all or any
part of the Collateral is on file or of record in any
jurisdiction in which such filing or recording would be
effective to perfect a Lien on such Collateral. No
Collateral is in the possession of any Person (other
than the Pledgor) asserting any claim thereto or
security interest therein, except that the Collateral
Trustee or its designee may have possession of
Collateral as contemplated hereby.
(C) Prior to the Issue Date, the Pledgor shall
have delivered the Perfection Certificate to the
Collateral Trustee. The information set forth therein
is correct and complete. Not later than 60 days
following the Issue Date, the Pledgor shall have
furnished to the Collateral Trustee file search reports
from each UCC filing office set forth in Schedule 7 to
the Perfection Certificate confirming the filing
information set forth in such Schedule.
(D) The Security Interests constitute valid
security interests under the UCC securing the Secured
Obligations. When UCC financing statements in the form
specified in Exhibit A hereto shall have been filed in
the offices specified in the Perfection Certificate,
the Security Interests shall constitute perfected
security interests in the Collateral (except inventory
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<PAGE>
(as defined in the UCC) in transit) to the extent that
a security interest therein may be perfected by filing
pursuant to the UCC, prior to all other Liens and
rights of others therein except for other Permitted
Liens.
(E) No consent of any party (other than the
Pledgor) to any material contract (as defined in the
UCC) is required, or purports to be required, in
connection with the execution, delivery and performance
of this Agreement except such as may be required under
the Casino Control Act in connection with the
enforcement of any of the rights of the Collateral
Trustee or the Noteholders hereunder. Except as to
matters that, in the aggregate, could not reasonably be
expected to materially impair the value of that portion
of the Collateral consisting of Contracts, (i) each
contract is in full force and effect and constitutes a
valid and legally enforceable obligation of the Pledgor
and (to the best of the Pledgor's knowledge) the other
parties thereto, except as enforceability may be
limited by bankruptcy, insolvency reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally, (ii) no consent or
authorization of, filing with or other act by or in
respect of any governmental authority is required in
connection with the execution, delivery, performance,
validity or enforceability of any of the contracts by
the Pledgor or (to the best of the Pledgor's knowledge)
any other party thereto other than those which have
been duly obtained, made or performed, are in full
force and effect and do not subject the scope of any
such contract to any material adverse limitation,
either specific or general in nature, (iii) neither the
Pledgor nor (to the best of the Pledgor's knowledge)
any other party to any contract is in default or is
likely to become in default in the performance or
observance of any of the terms thereof, (iv) the
Pledgor has fully performed all its obligations under
each contract and (v) to the best of the Pledgor's
knowledge, the right, title and interest of the Pledgor
in, to and under each contract are not subject to any
defense, offset, counterclaim or claim which would
materially adversely affect the value of such contract
or Collateral, nor have any of the foregoing been
asserted or alleged against the Pledgor as to any
contract.
H-4
<PAGE>
SECTION 3. The Security Interests. (A) In order
to secure the full and punctual payment of the Secured
Obligations in accordance with the terms thereof, and to
secure the performance of all of the obligations of the
Pledgor hereunder, the Pledgor hereby grants to the
Collateral Trustee a continuing security interest in and to
all of the following property of the Pledgor listed on
Schedule I attached hereto, whether now owned or existing or
hereafter acquired or arising, and regardless of where
located (all being collectively referred to herein as the
"Collateral").
(B) The Security Interests are granted as
security only and shall not subject the Collateral Trustee
or any Secured Party to, or transfer or in any way affect or
modify, any obligation or liability of the Pledgor with
respect to any of the Collateral or any transaction in
connection therewith.
SECTION 4. Further Assurances; Covenants. (A)
The Pledgor will not change its name, identity or structure
in any manner unless it shall have given the Collateral
Trustee prior notice thereof and delivered an opinion of
counsel with respect thereto in accordance with Section 4(M)
hereof. The Pledgor will not change the location of (i) its
chief executive office or chief place of business or
(ii) the locations where it keeps or holds any Collateral
(except for inventory (as defined in the UCC)) or any
records relating thereto from the applicable location
described in the Perfection Certificate unless it shall have
given the Collateral Trustee prior notice thereof and
delivered an opinion of counsel with respect thereto in
accordance with Section 4(M) hereof. The Pledgor shall not
in any event change the location of any Collateral if such
change would cause the Security Interests in such Collateral
to lapse or cease to be perfected.
(B) The Pledgor will, from time to time, at its
expense, execute, deliver, file and record any statement,
assignment, instrument, document, agreement or other paper
and take any other action (including, without limitation,
any filings with the United States Patent and Trademark
Office and any filings of financing or continuation
statements under the UCC) that from time to time may be
necessary or desirable, or that the Collateral Trustee may
reasonably request, in order to create, preserve, perfect,
confirm or validate the Security Interests or to enable the
Collateral Trustee and the Secured Parties to obtain the
full benefits of this Agreement, or to enable the Collateral
Trustee to exercise and enforce any of its rights, powers
and remedies hereunder with respect to any of the
H-5
<PAGE>
Collateral. To the extent permitted by applicable law, the
Pledgor hereby authorizes the Collateral Trustee to execute
and file financing statements or continuation statements
without the Pledgor's signature appearing thereon with
respect to the Collateral hereunder. The Pledgor agrees
that a carbon, photographic, photostatic or other
reproduction of this Agreement or of a financing statement
is sufficient as a financing statement to the extent
permitted by applicable law or regulation. The Pledgor
shall pay the costs of, or incidental to, any recording or
filing of any financing or continuation statements
concerning the Collateral.
(C) If any Collateral (except for inventory (as
defined in the UCC)) is at any time in the possession or
control of any warehouseman, bailee or any of the Pledgor's
agents or processors, the Pledgor shall notify such
warehouseman, bailee, agent or processor of the Security
Interests created hereby and to hold all such Collateral for
the Collateral Trustee's account subject to the Collateral
Trustee's instructions.
(D) The Pledgor shall keep full and accurate
books and records relating to the Collateral, and stamp or
otherwise mark such books and records in such manner as the
Collateral Trustee may reasonably require in order to
reflect the Security Interests.
(E) The Pledgor will immediately deliver and
pledge each instrument (as defined in the UCC) to the
Collateral Trustee, appropriately endorsed to the Collateral
Trustee, provided that so long as no Notice of Acceleration
is in effect, the Pledgor may retain for collection in the
ordinary course of business any instruments received by it
in the ordinary course of business and the Collateral
Trustee shall, promptly upon request of the Pledgor, make
appropriate arrangements for making any other instrument
pledged by the Pledgor available to it for purposes of
presentation, collection or renewal (any such arrangement to
be effected, to the extent deemed appropriate by the
Collateral Trustee, against trust receipt or like document).
(F) The Pledgor shall cause to be collected from
its account debtors, as and when due, any and all amounts
owing under or on account of each account (as defined in the
UCC) (including, without limitation, accounts which are
delinquent, such accounts to be collected in accordance with
lawful collection procedures) in accordance with its normal
business procedures and shall apply forthwith upon receipt
thereof all such amounts as are so collected to the
outstanding balance of such account. Subject to the rights
H-6
<PAGE>
of the Collateral Trustee hereunder while a Notice of
Acceleration is in effect, the Pledgor may allow in the
ordinary course of business as adjustments to amounts owing
under its accounts (i) an extension or renewal of the time
or times of payment, or settlement for less than the total
unpaid balance, which the Pledgor finds appropriate in
accordance with sound business judgment and (ii) a refund or
credit due as a result of returned or damaged merchandise,
all in accordance with the Pledgor's ordinary course of
business consistent with its historical collection practices
or otherwise consistent with sound business practices
prevailing in the industry. The costs and expenses
(including, without limitation, attorney's fees) of
collection, whether incurred by the Pledgor or the
Collateral Trustee, shall be borne by the Pledgor.
(G) While any Notice of Acceleration is in
effect, the Pledgor will promptly notify (and the Pledgor
hereby authorizes the Collateral Trustee so to notify) each
account debtor in respect of any account or instrument that
such Collateral has been assigned to the Collateral Trustee
hereunder, and that any payments due or to become due in
respect of such Collateral are to be made directly to the
Collateral Trustee or its designee.
(H) The Pledgor will, promptly upon request,
provide to the Collateral Trustee all information and
evidence it may reasonably request concerning the Collateral
to enable the Collateral Trustee to enforce the provisions
of this Agreement.
(I) The Pledgor shall notify the Collateral
Trustee promptly if it knows that any application or
registration relating to any patent, Trademark or copyright
material to the business and operations of the Pledgor may
become abandoned or dedicated, or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any court)
regarding the Pledgor's ownership of any such patent,
Trademark or copyright, its right to register the same, or
to keep and maintain the same. In the event that any
patent, patent license, Trademark, Trademark license,
copyright or copyright license is infringed, misappropriated
or diluted by a third party, the Pledgor shall take such
actions as the Pledgor shall reasonably deem appropriate
under the circumstances to protect such patent, patent
license, Trademark, Trademark license, copyright or
copyright license. The Pledgor shall notify the Collateral
Trustee not later than 15 days after the end of each fiscal
H-7
<PAGE>
quarter of the Pledgor of any and all applications that the
Pledgor, itself or through any agent, employee or licensee,
has filed for the registration of any patent or trademark
with the United States Patent and trademark Office or of any
copyright with the United States Copyright Office or, in any
such case, any similar office or agency in any other country
or any political subdivision thereof, during the immediately
preceding fiscal quarter. The Pledgor shall execute and
deliver any and all agreements, instruments, documents and
papers which may be necessary or that the Collateral Trustee
may reasonably request to evidence the Security Interests in
such patent, trademark or copyright and the goodwill and
general intangibles of the Pledgor relating thereto or
represented thereby, and the Pledgor hereby constitutes the
Collateral Trustee its attorney-in-fact to, at any time that
a Notice of Acceleration is in effect, execute and file all
such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power
being coupled with an interest shall be irrevocable until
the Secured Obligations are paid in full.
(J) The Pledgor shall promptly inform the
Collateral Trustee of any additions to or deletions from the
equipment (as defined in the UCC) and shall not permit any
such items to become a fixture to real estate or an
accession to other personal property.
(K) On or prior to the Issue Date, the Pledgor
will cause the Collateral Trustee to be named as an insured
party and loss payee on each insurance policy covering risks
relating to any of its Inventory and Equipment. The Pledgor
will deliver to the Collateral Trustee, upon request of the
Collateral Trustee, the insurance policies for such
insurance or certificates of insurance evidencing such
coverage. The Pledgor shall use its best efforts to cause
each such insurance policy to include effective waivers by
the insurer of all claims for insurance premiums against the
Collateral Trustee, provide for coverage to the Collateral
Trustee regardless of the breach by the Pledgor of any
warranty or representation made therein, provide that no
cancellation, termination or material modification thereof
shall be effective until at least 30 days after receipt by
the Collateral Trustee of written notice thereof and be
reasonably satisfactory in all other respects to the
Collateral Trustee. The Pledgor hereby appoints the
Collateral Trustee as its attorney-in-fact to, at any time
that a Notice of Acceleration is in effect, make proof of
loss, claim for insurance and adjustments with insurers, and
to execute or endorse all documents, checks or drafts in
connection with payments made as a result of any insurance
policies.
H-8
<PAGE>
(L) From time to time upon request by the
Collateral Trustee, the Pledgor shall, at its cost and
expense, cause to be delivered to the Collateral Trustee an
opinion of counsel reasonably satisfactory to the Collateral
Trustee as to such matters relating to the transactions
contemplated hereby as the Collateral Trustee may reasonably
request, including, without limitation, the continuing
perfection of the Security Interests hereunder.
SECTION 5. Remedies upon Notice of
Acceleration. While a Notice of Acceleration is in effect,
the Collateral Trustee may exercise on behalf of the Secured
Parties the rights set forth in Article III of the
Collateral Trust Agreement.
SECTION 6. Release of Collateral; Termination of
Security Interests. Collateral may be released from the
Security Interests created hereunder from time to time
pursuant to Section 5.02 of the Collateral Trust Agreement.
The Security Interests shall terminate and all rights to the
Collateral shall revert to the Pledgor in accordance with
Section 7.09 of the Collateral Trust Agreement.
SECTION 7. Notices. All notices, communications
and distributions hereunder shall be given in accordance
with Section 7.01 of the Collateral Trust Agreement.
SECTION 8. No Waiver; Non-Exclusive Remedies.
No failure on the part of the Collateral Trustee to
exercise, and no delay in exercising and no course of
dealing with respect to, any right under this Agreement or
any other Related Document shall operate as a waiver hereof
or thereof; nor shall any single or partial exercise by the
Collateral Trustee of any right under this Agreement or any
other Related Document preclude any other or further
exercise thereof or the exercise of any other right. The
rights in this Agreement are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 9. Successors and Assigns. This
Agreement is for the benefit of the Collateral Trustee and
the Secured Parties and their successors and assigns, and in
the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable
to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the
Pledgor and its successors and assigns.
SECTION 10. Changes in Writing. Neither this
Agreement nor any provision hereof may be changed, amended
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<PAGE>
or waived except in accordance with Section 7.03 of the
Collateral Trust Agreement.
SECTION 11. Non-Recourse. No general or limited
partner of the Pledgor nor any of their respective agents,
officers, directors or employees as such shall be personally
liable to any Secured Party or other person for any
obligations of the Pledgor (or the Company or the
Guarantors) under this Agreement or any of the other
Financing Documents or for any claim based upon or in
respect of such obligations. In addition, the Pledgor shall
not have general liability for any such obligations,
recourse to the Pledgor in respect of all such obligations
being expressly limited to the Collateral. Nothing
contained in this Section shall limit, restrict or impair
the rights of the Collateral Trustee, the Trustee or the
Noteholders to take actions or bring suit against any person
to enforce such obligations and the remedies provided in the
Financing Documents (so long as none of the Pledgor, its
general or limited partners, nor their respective agents,
officers, directors or employees as such shall have any
personal liability thereon, satisfaction thereon being
limited to the Collateral). Each Noteholder, by accepting a
Note, irrevocably waives and releases all such liability.
The waiver and release contained herein are part of the
consideration for the granting of the Mortgage and related
security interests by the Pledgor.
SECTION 12. New Jersey Law. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW JERSEY, EXCEPT TO THE EXTENT THAT REMEDIES
PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN NEW
JERSEY ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
SECTION 13. Severability. If any provision
hereof is invalid or unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor
of the Collateral Trustee and the Secured Parties in order
to carry out the intentions of the parties hereto as nearly
as may be possible and (ii) the invalidity or
unenforceability of such provision in any such jurisdiction
shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 14. Counterparts. This Agreement may be
signed in any number of counterparts with the same effect as
if the signatures thereto and hereto were upon the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
ATLANTIC CITY BOARDWALK ASSOCIATES,
L.P.
By: _____________________________
Title:
IBJ SCHRODER BANK & TRUST COMPANY
not in its individual capacity
but solely as trustee under the
Collateral Trust Agreement referred
to above
By: ____________________________
Title:
H-11
<PAGE>
SCHEDULE I
(a) All of Atlantic City Boardwalk Associates,
L.P.'s (the "Debtor") present and future accounts, contract
rights, general intangibles, chattel paper, documents and
instruments, as such terms are defined in the Uniform
Commercial Code, including, without limitation, all accounts
receivable and other receivables of any kind, and all
obligations for the payment of money arising out of the sale
of goods, rendition of services or the lease by the Debtor
of its property ("Accounts"); (b) all of the right, title
and interest of the Debtor in and to the goods or other
property represented by or securing any of the Accounts or
described in invoices relating thereto; (c) all rights of
the Debtor as an unpaid vendor or lienor, including stoppage
in transit, replevin and reclamation; (d) all additional
amounts due to the Debtor from any person; (e) all
guaranties, mortgages on real or personal property, leases
or other agreements on property securing or relating to any
of the items referred to in subparagraph (a) above, or
acquired for the purpose of securing and enforcing any of
such items; (f) all moneys, securities and other property
and the proceeds thereof, now or hereafter held or received
by the Debtor, and all claims of the Debtor against, any
person at any time existing; (g) all deposit accounts, as
such term is defined in the Uniform Commercial Code, and all
claims with respect thereto; (h) all raw materials, work in
process, finished goods, and all other inventory of whatever
kind or nature, and all wrapping, packaging, advertising and
shipping materials, and any documents relating thereto, and
all labels, logos and other devices, names or marks affixed
or to be affixed thereto for purposes of selling or of
identifying the same or the seller or manufacturer thereto,
wherever located, whether now owned or hereafter acquired by
the Debtor; (i) all equipment, machinery, furniture,
fixtures, dies, tools, vehicles, trucks, cars, tractors,
trailers, forklifts, cranes, hoists and tangible personal
property of the Debtor, wherever located and whether now
owned or hereafter acquired by the Debtor, all substitution
and replacements therefor, and all accessions and
attachments to or relating to any of the foregoing; (j) all
of the Debtor's general intangibles of every kind and
description, and the Wraparound Mortgage Note, dated October
31, 1983, by Atlantic City Boardwalk Associates, L.P. in
favor of The Claridge at Park Place, Incorporated, as
amended, all patents, patent applications, tradenames,
copyrights and trademarks and the goodwill of the business
symbolized thereby, and Federal, State and local tax refund
H-12
<PAGE>
claims of all kinds, all whether now owned or hereafter
acquired; (k) all other personal property and other assets
of the Debtor now owned or hereafter acquired; (l) all
books, records and other property relating to or referring
to any of the foregoing, including, without limitation, all
books, records, computer programs, ledger cards and other
property and general intangibles at any time evidencing or
relating to the Accounts; and (m) all proceeds of any of the
foregoing in whatever form, including without limitation,
any claims against third parties for loss or damage to or
destruction of any or all of the foregoing and cash,
negotiable instruments and other instruments for the payment
of money, chattel paper, security agreements or other
documents.
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<PAGE>
EXHIBIT A
to
Security Agreement
PERFECTION CERTIFICATE
The undersigned, the General Partners of Atlantic
City Boardwalk Associates, L.P., a New Jersey limited
partnership (the "Pledgor"), hereby certify with reference
to the Security Agreement dated as of ________, 1994 between
the Pledgor and IBJ Schroder Bank & Trust Company, a New
York banking corporation, as Collateral Trustee (terms
defined therein being used herein as therein defined), to
the Collateral Trustee and each Secured Party as follows:
1. Names. (a) The exact name of the Pledgor as
it appears in its certificate of limited partnership is as
follows:
(b) Set forth below is each other name the
Pledgor has had since its organization, together with the
date of the relevant change:
(c) Except as set forth in Schedule 1, the
Pledgor has not changed its identity or structure in any way
within the past five years.
(d) The following is a list of all other names
(including trade names or similar appellations) used by the
Pledgor or any of its divisions or other business units at
any time during the past five years:
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<PAGE>
2. Current Locations. (a) The chief executive
office of the Pledgor is located at the following address:
Mailing Address County State
--------------- ------ -----
(b) The following are all the locations where the
Pledgor maintains any books or records relating to any
Accounts:
Mailing
Name Address County State
- ---- ------- ------ -----
(c) The following are all the places of business
of the Pledgor not identified above:
Mailing
Name Address County State
- ---- ------- ------ ------
(d) The following are all the locations where the
Pledgor maintains any Inventory not identified above:
(e) The following are the names and addresses of
all Persons other than the Pledgor which have possession of
any of the Pledgor's Inventory:
3. Prior Locations. (a) Set forth below is the
information required by subparagraphs (a), (b) and (c) of
paragraph 2 with respect to each location or place of
business maintained by the Pledgor at any time during the
past five years:
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<PAGE>
(b) Set forth below is the information required
by subparagraphs (d) and (e) of paragraph 2 with respect to
each location or bailee where or with whom Inventory has
been lodged at any time during the past four months:
4. Unusual Transactions. Except as set forth in
Schedule 4, all Accounts have been originated by the Pledgor
and all Inventory and Equipment has been acquired by the
Pledgor in the ordinary course of its business.
5. File Search Reports. Attached hereto as
Schedule 5(A) is a true copy of a file search report from
the Uniform Commercial Code filing office in each
jurisdiction identified in paragraph 2 or 3 above with
respect to each name set forth in paragraph 1 above.
Attached hereto as Schedule 5(B) is a true copy of each
financing statement or other filing identified in such file
search reports.
6. UCC Filings. A duly signed financing
statement on Form UCC-1 in substantially the form of
Schedule 6(A) hereto has been duly filed in the Uniform
Commercial Code filing office in each jurisdiction
identified in paragraph 2 hereof. Attached hereto as
Schedule 6(B) is a true copy of each such filing duly
acknowledged by the filing officer.
7. Schedule of Filings. Attached hereto as
Schedule 7 is a schedule setting forth filing information
with respect to the filings described in paragraph 6 above.
8. Filing Fees. All filing fees and taxes
payable in connection with the filings described in
paragraph 6 above have been paid.
9. Non-Recourse. No general or limited partner
of the Pledgor nor any of their respective agents, officers,
directors or employees as such shall be personally liable to
any Secured Party or other person for any obligations of the
Pledgor (or the Company or the Guarantors) under the
Financing Documents or for any claim based upon or in
respect of such obligations. In addition, the Pledgor shall
not have general liability for any such obligations,
recourse to the Pledgor in respect of all such obligations
being expressly limited to the Collateral. Nothing
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<PAGE>
contained in this Section shall limit, restrict or impair
the rights of the Collateral Trustee, the Trustee or the
Noteholders to take actions or bring suit against any person
to enforce such obligations and the remedies provided in the
Financing Documents (so long as none of the Pledgor, its
general or limited partners, nor their respective agents,
officers, directors or employees as such shall have any
personal liability thereon, satisfaction thereon being
limited to the Collateral). Each Noteholder, by accepting a
Note, irrevocably waives and releases all such liability.
The waiver and release contained in the Financing Documents
are part of the consideration for the granting of the
Mortgage and related security interests by the Pledgor.
H-A-4
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands
as of the ___ day of ____________, 1994.
________________________________
Title: General Partner
________________________________
Title: General Partner
H-A-5
<PAGE>
SCHEDULE 6(A)*
DESCRIPTION OF COLLATERAL
(a) All of Atlantic City Boardwalk Associates,
L.P.'s (the "Debtor") present and future accounts, contract
rights, general intangibles, chattel paper, documents and
instruments, as such terms are defined in the Uniform
Commercial Code, including, without limitation, all accounts
receivable and other receivables of any kind, and all
obligations for the payment of money arising out of the sale
of goods, rendition of services or the lease by the Debtor
of its property ("Accounts"); (b) all of the right, title
and interest of the Debtor in and to the goods or other
property represented by or securing any of the Accounts or
described in invoices relating thereto; (c) all rights of
the Debtor as an unpaid vendor or lienor, including stoppage
in transit, replevin and reclamation; (d) all additional
amounts due to the Debtor from any customer; irrespective of
whether such additional amounts have been specifically
assigned to First Fidelity Bank, National Association, New
Jersey (the "Secured Party"); (e) all guaranties, mortgages
on real or personal property, leases or other agreements on
property securing or relating to any of the items referred
to in subparagraph (a) above, or acquired for the purpose of
securing and enforcing any of such items; (f) all moneys,
securities and other property and the proceeds thereof, now
or hereafter held or received by, or in transit to the
Secured Party from or for the Debtor whether for
safekeeping, pledge, custody, transmission, collection or
otherwise, and all claims of the Debtor against, the Secured
Party at any time existing; (g) all deposit accounts, as
such term is defined in the Uniform Commercial Code, and all
claims with respect thereto; (h) all raw materials, work in
process, finished goods, and all other inventory of whatever
kind or nature, and all wrapping, packaging, advertising and
shipping materials, and any documents relating thereto, and
all labels, logos and other devices, names or marks affixed
or to be affixed thereto for purposes of selling or of
identifying the same or the seller or manufacturer thereto,
wherever located, whether now owned or hereafter acquired by
the Debtor; (i) all equipment, machinery, furniture,
fixtures, dies, tools, vehicles, trucks, cars, tractors,
trailers, forklifts, cranes, hoists and tangible personal
property of the Debtor, wherever located and whether now
owned or hereafter acquired by the Debtor, all substitution
and replacements therefor, and all accessions and
attachments to or relating to any of the foregoing; (j) all
<PAGE>
of the Debtor's general intangibles of every kind and
description, including, without limitation, all right, title
and interest in the Second Mortgage Note, dated October 31,
1983, by Atlantic City Boardwalk Associates, L.P. in favor
of Claridge Limited, as amended, and the Wraparound Mortgage
Note, dated October 31, 1983, by Atlantic City Boardwalk
Associates, L.P. in favor of The Claridge at Park Place,
Incorporated, as amended, all patents, patent applications,
tradenames, copyrights and trademarks and the goodwill of
the business symbolized thereby, and Federal, State and
local tax refund claims of all kinds, all whether now owned
or hereafter acquired; (k) all other personal property and
other assets of the Debtor now owned or hereafter acquired;
(l) all books, records and other property relating to or
referring to any of the foregoing, including, without
limitation, all books, records, computer programs, ledger
cards and other property and general intangibles at any time
evidencing or relating to the Accounts; and (m) all proceeds
of any of the foregoing in whatever form, including without
limitation, any claims against third parties for loss or
damage to or destruction of any or all of the foregoing and
cash, negotiable instruments and other instruments for the
payment of money, chattel paper, security agreements or
other documents.
<PAGE>
SCHEDULE 7
SCHEDULE OF FILINGS
Debtor Filing Officer File Number Date of Filing*
- ------ -------------- ----------- --------------
_______________
* Indicate lapse date, if other than fifth anniversary.
<PAGE>
<PAGE>
EXHIBIT I
to Collateral Trust Agreement
PARTNERSHIP CASH COLLATERAL PLEDGE AGREEMENT
AGREEMENT (this "Agreement") dated as of ______
__, 1994 between Atlantic City Boardwalk Associates, L.P., a
New Jersey limited partnership (with its successors, the
"Pledgor"), and IBJ Schroder Bank & Trust Company, as
trustee under the Collateral Trust Agreement referred to
therein (the "Collateral Trustee").
W I T N E S S E T H :
WHEREAS, simultaneously with the execution and
delivery of the Collateral Trust Agreement dated as of the
date hereof, The Claridge Hotel & Casino Corporation (the
"Company") is entering into an indenture (the "Indenture")
among the Company, as issuer, The Claridge at Park Place,
Incorporated ("CPPI"), as guarantor, and IBJ Schroder Bank &
Trust Company, as trustee, pursuant to which the Company
will issue its First Mortgage Notes Due 2002 (the "Notes");
and
WHEREAS, in order to secure its obligations under
the Indenture and all other Secured Obligations (as defined
herein), the Pledgor has agreed to grant to the Collateral
Trustee a continuing security interest in and to the
Collateral (as defined herein);
NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
SECTION 1. Definitions. Terms used herein and
not otherwise defined herein have the respective meanings
given to such terms in the Collateral Trust Agreement, or if
not defined therein, in the Indenture. The following
additional terms, as used herein, have the following
respective meanings:
"Agreement" means this Partnership Cash Collateral
Pledge Agreement dated as of the date hereof, as the same
may be amended or otherwise modified from time to time.
<PAGE>
"Asset Sale Account" has the meaning assigned to
such term in Section 2.
"Collateral" has the meaning assigned to such term
in Section 2.
"Cash Collateral Investments" has the meaning
assigned to such term in Section 4.
"Collateral Trust Agreement" means the Collateral
Trust Agreement dated as of the date hereof, among the
Pledgor, CPPI, the Company and the Collateral Trustee, as
the same may be amended or otherwise modified from time to
time.
"Lease Account" has the meaning assigned to such
term in Section 2.
"Partnership Cash Collateral Account" has the
meaning assigned to such term in Section 2.
"Secured Obligations" means (i) the Note
Obligations (as defined in the Collateral Trust Agreement)
and (ii) all sums payable by the Pledgor under the Related
Documents.
"Security Interests" means the security interests
in the Cash Collateral granted by the Pledgor to the
Collateral Trustee hereunder securing the Secured
Obligations.
Unless otherwise defined herein, or unless the
context otherwise requires, all terms used herein which are
defined in the Uniform Commercial Code as in effect from
time to time in the State of New York shall have the
meanings therein stated.
SECTION 2. Grant of Security Interest. In order
to secure the due and punctual payment, performance and
observance of the Secured Obligations, the Pledgor hereby
assigns, transfers and pledges to the Collateral Trustee,
and grants to the Collateral Trustee a continuing security
interest in, right of setoff against, and lien upon, all
right, title and interest of the Pledgor in and to the
following property whether presently existing or hereafter
arising or acquired (the "Collateral"):
(i) the deposit account, account number ________
(the "Lease Account"), the deposit account, account
number ________ ("the "Asset Sale Account") and any
other deposit account now or hereafter maintained by
I-2
<PAGE>
the Pledgor (collectively, the "Partnership Cash
Collateral Account"), all cash deposited therein and
all certificates and instruments, if any, from time to
time representing or evidencing the Partnership Cash
Collateral Account and all benefits, claims, demands
and choses in action of the Pledgor arising thereunder;
(ii) all Cash Collateral Investments (as
hereinafter defined) from time to time made and all
certificates and instruments, if any, from time to time
representing or evidencing such Cash Collateral
Investments;
(iii) all interest, dividends, cash, instruments,
and other property and income from time to time
received, receivable or otherwise distributed in
respect of or in exchange for any or all of the
Partnership Cash Collateral Account and Cash Collateral
Investments; and
(iv) all Net Proceeds as defined in the Indenture
in respect of any Asset Sale (including any insurance
and condemnation proceeds) which are to be required to
be placed in the Partnership Cash Collateral Account
pursuant to Section 3 hereby.
(iv) to the extent not covered by clauses (i)
through (iii) above, all proceeds of any or all of the
foregoing (whether the same arise or are acquired
before or after the commencement of a case under Title
11 of the United States Code as amended from time to
time or any similar law of any state or foreign
country, or political subdivision thereof in which the
Pledgor in a debtor.)
SECTION 3. The Partnership Cash Collateral
Account. (a) The Pledgor agrees that the Partnership Cash
Collateral Account shall at all times be maintained with the
Collateral Trustee or any other bank, trust company or
financial institution that has combined capital and surplus
of not less than $100,000,000 reasonably acceptable to the
Trustee (a "Permitted Depositary") and shall be designated a
"cash collateral account" or shall have such other
designation as the Collateral Trustee deems sufficient or
appropriate to evidence the pledge created hereby and to
enable the Collateral Trustee to pursue the remedies
purported to be granted to it hereunder and under the
Collateral Trust Agreement. The Pledgor agrees to deposit
from time to time immediately upon receipt thereof (i) into
the Lease Account, all payments received from CPPI in
respect of the Claridge Lease and (ii) into the Asset Sale
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<PAGE>
Account, receipts in respect of any Asset Sale that exceed
$1 million. Any income with respect to the balance from
time to time standing to the credit of the Partnership Cash
Collateral Account, including any interest or capital gains
on Cash Collateral Investments, shall remain, or be
deposited, in the applicable Partnership Cash Collateral
Account. All right, title and interest in and to the cash
amounts on deposit from time to time in the Partnership Cash
Collateral Account together with any Cash Collateral
Investments from time to time made therein shall constitute
part of the Collateral hereunder and shall not constitute
payment of the Secured Obligations until applied thereto as
hereinafter provided.
(b) The Pledger hereby irrevocably constitutes
and appoints any one or more officers of the Collateral
Trustee, acting individually or in any combination, the true
and lawful agent and attorney-in-fact of the Pledgor with
full power of substitution, with, from and after the
occurrence of a Notice of Acceleration and so long as any
Notice of Acceleration is continuing, the sole and exclusive
right as sole signatory for the Partnership Cash Collateral
Account to (i) ask, demand, collect, receive, receipt for,
sue for, compromise and give acquittance for any and all
amounts which may be or become due or payable under the
Partnership Cash Collateral Account, (ii) execute any and
all checks, withdrawal receipts or other orders for the
payment of money drawn on the Partnership Cash Collateral
Account and to endorse the name of the Pledgor on all
commercial paper given in payment or in part payment
thereof, and (iii) in the Collateral Trustee's discretion,
to file any claim or take any other action or institute any
proceeding, either in its own name or in the name of the
Pledgor or otherwise, which such agent and attorney may deem
necessary or appropriate to protect and preserve the right,
title and interest of the Collateral Trustee hereunder and,
without limiting the foregoing, such agent and attorney
shall have and is hereby given full power and authority,
from and after the occurrence of a Notice of Acceleration
and so long as any Notice of Acceleration is continuing, to
transfer the Partnership Cash Collateral Account into the
name of the Collateral Trustee or its nominee.
(c) The Pledgor agrees that the amounts referred
to in (a) above shall as promptly as possible be deposited
by the Pledgor into the Partnership Cash Collateral Account.
Until so deposited, all such proceeds shall be held in trust
by the Pledgor for and as the property of the Collateral
Trustee and the Secured Parties and shall not be commingled
with any other funds or property of the Pledgor.
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<PAGE>
(d) The balance from time to time standing to the
credit of the Partnership Cash Collateral Account shall, if
and so long as no Notice of Acceleration is in effect, be
invested and reinvested in accordance with this Agreement at
the sole direction of the Pledgor. The Pledgor shall have
the right, if and so long as no Notice of Acceleration is in
effect, to withdraw the balance from time to time standing
to the credit of the Lease Account for any bona fide
obligation of the Pledgor incurred or assumed without
intention to hinder, delay or defraud the Secured Parties
(and which does not have such effect), including without
limitation, any lawful distribution to the partners of the
Pledgor, without the need for any consent or release by the
Collateral Trustee or any other Secured Party. If and so
long as no Notice of Acceleration is in effect, the balance
from time to time standing to the credit of the Asset Sale
Account shall not be withdrawn except for application in
accordance with the terms of the Mortgage and the Indenture
(including for application to an Asset Sale Offer), and the
Pledgor shall be required to obtain the consent of the
Collateral Trustee to any such release. If and so long as a
Notice of Acceleration is in effect, the Collateral Trustee
may assume sole control over the Partnership Cash Collateral
Account. If a Notice of Acceleration shall be in effect,
the Collateral Trustee shall, if so instructed by the
Required Secured Parties, apply or cause to be applied
(subject to collection) any or all of the balance from time
to time standing to the credit of the Partnership Cash
Collateral Account in the manner specified in the Collateral
Trust Agreement.
SECTION 4. Investments of Funds Deposited in
Partnership Cash Collateral Accounts. (a) Amounts on
deposit in the Partnership Cash Collateral Account and all
interest and income on and the proceeds from investment
thereof shall not be invested or reinvested by the Pledgor
or the Collateral Trustee, other than in:
(A) marketable obligations of the United States
having a maturity of not more than one (1) year from
the date of acquisition;
(B) marketable obligations directly and fully
guaranteed by the United States having a maturity of
not more than one (1) year from the date of
acquisition;
(C) bankers' acceptances and certificates of
deposit and other interest-bearing obligations issued
by any commercial bank organized under the laws of the
United States or any political subdivision thereof with
I-5
<PAGE>
capital, surplus and undivided profits aggregating at
least $1,000,000,000 (all of the foregoing being
hereinafter referred to as the "Cash Collateral
Investments");
provided, however, that in order to provide the Collateral
Trustee with a perfected security interest therein, each
such investment shall be either (i) evidenced by negotiable
certificates or instruments, or if non-negotiable or
represented only by a confirmation, then issued in the name
of the Pledgor, a Permitted Depositary or the Collateral
Trustee which (together with any appropriate instruments of
transfer in blank) are delivered to, and held by, the
Collateral Trustee or the Permitted Depositary as agent for
the Collateral Trustee; or (ii) in book-entry form and
issued by the United States and subject to pledge under
applicable state law and Treasury regulations and in which
(in the written opinion of counsel to the Collateral
Trustee) the Collateral Trustee shall have a perfected
security interest.
(b) Except during the continuance of a Notice of
Acceleration, the Pledgor shall control the investment and
reinvestment of the funds in the Partnership Cash Collateral
Account in accordance with the provisions of Section 4(a)
hereof. During the continuance of a Notice of Acceleration,
the Collateral Trustee shall invest and reinvest all funds
in the Partnership Cash Collateral Account in the Cash
Collateral Investments specified in Section 4(a)(A) hereof.
SECTION 5. Representations, Warranties and
Covenants. The Pledgor represents, warrants and covenants
as follows:
(a) Upon deposit of the cash required to be
pledged hereunder, the Collateral Trustee will have a
valid lien on, assignment of, and security interest in,
such Cash Collateral under all applicable state and
federal laws and regulations. No registration,
recordation or filing with any governmental body or
agency is required for the Collateral Trustee's
security interest in the Cash Collateral. The Pledgor
has not performed any acts which might prevent the
Collateral Trustee from enforcing any of the terms and
conditions of the pledge of Cash Collateral as set
forth in this Pledge Agreement or the Loan Agreement or
which would limit the Collateral Trustee in any
enforcement.
(b) The offices of the Pledgor are located at the
address set forth on the signature page hereto and the
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<PAGE>
Pledgor will not change same, without prior written
notice to and consent of the Collateral Trustee.
(c) The Cash Collateral is now, and at all times
will be, owned by the Pledgor free and clear of all
liens, security interests, claims and encumbrances
(including any right of setoff), except in favor of the
Collateral Trustee and the Pledgor will not suffer or
permit any of the same to occur with respect to any
Cash Collateral.
(d) The Pledgor has made, and will continue to
make, payment or deposit, or otherwise has provided and
will provide for the payment, when due, of all taxes,
assessments or contributions or other public or private
charges which have been or may be levied or assessed
against the Pledgor, with respect to any Cash
Collateral, and will deliver to the Collateral Trustee,
on demand, certificates or other evidence satisfactory
to the Collateral Trustee attesting thereto.
(e) The Pledgor will pay the Collateral Trustee
for any reasonable sums, costs and expenses which the
Collateral Trustee may pay or incur after a Notice of
Acceleration pursuant to the provisions of this
Agreement or in enforcing this Agreement or the
security interest granted herein or in enforcing
payment of the Secured Obligations or otherwise in
connection with the provisions hereof, including but
not limited to court costs, collection charges, travel
expenses and reasonable attorney's fees, all of which
shall be part of the Secured Obligations and shall be
payable, together with interest on demand.
SECTION 6. Filing; Further Assurances. The
Pledgor will, at its expense and in such manner and form as
the Collateral Trustee may require, execute, deliver, file
and record any financing statement, specific assignment or
other paper and take any other action that may be necessary
or desirable, or that the Collateral Trustee may reasonably
request, in order to create, preserve, perfect or validate
any Security Interest or to enable the Collateral Trustee to
exercise and enforce its rights hereunder with respect to
any of the Cash Collateral. To the extent permitted by
applicable law, the Pledgor hereby authorizes the Collateral
Trustee to execute and file, in the name of the Pledgor or
otherwise, Uniform Commercial Code financing statements
(which may be carbon, photographic, photostatic, or other
reproductions of this Agreement or of a financing statement
relating to this Agreement) which the Collateral Trustee in
I-7
<PAGE>
its sole discretion may deem necessary or appropriate to
further perfect the Security Interests.
SECTION 7. Record Ownership of Cash Collateral
Investments. (a) So long as no Notice of Acceleration is in
effect, all of the Cash Collateral Investments in the Lease
Account may be registered in the Pledgor's name on the books
of the applicable issuer, clearing corporation, financial
intermediary, custodian, nominee or bailee; provided,
however, that to the extent practicable the interest of the
Collateral Trustee shall be recorded or notated thereon.
The Pledgor will promptly give to the Collateral Trustee
copies of any notices and communications received by the
Pledgor with respect to the Cash Collateral Investments in
the Lease Account.
(b) All of the Cash Collateral Investments in the
Asset Sale Account and, so long as a Notice of Acceleration
is in effect, all of the Cash Collateral Investments in the
Lease Account, shall be registered in the Collateral
Trustee's name on the books of the applicable issuer,
clearing corporation, financial intermediary, custodian,
nominee or bailee. The Collateral Trustee will promptly
give to the Pledgor copies of any notices and communications
received by the Collateral Trustee with respect to the Cash
Collateral Investments in the Asset Sale Account.
SECTION 8. Right to Receive Distributions on
Cash Collateral. Unless a Notice of Acceleration shall be
in effect, the Pledgor shall have the right to receive and
retain all dividends, interest and other payments and
distributions made upon or with respect to the Collateral.
While a Notice of Acceleration is in effect, the
Collateral Trustee shall have the right to receive and to
retain as Collateral hereunder all dividends, interest and
other payments and distributions made upon or with respect
to the Collateral, and the Pledgor shall take all such
action as the Collateral Trustee may deem necessary or
appropriate to give effect to such right. All such
dividends, interest and other payments and distributions
which are received by the Pledgor while a Notice of
Acceleration is in effect shall be received in trust for the
benefit of the Collateral Trustee and, if the Collateral
Trustee so directs, shall forthwith be segregated from other
funds of the Pledgor and paid over to the Collateral Trustee
as Collateral in the same form as received (with any
necessary endorsement).
SECTION 9. Remedies Upon a Notice of
Acceleration. If a Notice of Acceleration shall be in
I-8
<PAGE>
effect, the Collateral Trustee may exercise on behalf of the
Secured Parties the rights set forth in Article Three of the
Collateral Trust Agreement.
SECTION 10. Release of Cash Collateral;
Termination of Security Interest. Cash Collateral may be
released from the Security Interests created hereunder from
time to time pursuant to Section 3(d) hereof or Section 5.02
of the Collateral Trust Agreement. The Security Interests
shall terminate and all rights to the Cash Collateral shall
revert to the Pledgor in accordance with Section 7.09 of the
Collateral Trust Agreement.
SECTION 11. Waivers; Nonexclusive Remedies. No
failure on the part of the Collateral Trustee to exercise,
and no delay in exercising and no course of dealing with
respect to, any right under this Agreement or any other
Related Document shall operate as a waiver hereof or
thereof; nor shall any single or partial exercise by the
Collateral Trustee of any right under this Agreement or any
other Related Document preclude any other or further
exercise thereof or the exercise of any other right. The
rights in this Agreement are cumulative and are not
exclusive of any other remedies provided by law.
SECTION 12. Duties of the Collateral Trustee
Regarding Certain Events. The Collateral Trustee shall have
no duty as to the collection or protection of the Collateral
or any income thereon or as to the preservation of any
rights pertaining thereto, beyond the safe custody of any
thereof actually in its possession.
Except as set forth above, the Collateral Trustee
shall not be deemed to assume any such further obligation
with respect to any Collateral in its possession, and each
Pledgor releases the Collateral Trustee from any claims,
causes of action and demands at any time arising out of or
with respect to this Agreement or the Cash Collateral Pledge
Agreements, the Collateral and/or any actions, taken or
omitted to be taken by the Collateral Trustee with respect
thereto, and each Pledgor hereby agrees to hold the
Collateral Trustee harmless from and with respect to any and
all such claims, causes of action and demands other than
those relating to the gross negligence or willful misconduct
of the Collateral Trustee.
SECTION 13. Collateral Trustee May Perform. If
the Pledgor fails to perform any obligation it may have
hereunder, the Collateral Trustee may itself perform or
cause to be performed such obligation and the expenses of
I-9
<PAGE>
the Collateral Trustee incurred therewith shall be payable
by the Pledgor in accordance with Section 5(f) hereof.
SECTION 14. Successors and Assigns. This
Agreement is for the benefit of the Collateral Trustee and
the Secured Parties and their successors and assigns, and in
the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable
to the indebtedness so assigned, may be transferred with
such indebtedness. This Agreement shall be binding on the
Pledgor and its successors and assigns.
SECTION 15. Notices. All notices,
communications and distributions hereunder shall be given in
accordance with Section 7.01 of the Collateral Trustee
Agreement.
SECTION 16. Changes in Writing. Neither this
Agreement nor any provision hereof may be changed, amended
or waived except in accordance with Section 7.03 of the
Collateral Trust Agreement.
SECTION 17. Non-Recourse. No general or
limited partner of the Pledgor nor any of their respective
agents, officers, directors or employees as such shall be
personally liable to any Secured Party or other person for
any obligations of the Pledgor (or the Company or the
Guarantors) under this Agreement or any of the other
Financing Documents or for any claim based upon or in
respect of such obligations. In addition, the Pledgor shall
not have general liability for any such obligations,
recourse to the Pledgor in respect of all such obligations
being expressly limited to the Collateral. Nothing
contained in this Section shall limit, restrict or impair
the rights of the Collateral Trustee, the Trustee or the
Noteholders to take actions or bring suit against any person
to enforce such obligations and the remedies provided in the
Financing Documents (so long as none of the Pledgor, its
general or limited partners, nor their respective agents,
officers, directors or employees as such shall have any
personal liability thereon, satisfaction thereon being
limited to the Collateral). Each Noteholder, by accepting a
Note, irrevocably waives and releases all such liability.
The waiver and release contained herein are part of the
consideration for the granting of the Mortgage and related
security interests by the Pledgor.
SECTION 18. NEW JERSEY LAW. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW JERSEY, EXCEPT TO THE EXTENT THAT
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<PAGE>
REMEDIES PROVIDED BY THE LAWS OF ANY JURISDICTION OTHER THAN
NEW JERSEY ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
SECTION 19. Severability. If any provision
hereof is invalid or unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor
of the Collateral Trustee and the Secured Parties in order
to carry out the intentions of the parties hereto as nearly
as may be possible, and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such
provision in any other jurisdiction.
SECTION 20. Counterparts. This Agreement may be
signed in any number of counterparts with the same effect as
if the signatures thereto and hereto were upon the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Collateral
Trustee have caused this Agreement to be duly executed by
their respective officers duly authorized as of the day and
year first above written.
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
By: ___________________________
Name:
General Partner
Address: Las Vegas
IBJ SCHRODER BANK & TRUST COMPANY
By: __________________________
Name:
Title:
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<PAGE>
<PAGE>
EXHIBIT J
to
Collateral Trust Agreement
This instrument was prepared by the
attorney described below and, when
recorded, the recorded counterparts
should be returned to:
James P. McIntyre, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
By:_______________________
James P. McIntyre, Esq.
COLLATERAL ASSIGNMENT OF LESSOR'S
INTEREST IN OPERATING LEASES
THIS COLLATERAL ASSIGNMENT OF LESSOR'S INTEREST IN
OPERATING LEASES (this "Assignment") is made this ___ day of
January, 1994, by ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.,
a limited partnership organized under the laws of New
Jersey, having an office at Indiana Avenue and the
Boardwalk, Atlantic City, New Jersey ("Assignor") in favor
of IBJ SCHRODER BANK & TRUST COMPANY, a banking corporation
organized under the laws of the State of New York, as
Collateral Trustee under the Collateral Trust Agreement
(hereinafter defined), having an address at 1 State Street,
11th Floor, New York, New York 10004 ("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor is the present owner of a fee
simple estate in (i) certain property located, situate,
lying and being in the City and County of Atlantic and the
State of New Jersey, and more particularly described on
Schedule A annexed hereto (the "Land"), (ii) certain air
space located, situate, lying and being in the City and
County of Atlantic and the State of New Jersey, and more
fully described in Tract IV of Schedule A annexed hereto
(the "Air Space"), and (iii) certain buildings, structures,
improvements, equipment, furniture, fittings and fixtures
affixed or attached to, installed or placed in or upon the
Land or the Air Space (the "Hotel Assets", together with the
Land and the Air Space, the "Property"), and more
particularly described in that certain Operating Lease
<PAGE>
Agreement dated October 31, 1983 between Assignor, as
lessor, and The Claridge at Park Place, Incorporated
("CPPI"), as lessee, and that certain Expansion Operating
Lease Agreement dated March 17, 1986 between Assignor and
CPPI, each as amended by (i) Amendment to Operating Lease
Agreement and Expansion Operating Lease Agreement dated June
15, 1989 between Assignor and CPPI, (ii) Second Amendment to
Operating Lease Agreement and Expansion Operating Lease
Agreement dated March 27, 1990, between Assignor and CPPI,
and (iii) Third Amendment to Operating Lease Agreement and
Expansion Operating Lease Agreement dated August 1, 1991,
between Assignor and CPPI (collectively, as amended,
modified or supplemented from time to time in accordance
with their respective terms, the "Operating Leases"); and
WHEREAS, pursuant to the terms of the Operating
Leases, Assignor has leased the Property to CPPI; and
WHEREAS, CPPI and The Claridge Hotel and Casino
Corporation (the "Company") have entered into an indenture
dated as of the date hereof with Assignee (as amended,
modified or supplemented from time to time in accordance
with its terms, the "Indenture"); and
WHEREAS, CPPI, the Company and Assignor have
entered into a collateral trust agreement dated as of the
date hereof with Assignee (as amended, modified or
supplemented from time to time in accordance with its terms,
the "Collateral Trust Agreement"); and
WHEREAS, the issuance of the notes (together with
any replacements, modifications or substitutions thereof,
the "Notes") by Assignee under the Indenture is expressly
conditioned on the execution and delivery by the undersigned
of this Assignment; and
WHEREAS, to secure all of the present and future
obligations of CPPI, the Company and Assignor to Assignee
under the Indenture, the Notes, the Collateral Trust
Agreement and the mortgage dated as of the date hereof
between Assignor and Assignee (as modified, amended or
supplemented from time to time in accordance with its terms,
the "Mortgage") and all other agreements, documents and
instruments delivered in connection with the Indenture (as
modified, amended or supplemented from time to time in
accordance with their respective terms, collectively, the
"Financing Documents"), Assignor has agreed to execute and
deliver this Assignment covering all of its interest as
landlord in the Operating Leases.
2
<PAGE>
NOW, THEREFORE, THESE PRESENTS WITNESSETH, that in
consideration of the foregoing and the sum of One and 00/100
($1.00) Dollar and other good and valuable consideration by
Assignee to Assignor, the receipt whereof is hereby
acknowledged, Assignor does hereby SELL, ASSIGN, TRANSFER,
SET OVER, GRANT AND DELIVER unto Assignee, its successors
and assigns, all of Assignor's right, title and interest in,
to and under: the Operating Leases and all other leases and
subleases, written or oral, licenses, franchises,
concessions and all other agreements, now or hereinafter in
effect and whether or not of record, for use or occupancy of
all or any part of the Property.
TOGETHER WITH any and all extensions and renewals
of any thereof and all of Assignor's right, title and
interest in, to and under: any and all further leases and
subleases, lettings, sublettings, or agreements (including
subleases thereof and tenancies following attornment) upon
or covering the use or occupancy of all or any part of the
Property (the Operating Leases and all other leases,
subleases, licenses, franchises, concessions, tenancies and
other agreements heretofore mentioned are hereafter
collectively called the "Leases");
TOGETHER WITH all of Assignor's right, title and
interest in, to and under: any and all guarantees of any of
the obligations of tenants, subtenants, licensees,
franchisees, concessionaires and other occupants thereunder
(the foregoing being collectively called "Tenants") under
any of the Leases and all security given for such Tenant's
performance under any of the Leases subject to the rights
and interests of the party or parties giving such security
with respect thereto, if any; and
TOGETHER WITH the immediate and continuing right
to collect and receive all of the rents, royalties, income,
receipts, revenues, issues, profits and other benefits now
due or which may become due or to which Assignor may now or
shall hereafter (including during the period of redemption,
if any) become entitled or may demand or claim, arising or
issuing from or out of the Leases or from or out of the
Property, including, but not limited to: (a) minimum rents,
additional rents, percentage rents, parking, maintenance,
tax and insurance contributions, construction contributions
and/or reimbursements, deficiency rents and liquidated
damages following default, premiums payable by any Tenant
upon the exercise of a cancellation privilege originally
provided in any Lease, all income from any licenses,
franchise or any other agreements and all proceeds payable
under any condemnation awards or settlements, policies of
insurance or settlement thereof covering loss of rents
3
<PAGE>
resulting from untenantability cause by destruction or
damage to the Property together with any and all rights and
claims of any kind which Assignor may have against any
Tenant (sometimes hereafter collectively referred to as
"Rents"), and (b) any abatement, rebate, refund or return,
whether now or hereafter payable, of the whole or any part
of any tax, assessment or other charge levied or assessed
upon the whole or any part of the Property whether
heretofore or hereafter levied or assessed or that has been
or hereafter is paid (sometimes hereafter referred to as
"Abatements").
TO HAVE AND TO HOLD the same unto Assignee, its
successors and assigns forever, or for such shorter period
as hereafter may be indicated, subject to a revocable
license to Assignor as more particularly set forth herein.
FOR THE PURPOSE OF SECURING the payment and
performance of the Secured Obligations (as defined in the
Mortgage).
Subject to the provisions contained in the
Financing Documents, during the existence of a Notice of
Acceleration Assignor irrevocably constitutes and appoints
Assignee as its lawful attorney, coupled with any interest,
in its name and stead to collect any and all Rents and
Abatements. At the request of Assignee, Assignor shall
promptly execute, acknowledge, deliver, record, register and
file any specific assignment of Lease in addition to this
Assignment which Assignee reasonably may require from time
to time (all in form and substance reasonably satisfactory
to Assignee) to effectuate, complete, perfect, continue or
preserve the assignments of the Operating Leases or the
other Leases and the Rents and Abatements. If a Notice of
Acceleration shall be in effect, Assignor shall have a
license granted hereby to collect and receive all Rents and
Abatements and apply the same subject to the provisions of
the Financing Documents. This license shall terminate, at
the option of Assignee, upon the effectiveness of a Notice
of Acceleration. If a Notice of Acceleration shall be in
effect, Assignee shall have the right to terminate the
license granted hereunder, upon notice to Assignor, and to
exercise the following rights and remedies in addition to
any other rights or remedies available to Assignee under
applicable law: (a) to collect any and all of the Rents and
Abatements; (b) to use such measure, legal or equitable, as
in its discretion may be deemed necessary or appropriate to
enforce the payment of the Rents and Abatements and any
security given in connection therewith; (c) to secure and
maintain the use and possession of the Property or any part
thereof; (d) to fill any and all vacancies and to rent,
4
<PAGE>
lease and let the Property or any part thereof at its
discretion; (e) to adjust, settle or otherwise deal with any
Rents and Abatements and to execute or render any and all
instruments deemed by Assignee to be necessary or
appropriate in connection therewith; and (f) to subordinate
any Lease, at any time and from time to time to the
Mortgage, request or require such subordination, where such
reservation, option or authority was reserved to Assignor
under any Lease, or in any case, where Assignor otherwise
would have the right, power or privilege to do so. If a
Notice of Acceleration shall be in effect, upon demand by
Assignee, Assignor shall promptly pay to Assignee all Rents
and Abatements and, to the extent permitted by law, any
security given in connection therewith allocable to any
period after a Notice of Acceleration shall be in effect.
Subject to any requirement of law, any Rents or Abatements
received hereunder by Assignee shall be deposited in the
Partnership Collateral Account, to be held, applied and
disbursed as provided in the Collateral Trust Agreement,
provided that, subject to any applicable requirement of law,
any security deposits actually received by Assignee shall be
held, applied and disbursed as provided in the applicable
Leases and applicable law. The foregoing appointment shall
be irrevocable, coupled with an interest and continuing and
the rights, powers and privileges shall be exclusive in
Assignee so long as any part of the Secured Obligations
shall remain unpaid.
TO PROTECT THE SECURITY OF THIS ASSIGNMENT, IT IS
COVENANTED AND AGREED THAT:
SECTION 1. Definitions. Capitalized terms used
herein and not otherwise defined shall have the meanings
given such terms in, or by reference to, the Mortgage.
SECTION 2. Assignor's Warranties. Assignor
represents and warrants to Assignee that (a) Assignor has
good title to the Operating Leases, the Leases and Rents
hereby assigned and good right to assign the same; (b) no
other Person has any right, title or interest in Assignor's
right, title and interest therein, except pursuant to the
Wraparound Mortgage; (c) there are no existing leases on the
Property to which Assignor is a party other than the
Operating Leases and to the best of Assignor's knowledge,
CPPI has provided Assignee with complete and correct copies
of same; (d) the Leases are in full force and effect and
there are no renewals, extensions, modifications, amendments
or assignments to any of the Leases; (e) the Rents and
Abatements from the Property whether now due or hereafter to
become due are not currently sold, assigned, transferred,
mortgaged or pledged, except pursuant to the Wraparound
5
<PAGE>
Mortgage; and (f) any of the Rents and Abatements due and
issuing from the Property for any period subsequent to the
date hereof have not been collected and, except as
explicitly set forth in the Operating Leases with respect to
rent abatements and deferrals, payment of any of the same
has not otherwise been anticipated, waived, released,
discounted, set off or otherwise discharged or compromised.
SECTION 3. Assignor's Covenants. Assignor shall
(a) observe, perform and discharge, duly and punctually, all
of the obligations, terms, covenants, conditions and
warranties of the Operating Leases and the Leases on the
part of Assignor to be kept, observed and performed, and
give prompt notice to Assignee of any failure on the part of
Assignor to observe, perform and discharge same; (b) notify
and direct in writing each and every present or future
Tenant that any security deposit or other deposits (other
than payments of rent less than one month in advance
collected by Assignor at the start of the term of the Lease
or at the execution of the Lease) delivered to Assignor have
been retained by Assignor or assigned and delivered to
Assignee, as the case may be; (c) subject to receipt of
Assignee's consent as required pursuant to the terms of
Section 4 hereof, enforce or secure the performance of each
and every obligation, term, covenant, condition and
agreement in the Operating Leases or the Leases by any
Tenant (or any guarantor under any guaranty of any Lease) to
be performed; and (d) appear in and defend any action or
proceeding arising under, occurring out of, or in any manner
connected with the Operating Leases or the Leases or the
obligations, duties, or liabilities of Assignor or any
Tenant thereunder, and, upon request by Assignee, to do so
in the name and behalf of Assignee but at the expense of
Assignor, and to pay all reasonable costs and expenses of
Assignee, including reasonable attorney's fees, in any
action or proceeding in which Assignee is required to
appear.
SECTION 4. Assignor's Additional Covenants. (a)
Assignor further covenants and agrees that: (i) except as
permitted by the Wraparound Mortgage, Assignor shall not
pledge, transfer, mortgage or otherwise encumber or assign
future payments of Rents except to Assignee as Mortgagee
under the Mortgage; and (ii) without the consent of Assignee
as Mortgagee, unless otherwise expressly provided in the
Financing Documents, Assignor shall not (A) waive, excuse,
condone, discount, set-off, compromise, or in any manner
release or discharge any Tenant thereunder (or any guarantor
under any guaranty of any Lease), of and from any
obligations, covenants, conditions and agreements by said
Tenant (or guarantor) to be kept, observed and performed,
6
<PAGE>
including the obligation to pay any Rent thereunder, in the
manner and at the time specified therein; (B) cancel,
terminate or consent to any surrender of the Operating
Leases or any other Lease unless such right was originally
so reserved by Tenant in said Lease; (C) commence an action
of ejectment or any summary proceedings for dispossession of
the Tenant under the Operating Leases or any other Lease;
(D) exercise any right of recapture provided in the
Operating Leases or any other Lease, nor modify, or in any
way alter the terms of any Lease in a manner which would
reduce the rental, shorten the term, impose additional
obligations on Assignor thereunder or reduce a material
obligation of the Tenant thereunder; (E) lease any part of
the Property or renew or extend the term of any Lease unless
an option therefor was originally so reserved by the Tenant
in said Lease; (F) consent to any modification of the
express purposes for which any Tenant's premises have been
leased; and (G) except as expressly permitted by the
Operating Leases, consent to any subletting of any part of
the Property, or to any assignment of the Operating Leases
or any other Lease by any Tenant thereunder or to any
assignment or further subletting of any sublease (unless
such right was originally so reserved by Tenant in said
Lease) without the consent of Assignee, not to be
unreasonably withheld if any profit derived by the Tenant
thereunder from any such subletting or assignment shall be
paid over to Assignee.
(b) Assignor further covenants and agrees that:
all leases entered into by Assignor after the date hereof
shall be subjected to the Lien of this Assignment
immediately upon the execution thereof by Assignor and
shall, without further assignment, become subject to the
Lien of this Assignment as fully as though now leased by
Assignor. Nevertheless, Assignor will do all such further
acts and execute, acknowledge, deliver, record and file
mortgage supplements in a form reasonably satisfactory to
the parties hereto, and all such further assignements and
assurances as Assignee may reasonably deem necessary or
desirable effectively to subject such leases to the Lien of
this Assignment.
SECTION 5. Notice of Acceleration; Assignee's
Rights. So long as a Notice of Acceleration is in effect,
Assignee shall have the complete right, power and authority
hereunder to exercise and enforce any or all of the
following remedies: (i) in accordance with the Financing
Documents, to declare all sums secured hereby immediately
due and payable and, at its option, exercise all of the
rights and remedies contained in any of the Financing
Documents; and (ii) subject to the rights of the Tenant
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<PAGE>
under the Operating Leases, without regard to the adequacy
of the security, upon notice to Assignor, to apply for a
receiver to be appointed by a court to enter upon, take
possession of or manage, operate and repair the Property and
to make, modify, enforce, cancel or accept surrender of the
Operating Leases or any Lease now in effect or then in
effect; remove and evict any Tenant; increase or decrease
rents; decorate, clean and repair; and otherwise do any act
or incur any costs or expense as Assignee shall deem proper
to protect the security as fully and to the same extent as
Assignor could do if in possession, and in such event to
apply the Rents so collected to the costs of operation,
management and repair of the Property, but in such order as
Assignee shall deem proper, and including the payment of the
Secured Obligations; and (iii) to the extent permitted by
law, upon the demand of Assignee, Assignor shall turn over
the security deposits, if any, to Assignee or a receiver
appointed by a court;
Provided, however, that the acceptance by Assignee
of this Assignment, with all of the rights, powers,
privileges and authority so created, shall not, prior to
entry upon and taking of possession of the Property by
Assignee, be deemed or construed to constitute Assignee in
possession nor thereafter or at any time or in any event
obligate Assignee to appear in or defend any action or
proceeding relating to the Operating Leases or the Leases or
to the Property, or to take any action hereunder, or to
expend any money or incur any expenses or perform or
discharge any obligation, duty or liability under the
Operating Leases or the Leases; nor shall Assignee be deemed
to have assumed any obligation or responsibility for any
security deposits or other deposits delivered to Assignor by
any Tenant unless the same shall actually be received by
Assignee; nor shall Assignee be liable in any way for any
injury or damage to any Person or property sustained in or
about the Property, unless caused by the gross negligence or
willful misconduct of Assignee or its agents, contractors or
employees;
And provided further that the collection of the
Rents and application as aforesaid and the entry upon and
taking possession of the Property shall not cure or waive
any default or waive, modify or affect any notice of default
under any of the Financing Documents or invalidate any act
done pursuant to such notice, and the enforcement of any
such right or remedy by Assignee, once exercised, shall
continue for so long as Assignee shall elect,
notwithstanding that the collection and application
aforesaid of such Rents may have cured for the time the
original default. If Assignee shall thereafter elect to
8
<PAGE>
discontinue the exercise of any such right or remedy, the
same or any other right or remedy hereunder may be
reasserted at any time and from time to time following the
occurrence of any subsequent Event of Default. A demand on
any Tenant made by Assignee for payment of Rents by reason
of any default claimed by Assignee shall be sufficient
warrant to said Tenant to make future payments of Rents to
Assignee without the necessity for further consent by
Assignor.
SECTION 6. Indemnification. Subject to Section
18, Assignor hereby agrees to indemnify and hold Assignee
harmless of and from any and all liability, loss, damage or
expense which it may or might incur under or by reason of
this Assignment or for any action taken by Assignee
hereunder (other than such as may be incurred as a result of
the willful misconduct or gross negligence of Assignee), or
by reason or in defense of any and all claims and demands
whatsoever which may be asserted against Assignee arising
out of the Leases, including any claim by any Tenant of
credit for Rents paid to and received by Assignor, but not
delivered to Assignee; should Assignee incur any such
liability, loss, damage or expense, the amount thereof
(including reasonable attorney's fees) with interest
thereon, at the highest rate permitted by law, shall be
payable by Assignor upon demand, and shall be secured hereby
and by the other Security Documents.
SECTION 7. Delivery and Execution of Assignments.
Until the Secured Obligations shall have been paid in full,
Assignor will, upon the request of Assignee deliver to
Assignee executed copies of any and all Leases and any
guaranties of the Tenants' obligations thereunder.
SECTION 8. Waiver of Assignee's Rights. The
failure of Assignee to avail itself of any of the terms,
covenants and conditions of this Assignment for any period
of time or at any time or times shall not be construed or
deemed to be a waiver of any such right, and nothing herein
contained, nor anything done or omitted to be done by
Assignee pursuant hereto, shall be deemed a waiver by
Assignee of any of its rights and remedies hereunder or
under any of the Financing Documents or under any applicable
law. The right of Assignee to collect the Secured
Obligations and to enforce any other security therefor may
be exercised by Assignee either prior to, simultaneously
with, or subsequent to any action taken hereunder.
SECTION 9. Termination of Assignment. Upon
payment in full and performance of all of the Secured
Obligations, this Assignment shall become and be void and of
9
<PAGE>
no effect. Assignee agrees, on the request of Assignor, to
execute any further documents or instruments, in recordable
form if requested, necessary or desirable to terminate the
effectiveness of this Assignment.
SECTION 10. Notices. All notices and other
communications required or permitted to be given hereunder
shall be given as set forth in Section 6.03 of the Mortgage.
SECTION 11. Successors and Assigns. The terms,
covenants, conditions and warranties contained herein and
the powers granted hereby shall run with the land, shall
inure to the benefit of and bind all parties hereto and
their respective heirs, executors, administrators,
successors and assigns, and all lessees, subtenants and
assigns of same, and all subsequent owners of the Property,
and all subsequent holders of the Security Documents.
SECTION 12. Other Security. Assignee may accept
or release other security for payment of the Secured
Obligations, release any Person primarily or secondarily
liable therefor and apply any other security held by it to
the satisfaction of the Secured Obligations, without
prejudice to any of its rights under this Assignment.
SECTION 13. Further Assurances. Assignor and
Assignee shall each make, execute and deliver unto the other
upon demand and at any time or times any and all assignments
and other instruments sufficient for the purpose of carrying
out the purposes and intent of this Assignment.
SECTION 14. Governing Law. This Assignment shall
be governed by and construed in accordance with the laws of
the State of New Jersey.
SECTION 15. Modification. No provision of this
Assignment shall be modified, waived or terminated, and no
consent to any departure by Assignor from any provision of
this Assignment shall be effective, unless the same shall be
by an instrument in writing, signed by Assignor and Assignee
with the consent of the Holders of a majority in principal
amount of the then outstanding Notes. Any such waiver or
consent shall be effective only in the specific instance and
for the specific purpose for which it was given.
SECTION 16. Liens; Further Assurances. Assignor
will not execute any other assignment of Leases or any
interest therein or any of the Rents payable thereunder,
except in connection with any permitted and subordinate
financing. Any subordinate financing or other instrument or
Lien may not become superior to the Leases nor permit the
10
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holder of any subordinate mortgage to terminate the Leases
or otherwise adversely effect the Assignee's rights
hereunder. Assignor will perform all of its covenants and
agreements under the Leases, and except as explicitly
specified in the Operating Leases will not suffer or permit
to occur any release of liability of any Tenant or the
accrual or any right in such Tenant to withhold payment of
Rents. Assignor will give prompt notice to Assignee of any
notice of the default of any Tenant or from any other person
and furnish Assignee with complete copies of said notice.
If requested by Assignee, Assignor, at Assignor's sole cost
and expense, will enforce the Leases and all remedies
available to Assignor against any Tenant in case of default
under said Lease by such Tenant.
SECTION 17. No Release. (a) Notwithstanding any
variation of the terms of the Financing Documents, including
the increase or decrease of the principal amount thereof or
in the rate of interest payable thereunder or any extension
of time for payment thereunder, or any release of part or
parts of the Property, the Leases and the benefits hereby
assigned shall continue as additional security in accordance
with the terms of this Assignment.
(b) Assignee (i) may take security in addition to
the security already given Assignee for the payment of the
principal and interest provided to be paid in or by the
Financing Documents or release of such other security, (ii)
may release any party primarily or secondarily liable, (iii)
may grant an extension, renewal, modification, or
indulgences with respects to such Financing Documents and
replacements thereof, which replacement of the Financing
Documents may be on the same or on terms different from the
present terms, provided, that none of the foregoing are
prohibited by the Wraparound Mortgage, and (iv) may apply
any other security therefore held by it to the satisfaction
of such obligation without prejudice to any of its rights
hereunder.
Section 18. Non-Recourse. No general or limited
partner of Assignor nor any of their respective agents,
officers, directors or employees as such shall be personally
liable to any Secured Party or other person for any
obligations of Assignor (or the Company or the Guarantors)
under this Assignment or any of the other Financing
Documents or for any claim based upon or in respect of such
obligations. In addition, Assignor shall not have general
liability for any such obligations, recourse to Assignor in
respect of all such obligations being expressly limited to
the Collateral. Nothing contained in this Section shall
limit, restrict or impair the rights of Assignee, the
11
<PAGE>
Trustee or the Noteholders to take actions or bring suit
against any person to enforce such obligations and the
remedies provided in the Financing Documents (so long as
none of Assignor, its general or limited partners, nor their
respective agents, officers, directors or employees as such
shall have any personal liability thereon, satisfaction
thereon being limited to the Collateral). Each Noteholder,
by accepting a Note, irrevocably waives and releases all
such liability. The waiver and release contained herein are
part of the consideration for the granting of this
Assignment, the Mortgage and related security interests by
Assignor.
12
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused
this Assignment to be duly executed under seal and delivered
as of the day and year first above written.
ASSIGNOR:
ATLANTIC CITY BOARDWALK
ASSOCIATES, L.P.
By:_______________________
Name:
Title: General Partner
By:________________________
Name:
Title: General Partner
ASSIGNEE:
IBJ SCHRODER BANK & TRUST
COMPANY
By:________________________
Name:
Title:
13
<PAGE>
STATE OF ________ :
: ss.
COUNTY OF ________ :
BE IT REMEMBERED, that on this ___ day of ______,
1994, before me personally appeared ___________, General
Partner of ATLANTIC CITY BOARDWALK ASSOCIATES, L.P., a New
Jersey limited partnership, who I am satisfied is the person
who has signed the within instrument; and I having first
made known to him the contents thereof, he did acknowledge
that he signed, sealed and delivered the same as such
officer aforesaid; and that the within instrument is the
voluntary act and deed of said partnership, and further
acknowledges that he did receive a true copy of the within
instrument.
________________________
(Notary Public)
(SEAL) My Commission expires:
14
<PAGE>
STATE OF ________ :
: ss.
COUNTY OF ________ :
BE IT REMEMBERED, that on this ___ day of ______,
1994, before me personally appeared ___________, General
Partner of ATLANTIC CITY BOARDWALK ASSOCIATES, L.P., a New
Jersey limited partnership, who I am satisfied is the person
who has signed the within instrument; and I having first
made known to him the contents thereof, he did acknowledge
that he signed, sealed and delivered the same as such
officer aforesaid; and that the within instrument is the
voluntary act and deed of said partnership, and further
acknowledges that he did receive a true copy of the within
instrument.
________________________
(Notary Public)
(SEAL) My Commission expires:
15
<PAGE>
STATE OF ________ :
: ss.
COUNTY OF ________ :
BE IT REMEMBERED, that on this ___ day of January,
1994, before me personally appeared _________________,
__________________ of IBJ SCHRODER BANK & TRUST COMPANY, a
New York banking corporation, who I am satisfied is the
person who has signed the within instrument; and I having
first made known to him the contents thereof, he did
acknowledge that he signed, sealed and delivered the same as
such officer aforesaid; and that the within instrument is
the voluntary act and deed of said entity, and further
acknowledges that he did receive a true copy of the within
instrument.
________________________
(Notary Public)
(SEAL) My Commission expires:
16
<PAGE>
Schedule A
Description of Land
TRACT I:
BEGINNING in the Northeasterly line of Indiana
Avenue (60 feet wide) at a point 150 feet Southeastwardly of
the Southeasterly line of Pacific Avenue (60 feet wide) and
extending
1. North 62 degrees 32 minutes East, parallel
with Pacific Avenue, 155 fee; thence
2. South 27 degrees 28 minutes East, parallel
with Indiana Avenue, 50.10 feet; thence
3. South 62 degrees 32 minutes West, parallel
with Pacific Avenue 155 fee to the first mentioned
Northeasterly line of Indiana Avenue; thence
4. North 27 degrees 28 minutes West, along same,
50.10 feet to the point and place of BEGINNING.
TRACT II:
BEGINNING in the Southwesterly line of Indiana
Avenue (60 feet wide) at a point 150 feet Southeastwardly of
the Southeasterly line of Pacific Avenue (60 feet wide) and
extending:
1. South 27 degrees 28 minutes East, along said
Southwesterly line of Indiana Avenue, 300 feet; thence
2. South 62 degrees 32 minutes West, parallel
with Pacific Avenue, 138.10 feet to the Northeasterly line
of Park Place, (60 feet wide); thence
3. North 27 degrees 28 minutes West, along same,
300 feet; thence
4. North 62 degrees 32 minutes West, parallel
with Pacific Avenue, 138.10 feet to the point and place of
BEGINNING.
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TRACT III:
BEGINNING in the Northeasterly line of Ohio
Avenue, (50 feet wide) at a point 200 feet Southeastwardly
of the Southeasterly line of Pacific Avenue (60 feet wide),
and extending
1. North 62 degrees 32 minutes East, parallel
with Pacific Avenue, 145.60 feet to the Southwesterly line
of Park Place, (60 feet wide); thence
2. South 27 degrees 28 minutes East, along same,
150 feet; thence
3. South 62 degrees 32 minutes West, parallel
with Pacific Avenue, 145.60 feet to the First mentioned
Northeasterly line of Ohio Avenue; thence
4. North 27 degrees 28 minutes West, along same,
150 feet to the point and place of BEGINNING
TRACT IV: AIR RIGHTS
ALL THAT CERTAIN real property in the City of
Atlantic City, County of Atlantic, State of New Jersey,
which lies above (but not below) the horizontal plane the
elevation of which is 26.0 feet above that certain datum
level which designates as zero an elevation equal to mean
sea level at Atlantic City, as computed and established by
the United States Coast and Geodetic Survey and which lies
below (but not above) another horizontal plane the elevation
of which is 71.5 feet above said datum level, and which is
bounded by and lies within that certain plot or parcel
described as follows:
ALL THAT CERTAIN lot, tract, or parcel of land and
premises, situate, lying and being in the City of Atlantic
City, County of Atlantic, and State of New Jersey, bounded
and described as follows:
BEGINNING at a point in the Westerly line of Park
Place (60 feet wide), said point being distant 200.00 feet
South of the Southerly line of Pacific Avenue (60 feet
wide), and extending from said beginning point; thence
1. South 27 degrees 28 minutes 00 seconds West,
in and along the Westerly line of Park Place, a distance of
150.00 feet to a point; thence
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<PAGE>
2. North 89 degrees 42 minutes 23 seconds East,
crossing Park Place, a distance of 67.44 feet to the
easterly line of Park Place; thence
3. North 27 degrees 28 minutes 00 seconds West,
in and along the easterly line of Park Place, a distance of
180.80 feet; thence
4. South 62 degrees 32 minutes 00 seconds West
crossing Park Place, a distance of 60.00 feet to the point
and place of BEGINNING.
TOGETHER with the benefits of a certain easement
from the City of Atlantic City to Del E. Webb New Jersey,
Inc. dated 3-20-86, recorded in Deed Book 4216, page 299.
19
<PAGE>
This instrument was prepared by the
attorney described below and, when
recorded, the recorded counterparts
should be returned to:
James P. McIntyre, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
By:_______________________
James P. McIntyre, Esq.
COLLATERAL ASSIGNMENT OF LESSOR'S
INTEREST IN OPERATING LEASES
20
<PAGE>
<PAGE>
EXHIBIT L
to
Collateral Trust Agreement
This instrument was prepared by the
attorney described below and, when
recorded, the recorded counterparts
should be returned to:
James P. McIntyre, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
By:__________________________
James P. McIntyre, Esq.
SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT (this "Agreement") dated as of
January _, 1994 among ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.,
a New Jersey general partnership, having an address at Indiana
Avenue and the Boardwalk, Atlantic City, New Jersey (the
"Partnership"), in its capacity as landlord under the Operating
Leases or mortgagor under the Wraparound Mortgage (as such terms
are hereinafter defined), THE CLARIDGE AT PARK PLACE,
INCORPORATED, a New Jersey corporation, having an address at
Indiana Avenue and the Boardwalk, Atlantic City, New Jersey
("CPPI"), in its capacity as tenant under the Operating Leases or
mortgagee under the Wraparound Mortgage (as such terms are
hereinafter defined), and IBJ SCHRODER BANK & TRUST COMPANY, a
banking corporation organized under the laws of the State of New
York, having an address at 1 State Street, 11th Floor, New York,
New York 10004 (the "Mortgagee"), in its capacity as mortgagee
under the Mortgage (as such term is hereinafter defined).
W I T N E S S E T H:
A. Reference is hereby made to that certain Expandable
Wraparound Mortgage and Security Agreement dated as of October
31, 1983 between the Partnership, as mortgagor, and CPPI, as
mortgagee, recorded on October 31, 1983 in the Office of the
Clerk of Atlantic County, New Jersey, in Mortgage Book 2980 at
Page 250, as amended and modified, relating to the parcels of
land (the "Land") and air space (the "Air Space") described in
Exhibit A hereto, and the buildings, structures and other
improvements now or hereafter located on the Land and the Air
1
<PAGE>
Space (the "Improvements"; the Land, Air Space and Improvements
being collectively called the "Property"). As used herein, the
term "Wraparound Mortgage" shall mean, collectively, said
Expandable Wraparound Mortgage and Security Agreement and all
amendments, modifications (including partial releases),
supplements, additions, consolidations, extensions, renewals and
replacements thereof or thereto heretofore or hereafter entered
into.
B. Reference is hereby made to that certain Mortgage,
Assignment of Leases and Rents, Security Agreement and Financing
Statement dated as of the date hereof from the Partnership, as
mortgagor, to the Mortgagee, as mortgagee, and that certain
Collateral Assignment of Lessor's Interest in Operating Leases
dated as of the date hereof between the Partnership, as assignor,
and the Mortgagee, as assignee, each relating to the Property and
to be recorded contemporaneously herewith in the Office of the
Clerk of Atlantic County, New Jersey. As used herein, the term
"Mortgage" shall mean, collectively, said Mortgage, Assignment of
Leases and Rents, Security Agreement and Financing Statement and
said Collateral Assignment of Lessor's Interest in Operating
Leases and all amendments, modifications (including partial
releases), supplements, additions, consolidations, extensions,
renewals and replacements thereof or thereto hereafter entered
into. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the
Mortgage.
C. The Partnership is the owner of the Property.
D. Reference is hereby made to that certain Operating
Lease Agreement dated as of October 31, 1983 between the
Partnership, as landlord, and CPPI, as tenant, and that certain
Expansion Operating Lease Agreement dated as of March 17, 1986
between the Partnership, as landlord, and CPPI, as tenant, each
relating to the Property. As used herein, the term "Operating
Leases" shall mean, collectively, said Operating Lease Agreement
and said Expansion Operating Lease Agreement and all amendments,
modifications, extensions and renewals thereof or thereto
heretofore or hereafter entered into; subject to Section 11, the
term "Landlord" shall mean the Partnership and its successors and
assigns as owner of the Property and the landlord's interest
under the Operating Leases; and, subject to Section 11, the term
"Tenant" shall mean CPPI and its successors and assigns as owner
of the Tenant's interest under the Operating Leases.
NOW, THEREFORE, in consideration of Ten Dollars
($10.00) paid by each party hereto to the others and other good
and valuable consideration the receipt and sufficiency of which
is hereby acknowledged by each party to the others, in
2
<PAGE>
consideration of the agreements hereinafter set forth, and
intending to be bound hereby, the parties hereto hereby agree as
follows:
SECTION 1. Each of the Tenant and the Landlord agrees
that the Operating Leases and all of its rights and interest
thereunder shall be and remain at all times subject and
subordinate to the Mortgage, all advances now or hereafter made
which are secured thereby and all of the Mortgagee's rights and
interest thereunder. The subordination set forth herein shall
extend to all sums now or hereafter owing which are secured by
the Mortgage.
SECTION 2. (a) Each of the Partnership and CPPI
confirms and agrees that the Wraparound Mortgage and all of its
rights and interest thereunder shall be and remain at all times
subject and subordinate to the Mortgage, all advances now or
hereafter made which are secured thereby and all of the
Mortgagee's rights and interest thereunder. The subordination
set forth herein shall extend to all sums now or hereafter owing
which are secured by the Mortgage.
(b) If a Notice of Acceleration shall be in effect,
CPPI agrees not to ask, demand, sue for, take or require payment
or further security for all or any part of the indebtedness due
or to become due under the Wraparound Mortgage (the "Subordinated
Indebtedness"), or foreclose on any collateral therefor, unless
and until Mortgagee has begun to proceed with the enforcement of
its rights with respect to the Mortgaged Property; provided,
however that so long as no Notice of Acceleration is in effect,
CPPI may receive payment when due, but not prepayments, of the
scheduled installments of principal and interest under the
Subordinated Indebtedness.
SECTION 3. The Mortgagee may at any time, from time to
time, in any manner, without notice to or the consent of CPPI or
the Partnership, without incurring any liability to CPPI or the
Partnership, and without impairing, diminishing or otherwise
affecting the subordination hereunder or the other provisions
hereof:
(a) renew, extend, replace, accelerate, compromise,
waive, release or otherwise amend or modify any Secured
Obligation, any Financing Document or any other agreement,
instrument or document relating thereto to which CPPI or the
Partnership is not a party;
(b) sell, exchange, release or otherwise deal with any
Mortgaged Property for any Secured Obligation or under any
Related Document in any manner permitted under any Financing
3
<PAGE>
Document;
(c) release any Person liable in any manner for the
payment, collection or performance of any Secured Obligation or
Financing Document;
(d) exercise or refrain from exercising any right or
remedy available against any other Person under any Financing
Document or applicable law;
(e) apply any amounts received by the Mortgagee by
whomever paid or however received or realized on account of the
payment of the Secured Obligations in accordance with the terms
of the Mortgage; and
(f) take any other action which might but for this
Section be construed to impair, diminish or otherwise affect the
subordination hereunder or the other provisions hereof.
SECTION 4. Each of the Partnership and CPPI further
confirms and agrees that, upon any failure on the part of the
Partnership to make any payment when due under the Wraparound
Mortgage, the Tenant may exercise a right of offset against rent
or other payments under the Operating Leases to the extent of any
such deficiency. Nothing in this Section 4 shall derogate any of
the Partnership's rights of offset under the Operating Leases or
the Wraparound Mortgage.
SECTION 5. The Tenant agrees that, if the Landlord's
interest under the Operating Lease shall be transferred to
Mortgagee or any other person, including a receiver (any such
transferee and its successors and assigns being herein referred
to as the "Successor Landlord"), the Successor Landlord shall not
be:
(a) bound by any amendment, extension, renewal,
replacement, termination or other modification of the Operating
Leases, any waiver by the Landlord with respect to the Operating
Leases or any surrender of the Property, made or accepted without
the consent of the Mortgagee; and any such modification, waiver
or surrender made or accepted without any such consent, at the
option of such Successor Landlord, shall be void as against the
Successor Landlord or fully enforceable by the Successor Landlord
at its election made not later than thirty (30) days after the
later to occur of (i) the date on which the Successor Landlord
succeeds to the interest of the Landlord or (ii) the date on
which the Successor Landlord or the Mortgagee receives notice
from the Landlord or the Tenant of such modification, waiver or
surrender, except an extension, renewal or termination pursuant
to a right or option of the Tenant contained in the Operating
4
<PAGE>
Leases as it now exists or in an amendment thereof consented to
by the Mortgagee; or
(b) bound by any amendment, termination or other
modification of any guarantee of the Tenant's obligations under
the Operating Leases or waiver made by the Landlord with respect
to any such guarantee without the consent of the Mortgagee; or
(c) bound by any payment of rent or additional rent
payable under the Operating Leases made more than one month in
advance of the due date thereof under the Operating Leases; and,
if the Tenant shall have made any such payment more than one
month in advance and the Successor Landlord shall be or become
entitled to such payment, then, upon demand, the Tenant shall
forthwith make such payment again to the Successor Landlord as
additional rent under the Operating Leases, subject to credit for
or refund of any portion of such payment actually received
thereafter by the Successor Landlord); or
(d) liable for any sum on deposit with the Landlord or
owing by the Landlord to the Tenant, except to the extent that
such sum is actually received by the Successor Landlord; or
(e) subject to any counterclaim, defense, set off,
credit or deduction which shall have accrued to the Tenant
against the Landlord; or
(f) liable for any default by the Landlord under the
Operating Leases or any other act or omission by the Landlord; or
(g) obligated to rebuild or restore any Improvements
in the event of damage thereto or destruction thereof, or in the
event of a partial condemnation.
SECTION 6. CPPI represents and warrants that it is the
owner of the Tenant's interest under the Operating Leases and
that it is the mortgagee under the Wraparound Mortgage and has
the sole and unencumbered right and the power to enter into this
Agreement in its capacity as the Tenant and as mortgagee and that
this Agreement has been duly authorized, executed and delivered
by and on behalf of CPPI in each such capacity. The Partnership
represents and warrants that the Partnership is the owner of the
Landlord's interest under the Operating Leases and that it is
mortgagor under the Wraparound Mortgage and has the sole and
unencumbered right and the power to enter into this Agreement in
its capacity as the Landlord and as mortgagor and that this
Agreement has been duly authorized, executed and delivered by and
on behalf of the Partnership in each such capacity.
SECTION 7. The Mortgagee represents and warrants that
5
<PAGE>
it has the right and the power to enter into this Agreement in
its capacity as the Mortgagee under the Mortgage, and that this
Agreement has been duly authorized, executed and delivered on
behalf of the Mortgagee in such capacity.
SECTION 8. All notices or other communications
required or permitted to be given under this Agreement shall be
in writing and shall be given to any party hereto by personal
delivery or by registered or certified United States mail at its
address set forth below:
(a) if to the Mortgagee, at the address of the
Mortgagee set forth in the first paragraph of this
Agreement;
(b) if to the Partnership, at the address of the
Partnership set forth in the first paragraph of this
Agreement, with copies to:
Atlantic City Boardwalk Associates, L.P.
c/o Gerald Heetland, Esq.
2880 West Meade Avenue
Suite 201
Las Vegas, Nevada 89102
Alan Wovsaniker, Esq.
Lowenstein, Sandler, Kohl, Fisher & Boylan
65 Livingstone Avenue
Roseland, New Jersey 07068-1791; and
(c) if to CPPI, at the address of CPPI set forth in the
first paragraph of this Agreement.
Each notice or other communication shall be effective (i) if
given as specified in this Section by mail, 72 hours after it is
deposited in the United States mail, postage prepaid, registered
or certified, return receipt requested and addressed as set forth
above, or (ii) if given by personal delivery, when delivered or
rejected at the address set forth above.
SECTION 9. In this Agreement, unless otherwise
specified, singular words include the plural and plural words
include the singular; words imparting any gender include the
other genders; the word "Person" means an individual,
corporation, partnership, association, trust or other entity or
organization, including a government or political subdivision,
agency or instrumentality thereof; the word "successors", when it
refers to an individual, shall include without limitation the
heirs, devises, legatees, executors, administrators and personal
representatives of such individual; the word "consent" means the
6
<PAGE>
prior written consent of the party holding the right to consent,
which consent may be granted or withheld in such party's
subjective discretion; the words "include", "including" and
similar words shall be deemed to be followed by the words
"without limitation"; the words "hereto", "herein", "hereof",
"hereunder" and similar words refer to this Agreement in its
entirety; and references to Sections are to the Sections of this
Agreement.
SECTION 10. Except as specified herein, no provision
of this Agreement shall be modified, waived or terminated, except
by an instrument in writing signed by the party against whom
enforcement of such modification, waiver or termination is
sought.
SECTION 11. This Agreement and the covenants herein
shall be deemed to be covenants running with the land and shall
be binding upon and inure to the benefit of the parties hereto in
their respective capacities set forth above and their respective
successors and assigns in such capacities, including (a) as a
successor to the Mortgagee, a Successor Landlord by reason of the
foreclosure of the Mortgage; (b) as a successor to the Landlord,
any transferee of the Landlord's interest under the Operating
Leases, except any Successor Landlord; and (c) as a successor to
the Tenant, any assignee, subtenant or other person holding by,
through or under the Tenant. All references herein to
"Mortgagee", "Landlord" and "Tenant" shall include the respective
successors and assigns of such parties.
SECTION 12. This Agreement shall be construed in
accordance with and governed by the law of the State of New
Jersey.
SECTION 13. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the
same instrument; and, in making proof hereof, it shall not be
necessary to produce or account for more than one such
counterpart.
SECTION 14. No general or limited partner of the
Partnership nor any of their respective agents, officers,
directors or employees as such shall be personally liable to any
Secured Party or other person for any obligations of the
Partnership (or the Company or the Guarantors) under this
Agreement or any of the other Financing Documents or for any
claim based upon or in respect of such obligations. In addition,
the Partnership shall not have general liability for any such
obligations, recourse to the Partnership in respect of all such
obligations being expressly limited to the Collateral. Nothing
contained in this Section shall limit, restrict or impair the
7
<PAGE>
rights of the Mortgagee, the Trustee or the Noteholders to take
actions or bring suit against any person to enforce such
obligations and the remedies provided in the Financing Documents
(so long as none of the Partnership, its general or limited
partners, nor their respective agents, officers, directors or
employees as such shall have any personal liability thereon,
satisfaction thereon being limited to the Collateral). Each
Noteholder, by accepting a Note, irrevocably waives and releases
all such liability. The waiver and release contained herein are
part of the consideration for the granting of the Mortgage and
related security interests by the Partnership.
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first above written.
Mortgagee:
IBJ SCHRODER BANK & TRUST
COMPANY
By:__________________________
Name:
Title:
Landlord:
ATLANTIC CITY BOARDWALK
ASSOCIATES, L.P.
By:__________________________
Name:
Title: General Partner
By:__________________________
Name:
Title: General Partner
Tenant:
THE CLARIDGE AT PARK PLACE,
INCORPORATED
By:__________________________
Name:
Title:
i
<PAGE>
STATE OF ___________ :
: ss.
COUNTY OF ___________ :
BE IT REMEMBERED, that on this ____ day of January,
1994, before me personally appeared ____________________,
______________ of IBJ SCHRODER BANK & TRUST COMPANY, a New
York banking corporation, who I am satisfied is the person who
has signed the within instrument; and I having first made known
to him the contents thereof, he did acknowledge that he signed,
sealed and delivered the same as such officer aforesaid; and that
the within instrument is the voluntary act and deed of said
entity, and further acknowledges that he did receive a true copy
of the within instrument.
_____________________________
(Notary Public)
(SEAL) My Commission expires:
ii
<PAGE>
STATE OF ___________ :
: ss.
COUNTY OF ___________ :
BE IT REMEMBERED, that on this ____ day of January,
1994, before me personally appeared __________________, General
Partner of ATLANTIC CITY BOARDWALK ASSOCIATES, L.P., a New Jersey
limited partnership, who I am satisfied is the person who has
signed the within instrument; and I having first made known to
him the contents thereof, he did acknowledge that he signed,
sealed and delivered the same as such officer aforesaid; and that
the within instrument is the voluntary act and deed of said
partnership, and further acknowledges that he did receive a true
copy of the within instrument.
_____________________________
(Notary Public)
(SEAL) My Commission expires:
iii
<PAGE>
STATE OF ___________ :
: ss.
COUNTY OF ___________ :
BE IT REMEMBERED, that on this ____ day of January,
1994, before me personally appeared __________________, General
Partner of ATLANTIC CITY BOARDWALK ASSOCIATES, L.P., a New Jersey
limited partnership, who I am satisfied is the person who has
signed the within instrument; and I having first made known to
him the contents thereof, he did acknowledge that he signed,
sealed and delivered the same as such officer aforesaid; and that
the within instrument is the voluntary act and deed of said
partnership, and further acknowledges that he did receive a true
copy of the within instrument.
_____________________________
(Notary Public)
(SEAL) My Commission expires:
iv
<PAGE>
STATE OF ___________ :
: ss.
COUNTY OF ___________ :
BE IT REMEMBERED, that on this ____ day of January,
1994, before me personally appeared ____________________,
________________, of THE CLARIDGE AT PARK PLACE, INCORPORATED, a
New Jersey corporation, who I am satisfied is the person who has
signed the within instrument; and I having first made known to
him the contents thereof, he did acknowledge that he signed,
sealed and delivered the same as such officer aforesaid; and that
the within instrument is the voluntary act and deed of said
corporation, and further acknowledges that he did receive a true
copy of the within instrument.
_____________________________
(Notary Public)
(SEAL) My Commission expires:
v
<PAGE>
EXHIBIT A
Description of Land
TRACT I:
BEGINNING in the Northeasterly line of Indiana Avenue
(60 feet wide) at a point 150 feet Southeastwardly of the
Southeasterly line of Pacific Avenue (60 feet wide) and extending
1. North 62 degrees 32 minutes East, parallel with
Pacific Avenue, 155 fee; thence
2. South 27 degrees 28 minutes East, parallel with
Indiana Avenue, 50.10 feet; thence
3. South 62 degrees 32 minutes West, parallel with
Pacific Avenue 155 fee to the first mentioned Northeasterly line
of Indiana Avenue; thence
4. North 27 degrees 28 minutes West, along same, 50.10
feet to the point and place of BEGINNING.
TRACT II:
BEGINNING in the Southwesterly line of Indiana Avenue
(60 feet wide) at a point 150 feet Southeastwardly of the
Southeasterly line of Pacific Avenue (60 feet wide) and
extending:
1. South 27 degrees 28 minutes East, along said
Southwesterly line of Indiana Avenue, 300 feet; thence
2. South 62 degrees 32 minutes West, parallel with
Pacific Avenue, 138.10 feet to the Northeasterly line of Park
Place, (60 feet wide); thence
3. North 27 degrees 28 minutes West, along same, 300
feet; thence
4. North 62 degrees 32 minutes West, parallel with
Pacific Avenue, 138.10 feet to the point and place of BEGINNING.
vi
<PAGE>
TRACT III:
BEGINNING in the Northeasterly line of Ohio Avenue, (50
feet wide) at a point 200 feet Southeastwardly of the
Southeasterly line of Pacific Avenue (60 feet wide), and
extending
1. North 62 degrees 32 minutes East, parallel with
Pacific Avenue, 145.60 feet to the Southwesterly line of Park
Place, (60 feet wide); thence
2. South 27 degrees 28 minutes East, along same, 150
feet; thence
3. South 62 degrees 32 minutes West, parallel with
Pacific Avenue, 145.60 feet to the First mentioned Northeasterly
line of Ohio Avenue; thence
4. North 27 degrees 28 minutes West, along same, 150
feet to the point and place of BEGINNING
TRACT IV: AIR RIGHTS
ALL THAT CERTAIN real property in the City of Atlantic
City, County of Atlantic, State of New Jersey, which lies above
(but not below) the horizontal plane the elevation of which is
26.0 feet above that certain datum level which designates as zero
an elevation equal to mean sea level at Atlantic City, as
computed and established by the United States Coast and Geodetic
Survey and which lies below (but not above) another horizontal
plane the elevation of which is 71.5 feet above said datum level,
and which is bounded by and lies within that certain plot or
parcel described as follows:
ALL THAT CERTAIN lot, tract, or parcel of land and
premises, situate, lying and being in the City of Atlantic City,
County of Atlantic, and State of New Jersey, bounded and
described as follows:
BEGINNING at a point in the Westerly line of Park Place
(60 feet wide), said point being distant 200.00 feet South of the
Southerly line of Pacific Avenue (60 feet wide), and extending
from said beginning point; thence
1. South 27 degrees 28 minutes 00 seconds West, in and
along the Westerly line of Park Place, a distance of 150.00 feet
to a point; thence
2. North 89 degrees 42 minutes 23 seconds East,
vii
<PAGE>
crossing Park Place, a distance of 67.44 feet to the easterly
line of Park Place; thence
3. North 27 degrees 28 minutes 00 seconds West, in and
along the easterly line of Park Place, a distance of 180.80 feet;
thence
4. South 62 degrees 32 minutes 00 seconds West
crossing Park Place, a distance of 60.00 feet to the point and
place of BEGINNING.
TOGETHER with the benefits of a certain easement from
the City of Atlantic City to Del E. Webb New Jersey, Inc. dated
3-20-86, recorded in Deed Book 4216, page 299.
viii
<PAGE>
This instrument was prepared by the
attorney described below and, when
recorded, the recorded counterparts
should be returned to:
James P. McIntyre, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
By:__________________________
James P. McIntyre, Esq.
SUBORDINATION AGREEMENT
ix
<PAGE>
<PAGE>
EXHIBIT M
to
Collateral Trust Agreement
This instrument was prepared by the
attorney described below and, when
recorded, the recorded counterparts
should be returned to:
James P. McIntyre, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
By:_______________________
James P. McIntyre, Esq.
ASSIGNMENT OF LEASES AND RENTS AND OTHER CONTRACT RIGHTS
THIS ASSIGNMENT OF LEASES AND RENTS AND OTHER
CONTRACT RIGHTS (this "Assignment") is made as of this ____
day of January, 1994, by THE CLARIDGE AT PARK PLACE,
INCORPORATED, a New Jersey corporation ("Assignor"), having
an office at Indiana Avenue and the Boardwalk, Atlantic
City, New Jersey, in favor of IBJ SCHRODER BANK & TRUST
COMPANY, a banking corporation organized under the laws of
the State of New York ("Assignee"), as Collateral Trustee
under the Collateral Trust Agreement (hereinafter defined),
having an address at 1 State Street, 11th Floor, New York,
New York 10004.
W I T N E S S E T H:
WHEREAS, Assignor is the present owner of a
leasehold estate in (i) certain property located, situate,
lying and being in the City and County of Atlantic and the
State of New Jersey, and more particularly described on
Schedule A annexed hereto (the "Land"), (ii) certain air
space located, situate, lying and being in the City and
County of Atlantic and the State of New Jersey, and more
fully described in Tract IV of Schedule A annexed hereto
(the "Air Space"), and (iii) certain buildings, structures,
improvements, equipment, furniture, fittings, fixtures and
personal property affixed or attached to, installed or
placed in or upon the Land or the Air Space (the "Hotel
Assets", together with the Land and the Air Space, the
"Property") and more particularly described in that certain
<PAGE>
Operating Lease Agreement dated October 31, 1983 between
Atlantic City Boardwalk Associates, L.P. (the
"Partnership"), as lessor, and Assignor, as lessee, and that
certain Expansion Operating Lease Agreement dated March 17,
1986 between the Partnership and Assignor, each as amended
by (i) Amendment to Operating Lease Agreement and Expansion
Operating Lease Agreement dated June 15, 1989 between the
Partnership and Assignor, (ii) Second Amendment to Operating
Lease Agreement and Expansion Operating Lease Agreement
dated March 27, 1990, between the Partnership and Assignor
and (iii) Third Amendment to Operating Lease Agreement and
Expansion Operating Lease Agreement dated August 1, 1991,
between the Partnership and Assignor (collectively, as
amended, modified or supplemented from time to time in
accordance with their respective terms, the "Operating
Leases"); and
WHEREAS, pursuant to the terms of the Operating
Leases, the Partnership has leased the Property to Assignor;
and
WHEREAS, Assignor and The Claridge Hotel and
Casino Corporation (the "Company") have entered into an
indenture dated as of the date hereof with Assignee (as
amended, modified or supplemented from time to time in
accordance with its terms, the "Indenture"); and
WHEREAS, the Company, the Partnership and Assignor
have entered into a collateral trust agreement dated as of
the date hereof with Assignee (as amended, modified or
supplemented from time to time in accordance with its terms,
the "Collateral Trust Agreement"); and
WHEREAS, the issuance of the notes (together with
any replacements, modifications or substitutions thereof,
the "Notes") by Assignee under the Indenture is expressly
conditioned on the execution and delivery by the undersigned
of this Assignment; and
WHEREAS, to secure all of the present and future
obligations of the Company, Assignor and the Partnership
(with respect to the Mortgage and other Financing Documents
to which it is a party (as such terms are defined below)) to
Assignee under the Indenture, the Notes, the Guarantee dated
as of the date hereof from Assignor to Assignee (as
modified, amended or supplemented from time to time in
accordance with its terms, the "Guarantee"), and the
mortgage dated as of the date hereof between the Partnership
and Assignee (as modified, amended or supplemented from time
to time in accordance with its terms, the "Mortgage") and
all other agreements, documents and instruments delivered in
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connection with the Indenture (as modified, amended or
supplemented from time to time in accordance with their
respective terms, collectively, the "Financing Documents"),
Assignor has agreed to execute and deliver this Assignment
covering all of its interests under the Operating Leases,
any other Leases and any contracts relating to the use and
operation of the Property, more particularly as set forth on
Schedule B annexed hereto (together with any other contracts
now or hereafter existing in connection with the use and
operation of the Property, as amended, modified or
supplemented from time to time in accordance with their
respective terms, collectively, the "Contracts").
NOW, THEREFORE, THESE PRESENTS WITNESSETH, that in
the consideration of the foregoing and the sum of One and
00/100 ($1.00) Dollar and other good and valuable
consideration by Assignee to Assignor, the receipt whereof
is hereby acknowledged, Assignor does hereby SELL, ASSIGN,
TRANSFER, SET OVER, GRANT AND DELIVER unto Assignee, its
successors and assigns, all of Assignor's right, title and
interest in, to and under: (i) the Operating Leases, (ii)
the Contracts and (iii) all other leases and subleases,
written or oral, licenses, franchises, concessions and all
other agreements, now or hereinafter in effect and whether
or not of record, for use or occupancy of all or any part of
the Property (together with the Operating Leases and the
Contracts, hereafter collectively called the "Leases").
TOGETHER WITH any and all extensions and renewals
of the Leases (including subleases thereof and tenancies
following attornment);
TOGETHER WITH all of Assignor's right, title and
interest in, to and under: any and all guarantees of any of
the obligations of subtenants, licensees, franchisees,
concessionaires and other occupants thereunder (the
foregoing being collectively called "Tenants") under any of
the Leases and all security given for such Tenant's
performance under any of the Leases subject to the rights
and interests of the party or parties giving such security
with respect thereto, if any; and
TOGETHER WITH the immediate and continuing right
to collect and receive all of the rents, royalties, income,
receipts, revenues, issues, profits and other benefits now
due or which may become due or to which Assignor may now or
shall hereafter (including during the period of redemption,
if any) become entitled or may demand or claim, arising or
issuing from or out of the Leases or from or out of the
Property, including, but not limited to: (a) minimum rents,
additional rents, percentage rents, parking, maintenance,
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tax and insurance contributions, construction contributions
and/or reimbursements, deficiency rents and liquidated
damages following default, premiums payable by any Tenant
upon the exercise of a cancellation privilege originally
provided in any Lease, all income from any licenses,
franchise or any other agreements and all proceeds payable
under any condemnation awards or settlements, policies of
insurance or settlement thereof covering loss of rents
resulting from untenantability cause by destruction or
damage to the Property together with any and all rights and
claims of any kind which Assignor may have against any
Tenant (sometimes hereafter collectively referred to as
"Rents") and (b) any abatement, rebate, refund or return,
whether now or hereafter payable, of the whole or any part
of any tax, assessment or other charge levied or assessed
upon the whole or any part of the Property whether
heretofore or hereafter levied or assessed or that has been
or hereafter is paid (sometimes hereafter referred to as
"Abatements").
TO HAVE AND TO HOLD the same unto Assignee, its
successors and assigns forever, or for such shorter period
as hereafter may be indicated, subject to a revocable
license to Assignor as more particularly set forth herein.
FOR THE PURPOSE OF SECURING the payment and
performance of the Secured Obligations (as defined in the
Collateral Trust Agreement).
Subject to the provisions contained in the
Financing Documents, during the existence of a Notice of
Acceleration Assignor irrevocably constitutes and appoints
Assignee as its lawful attorney, coupled with any interest,
in its name and stead to collect any and all Rents and
Abatements. At the request of Assignee, Assignor shall
promptly execute, acknowledge, deliver, record, register and
file any specific assignment of Lease in addition to this
Assignment which Assignee reasonably may require from time
to time (all in form and substance reasonably satisfactory
to Assignee) to effectuate, complete, perfect, continue or
preserve the assignments of the Leases and the Rents and
Abatements. If a Notice of Acceleration shall not be in
effect, Assignor shall have a license granted hereby to
collect and receive all Rents and Abatements and apply the
same subject to the provisions of the Financing Documents.
This license shall terminate, at the option of Assignee,
upon the effectiveness of a Notice of Acceleration. If a
Notice of Acceleration shall be in effect, Assignee shall
have the right to terminate the license granted hereunder,
upon notice to Assignor, and to exercise the following
rights and remedies in addition to any other rights or
4
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remedies available to Assignee under applicable law: (a) to
collect any and all of the Rents and Abatements; (b) to use
such measure, legal or equitable, as in its discretion may
be deemed necessary or appropriate to enforce the payment of
the Rents and Abatements and any security given in
connection therewith; (c) to secure and maintain the use and
possession of the Property or any part thereof; (d) to fill
any and all vacancies and to rent, lease and let the
Property or any part thereof at its discretion; (e) to
adjust, settle or otherwise deal with any Rents and
Abatements and to execute or render any and all instruments
deemed by Assignee to be necessary or appropriate in
connection therewith; and (f) to subordinate any Lease, at
any time and from time to time to the Mortgage, request or
require such subordination, where such reservation, option
or authority was reserved to Assignor under any Lease, or in
any case, where Assignor otherwise would have the right,
power or privilege to do so. If a Notice of Acceleration is
in effect, upon demand by Assignee, Assignor shall promptly
pay to Assignee all Rents and Abatements and any security
given in connection therewith allocable to any period after
a Notice of Acceleration shall be in effect. Subject to any
requirement of law, any Rents or Abatements received
hereunder by Assignee shall be deposited in the Guarantor
Collateral Account, to be held, applied and disbursed as
provided in the Collateral Trust Agreement, provided that,
subject to any applicable requirement of law, any security
deposits actually received by Assignee shall be held,
applied and disbursed as provided in the applicable Leases
and applicable law. The foregoing appointment shall be
irrevocable, coupled with an interest and continuing and the
rights, powers and privileges shall be exclusive in Assignee
so long as any part of the Secured Obligations shall remain
unpaid.
TO PROTECT THE SECURITY OF THIS ASSIGNMENT, IT IS
COVENANTED AND AGREED THAT:
SECTION 1. Definitions. Capitalized terms used
herein and not otherwise defined shall have the meanings
given such terms in, or by reference to, the Indenture or
the Collateral Trust Agreement. The Indenture and the other
Financing Documents are incorporated herein by reference and
this Assignment, the Indenture and the other Financing
Documents should be construed as an integrated set of
documents.
SECTION 2. Assignor's Warranties. Assignor
represents and warrants to Assignee that (a) Assignor has
good title to the tenant's interest under the Operating
Leases and to the other Leases and Rents hereby assigned and
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good right to assign the same; (b) no other Person has any
right, title or interest in Assignor's right, title and
interest therein; (c) there are no existing leases or
contracts on the Property other than the Operating Leases
and those set forth on Schedule B and Assignor has provided
Assignee with complete and correct copies of same; (d) the
Leases are in full force and effect and there are no
renewals, extensions, modifications, amendments or
assignments to any of the Leases or the Contracts; (e) the
Rents and Abatements from the Property whether now due or
hereafter to become due are not currently sold, assigned,
transferred, mortgaged or pledged; and (f) any of the Rents
and Abatements due and issuing from the Property for any
period subsequent to the date hereof have not been collected
and, except as specifically set forth in the Operating
Leases with respect to rent abatements and deferrals,
payment of any of the same has not otherwise been
anticipated, waived, released, discounted, set off or
otherwise discharged or compromised.
SECTION 3. Assignor's Covenants. Assignor shall
(a) observe, perform and discharge, duly and punctually, all
of the obligations, terms, covenants, conditions and
warranties of the Leases on the part of Assignor to be kept,
observed and performed, and give prompt notice to Assignee
of any failure on the part of Assignor to observe, perform
and discharge same; (b) notify and direct in writing each
and every present or future Tenant that any security deposit
or other deposits (other than payments of rent less than one
month in advance collected by Assignor at the start of the
term of the Lease or at the execution of the Lease)
delivered to Assignor have been retained by Assignor or
assigned and delivered to Assignee, as the case may be; (c)
subject to receipt of Assignee's consent as required
pursuant to the terms of Section 4 hereof, enforce or secure
the performance of each and every obligation, term,
covenant, condition and agreement in the Leases by any
Tenant (or any guarantor under any guaranty of any Lease) to
be performed; and (d) appear in and defend any action or
proceeding arising under, occurring out of, or in any manner
connected with the Leases or the obligations, duties, or
liabilities of Assignor or any Tenant thereunder, and, upon
request by Assignee, to do so in the name and behalf of
Assignee but at the expense of Assignor, and to pay all
reasonable costs and expenses of Assignee, including
reasonable attorney's fees, in any action or proceeding in
which Assignee may appear.
SECTION 4. Assignor's Additional Covenants. Assignor
further covenants and agrees that: (a) Assignor shall not
pledge, transfer, mortgage or otherwise encumber or assign
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future payments of Rents except to Assignee as Mortgagee
under the Mortgage; and (b) without the consent of Assignee
as Mortgagee, unless otherwise expressly provided in the
Financing Documents, Assignor shall not (i) waive, excuse,
condone, discount, set-off, compromise, or in any manner
release or discharge any Tenant thereunder (or any guarantor
under any guaranty of any Lease), of and from any
obligations, covenants, conditions and agreements by said
Tenant (or guarantor) to be kept, observed and performed,
including the obligation to pay any Rent thereunder, in the
manner and at the time specified therein; (ii) cancel or
terminate any Lease unless such right was originally so
reserved by Tenant (other than Assignor under the Operating
Leases) in said Lease; (iii) commence an action of ejectment
or any summary proceedings for dispossession of the Tenant
under any Lease; (iv) exercise any option to purchase
provided in any Lease without the consent of Assignee; (v)
exercise any right of recapture provided in any Lease or
modify, or in any way alter the terms of any Lease in a
manner which would reduce the rental, shorten the term,
impose additional obligations on Assignor thereunder or
reduce a material obligation of Tenant thereunder; (vi)
lease any part of the Property or renew or extend the term
of any Lease unless an option therefor was originally so
reserved by the Tenant in said Lease; (vii) consent to any
modification of the express purposes for which any Tenant's
premises have been leased; and (viii) except as permitted by
the Operating Leases, consent to any subletting of any part
of the Property, or to any assignment of the Operating
Leases, the Contracts or any other Lease by any Tenant
thereunder or to any assignment or further subletting of any
sublease without the consent of Assignee, not to be
unreasonably withheld if any profit derived by Tenant
thereunder from any such subletting or assignment shall be
paid over to Assignee.
SECTION 5. Notice of Acceleration; Assignee's
Rights. So long as a Notice of Acceleration is in effect,
Assignee, at its option, shall have the complete right,
power and authority hereunder to exercise and enforce any or
all of the following remedies: (i) in accordance with the
Financing Documents, to declare all sums secured hereby
immediately due and payable and, at its option, exercise all
of the rights and remedies contained in any of the Financing
Documents; and (ii) subject to the rights of the landlord
under the Operating Leases, without regard to the adequacy
of the security, upon notice to Assignor, to apply for a
receiver to be appointed by a court to enter upon, take
possession of or manage, operate and repair the Property and
to make, modify, enforce, cancel or accept surrender of the
Operating Leases, the Contracts or any other Lease now in
7
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effect or then in effect; remove and evict any Tenant;
increase or decrease rents; decorate, clean and repair; and
otherwise do any act or incur any costs or expense as
Assignee shall deem proper to protect the security as fully
and to the same extent as Assignor could do if in
possession, and in such event to apply the Rents so
collected to the costs of operation, management and repair
of the Property, but in such order as Assignee shall deem
proper, and including the payment of the Secured
Obligations; and (iii) to the extent permitted by law, upon
the demand of Assignee, Assignor shall turn over the
security deposits to Assignee or a receiver appointed by a
court;
Provided, however, that the acceptance by Assignee
of this Assignment, with all of the rights, powers,
privileges and authority so created, shall not, prior to
entry upon and taking of possession of the Property by
Assignee, be deemed or construed to constitute Assignee in
possession nor thereafter or at any time or in any event
obligate Assignee to appear in or defend any action or
proceeding relating to any Lease or to the Property, or to
take any action hereunder, or to expend any money or incur
any expenses or perform or discharge any obligation, duty or
liability under any Lease; nor shall Assignee be deemed to
have assumed any obligation or responsibility for any
security deposits or other deposits delivered to Assignor by
any Tenant unless the same shall actually be received by
Assignee; nor shall Assignee be liable in any way for any
injury or damage to any Person or property sustained in or
about the Property, unless caused by the gross negligence or
willful misconduct of Assignee or its agents, contractors or
employees;
And provided further that the collection of Rents
and application as aforesaid and the entry upon and taking
possession of the Property shall not cure or waive any
default or waive, modify or affect any notice of default
under any of the Financing Documents or invalidate any act
done pursuant to such notice, and the enforcement of any
such right or remedy by Assignee, once exercised, shall
continue for so long as Assignee shall elect,
notwithstanding that the collection and application
aforesaid of such Rents may have cured for the time the
original default. If Assignee shall thereafter elect to
discontinue the exercise of any such right or remedy, the
same or any other right or remedy hereunder may be
reasserted at any time and from time to time following the
occurrence of any subsequent Event of Default. A demand on
any Tenant made by Assignee for payment of Rents by reason
of any default claimed by Assignee shall be sufficient
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<PAGE>
warrant to said Tenant to make future payments of Rents to
Assignee without the necessity for further consent by
Assignor.
SECTION 6. Indemnification. Assignor hereby
agrees to indemnify and hold Assignee harmless of and from
any and all liability, loss, damage or expense which it may
or might incur under or by reason of this Assignment or for
any action taken by Assignee hereunder (other than such as
may be incurred as a result of the willful misconduct or
gross negligence of Assignee), or by reason or in defense of
any and all claims and demands whatsoever which may be
asserted against Assignee arising out of the Leases,
including any claim by any Tenant of credit for Rents paid
to and received by Assignor, but not delivered to Assignee;
should Assignee incur any such liability, loss, damage or
expense, the amount thereof (including reasonable attorney's
fees) with interest thereon, at the highest rate permitted
by law, shall be payable by Assignor upon demand, and shall
be secured hereby and by the other Collateral Documents.
SECTION 7. Delivery and Execution of Assignments.
Until the Secured Obligations shall have been paid in full,
Assignor will, upon the request of Assignee deliver to
Assignee executed copies of any and all Leases and any
guaranties of the Tenants' obligations thereunder.
SECTION 8. Waiver of Assignee's Rights. The
failure of Assignee to avail itself of any of the terms,
covenants and conditions of this Assignment for any period
of time or at any time or times shall not be construed or
deemed to be a waiver of any such right, and nothing herein
contained, nor anything done or omitted to be done by
Assignee pursuant hereto, shall be deemed a waiver by
Assignee of any of its rights and remedies hereunder or
under any of the Financing Documents or under any applicable
law. The right of Assignee to collect the Secured
Obligations and to enforce any other security therefor may
be exercised by Assignee either prior to, simultaneously
with, or subsequent to any action taken hereunder.
SECTION 9. Termination of Assignment. Upon
payment in full and performance of all of the Secured
Obligations, this Assignment shall become and be void and of
no effect. Assignee agrees, on the request of Assignor, to
execute any further documents or instruments, in recordable
form if requested, necessary or desirable to terminate the
effectiveness of this Assignment.
SECTION 10. Notices. All notices and other
communications required or permitted to be given hereunder
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shall be given as set forth in Section 7.01 of the
Collateral Trust Agreement.
SECTION 11. Successors and Assigns. The terms,
covenants, conditions and warranties contained herein and
the powers granted hereby shall run with the land, shall
inure to the benefit of and bind all parties hereto and
their respective heirs, executors, administrators,
successors and assigns, and all lessees, subtenants and
assigns of same, and all subsequent owners of the Property,
and all subsequent holders of the Collateral Documents.
SECTION 12. Other Security. Assignee may accept
or release other security for payment of the Secured
Obligations, release any Person primarily or secondarily
liable therefor and apply any other security held by it to
the satisfaction of the Secured Obligations, without
prejudice to any of its rights under this Assignment.
SECTION 13. Further Assurances. Assignor and
Assignee shall each make, execute and deliver unto the other
upon demand and at any time or times any and all assignments
and other instruments sufficient for the purpose of carrying
out the purposes and intent of this Assignment.
SECTION 14. Governing Law. This Assignment shall
be governed by and construed in accordance with the laws of
the State of New Jersey.
SECTION 15. Modification. No provision of this
Assignment shall be modified, waived or terminated, and no
consent to any departure by Assignor from any provision of
this Assignment shall be effective, unless the same shall be
by an instrument in writing, signed by Assignor and Assignee
with the consent of the Holders of a majority in principal
amount of the then outstanding Notes. Any such waiver or
consent shall be effective only in the specific instance and
for the specific purpose for which it was given.
SECTION 16. Liens; Further Assurances. Assignor
will not execute any other assignment of Leases or any
interest therein or any of the Rents payable thereunder,
except in connection with any permitted and subordinate
financing. Any subordinate financing or other instrument or
Lien may not become superior to the Leases nor permit the
holder of any subordinate mortgage to terminate the Leases
or otherwise adversely effect the Assignee's rights
hereunder. Assignor will perform all of its covenants and
agreements under the Leases, will not suffer or permit to
occur any release of liability of any Tenant or the accrual
or any right in such Tenant to withhold payment of Rents.
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Assignor will give prompt notice to Assignee of any notice
of the default of any Tenant or from any other person and
furnish Assignee with complete copies of said notice. If
requested by Assignee, Assignor will enforce the Leasesand
all remedies available to Assignor against any Tenant in
case of default under said Lease by such Tenant.
SECTION 17. No Release. (a) Notwithstanding any
variation of the terms of the Financing Documents, including
the increase or decrease of the principal amount thereof or
in the rate of interest payable thereunder or any extension
of time for payment thereunder, or any release of part or
parts of the Property, the Leases and the benefits hereby
assigned shall continue as additional security in accordance
with the terms of this Assignment.
(b) Assignee (i) may take security in addition to
the security already given Assignee for the payment of the
principal and interest provided to be paid in or by the
Financing Documents or release of such other security, (ii)
may release any party primarily or secondarily liable, (iii)
may grant an extension, renewal, modification, or
indulgences with respects to such Financing Documents and
replacements thereof, which replacement of the Financing
Documents may be on the same or on terms different from the
present terms, and (iv) may apply any other security
therefore held by it to the satisfaction of such obligation
without prejudice to any of its rights hereunder.
SECTION 18. No Recourse Against Others. A
director, officer, employee or shareholder as such of any of
the Company or the Guarantors shall not have any liability
for any obligations of the Company or the Guarantors under
the Notes, this Assignment, the Indenture or any other
Related Document or for any claim based on, in respect of or
by reason of such obligations or their creation. Each
Noteholder by accepting a Note irrevocably waives and
releases all such liability. The waiver and release are
part of the consideration for the issuance of the Notes.
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IN WITNESS WHEREOF, the undersigned have caused
this Assignment to be duly executed under seal and delivered
as of the day and year first above written.
ASSIGNOR:
THE CLARIDGE AT PARK PLACE,
INCORPORATED
By:________________________
Name:
Title:
ASSIGNEE:
IBJ SCHRODER BANK & TRUST COMPANY
By:________________________
Name:
Title:
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STATE OF ________ :
: ss.
COUNTY OF ________ :
BE IT REMEMBERED, that on this ___ day of January, 1994,
before me personally appeared ___________, __________________, of THE
CLARIDGE AT PARK PLACE, INCORPORATED, a New Jersey corporation, who I
am satisfied is the person who has signed the within instrument; and
I having first made known to him the contents thereof, he did
acknowledge that he signed, sealed and delivered the same as such
officer aforesaid; and that the within instrument is the voluntary
act and deed of said corporation, and further acknowledges that he
did receive a true copy of the within instrument.
________________________
(Notary Public)
(SEAL) My Commission expires:
13
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STATE OF ________ :
: ss.
COUNTY OF ________ :
BE IT REMEMBERED, that on this ___ day of January, 1993,
before me personally appeared _________________, __________________
of IBJ SCHRODER BANK & TRUST COMPANY, a New York banking corporation,
who I am satisfied is the person who has signed the within
instrument; and I having first made known to him the contents
thereof, he did acknowledge that he signed, sealed and delivered the
same as such officer aforesaid; and that the within instrument is the
voluntary act and deed of said entity, and further acknowledges that
he did receive a true copy of the within instrument.
________________________
(Notary Public)
(SEAL) My Commission expires:
14
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Schedule A
Description of Land
TRACT I:
BEGINNING in the Northeasterly line of Indiana Avenue (60
feet wide) at a point 150 feet Southeastwardly of the Southeasterly
line of Pacific Avenue (60 feet wide) and extending
1. North 62 degrees 32 minutes East, parallel with Pacific
Avenue, 155 fee; thence
2. South 27 degrees 28 minutes East, parallel with Indiana
Avenue, 50.10 feet; thence
3. South 62 degrees 32 minutes West, parallel with Pacific
Avenue 155 fee to the first mentioned Northeasterly line of Indiana
Avenue; thence
4. North 27 degrees 28 minutes West, along same, 50.10
feet to the point and place of BEGINNING.
TRACT II:
BEGINNING in the Southwesterly line of Indiana Avenue (60
feet wide) at a point 150 feet Southeastwardly of the Southeasterly
line of Pacific Avenue (60 feet wide) and extending:
1. South 27 degrees 28 minutes East, along said
Southwesterly line of Indiana Avenue, 300 feet; thence
2. South 62 degrees 32 minutes West, parallel with Pacific
Avenue, 138.10 feet to the Northeasterly line of Park Place, (60 feet
wide); thence
3. North 27 degrees 28 minutes West, along same, 300 feet;
thence
4. North 62 degrees 32 minutes West, parallel with
Pacific Avenue, 138.10 feet to the point and place of BEGINNING.
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TRACT III:
BEGINNING in the Northeasterly line of Ohio Avenue, (50
feet wide) at a point 200 feet Southeastwardly of the Southeasterly
line of Pacific Avenue (60 feet wide), and extending
1. North 62 degrees 32 minutes East, parallel with Pacific
Avenue, 145.60 feet to the Southwesterly line of Park Place, (60 feet
wide); thence
2. South 27 degrees 28 minutes East, along same, 150 feet;
thence
3. South 62 degrees 32 minutes West, parallel with Pacific
Avenue, 145.60 feet to the First mentioned Northeasterly line of Ohio
Avenue; thence
4. North 27 degrees 28 minutes West, along same, 150 feet
to the point and place of BEGINNING
TRACT IV: AIR RIGHTS
ALL THAT CERTAIN real property in the City of Atlantic
City, County of Atlantic, State of New Jersey, which lies above (but
not below) the horizontal plane the elevation of which is 26.0 feet
above that certain datum level which designates as zero an elevation
equal to mean sea level at Atlantic City, as computed and established
by the United States Coast and Geodetic Survey and which lies below
(but not above) another horizontal plane the elevation of which is
71.5 feet above said datum level, and which is bounded by and lies
within that certain plot or parcel described as follows:
ALL THAT CERTAIN lot, tract, or parcel of land and
premises, situate, lying and being in the City of Atlantic City,
County of Atlantic, and State of New Jersey, bounded and described as
follows:
BEGINNING at a point in the Westerly line of Park Place (60
feet wide), said point being distant 200.00 feet South of the
Southerly line of Pacific Avenue (60 feet wide), and extending from
said beginning point; thence
1. South 27 degrees 28 minutes 00 seconds West, in and
along the Westerly line of Park Place, a distance of 150.00 feet to a
point; thence
2. North 89 degrees 42 minutes 23 seconds East, crossing
Park Place, a distance of 67.44 feet to the easterly line of Park
Place; thence
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3. North 27 degrees 28 minutes 00 seconds West, in and
along the easterly line of Park Place, a distance of 180.80 feet;
thence
4. South 62 degrees 32 minutes 00 seconds West crossing
Park Place, a distance of 60.00 feet to the point and place of
BEGINNING.
TOGETHER with the benefits of a certain easement from the
City of Atlantic City to Del E. Webb New Jersey, Inc. dated 3-20-86,
recorded in Deed Book 4216, page 299.
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Schedule B
Existing Leases and Contracts
1. License Agreement dated April 29, 1991 by and between Square
Kentucky Corp. and Square Brighton Corp., as licensors, and The
Claridge at Park Place, Incorporated d/b/a Claridge Casino
Hotel, as licensee, relating to the Illinois Avenue parking lot
and expiring April 30, 1994 at a rate of $500,000 per year.
2. Lease dated December 26, 1984 between Delilah Road Limited
Partnership, as landlord, and The Claridge at Park Place,
Incorporated, as tenant, as amended by First Amendment to Lease
dated November 6, 1989, relating to certain office and warehouse
premises located in Egg Harbor, New Jersey original term
expiring on January 31, 1995 and continuing on a year-to-year
basis thereafter unless terminated by either party, at a rate of
$_________________ per year.
3. Bus Intercept Agreement (Missouri Avenue Lot) dated ____________
, 1993 by and between the South Jersey Transportation
Authority and the Claridge Casino Hotel, expiring on June 30,
1994 unless otherwise extended by mutual agreement of the
parties, $11,750.00 payable on January 1, 1994 and April 1,
1994.
4. License Agreement dated June 1, 1993 by and between the South
Jersey Transportation Authority, as licensor, and The Claridge
at Park Place, Incorporated d/b/a Claridge Casino Hotel, as
licensee, relating to an employee parking lot (missing
exhibits), expiring (August 30, 1993), at a rate of $2.25 per
day.
5. Brighton Park Improvements Agreement dated November 5, 1987 by
and between Greate Bay Hotel and Casino, Inc. t/a "Sands Hotel,
Casino & County Club/Atlantic City" and The Claridge at Park
Place, Incorporated t/a "Del Webb's Claridge Casino Hotel",
relating to the construction and maintenance of the "people
mover".
18
<PAGE>
This instrument was prepared by the
attorney described below and, when
recorded, the recorded counterparts
should be returned to:
James P. McIntyre, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
By:_______________________
James P. McIntyre, Esq.
ASSIGNMENT OF LEASES AND RENTS AND OTHER CONTRACT RIGHTS
19
<PAGE>
<PAGE>
EXHIBIT B-1
FORM OF INTERCREDITOR AGREEMENT
FOR WORKING CAPITAL FACILITY
INTERCREDITOR AGREEMENT, dated ____________, among
the trustee (the "Trustee") under the Indenture (as
hereinafter defined), The Claridge Hotel and Casino
Corporation, a New York corporation (the "Company"), The
Claridge at Park Place, Incorporated, a New Jersey
corporation ("CPPI"), and (Name of holder (or agent, trustee
or other authorized representative thereof)) (the "Working
Capital Lender") of Indebtedness under the (Working Capital
Facility)to be secured by a lien with respect to all or any
portion of the Collateral (as defined below). The term
"Collateral" as used herein means the following: (identify
the gaming equipment and other assets) in which the
Collateral Trustee has a lien or security interest pursuant
to the Related Documents, and which are to be subject to a
lien or security interest in favor of the Working Capital
Lender in the priorities specified in this Intercreditor
Agreement.
WHEREAS, the Company has issued its __% First
Mortgage Notes due 2002 (the " Notes") under that certain
indenture, (the "Indenture"), dated as of ______, 1994 among
the Company, CPPI as guarantor, and the Trustee, as amended
or supplemented from time to time;
WHEREAS, the First Mortgage Notes are guaranteed
by CPPI and such guaranty (the "CPPI Guaranty") is secured
by, among other things, a lien on the gaming and other
assets pursuant to a security agreement dated as of ______,
1994 by CPPI, as pledgor, (the "CPPI Security Agreement");
WHEREAS, the Working Capital Lender has lent
$(fill in amount of loan not to exceed $7.5 million) to CPPI
under the Working Capital Facility;
WHEREAS, CPPI proposes to provide the Working
Capital Lender with a lien or security interest in the
Collateral as security for Indebtedness of CPPI under the
Working Capital Facility not at any time to exceed $7.5
million in principal amount;
WHEREAS, the Indenture permits the Company and its
Subsidiaries, subject to certain limitations, to create or
cause to be created liens and security interests in the
<PAGE>
Collateral in favor of the Working Capital Lender which will
have priority over the lien granted over the Collateral to
the Collateral Trustee for the benefit of the Noteholders
pursuant to the CPPI Security Agreement and requires the
Trustee, the Company, CPPI and the Working Capital Lender,
to execute and deliver an Intercreditor Agreement in
substantially the form hereof;
WHEREAS, the aggregate outstanding principal
amount of the Notes at the date hereof is $(__________);
WHEREAS, the aggregate principal amount of
Indebtedness under the Working Capital Facility may not
exceed $(__________);
WHEREAS, the parties hereto desire to set forth
their agreement as to the nature of priority of the liens
and security interests held by the Trustee, the Company and
the Working Capital Lender in the Collateral and certain
other matters related thereto;
NOW, THEREFORE, in consideration of the mutual
premises and agreements herein contained it is hereby agreed
as follows:
SECTION 1. Definitions. As used in this
Agreement, the following terms have the meanings hereinafter
set forth:
"Bankruptcy Code" means the United States
Bankruptcy Code, 11 U.S.C. section 101 et seq.
"Bankruptcy Law" means Title 11, United States
Code, and any other state or federal insolvency,
reorganization, moratorium or similar law for the relief of
debtors.
"Bankruptcy Proceeding" means any proceeding
commenced under any Bankruptcy Law.
"Secured Parties" means, collectively, the Trustee
and the Working Capital Lender.
All capitalized terms used herein which are not
otherwise defined herein shall have the meaning ascribed to
such terms in the Indenture.
SECTION 2. Lien Acknowledgment. (a) The
Company and each of the Secured Parties hereby agrees that
each lien or security interest in the gaming equipment and
other assets constituting the Collateral pursuant to the
2
<PAGE>
Working Capital Facility to the extent of the obligations
secured by such lien or security interest (provided that the
aggregate principal amount of Indebtedness secured by such
lien or security interest shall not exceed $7.5 million),
shall have priority over each lien or security interest of
the Company in the property and assets constituting the
Collateral pursuant to the CPPI Security Agreement.
SECTION 3. Lien Priority. The priorities of the
liens or security interests established, altered or
specified herein are applicable irrespective of:
(i) the time or order of attachment or perfection
thereof;
(ii) the method of perfection;
(iii) the time or order of filing or recording of
financing statements, mortgages or other instruments;
or
(iv) any amendments to the liens or security
interest established, altered or specified herein,
provided that such amendment does not alter the
aggregate principal amount of the Indebtedness secured
by such lien, mortgage or security interest; and
(v) the time or order of foreclosure, taking of
position or the exercise of any remedy;
provided, however, that the priorities of any liens or
security interests which are not established, altered or
specified herein shall be unaffected and shall exist and
continue in accordance with applicable law. The agreements
in paragraph 2 hereof are solely for the purpose of
establishing the relative priorities of the interests of the
Secured Parties in the Collateral and shall not inure to the
benefit of any other Person.
SECTION 4. Controlling Party. The Secured Party
or Parties holding a majority in principal amount of
Indebtedness of CPPI secured by the Collateral (the
"Controlling Party") shall have the sole right, without the
affirmative consent of any of the other Secured Parties (the
"Minority Party"), and on behalf of itself and each Secured
Party, to (i) request to take any action, or fail to request
to take any action, to enforce or exercise any right or
remedy with respect to the Collateral and to foreclose upon,
collect, dispose of the Collateral or any portion thereof;
and (ii) exercise any right or remedy, or decline to
exercise any right or remedy, with respect to the Collateral
3
<PAGE>
in any Bankruptcy Proceeding, including, without limitation,
any right of election under Sections 1111(b) or 365(h) of
the Bankruptcy Code, any other rights of election,
determinations, proofs of claims or other rights or remedies
in connection with any Bankruptcy Proceeding; provided that
each Minority Party shall have the right to file its own
proof(s) of claim in any Bankruptcy Proceeding.
SECTION 5. Minority Party Agreements. In
accordance with paragraph 4 hereof, the Minority Party
agrees (regardless of whether any individual Secured Party
agrees, disagrees or abstains with respect to any action or
failure to act by the Controlling Party) that the
Controlling Party shall have the authority to act or fail to
act, as it deems necessary in its sole discretion, with
respect to the rights and remedies of all of the Secured
Parties and that the Controlling Party shall have no
liability for acting or failing to act (provided such action
or failure to act does not conflict with the express terms
of this Agreement). The Working Capital Lender further
acknowledges and agrees that, until the obligations under
the Indenture and the Guaranty are no longer outstanding,
the only right of such Working Capital Lender with respect
to the Collateral is to be secured by the Collateral as and
to the extent provided in its respective loan document or
agreement and as provided herein and to receive a share of
the proceeds of the Collateral, if any, to the extent
provided under paragraph 6 hereof; provided, however, that,
until the obligations under the Indenture and the Guaranty
are no longer outstanding, in no event shall any rights or
benefits accorded to the Working Capital Lender include any
right to challenge, contest or dispute any action taken or
not taken, by the Controlling Party, the Collateral Agent
(as hereinafter defined) or any other Secured Party in
accordance with this Agreement, and, until the obligations
under the Indenture and the Guaranty are no longer
outstanding, in no event shall the security interest granted
to the Working Capital Lender under this Agreement entitle
the Working Capital Lender to enforce its respective rights
in respect of the Collateral except through the Controlling
Party and the Collateral Agent (as hereinafter defined) in
accordance with this Agreement. In addition, the Minority
Party agrees that it (i) shall not attack nor challenge the
validity, perfection or priority of the Controlling Party's
lien with respect to the Collateral; (ii) will release all
liens and security interests in all or any portion of the
Collateral in the event that the Controlling Party elects to
sell all or any portion of the Collateral in exercising any
right or remedy with respect to the Collateral; and (iii)
waives any right of election it may have under Sections
1111(b) or 365(h) of the Bankruptcy Code, or any other
4
<PAGE>
rights of election, determinations, proofs of claims or
other rights or remedies in connection with any Bankruptcy
Proceeding with respect to the Collateral.
SECTION 6. Allocation of Payments. The Secured
Parties each agree that all money or funds collected with
respect to the Collateral (including, without limitation,
any net condemnation proceeds or other awards, insurance or
other loss recoveries which are required or permitted under
each of the documents and agreements governing the
Collateral, and any property (real and personal) and any
amounts in respect of any deficiency recoveries) in
connection with the enforcement or exercise of any right or
remedy with respect to the Collateral following the
acceleration of the Indebtedness of CPPI to any of the
Secured Parties, shall be directed to a collateral agent
appointed by the Controlling Party on behalf of all of the
Secured Parties (the "Collateral Agent"), which Collateral
Agent shall be instructed by the Controlling Party to
distribute such money, funds or other property in the
following order of priority:
First: to the payment to each Party in respect of
all reasonable expenses in connection with
the collection or realization of such cash or
funds or the administration of this Agreement
in connection with the collection or
realization of such cash or funds;
Second: to the Working Capital Lender under the
Working Capital Facility to satisfy all
obligations thereunder secured by a lien or
security interest on the Collateral not to
exceed $7.5 million in principal amount;
Third: to the Trustee to satisfy the Secured
Obligations under the Indenture (as defined
therein);
Fourth: to any other obligor under any other
applicable Related Document or to whosoever
may be lawfully entitled to receive the same
as a court of competent jurisdiction may
direct.
SECTION 7. Enforcing Rights. Each Secured Party
agrees not to take any action whatsoever to enforce any term
or provision of its respective security document or this
Agreement or to enforce any of its rights in respect of the
Collateral, except through the Controlling Party in
accordance with paragraphs 5 and 6 hereof; provided,
5
<PAGE>
however, that this Agreement shall not prevent any Secured
Party from enforcing or exercising any right or remedy with
respect to the Collateral granted to it by its respective
documents and agreements to the extent that such enforcement
or exercise of rights or remedies does not impair the
security interest of the Controlling Party or any other
Secured Party in the Collateral; nor shall this Agreement
grant any of the Secured Parties any right or remedy under
the documents or agreements of the other Secured Parties.
SECTION 8. Distributions. The Company, CPPI, the
Trustee and the Working Capital Lender each agree that if
any Secured Party receives any money, funds or other
property that are distributed pursuant to paragraph 7 above
(or any similar provision in any other Intercreditor
Agreement substantially in the form of this Agreement), such
money, funds or other property shall not discharge any
secured obligation held by the Person receiving such money,
funds or other property to the extent such money, funds or
other property were distributed to any other Person. In the
event that any payment in respect of, or distribution of,
the Collateral, of any kind or character, whether in cash,
property or securities, shall be received by any Secured
Party before all Indebtedness secured by Collateral is paid
in full, such payment or distribution shall be held in trust
for the benefit of, and shall be paid over to, the Secured
Parties in accordance with paragraph 6 above.
SECTION 9. Communications to CPPI. Each of the
Secured Parties agrees to transmit to the Controlling Party
a copy of any communication sent by such Secured Party to
the Company, CPPI, Trustee, Working Capital Lender or any
other Person (contemporaneously with the transmittal of any
such communication) with respect to any event of default,
any acceleration of Indebtedness, or any notice of sale of
any Collateral as a result of a default. Any failure by any
Secured Party to furnish a notice pursuant to this paragraph
9 shall in no way diminish the rights of such party
hereunder.
SECTION 10. GOVERNING LAW. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW JERSEY, WITHOUT REGARD TO ITS CHOICE OF LAW
PROVISIONS, AND SHALL BE BINDING UPON AND INURE TO THE
BENEFIT OF THE SECURED PARTIES, AND THEIR RESPECTIVE
SUCCESSORS, DESIGNEES AND ASSIGNS.
SECTION 11. Defined Terms. All terms used herein
which are defined in the New Jersey Uniform Commercial Code
shall have the meanings therein stated, unless the context
otherwise requires.
6
<PAGE>
SECTION 12. Notices. All notices or other
communications required or permitted hereunder shall be in
writing and shall be given by, personal delivery or United
States mail, first class, registered or certified, postage
prepaid, return receipt requested, addressed to the parties
at the addresses indicated on the signature pages hereof.
Each such notice or other communication shall be deemed
given on (a) the date of receipt of personal delivery
thereof, or (b) if not by mail (as aforesaid), the date
which is three (3) business days after such communication is
deposited in the mall (postage prepaid as aforesaid). Any
party may change its address for notice by notice to the
other parties hereto in accordance with the foregoing.
SECTION 13. Further Assurances. Each of the
Secured Parties (including the Trustee), upon the request of
any Secured Party, shall execute and deliver and cause to be
recorded with the (fill in appropriate counties in New
Jersey) an Intercreditor Agreement substantially in the form
of this Agreement, which Intercreditor Agreement shall be
effective if and only if all Secured Parties shall have
executed and delivered the same or a counterpart thereof.
Simultaneously with the repayment or other discharge of
Indebtedness secured by any Collateral, the Secured Party
whose Indebtedness is so repaid or discharged shall execute
and deliver such instruments as may be reasonably required
by any of the other Secured Parties to release or extinguish
such Secured Party's interest in the Collateral.
SECTION 14. Liability. No Secured Party shall be
liable to any other Secured Party for any action taken by
it, including the payment of any monies hereunder, in
connection with this Agreement, provided the same was taken
in good faith and did not constitute gross negligence or
willful conduct.
SECTION 15. Amendments. Each Secured Party shall
have the right to alter or amend its respective loan
agreements and documents and to release or take additional
collateral pursuant thereto. Nothing in this agreement is
intended to alter or amend the obligations of any Secured
Party with respect to the Company or any of its Subsidiaries
under its respective loan agreements and documents. Nothing
herein is intended to confer upon the Company or any of its
Subsidiaries any right or benefit with respect to any. Each
Secured Party and the Company and its Subsidiaries hereby
acknowledge that they have no right to enforce the terms
hereunder against any Secured Party. Their signatures
hereto are merely to acknowledge this agreement, which is
for the sole benefit of the Secured Parties.
7
<PAGE>
SECTION 16. Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall
be deemed an original but all of which together shall
constitute one and the same instrument.
SECTION 17. Severability. In the event any
provision hereof is determined to be unenforceable or
invalid, such provision or such part thereof which may be
unenforceable shall be deemed severed from this Agreement
and the remaining provisions carried out with the same force
and effect as if the severed provision of part thereof had
not been made a part hereof.
8
<PAGE>
IN WITNESS WHEREOF, the Trustee, the Company,
CPPI, the Working Capital Lender and the Trustee, as
trustee, have caused this Agreement to be duly executed as
of the date first above written.
(Parties to the Intercreditor
Agreement)
9
<PAGE>
<PAGE>
EXHIBIT B-2
FORM OF INTERCREDITOR AGREEMENT
FOR PARI PASSU INDEBTEDNESS OF
THE CLARIDGE HOTEL AND CASINO CORPORATION
(Project Expansion)
INTERCREDITOR AGREEMENT, dated ____________, among
the trustee (the "Trustee") under the Indenture (as
hereinafter defined), The Claridge Hotel and Casino
Corporation, a New York corporation (the "Company"), The
Claridge at Park Place, Incorporated, a New Jersey
corporation ("CPPI") and [Name of holder (or agent, trustee
or other authorized representative thereof)] of Indebtedness
to be secured by a lien with respect to all or any portion
of the Collateral (as defined below) pursuant to the terms
of this Intercreditor Agreement (the "New Lender"). The
term "Collateral" as used herein means the following:
[identify the properties and assets relating to a Project
Expansion] in which the Collateral Trustee has a lien or
security interest pursuant to the Indenture or any other
Related Document, and which are to be subject to a lien or
security interest in favor of the New Lender in the
priorities specified in this Intercreditor Agreement.
WHEREAS, the Company has issued its __% First
Mortgage Notes due 2002 (the "Notes") under that certain
indenture, (the "Indenture"), dated as of __________, 1994,
among the Company, The Claridge at Park Place, Incorporated
as guarantor, and the Trustee, as amended or supplemented
from time to time;
WHEREAS, the First Mortgage Notes are secured by a
Mortgage and Related Documents relating to certain property
and assets of the Claridge Hotel and Casino in Atlantic
City, New Jersey;
WHEREAS, the Company proposes to provide the New
Lender with a lien or security interest in the Collateral as
security for Indebtedness of the Company;
WHEREAS, it has been agreed by the Trustee that
the Company and its Subsidiaries, subject to the terms and
provisions of the Indenture, be permitted to obtain
additional financing from other lenders to finance the costs
of a Project Expansion as allowed under the Indenture;
<PAGE>
WHEREAS, the Indenture permits the Company,
subject to certain limitations, to create or cause to be
created additional Liens and security interests in the
Collateral in favor of Persons other than the Trustee which
will have equal priority with the lien of the Related
Documents pursuant to an Intercreditor Agreement and
requires the Trustee and the Company, upon fulfillment of
certain conditions precedent, to execute and deliver an
Intercreditor Agreement in substantially the form hereof to
the holder of the Indebtedness to be secured by such
additional liens and security interests (or such holder's
agent, trustee or other authorized representative);
WHEREAS, the New Lender [has] entered into certain
documents and agreements providing for the grant to such
Persons of liens, mortgages and security interests in all
[or a portion] of the property and assets constituting the
Collateral including, without limitation, [describe
collateral documents and identification of location and
dates of recording or filings] [define New Lender's
documents as "New Lender's Documents"] (the property and
assets constituting the Collateral in which each of the
Trustee, and the New Lender have obtained liens, mortgages
or security interests being referred to herein as the "Pari
Passu Collateral") [reference to property description to be
supplied at the time of execution)];
WHEREAS, the aggregate outstanding principal
amount of the First Mortgage Notes at the date hereof is
$[___________];
WHEREAS, the aggregate outstanding principal
amount of the Indebtedness owed by the Company and its
Subsidiaries to the New Lender at the date hereof is
$[___________];
WHEREAS, the parties hereto desire to set forth
their agreement as to the nature of priority of the liens,
mortgages and security interests held by the Trustee and the
New Lender in the Pari Passu Collateral and certain other
matters related thereto;
NOW, THEREFORE, in consideration of the mutual
premises and agreements herein contained it is hereby agreed
as follows:
SECTION 1. Definitions. As used in this
Agreement, the following terms have the meanings hereinafter
set forth:
2
<PAGE>
"Bankruptcy Code" means the United States
Bankruptcy Code, 11 U.S.C. section 101 et seq.
"Bankruptcy Law" means Title 11, United States
Code, and any other state or federal insolvency,
reorganization, moratorium or similar law for the relief of
debtors.
"Bankruptcy Proceeding" means any proceeding
commenced under any Bankruptcy Law.
"Pari Passu Parties" means, collectively, the
Trustee and the New Lender.
All capitalized terms used herein which are not
otherwise defined herein shall have the meaning ascribed to
such terms in the Indenture.
SECTION 2. Lien Acknowledgement. (a) The
Company and each of the Pari Passu Parties hereby agrees
that each lien, mortgage or security interest of the Trustee
in the property and assets constituting the Pari Passu
Collateral pursuant to the [Related Documents], to the
extent of the obligations secured by such lien, mortgage or
security interest, shall be equal in priority with (i) each
lien, mortgage, or security interest of the New Lender in
the property and assets constituting the Pari Passu
Collateral pursuant to the New Lender's Documents, to the
extent of the obligations secured by such liens, mortgages
or security interests.
SECTION 3. Lien Priority. The priorities of
the liens, mortgages or security interests established,
altered or specified herein are applicable irrespective of:
(i) the time or order of attachment or perfection
thereof;
(ii) the method of perfection;
(iii) the time or order of filing or recording of
financing statements, mortgages or other instruments;
or
(iv) any amendments to the liens, mortgages or
security interest established, altered or specified
herein, provided that such amendment does not alter the
aggregate principal amount of the Indebtedness secured
by such lien, mortgage or security interest; and
3
<PAGE>
(v) the time or order of foreclosure, taking of
possession or the exercise of any remedy;
provided, however, that the priorities of any liens,
mortgages or security interests which are not established,
altered or specified herein shall be unaffected and shall
exist and continue in accordance with applicable law. The
agreements in paragraph 2 hereof are solely for the purpose
of establishing the relative priorities of the interests of
the Pari Passu Parties in the Pari Passu Collateral and
shall not inure to the benefit of any other Person.
SECTION 4. Controlling Party. The Pari Passu
Party or Parties holding a majority in principal amount of
Indebtedness secured by the Pari Passu Collateral (the
"Controlling Party") shall have the sole right, without the
affirmative consent of any of the other Pari Passu Parties
(the "Minority Party"), and on behalf of itself and each
Pari Passu Party, to (i) request to take any action, or fail
to request to take any action, to enforce or exercise any
right or remedy with respect to the Pari Passu Collateral
and to foreclose upon, collect, dispose of the Pari Passu
Collateral or any portion thereof; and (ii) exercise any
right or remedy, or decline to exercise any right or remedy,
with respect to the Pari Passu Collateral in any Bankruptcy
Proceeding, including, without limitation, any right of
election under Sections 1111(b) or 365(h) of the Bankruptcy
Code, any other rights of election, determinations, proofs
of claims or other rights or remedies in connection with any
Bankruptcy Proceeding; provided that each Minority Party
shall have the right to file its own proof(s) of claim in
any Bankruptcy Proceeding.
SECTION 5. Minority Party Agreements. In
accordance with paragraph 4 hereof, the Minority Party
agrees (regardless of whether any individual Pari Passu
Party agrees, disagrees or abstains with respect to any
action or failure to act by the Controlling Party) that the
Controlling Party shall have the authority to act or fail to
act, as it deems necessary in its sole discretion, with
respect to the rights and remedies of all of the Pari Passu
Parties and that the Controlling Party shall have no
liability for acting or failing to act (provided such action
or failure to act does not conflict with the express terms
of this Agreement). Each Pari Passu Party further
acknowledges and agrees that, until the obligations under
the Indenture are no longer outstanding, the only right of
such Pari Passu Party with respect to the Pari Passu
Collateral is to be secured by the Pari Passu Collateral as
and to the extent provided in its respective loan document
or agreement and as provided herein and to receive a share
4
<PAGE>
of the proceeds of the Pari Passu Collateral, if any, to the
extent provided under paragraph 6 hereof; provided, however,
that, until the obligations under the Indenture are no
longer outstanding, in no event shall any rights or benefits
accorded any Pari Passu Party include any right to
challenge, contest or dispute any action taken or not taken,
by the Controlling Party, the Collateral Agent (as
hereinafter defined) or any other Pari Passu Party in
accordance with this Agreement, and, until the obligations
under the Indenture are no longer outstanding, in no event
shall the security interest granted to the New Lender under
this Agreement entitle any Pari Passu Party to enforce its
respective rights in respect of the Pari Passu Collateral
except through the Controlling Party and the Collateral
Agent (as hereinafter defined) in accordance with this
Agreement. In addition, the Minority Party agrees that it
(i) shall not attack nor challenge the validity, perfection
or priority of the Controlling Party's lien with respect to
the Pari Passu Collateral; (ii) will release all liens,
mortgages and security interests in all or any portion of
the Pari Passu Collateral (to the extent of its respective
interest therein) in the event that the Controlling Party
elects to sell all or any portion of the Pari Passu
Collateral in exercising any right or remedy with respect to
the Pari Passu Collateral; and (iii) waives any right of
election it may have under Sections 1111(b) or 365(h) of the
Bankruptcy Code, or any other rights of election,
determinations, proofs of claims or other rights or remedies
in connection with any Bankruptcy Proceeding with respect to
the Pari Passu Collateral.
SECTION 6. Allocation of Payments. The Pari
Passu Parties each agree that all money or funds collected
with respect to the Pari Passu Collateral (including,
without limitation, any net condemnation proceeds or other
awards, insurance or other loss recoveries which are
required or permitted under each of the documents and
agreements governing the Pari Passu Collateral, and any
property (real and personal) and any amounts in respect of
any deficiency recoveries) in connection with the
enforcement or exercise of any right or remedy with respect
to the Pari Passu Collateral following the acceleration of
the Indebtedness of the Company to any of the Pari Passu
Parties, shall be directed to a collateral agent appointed
by the Controlling Party on behalf of all of the Pari Passu
Parties (the "Collateral Agent"), which Collateral Agent
shall be instructed by the Controlling Party to distribute
such money, funds or other property in the following order
of priority:
5
<PAGE>
First: to the payment to each Pari Passu Party in
respect of all reasonable expense in
connection with the collection or realization
of such cash or funds or the administration
of this Agreement in connection with the
collection or realization of such cash or
funds;
Second: to each such Pari Passu Party a proportion of
such remaining money or funds as the total
outstanding obligations secured by a lien,
mortgage or security interest on the Pari
Passu Collateral held by such Pari Passu
Party bears to the total amount of
outstanding obligations secured by liens,
mortgages or security interests on the Pari
Passu Collateral held by all Pari Passu
Parties until all such secured obligations of
such Pari Passu Party have been paid in full
(disregarding any reduction of any such
secured obligations arising or occurring
because of a foreclosure sale or the exercise
of any other right or remedy with respect to
the Pari Passu Collateral);
Third: to the Trustee under the Mortgage or other
obligor under any other applicable Related
Document or to whosoever may be lawfully
entitled to receive the same as a court of
competent jurisdiction may direct.
SECTION 7. Enforcing Rights. Each Pari Passu
Party agrees not to take any action whatsoever to enforce
any term or provision of its respective security document or
this Agreement or to enforce ny of its rights in respect of
the Pari Passu Collateral, except through the Controlling
Party in accordance with paragraphs 5 and 6 hereof;
provided, however that this Agreement shall not prevent any
Pari Passu Party from enforcing or exercising any right or
remedy with respect to the Pari Passu Collateral granted to
it by its respective documents and agreements to the extent
that such enforcement or exercise of rights or remedies does
not impair the security interest of the Controlling Party or
any other Pari Passu Party in the Pari Passu Collateral; nor
shall this Agreement grant any of the Pari Passu Parties any
right or remedy under the documents or agreements of the
other Pari Passu Parties.
SECTION 8. Distributions. The Company, CPPI,
the Trustee and the New Lender each agree that if any Pari
6
<PAGE>
Passu Party receives any money, funds or other property that
are distributed pursuant to paragraph 7 above (or any
similar provision in any other Intercreditor Agreement
substantially in the form of this Agreement), such money,
funds or other property shall not discharge any secured
obligation held by the Person receiving such money, funds or
other property to the extent such money, funds or other
property were distributed to any other Person. In the event
that any payment in respect of, or distribution of, the Pari
Passu Collateral, of any kind or character, whether in cash,
property or securities, shall be received by any Pari Passu
Party before all Indebtedness secured by Pari Passu
Collateral is paid in full, such payment or distribution
shall be held in trust for the benefit of, and shall be paid
over to, the Pari Passu Parties in accordance with paragraph
6 above.
SECTION 9. Communications. Each of the Pari
Passu Parties agrees to transmit to the Controlling Party a
copy of any communication sent by such Pari Passu Party to
the Company, CPPI or any other Person (contemporaneously
with the transmittal of any such communication) with respect
to any event of default, any acceleration of Indebtedness,
or any notice of sale of any Pari Passu Collateral as a
result of a default. Any failure by any Pari Passu Party to
furnish a notice pursuant to this paragraph 9 shall in no
way diminish the rights of such party hereunder.
SECTION 10. Governing Law. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CHOICE
OF LAW PROVISIONS, AND SHALL BE BINDING UPON AND INURE TO
THE BENEFIT OF THE Pari Passu PARTIES, AND THEIR RESPECTIVE
SUCCESSORS, DESIGNEES AND ASSIGNS.
SECTION 11. Defined Terms. All terms used
herein which are defined in the New York Uniform Commercial
Code shall have the meanings therein stated, unless the
context otherwise requires.
SECTION 12. Notices. All notices or other
communications required or permitted hereunder shall be in
writing and shall be given by personal delivery or United
States mail, first class, registered or certified, postage
prepaid, return receipt requested, addressed to the parties
at the address indicated on the signature pages hereof.
Each such notice or other communication shall be deemed
given on (a) the date of receipt of personal delivery
thereof, or (b) if not by mail (as aforesaid), the date
which is three (3) business days after such communication is
deposited in the mail (postage prepaid as aforesaid). Any
7
<PAGE>
party may change its address for notice by notice to the
other parties hereto in accordance with the foregoing.
SECTION 13. Further Assurances. Each of the
Pari Passu Parties (including the Trustee), upon the request
of any Pari Passu Party, shall execute and deliver and cause
to be recorded with the [fill in appropriate counties in New
York] an Intercreditor Agreement substantially in the form
of this Agreement, which Intercreditor Agreement shall be
effective if and only if all Pari Passu Parties shall have
executed and delivered the same or a counterpart thereof.
Simultaneously with the repayment or other discharge of
Indebtedness secured by any Pari Passu Collateral, the Pari
Passu Party whose Indebtedness is so repaid or discharged
shall execute and delivery such instruments as may be
reasonably required by any of the other Pari Passu Parties
to release or extinguish such Pari Passu Party's interest in
the Pari Passu Collateral.
SECTION 14. Liability. No Pari Passu Party
shall be liable to any other Pari Passu Party for any action
taken by it, including the, payment of any monies hereunder,
in connection with this Agreement, provided the same was
taken in good faith and did not constitute gross negligence
or willful misconduct.
SECTION 15. Amendments. Each Pari Passu Party
shall have the right to alter or amend its respective loan
agreements and documents and to release or take additional
collateral pursuant thereto. Nothing in this agreement is
intended to alter or amend the obligations of any Pari Passu
Party with respect to the Company or any of its Subsidiaries
under its respective loan agreements and documents. Nothing
herein is intended to confer upon the Company or any of its
Subsidiaries any right or benefit with respect to any Pari
Passu Party and the Company and its Subsidiaries hereby
acknowledge that they have no right to enforce the terms
hereunder against any Pari Passu Party. Their signatures
hereto are merely to acknowledge this agreement, which is
for the sole benefit of the Pari Passu Parties.
SECTION 15. Counterparts. This Agreement may
be executed in any number of counterparts, each of which
shall be deemed an original but all of which together shall
constitute one and the same instrument.
SECTION 17. Severability. In the event any
provision hereof is determined to be unenforceable or
invalid, such provision or such part thereof which may be
unenforceable shall be deemed severed from this Agreement
and the remaining provisions carried out with the same force
8
<PAGE>
and effect as if the severed provision of part thereof had
not been made a part hereof.
9
<PAGE>
IN WITNESS WHEREOF, the Trustee, the Company, CPPI
and the New Lender have caused this Agreement to be duly
executed as of the date first above written.
[Parties to the
Intercreditor
Agreement]
10
<PAGE>
<PAGE>
(ROGERS & WELLS LETTERHEAD)
January 17, 1994
The Claridge Hotel and Casino Corporation
The Claridge at Park Place, Incorporated
Indiana Avenue and The Boardwalk
Atlantic City, New Jersey 08401
Re: $85,000,000 of % First Mortgage Notes Due 2002
Registration Statement on Form S-1/Registration No. 33-71550
Ladies and Gentlemen:
We have acted as counsel to The Claridge Hotel and
Casino Corporation, a New York corporation (the "Company"), and
The Claridge at Park Place, Incorporated, a New Jersey
corporation and wholly-owned subsidiary of the Company ("CPPI"),
in connection with the preparation and filing of a Registration
Statement on Form S-1 (the "Registration Statement") relating to
the proposed offer, issuance and sale by the Company of $85
million aggregate principal amount of First Mortgage Notes due
2002 (the "Notes"), which are to be guaranteed by CPPI pursuant
to a guarantee (the "Guarantee"). It is contemplated that the
Notes will be issued pursuant to an indenture (the "Indenture")
to be executed and delivered by the Company, CPPI and IBJ
Schroder Bank & Trust Company, as trustee (the "Trustee").
Based on the information contained in the
Registration Statement and such other examination of law and fact
as we have deemed necessary, we are of the opinion that when the
Notes are sold, authenticated and delivered as contemplated by
(i) the Registration Statement and (ii) the Indenture (and when
the Indenture is qualified under the Trust Indenture Act of 1939,
as amended, and duly authorized, executed and delivered by each
of the parties thereto):
<PAGE>
1. The Notes will be duly authorized and validly
issued and will constitute the valid and binding
obligations of the Company, enforceable against the Company
in accordance with their terms, except insofar as
enforceability may be limited by (i) usury, bankruptcy,
insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally, including
without limitation applicable fraudulent transfer laws,
(ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity
or at law), or (iii) the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 et seq., the regulations adopted pursuant
thereto, or rulings of the New Jersey Casino Control
Commission, and as such laws, regulations or rulings may
now or hereafter be in effect.
2. The Guarantee, when duly authorized, will
constitute a valid and binding obligation of CPPI,
enforceable against CPPI in accordance with its terms,
except insofar as enforceability may be limited by (i)
usury, bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights
generally, including without limitation applicable
fraudulent transfer laws, (ii) general principles of equity
(regardless of whether such enforceability is considered in
a proceeding in equity or at law), or (iii) the New Jersey
Casino Control Act, N.J.S.A. 5:12-1 et seq., the
regulations adopted pursuant thereto, or rulings of the New
Jersey Casino Control Commission, as such laws, regulations
or rulings may now or hereafter be in effect.
The opinions set forth herein relate solely to the
laws of the United States of America and the laws of the State of
New York. We are not admitted to practice law in the State of
New Jersey and, with respect to matters herein governed by the
laws of the State of New Jersey, have relied entirely upon the
opinion of Frank A. Bellis, Jr., Esq., including the assumptions
set forth therein, a copy of which is annexed hereto.
We hereby consent to the filing of this opinion
letter as an exhibit to the Registration Statement and to the
reference to our name under the caption "Legal Matters" in the
Prospectus that forms a part of the Registration Statement. In
giving this consent, we do not thereby concede that we are within
the category of persons whose consent is required under the
Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder.
Very truly yours,
ROGERS & WELLS
<PAGE>
(CLARIDGE LETTERHEAD)
January 17, 1994
The Claridge Hotel and Casino Corporation
The Claridge at Park Place, Incorporated
Indiana Avenue and The Boardwalk
Atlantic City, New Jersey 08401
Rogers & Wells
200 Park Avenue
New York, New York 10166
Re: $85,000,000 of % First Mortgage Notes Due 2002
Registration Statement on Form S-1/Registration No. 33-71550
Ladies and Gentlemen:
I am delivering this opinion to you in my capacity as
General Counsel of The Claridge Hotel and Casino Corporation, a
New York corporation (the "Company"), and The Claridge at Park
Place, Incorporated, a New Jersey corporation and wholly-owned
subsidiary of the Company ("CPPI"), in connection with the
preparation and filing of a Registration Statement on Form S-1
(the "Registration Statement") relating to the proposed offer,
issuance and sale by the Company of $85 million aggregate
principal amount of First Mortgage Notes due 2002 (the "Notes"),
which are to be guaranteed by CPPI pursuant to a guarantee (the
"Guarantee"). It is contemplated that the Notes will be issued
pursuant to an indenture (the "Indenture") to be executed and
delivered by the Company, CPPI and IBJ Schroder Bank & Trust
Company, as trustee (the "Trustee").
I have made such examination of New Jersey law as I
have deemed relevant for the purpose of rendering this opinion,
but I have not made an independent review of federal law or the
laws of any other state or foreign jurisdiction. Accordingly, I
express no opinion as to federal law or the laws any state or
foreign jurisdiction, and this opinion is confined to such
matters as are governed solely by New Jersey law.
<PAGE>
Based on the information contained in the
Registration Statement and such other examination of New Jersey
law and fact as I have deemed necessary, I am of the opinion that
when the Notes are sold, authenticated and delivered as
contemplated by (i) the Registration Statement and (ii) the
Indenture (and when the Indenture is qualified under the Trust
Indenture Act of 1939, as amended, and duly authorized, executed
and delivered by each of the parties thereto), the Guarantee,
when duly authorized, will constitute a valid and binding
obligation of CPPI, enforceable against CPPI in accordance with
its terms, except insofar as enforceability may be limited by (i)
usury, bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally,
including without limitation applicable fraudulent transfer laws,
(ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law), or (iii) the New Jersey Casino Control Act, N.J.S.A. 5:12-1
et seq., the regulations adopted pursuant thereto, or rulings of
the New Jersey Casino Control Commission, as such laws,
regulations or rulings may now or hereafter be in effect.
No person or entity other than the Company, CPPI or
Rogers & Wells, in rendering its opinion of even date herewith to
the Company and CPPI, may rely or claim reliance upon this
opinion.
I hereby consent to the filing of this opinion letter
as an exhibit to the Registration Statement and to the reference
to my name under the caption "Legal Matters" in the Prospectus
that forms a part of the Registration Statement. In giving this
consent, I do not thereby concede that I am within the category
of persons whose consent is required under the Securities Act of
1933, as amended, or the rules and regulations promulgated
thereunder.
Very truly yours,
Frank A. Bellis, Jr.
<PAGE>
<PAGE>
As filed with the Securities and Exchange Commission on January 18, 1994
- --------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
--------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)__
IBJ SCHRODER BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-5375195
(Jurisdiction of incorporation or (I.R.S. employer
organization if not a U.S. national bank) identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip Code)
R. Anthony Pohlig
Assistant Vice President
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
(212) 858-2000
(Name, address and telephone number of agent for service)
THE CLARIDGE HOTEL AND CASINO CORPORATION
THE CLARIDGE AT PARK PLACE, INCORPORATED
(Exact name of each obligor as specified in its charter)
New York 22-2469172
New Jersey 22-2469171
(State or jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Indiana Avenue and The Boardwalk 08401
Atlantic City, New Jersey (Zip Code)
(Address of principal executive office)
$85,000,000 First Mortgage Notes Due 2002
(Title of the indenture securities)
- -------------------------------------------------------------------------
<PAGE>
Item 1. General information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
New York State Banking Department,
Two Rector Street, New York, New York
Federal Deposit Insurance Corporation
Washington, D.C.
Federal Reserve Bank of New York
Second District,
33 Liberty Street, New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the obligors or underwriters.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee.
Item 3. Voting securities of the trustee.
Furnish the following information as to each class of voting securities
of the trustee:
As of December 1, 1993
Col. A Col. B
Title of class Amount Outstanding
-------------- ------------------
Not Applicable
Item 4. Trusteeships under other indentures.
If the trustee is a trustee under another indenture under which any other
securities, or certificates or interest or participation in any other
securities, of the obligor are outstanding, furnish the following
information:
(a) Title of the securities outstanding under each such other indenture.
Not Applicable
(b) A brief statement of the facts called upon as a basis for the claim
that no conflicting interest within the meaning of Section 310 (b)
(1) of the Act arises as a result of the trusteeship under any such
other indenture, including a statement as to how the indenture
securities will rank as compared with the securities issued under
such other indenture.
Not Applicable
Item 5. Interlocking directorates and similar relationships with the obligor
or underwriters.
If the trustee or any of the directors or executive officers of the
trustee is a director, officer, partner, employee, appointee, or
representative of the obligor or of any underwriter for the obligor,
identify each such person having any such connection and state the nature
of each such connection.
Not Applicable
Item 6. Voting securities of the trustee owned by the obligor or its
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by the obligor and each director, partner, and
executive officer of the obligor.
As of December 1, 1993
Col. A Col. B Col. C Col. D
Name of owner Title of class Amount owned Percentage of
beneficially voting
securities
represented by
amount given
in Col. C
- ------------- -------------- -------------- ----------------
Not Applicable
Item 7. Voting securities of the trustee owned by underwriters or their
officials.
Furnish the following information as to the voting securities of the
trustee owned beneficially by each underwriter for the obligor and each
director, partner and executive officer of each such underwriter.
As of December 1, 1993
Col. A Col. B Col. C Col. D
Name of owner Title of class Amount owned Percentage of
beneficially voting
securities
represented by
amount given
in Col. C
- ------------- -------------- -------------- ----------------
Not Applicable
Item 8. Securities of the obligor owned or held by the trustee.
Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by
the trustee.
As of December 1, 1993
Col. A Col. B Col. C Col. D
Title of Class Whether the Amount owned Percentage of
securities are beneficially class
voting or or represented
non voting held as by amount given
securities collateral in Col. C
security for
obligations
in default
- ------------- -------------- -------------- ----------------
Not Applicable
Item 9. Securities of underwriters owned or held by the trustee.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor,
furnish the following information as to each class of securities of such
underwriter any of which are so owned or held by the trustee.
As of December 1, 1993
Col. A Col. B Col. C Col. D
Name of Issuer Amount Amount owned Percentage of
and title of Outstanding beneficially class
class or represented
held as by amount given
collateral in Col. C
security for
obligations
in default
- ------------- -------------- -------------- ----------------
Not Applicable
Item 10. Ownership or holdings by the trustee of voting securities of certain
affiliates or security holders of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person, who, to the
knowledge of the trustee (1) owns 10 percent or more of the voting
securities of the obligor or (2) is an affiliate, other than a
subsidiary, of the obligor, furnish the following information as to the
voting securities of such person.
As of December 1, 1993
Col. A Col. B Col. C Col. D
Name of Amount Amount owned Percentage of
Issuer Outstanding beneficially class
and title of or held as represented
class collateral by amount given
security in Col. C
for obligations
in default
- ----------- ------------- -------------- ----------------
Not Applicable
Item 11. Ownership or holdings by the trustee of any securities of a person
owning 50 percent or more of the voting securities of the obligor.
If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge
of the trustee, owns 50 percent or more of the voting securities of the
obligor, furnish the following information as to each class of securities
of such person any of which are so owned or held by the trustee.
As of December 1, 1993
Col. A Col. B Col. C
Nature of Amount Due Date
Indebtedness Outstanding
------------ ----------- ---------
Not Applicable
Item 12. Indebtedness of the Obligor to the Trustee.
Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information:
As of December 1, 1993
Col. A Col. B Col. C Col. D
Title of Class Whether the Amount owned Percentage of
securities are beneficially class
voting or or represented
non voting held as by amount given
securities collateral in Col. C
security for
obligations
in default
- ------------- -------------- -------------- ----------------
Not Applicable
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such
default.
Not Applicable
(b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in
any other securities, of the obligor are outstanding, or is trustee
for more than one outstanding series of securities under the
indenture, state whether there has been a default under any such
indenture or series, identify the indenture or series affected, and
explain the nature of any such default.
Not Applicable
Item 14. Affiliations with the Underwriters.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not Applicable
Item 15. Foreign Trustees.
Identify the order or rule pursuant to which the foreign trustee is
authorized to act as sole trustee under indentures qualified or to be
qualified under the Act.
Not Applicable
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
*1. A copy of the Charter of IBJ Schroder Bank & Trust Company as
amended to date, see Exhibit 1A to Form T-1, Securities and Exchange
Commission File No. 22-18460.
*2. A copy of the Certificate of Authority of the Trustee to Commence
Business (Included in 1 above).
*3. A copy of the Authorization of the Trustee to exercise Corporate
Trust Powers (Included in 1 above).
*4. A copy of the existing By-Laws of the Trustee, as amended to date,
see Exhibit 4 to Form T-1, Securities and Exchange Commission File
No. 22-19146.
5. The consent of the United States institutional trustee required by
Section 321(b) of the Act (see attached Exhibit I).
6. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority (see attached Exhibit II).
_________________
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a
reference to the copy of the Exhibit heretofore filed with the Securities
and Exchange Commission, to which there have been no amendments or
changes.
NOTE
In answering any item in this Statement of Eligibility which
relates to matters particularly within the knowledge of the
obligor and its directors or officers, the trustee has relied
upon information furnished to it by the obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base responsive answers, certain answers
may be based on incomplete information.
However, those answers should be considered as correct unless amended by
an amendment to this Form T-1.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, IBJ Schroder Bank & Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility and qualification to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of New York,
and State of New York, on the 18th day of January, 1994.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ R. Anthony Pohlig
----------------------------
R. Anthony Pohlig
Assistant Vice President
<PAGE>
Exhibit I
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, in connection with the proposed issue of THE CLARIDGE HOTEL AND
CASINO CORPORATION $85,000,000 First Mortgage Notes due 2002, we hereby
consent that reports of examinations by Federal, State, Territorial, or
District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefore.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ R. Anthony Pohlig
------------------------------
R. Anthony Pohlig
Assistant Vice President
Dated: January 18, 1994
<PAGE>
Exhibit II
REPORT OF CONDITION
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY of New York, New York
And Foreign and Domestic Subsidiaries
Report as of September 30, 1993
Dollar Amounts
ASSETS in Thousands
Cash and balance due from depository institutions: --------------
Noninterest-bearing balances and currency and coin..........$ 41,309
Interest-bearing balances................................... 337,387
Securities.................................................... 87,599
Federal funds sold and securities purchased under agreements
to resell in domestic offices of the bank............... 1,266,263
Loans and lease financing receivables:
Loan and leases, net of unearned income........2,366,827
LESS: Allowance for loan and lease losses.........55,000
Loans and leases, net of unearned income, allowance, and
reserve................................................. 2,311,827
Assets held in trading accounts............................... 3,683,339
Premises and fixed assets..................................... 12,021
Other real estate owned....................................... 1,455
Customers' liability to this bank on acceptances outstanding.. 1,966
Intangible assets............................................. 79,231
Other assets.................................................. 317,631
-----------
TOTAL ASSETS..................................................$ 8,140,028
===========
Deposits: LIABILITIES
In domestic offices..................................... 636,177
Noninterest-bearing............................118,994
Interest-bearing...............................517,183
In foreign offices, Edge and Agreement subsidiaries,
and IBFs................................................ 720,799
Noninterest-bearing.............................11,964
Interest-bearing...............................708,835
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank........... 4,727,931
Demand notes issued to the U.S. Treasury...................... 95,000
Other borrowed money.......................................... 1,116,744
Mortgage indebtedness and obligations under capitalized
leases.................................................. 11,958
Bank's liability on acceptances executed and outstanding...... 1,966
Other liabilities............................................. 460,893
-----------
TOTAL LIABILITIES............................................. 7,771,468
-----------
EQUITY CAPITAL
Perpetual preferred stock..................................... 50,000
Common Stock.................................................. 41,473
Surplus....................................................... 282,945
Undivided profits and capital reserves........................ (5,858)
TOTAL EQUITY CAPITAL.......................................... 368,560
-----------
TOTAL LIABILITIES AND EQUITY CAPITAL..........................$ 8,140,028
===========
<PAGE>
